Determinants of market participation among smallholder farmers in Southwest Ethiopia: double-hurdle model approach

Abstract

BackgroundAgricultural production by smallholder farm households is a means of livelihood for many rural households in developing economies, including Africa. Commercializing smallholder farmers in the agricultural sector is an indispensable path to boost economic growth and development of most developing countries, like Ethiopia. But, maize marketing has not been given due attention, which has potential production volume and marketability. Therefore, this study is designed to identify determinants of market participation decision and volume of supply among smallholder maize producer farmers in Southwest Ethiopia.MethodsData for this study were collected through cross‑sectional survey from maize producer farm households. The primary data were generated by household survey using a pre-tested structured questionnaire. A both purposive and random sampling technique was used to draw an appropriate sample of 546 maize producer households for this cross-sectional survey study. The data were analyzed using descriptive statistics and double-hurdle econometric model.ResultsThe result of the survey indicates that out of total 546 maize producers, 381 households are maize market participants and 165 households are non-participants. First hurdle model results show that nine variables—education level, farming experience, quantity of maize produced, cooperative membership, distance to nearest market, amount of credit received, off/non-farming income, number of oxen and perception about lagged price—significantly affect the market participation decision among maize producer farmers. The second hurdle result confirmed that seven variables—sex, family size, land allocated for maize, number of oxen, distance to nearest market, livestock holding and perception about lagged price—significantly affect the level of market participation by maize producer farmers.ConclusionThe findings of this study revealed that understanding the factors and its extent is very important for policy-making to address the problem of market participation decision and level of participation among smallholder farm households. Therefore, the study suggests that important resource and socio-economic factors must take into consideration to enhance the productivity and strength supportive institutions or infrastructural facilities in the study area to improve market participation decision and level of participation of smallholders.