Crop commercialization in Ethiopia: Trends, drivers, and impact on well-being

Crop commercialization in Ethiopia: Trends, drivers, and impact on well-being

Author: Minot, Nicholas

Publisher: Intl Food Policy Res Inst

Published: 2022-12-06

Total Pages: 6

ISBN-13:

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Agricultural transformation refers to a series of changes in agriculture that both reflect and drive rising income and economic development more broadly. While the macroeconomic patterns of agricultural transformation are relatively well documented, less is known about how it is manifested at the household level. Ethiopia makes an excellent case study as it has had one of the fastest growing economies in the world. An important aspect of this process is agricultural commercialization, that is, the rising share of agricultural output is sold on the market rather than being consumed at home. Agricultural commercialization tends to rise with development with improved infrastructure and communications, the availability of inputs and know-how regarding commercial crop production, and farmers being willing to accept the risks associated with producing crops for the market. Agricultural commercialization is widely believed to allow farmers to earn higher income as they specialize in crops for which they have a comparative advantage. The analysis makes use of a data from three rural household surveys carried out in Ethiopia by IFPRI in 2012, 2016, and 2019. Each survey used a sample that was representative of the four main agricultural regions of the country (Tigre, Oromia, Amhara, and SNNP) with sample sizes of 3000 to 5000, including 1,900 households that were interviewed in all three rounds. In addition, we incorporate several weather variables based on CHIRPS rainfall data to estimate the effect of the level and variability of rainfall on agricultural commercialization.


Role of agricultural commercialization in the agricultural transformation of Ethiopia: Trends, drivers, and impact on well-being

Role of agricultural commercialization in the agricultural transformation of Ethiopia: Trends, drivers, and impact on well-being

Author: Minot, Nicholas

Publisher: Intl Food Policy Res Inst

Published: 2023-01-23

Total Pages: 68

ISBN-13:

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Agricultural transformation refers to a series of changes in agriculture that both reflect and drive rising income and economic development more broadly. While the macroeconomic patterns of agricultural transformation are relatively well documented, less is known about how it is manifested at the household level. Ethiopia makes an excellent case study as it has had one of the fastest growing economies in the world. This paper focuses on one aspect of this process: agricultural commercialization, that is, the process through which an increasing share of agricultural output is sold on the market rather than being consumed at home. The analysis uses three nationally representative rural household surveys carried out in 2012, 2016, and 2019, including a panel of 1,900 households. The results show that the share of marketed agricultural output has increased significantly over the seven-year period. Somewhat surprisingly, this increase is not due to a shift in crop mix toward more commercial crops but rather an increase in the degree of commercialization of each crop. Using a correlated random effects model, we find marketed share to be significantly related to age of the head of household, farm size, wealth, distance to road, rainfall, rainfall variability, and region. Although endogeneity is a challenge, descriptive statistics and regression analysis further suggest that agricultural commercialization contributes to higher income, largely because commercial crops generate higher returns per hectare than staple grains. The results indicate that there is no clear line between “subsistence” and “commercial” farms. A large majority of farms have some crop sales, while virtually none of them sell all their output. Similarly, the contrast between subsistence crops and cash crops can be misleading. For example, the value of staple cereal sales in Ethiopia is almost three times greater than that of coffee, the main cash crop. We draw lessons from the results for the design of programs to raise rural incomes by facilitating market-oriented agricultural production.


Gender implications of agricultural commercialization in Africa: Evidence from farm households in Ethiopia and Nigeria

Gender implications of agricultural commercialization in Africa: Evidence from farm households in Ethiopia and Nigeria

Author: Berhane, Guush

Publisher: Intl Food Policy Res Inst

Published: 2023-01-03

Total Pages: 50

ISBN-13:

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Agricultural commercialization is often pursued as an important driver of agricultural transformation in low-income countries. However, the implications it can have on gendered outcomes are less understood. While agricultural commercialization creates opportunities to increase income, this may come at the expense of change in women’s decision-making agency and control over resources. Understanding the interactions between agricultural commercialization and gender outcomes is thus critical for policymakers aspiring to achieve agricultural transformation while promoting gender equity and the evidence on the links between the two in the context of Africa is scarce and mixed. We use three rounds of Ethiopia’s and Nigeria’s LSMS-ISA panel data to understand the implications of agricultural commercialization to gendered decision-making on crop harvest use, marketing, revenue control, asset ownership, and intrahousehold budget allocation. Results indicate commercialization is associated with decreases in women’s participation in decision-making related to use of harvest, crop marketing, and control over revenue in Ethiopia, but only on harvest use and control over revenue in Nigeria. The association with land ownership is mixed: positive in Ethiopia but negative in Nigeria. Moreover, commercialization is associated with decreases in women’s share of farm-workload but with increases in share of hired labor in Ethiopia. In Ethiopia we also find women’s control over revenue is positively associated with increases in per capita consumption expenditures and dietary diversity, but men’s control is negatively associated with increases in the share of expenditure on children’s shoes and clothes. In Nigeria, women’s control is positively associated with increases in the share of expenditure on women’s shoes and clothes, food gap, and dietary diversity. In sum, we find suggestive evidence that commercialization may further marginalize women’s decision-making agency in Ethiopia and Nigeria. However, conditional on women’s control over proceeds, commercialization tends to improve women’s as well as other members’ welfare. We provide some policy recommendations and directions for future research.


Farmers’ quality assessment of their crops and its impact on commercialization behavior: A field experiment in Ethiopia

Farmers’ quality assessment of their crops and its impact on commercialization behavior: A field experiment in Ethiopia

Author: Abate, Gashaw T.

Publisher: Intl Food Policy Res Inst

Published: 2017-03-24

Total Pages: 44

ISBN-13:

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Adoption of quality-enhancing technologies is often driven largely by farmers’ expected returns from these technologies. Without proper grades, standards, and certification systems, however, farmers may remain uncertain about the actual financial return associated with their quality-enhancing investments. This report summarizes the outcomes of a short video-based randomized training intervention on wheat quality measurement and collective marketing among 15,000 wheat farmers in Ethiopia. Our results suggest that the intervention led to significant changes in farmers’ commercialization behaviors—namely, it prompted farmers to adopt behaviors geared toward assessing their wheat’s quality using easily implementable test-weight measures, assessing the accuracy of the equipment used by buyers in their kebeles (scales, in particular), and contacting more than one buyer before concluding a sale. The training also led to improvements in share of output sold, price received, and collective marketing, albeit with important limitations. First, farmers who measured their wheat quality received a higher price, but only if their wheat was of higher quality. Second, farmers who found that their wheat was of higher quality were more reluctant to aggregate their wheat (that is, sell their products through local cooperatives) than those who found that their wheat was of lower quality. Lastly, the training intervention led to better use of fertilizer in the following season. Our discovery that a short training intervention can significantly change farmers’ marketing and production behavior should encourage the development of further interventions aimed at enhancing farmers’ adoption of improved technologies and commercialization.


Cooperatives for Staple Crop Marketing

Cooperatives for Staple Crop Marketing

Author: Tanguy Bernard

Publisher: Intl Food Policy Res Inst

Published: 2010

Total Pages: 104

ISBN-13: 0896291758

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Rural producer organizations (RPOs), such as farmers' organizations or rural cooperatives, offer a means for smallholder farmers in developing countries to sell their crops commercially. RPOs hold particular promise for Sub-Saharan Africa, where small-scale farming is the primary livelihood but commercialization of food crops is very limited. Using the experience of smallholders in Ethiopia as a case study, this research monograph identifies the benefits of RPOs for small farmers, as well as the conditions under which such organizations most successfully promote smallholder commercialization. The evidence from Ethiopia indicates that RPOs do increase farmers' profits from crop sales, but that the beneficiaries do not tend to be the poorest smallholders. Moreover, an RPO's marketing effectiveness is precarious: it can easily diminish if the number or diversity of its members increases or if it provides more non-marketing services. The authors conclude that RPOs have a role to play in the agricultural development of Sub-Saharan Africa, but that role should be complemented by other programs that directly target the poorest farmers. Further, the effectiveness of RPOs should be preserved by allowing them to follow their own agendas rather than being encouraged to take on non-marketing activities. The assessment of RPOs presented in this monograph should be a valuable resource for policymakers and researchers concerned with economic development and poverty reduction in Sub-Saharan Africa.


Food and Agriculture in Ethiopia

Food and Agriculture in Ethiopia

Author: Paul Dorosh

Publisher: University of Pennsylvania Press

Published: 2013-02-11

Total Pages: 377

ISBN-13: 0812208617

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The perception of Ethiopia projected in the media is often one of chronic poverty and hunger, but this bleak assessment does not accurately reflect most of the country today. Ethiopia encompasses a wide variety of agroecologies and peoples. Its agriculture sector, economy, and food security status are equally complex. In fact, since 2001 the per capita income in certain rural areas has risen by more than 50 percent, and crop yields and availability have also increased. Higher investments in roads and mobile phone technology have led to improved infrastructure and thereby greater access to markets, commodities, services, and information. In Food and Agriculture in Ethiopia: Progress and Policy Challenges, Paul Dorosh and Shahidur Rashid, along with other experts, tell the story of Ethiopia's political, economic, and agricultural transformation. The book is designed to provide empirical evidence to shed light on the complexities of agricultural and food policy in today's Ethiopia, highlight major policies and interventions of the past decade, and provide insights into building resilience to natural disasters and food crises. It examines the key issues, constraints, and opportunities that are likely to shape a food-secure future in Ethiopia, focusing on land quality, crop production, adoption of high-quality seed and fertilizer, and household income. Students, researchers, policy analysts, and decisionmakers will find this book a useful overview of Ethiopia's political, economic, and agricultural transformation as well as a resource for major food policy issues in Ethiopia. Contributors: Dawit Alemu, Guush Berhane, Jordan Chamberlin, Sarah Coll-Black, Paul Dorosh, Berhanu Gebremedhin, Sinafikeh Asrat Gemessa, Daniel O. Gilligan, John Graham, Kibrom Tafere Hirfrfot, John Hoddinott, Adam Kennedy, Neha Kumar, Mehrab Malek, Linden McBride, Dawit Kelemework Mekonnen, Asfaw Negassa, Shahidur Rashid, Emily Schmidt, David Spielman, Alemayehu Seyoum Taffesse, Seneshaw Tamiru, James Thurlow, William Wiseman.