Microfinance as the key factor affecting farmers’ investment decision-making: cluster experiences in Impasugong, Bukidnon, the Philippines

Abstract

This paper focuses on how microfinance has affected the investment decision making of squash and bitter gourd cluster farmers in Impasugong in the Southern Philippines. The farmers received loans from a microfinance institution (MFI) but because of production problems farmers were not able to meet their buyers’ requirements. The squash cluster disintegrated, while the bitter gourd cluster decided to diversify into onion production and to adopt organic fertilizers as a more cost effective means of production. As a result of these setbacks, both the clusters and the MFI learned some valuable lessons including; the role of microfinance in production; the risks associated with loans; and the level of support received by the farmers. Sustainability of livelihoods is the key factor that keeps the MFI and the farmers together. As the farmers aspire to maintain production, they will continue to need access to financial resources to meet their farm and family commitments.