The impact of credit and productivity improvement on farm household welfare based on agro ecosystems in east Nusa Tenggara province, Indonesia

This study about the impact of credit and productivity improvement was aimed to discover the changes in farm household production, income and expenditure in dryland and wetland agro ecosystem zones. The study was conducted in Kupang Regency and Timor Tengah Selatan (TTS) Regency, East Nusa Tenggara (NTT) Province, Indonesia. This province was chosen because it is one of the poorer provinces in Indonesia. Data were collected using the structured interview technique from 178 farm households; 128 households in the dryland zone and 50 households in the wetland zone. The data were analyzed using econometric analysis, the simultaneous equation system with the 2-SLS method (two stage least squares), validated, and simulation using the Newton method, and Simnlin procedure. The results of the analysis showed that if only given agricultural credit, the impact of increased production, income and welfare is only seen in farm households in the wetland zone. Agricultural credit policies followed by increased production input through improvements in technology would have a positive effect both on farm households in the dryland and in the wetland zone.