The nexus of crop and income diversification, commercialisation and household welfare: empirical evidence from Ethiopia.
Year: 2019
Type: dissertation
Study design: Observational Study
Abstract: Agriculture is a key economic sector playing an important role in an endeavour to realize the country's development objectives and overcome rural poverty.It is a source of livelihoods and employment for most of the population living in rural areas of Ethiopia.However, the sector is dominated by subsistence smallholders heavily characterized by rain-fed farming and poverty.Adverse events because of unpredictable weather conditions e.g.periodic droughts, declining landholding and fragmentation, lack of institutional services, input and output price fluctuations and population pressure significantly influence the livelihoods of rural households.Smallholders are pursuing various adaptation strategies to develop the resilience that helps them overcome these challenges guided by the resources, information, intrinsic values and motivation.Accordingly, crop and income diversifications are among the decisions followed to spread risk over multiple activities and make economically rational choices.On the other hand, the government is striving to undertake economic transformation which mainly encourages specialized farming.Thus, the analysis of crop and income diversification and the consequence on a household welfare is relevant to design and execute an appropriate mix of policies that recognizes the integration of subsistence and commercial farming.The study was conducted in nine selected districts from three administrative regional states of Ethiopia representing the major maize-legume production systems.Balanced panel data of 854 respondents (1708 observations) generated in two round survey were analyzed.Econometric models were chosen to empirically analyze the data, guided by economic theory, literature and the nature of the response variables.The fractional probit and Pseudo Fixed-effect (PFE) models were used to analyze the determinants of crop diversification and its effects on crop productivity, respectively.The fractional probit model was employed to analyze the determinants of income diversification and poverty gap while the PFE was used for income and vulnerability analysis.Finally, a logit transformation model was employed to analyze smallholders' commercialization behaviour and the influence of crop and income diversification on smallholders' commercialization.Before the estimation of the models, necessary heteroscedasticity and endogeneity tests were conducted so that a consistent and efficient estimations are achieved.The result suggested that dependency ratio, farm size, livestock endowment, credit access, access to extension services and the use of crop rotation practices are positive drivers of crop diversification.Membership of market groups is negatively associated with the level of crop diversification.Moreover, diversification is greater in sub-humid high-potential agroecological areas than in semiarid agro-ecologies.Concerning crop productivity,
Author: Mekonnen Sime Kidane
Language: English
Domain: Life Sciences
Open Access status: green
OpenAlex ID: W3014360238