Abstract
The majority of farmers in Ethiopia are smallholder farmers. However, smallholder farmers Participation in markets remain low due to range of resource constraints such as capital, inputs and technology and their exposure to risk. Therefore, this paper was aimed to review different literature determinants of smaller holder farmers’ market participation and outlet choice decision in Ethiopia based on desk review method. The review reveals that demographic and socio-economic factors, institutional factors, market factors, technological factors, transaction cost and risk were determinants of smallholder farmers’ market participation decision in Ethiopia. On other hand, the determinants of smallholder farmers’ market outlet decision also reviewed. Accordingly, household characteristics, transaction costs, product characteristics, household asset and trusts on buyers were determinants smallholder farmers’ market outlet choice in Ethiopia. Therefore, government and concerned bodies should improve rural infrastructure, smallholder farm productivity through technology, market information, promotion of farmer associations to enhance market participation and outlet choice small holder farmers in Ethiopia.
Highlights
This review identifies and provides information on determinants of smallholder farmers’ market participation decision and outlet choice in Ethiopia
Transaction Costs In addition to household characteristics transaction costs could influence market outlet choice. [47] used multivariate probit model to identify factors affecting market outlet choice of smallholder mango producers in Boloso Bombe district, Southern Ethiopia. Their results from multivariate probit model indicated that variables such distance to the market, proxy for transaction cost determined the decision of choice of wholesaler, collector, retailer and consumer market outlets
Agriculture is main economic pillars of the Ethiopian economy and the economic growth of the country is highly dependent on the success of the agriculture sector
Summary
Ethiopia is one of the Sub-Saharan Africa countries that liberalized its economy and developed Poverty reduction strategies that strengthen market-led strategies for agricultural development and economic growth [6]. Limiting constraints faced by smallholder farmers is linked to poor market access, high transaction costs, Poor infrastructure and weak institutions cause transaction costs to rises, which considerably alter production and market-participation decisions [11] The transformation of subsistence agricultural production into a commercially oriented system requires two essential dynamics: 1) efficient market services for timely delivery of quality inputs to farmers at competitive prices, 2) transparent output markets that provide signals to the farmers, allowing them to make informed decisions on what to produce and at what quality standards, as well as where and when to sell their outputs to be promoted and which markets to focus on [9].
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