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Abstract

In Chile, the small-scale farmer sector has more than 1.2 millions of peasants with more than 278 thousand productive farms which represent 85% of total productive farms in Chile. This sector is considered to be heterogeneous and multifunctional. As other farming sectors, small-scale farmers need smooth access to credit to support working capital and investment. However, these kinds of farmers do not meet the requirements of commercial banks due to asymmetric information. The objective of this paper is to determine farmer characteristics that affect the payment of credit obligations. This case-study analysis is based on a cross-section survey data taken of 185 small-scale farmers in O’Higgins Region in Chile, who applied for a commercial bank loan during two seasons. An ordered probit regression model is estimated. The results suggest that the variables that reduce the probability of credit repayment are total production cost and crop specialization. On the other hand, education and farm location did not present statistically significant differences.

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