6533b7defe1ef96bd127608f

RESEARCH PRODUCT

Commercialization of smallholder farming: determinants andwelfare outcomes : a cross-sectional study in Enderta district, Tigrai, Ethiopia

subject

description

Masteroppgave i development management- Universitetet i Agder 2009 Transforming the subsistence-oriented production system into a market-oriented production system as a way to increasing the smallholder farmer’s income and thus its welfare outcomes, and reducing rural poverty, has been in the policy spotlight of many developing countries, including Ethiopia, for some time now. However, there are no adequate studies in Tigrai focusing on the level of market integration of the smallholder farmers and whether the market participants are better-off in welfare outcomes. This study, thus, focused on identifying the micro-level factors determining market participation, the level of commercialization as well as evaluating the welfare outcomes of participant smallholders in Enderta District of Tigrai. Descriptive, statistical and econometric methods were employed to analyze the data collected from a sample of 125 households using structured household questionnaires. The findings from the statistical analysis showed that landholding size and land slope, irrigation use, number of oxen owned, and membership in extension package program have positive and significant association with commercialization while participation in non-farm activities has significant but negative association with commercialization. Nonetheless, descriptive findings showed that the degree of commercialization in the study area is very low (23%) even in comparison to the national average (33-36%), which is in itself considered to be low. The findings from the probit regression analysis revealed that production level (in value terms), use of improved seeds, use of irrigation and total landholding size are the most important factors affecting the ability of a smallholder to participate in output markets. Moreover, the findings from OLS estimation showed that the level of food and cash crop production (in value terms), gender, technology use (irrigation, improved seeds), use of fertilizer and the number of oxen owned per household are important factors determining the level of commercialization of smallholder farms. Finally, findings from one-way ANOVA analysis indicated that farm households with high degree of commercialization enjoyed better welfare outcomes (represented by consumption of basic non-grain consumables and expenditure on education, shoes and clothes, durables and housing). Therefore, the findings indicate that farmers with high level of commercialization are better-off in welfare outcomes. In addition, the findings indicate that farmers can be better integrated with the market if better support services are provided and efforts to enhance farmers’ access to technology and assets are strengthened. Key words: Smallholder, Commercialization, Welfare, Subsistence farming, Probit model, OLS estimation, Enderta- Tigrai