Abstract
Agribusiness has been a growing trend for the past years. Transactions have become more complex, and farming faced more challenges than before. Financial literacy is essential for farm management to sustain the resiliency and sustainability of farmers’ livelihoods. Tuguegarao City is the regional center of Cagayan Valley, and its top agricultural product is corn. Additionally, most of its farmers’ population are smallholders owning less than two hectares of operated land area. Thus, this study assessed the financial literacy level of smallholder corn farmers in Tuguegarao City, Cagayan. Specifically, the study aimed to measure their financial literacy level, and identify the relationship between overall financial literacy level and socio-demographic profile. Data were gathered among 136 smallholder corn farmers through a survey questionnaire comprising the respondents’ socio-demographic characteristics and core questions about financial literacy, adopted from the standardized survey instrument developed by the Organisation for Economic Co-operation and Development (OECD). Results showed that smallholder corn farmers in Tuguegarao possessed a medium measure of financial knowledge, financial behavior, and financial attitude. Overall, the respondents also have a medium level of financial literacy, and financial attitude has the largest share in overall financial literacy. It was concluded that a significant positive relationship exists between income per cropping, participation in financial training/programs, and overall financial literacy. Furthermore, farmers with higher incomes and those who participated in financial training tended to have medium financial literacy.
Keywords: Financial Literacy, Financial Knowledge, Financial Behavior, Financial Attitude, Farming, Smallholder Farmers
*This paper is presented at the 4th Northern Philippines Business Research Conference hosted by Northwestern University”
References
Aggarwal, N., Gupta, M., & Singh, S. (2014). Financial Literacy among Farmers: Empirical Evidence from Punjab. Pacific Business Review International, 6(7), 36–42. http://www.pbr.co.in/2014/2014_month/jan/4.pdf
Akoto, G. O., Appiah, K. O., & Turkson, J. K. (2017). Financial literacy of cocoa farmers in Ghana. International Journal of Accounting and Finance, 7(1), 11. https://doi.org/10.1504/ijaf.2017.10004762
Ameliawati, M., & Setiyani, R. (2018). The Influence of Financial Attitude, Financial Socialization, and Financial Experience to Financial Management Behavior with Financial Literacy as the Mediation Variable. KnE Social Sciences, 3(10), 811. https://doi.org/10.18502/kss.v3i10.3174
Andoh F. K., Nunoo J., Darfor K. N. (2015). Sustaining small and medium enterprises through financial service utilization: Does financial literacy matter? Journal of Business and Entreprise Development, 5(1), 74–94. DOI: 10.22004/ag.econ.123418.
Atkinson, A., & Messy, F. A. (2012). Measuring Financial Literacy: Results of the OECD International Network on Financial Education Pilot Study. OECD Working Papers on Finance, Insurance and Private Pensions, 15, 1–73. https://dx.doi.org/10.1787/5k9csfs90fr4-en
Atkinson, A., & Messy, F. (2013). Promoting Financial Inclusion Through Financial Education.pdf. OECD Publishing, (34). https://doi.org/10.1787/5k3xz6m88smp-en
Banerjee, A., Kumar, K., & Philip, D. (2017). Financial literacy, awareness and inclusion. ISI Working Paper, https://www.isid.ac.in/epu/acegd2017/papers/KamleshKumar.pdf.
Bhushan, P., & Medury, Y. (2014). An empirical analysis of inter linkages between financial attitudes, financial behavior and financial knowledge of salaried individuals. Indian Journal of Commerce and Management Studies, 5(3), 58. https://econpapers.repec.org/scripts/redir.pf?u=http%3A%2F%2Fscholarshub.net%2Findex.php%2Fijcms%2Farticle%2Fview%2F190%2F184;h=repec:aii:ijcmss:v:5:y:2014:i:3:p:58-64
Boekhold, H. (2016). Financial literacy to facilitate access to finance in Eastern Africa: An inventory of training tools and materials for coffee farmers. Bank of Uganda. http://www.globalcoffeeplatform.org/assets/files/FinancialLiteracy-training-tools-and-materials-for-African-coffee-farmers.pdf
Demirgüç-Kunt A., Klapper L., Singer D., Ansar S. & Hess, J. (2017). The Global Findex Database 2017: Measuring Financial Inclusion and Opportunities to Expand Access to and Use of Financial Services. The World Bank Economic Review, 34(2–8), https://doi.org/10.1093/wber/lhz013
Firli, A. (2017, March). Factors that influence financial literacy: A conceptual framework. In IOP Conference Series: Materials Science and Engineering (Vol. 180, No. 1, p. 012254). IOP Publishing.
Gaurav, S., & Singh, A. (2012). An inquiry into the financial literacy and cognitive ability of farmers: Evidence from rural India. Oxford Development Studies, 40(3), 358-380. https://www.tandfonline.com/doi/abs/10.1080/13600818.2012.703319
Hashemi, Seyyed Mahmoud & Mahmood Hosseini, Seyed & Hashemi, Mohammad. (2011). Farmers’ perceptions of safe use of pesticides: Determinants and training needs. Archiv für Gewerbepathologie und Gewerbehygiene. http://dx.doi.org/10.1007/s00420-011-0641-8
Hasler, A., & Lusardi, A. (2017). The gender gap in financial literacy: A global perspective. Global Financial Literacy Excellence Center, The George Washington University School of Business.
Kalekye, P., Memba, F. (2015). The role of financial literacy on the profitability of women owned enterprises in Kitui Town, Kitui Country, Kenya. International Journal of Science & Research, 4(6), 2360–2365. https://www.ijsr.net/archive/v4i6/SUB155793.pdf
Kalunda, E. (2014). Financial inclusion impact on small-scale tea farmers in Nyeri County, Kenya. World Journal of Social Sciences, 4(1), 130-139.
Lusardi, A. (2019). Financial literacy and the need for financial education: evidence and implications. Swiss Journal of Economics and Statistics, 155(1), 1–8. https://doi.org/10.1186/s41937-019-0027-5
Lusardi, A., & Mitchell, O. S. (2014). The economic importance of financial literacy: Theory and evidence. Journal of Economic Literature, 52(1), 5–44. https://doi.org/10.1257/jel.52.1.5
McHutchon, M (2021). How well farmers understand their finances? Looking at the implications of low levels of financial literacy. Rural Leaders. https://ruralleaders.co.nz/wp-content/uploads/2021/04/McHutchon-Michael_Understanding-your-business.pdf
Mian, T. S. (2014). Examining the level of financial literacy among Saudi Investors and its impact on Financial Decisions. International Journal of Accounting and Financial Reporting, 4(2), 312-328.
Morgan, P. & Trinh, L. (2019). Determinants and Impacts of Financial Literacy in Cambodia and Vietnam. In Journal of Risk and Financial Management, 12(1). https://doi.org/10.3390/jrfm12010019
Ntakyo, R. P., Johnny, M., Robert, B., Diana, N., & Robert, K. (2021). Influence of informal financial literacy training on financial knowledge and behavior of rural farmers: Evidence from Uganda. Journal of Development and Agricultural Economics, 13(3), 192–204. https://doi.org/10.5897/jdae2021.1290
OECD. (2013). Financial Literacy and Inclusion: results of OECD/INPE survey across countries and by gender. Financial Literacy & Education: Russia Trust Fund, June, 1–175. https://www.oecd.org/daf/fin/financial-education/TrustFund2013_OECD_INFE_Fin_Lit_and_Incl_SurveyResults_by_Country_and_Gender.pdf
OECD. (2020). OECD/INFE 2020 International Survey of Adult Financial Literacy. OECD/INFE 2020 International Survey of Adult Financial Literacy, 78. www.oecd.org/financial/education/launchoftheoecdinfeglobalfinancialliteracysurveyreport.htm
Potrich, A. C. G., Vieira, K. M., & Kirch, G. (2015). Determinants of financial literacy: Analysis of the influence of socioeconomic and demographic variables. Revista Contabilidade & Finanças, 26, 362-377.
PSA. (2014). Costs and Returns of Corn Production. Philippine Statistics Authority. https://psa.gov.ph/sites/default/files/crs_corn2013_0.pdf
PSA. (2015). Updated Costs of Production of Palay and Corn. Philippine Statistics Authority. https://psa.gov.ph/sites/default/files/UpdatdCostsProdPALAYCorn101216.pdf
Rai, K., Dua, S., & Yadav, M. (2019). Association of financial attitude, financial behaviour and financial knowledge towards financial literacy: A structural equation modeling approach. FIIB Business Review, 8(1), 51-60.
Ravikumar, R., Sivakumar, S. D., Jawaharlal, M., Palanichamy, N. V., & Sureshkumar, D. (2013). Assessment of Farm Financial Literacy among Jasmine Growers in Tamilnadu, India. Developing Country Studies, 3(13), 67–75. https://www.iiste.org/Journals/index.php/DCS/article/view/9413
Remmele, B. (2016). Financial literacy and financial incomprehensibility. International handbook of financial literacy, 39-55.
Safitri, K. A. (2021). An analysis of Indonesian farmer’s financial literacy. Estudios de Economia Aplicada, 39(4). https://doi.org/10.25115/eea.v39i4.4489
Sanglay, P.D., Apat, E.C., Sumague, J.A. & Tec, E.T. (2021). Financial Literacy and Income Distribution of Rice Farmers. International Journal of Accounting, Finance and Education, 2(3), 1-21. https://media.neliti.com/media/publications/348732-financial-literacy-and-income-distributi-13c4023d.pdf
Santoso, W., Asmara, K., & Abidin, Z. (2020). Measuring the Financial Literacy of Farmers Food Crops in the Poor Area of Madura, Indonesia. European Journal of Agriculture and Food Sciences, 2(6). https://doi.org/10.24018/ejfood.2020.2.6.138
Sayinzoga, A., Bulte, E. H., & Lensink, R. (2016). Financial Literacy and Financial Behaviour: Experimental Evidence from Rural Rwanda. Economic Journal, 126(594), 1571–1599. https://doi.org/10.1111/ecoj.12217
Shimray, R. J., Thongkamkaew, C., & Jirangvoraphot, N. (2018). Financial Literacy Competencies of Farm Households in Bang Klam District, Songkhla: Methodological Issues. The 9th Hatyai National and International Conference. 1833, 1833–1846. http://www.hu.ac.th/conference/proceedings/data/Inter/Oral/Social%20Science/162-207So-IO%20(Rochelle%20J.%20Shimray).pdf
Sreelakshmi, C. (2017) Impact of the Financial Literacy programme on farmers in Pullu Village. Impact Journals US. http://ns1.impactjournals.us/download/archives/–1507026343-2.format.%20hum-IMPACT%20OF%20FINANCIAL%20LITERACY%20PROGRAMM%20ON%20FARMERS%20IN%20PULLU%20VILLAGE%20_SREELAKSHMI%20C%20C_.pdf
Thapa, G., & Gaiha, R. (2011). Smallholder Farming in Asia and the Pacific: Challenges and Opportunities. Paper presented at the New Directions for Smallholder Agriculture, Rome, IFAD HQ. http://www.ifad.org/events/agriculture/doc/papers/ganesh.pdf
Twumasi, M. A., Jiang, Y., Ding, Z., Wang, P., & Abgenyo, W. (2022). The mediating role of access to financial services in the effect of financial literacy on household income: The case of rural Ghana. Sage Open, 12(1), 21582440221079921.
Widhiyanto, I., Nuryartono, N., & Siregar, H. (2018). The Analysis of Farmers’ Financial Literacy and its’ Impact on Microcredit Accessibility with Interest Subsidy on Agricultural Sector. International Journal of Economics and Financial Issues, 8(3), 148–159. https://www.econjournals.com/index.php/ijefi/article/view/6441/pdf
Zait, A., Bertea, P.E. (2014), Financial literacy – Conceptual definition and proposed approach for a measurement instrument. The Journal of Accounting and Management, 3, 37-42. https://core.ac.uk/download/pdf/229471204.pdf
Zakić, V., Kovačević, V., & Damnjanović, J. (2017). Significance of financial literacy for the agricultural holdings in Serbia. Економика пољопривреде, 64(4), 1687-1702.
