Does crop diversification reduce downside risk in maize yield enhancing investments? Evidence from Ethiopia using panel data

Abstract

Using a unique household level panel data collected from the major maize producing regions of Ethiopia, this study assesses the role of crop diversification in minimizing the downside risks associated with the use of improved seed and chemical fertilizer in maize production. Empirical results show that maize-legume intercropping and rotation increases the average maize yield and reduces downside risk as captured by the estimated yield distribution using Endogenous Switching Regression models and quintile moment approaches. Controlling for plot and household level characteristics that may induce selection bias in technology adoption, maximum yield was obtained on plots with maize-legume rotation or intercropping sequences. The contribution of crop diversification in reducing downside risk in maize yield was higher when diversification was applied to plots that received improved seed and chemical fertilizers. In addition to the technical support provided to smallholder farmers on the use of improved seed and chemical fertilizer in maize production, the existing agricultural extension program in Ethiopia may also need to give due emphasis to both spatial and temporal crop diversification practices to enhance crop productivity further and reduce the potential downside risk hampering smallholder farmers initiatives in investing in purchased agricultural inputs in maize production. Acknowledgement : The authors would like to acknowledge two projects financially supported the collection of panel data used in this study: Sustainable Intensification of Maize-Legume cropping systems for food security in Eastern and Southern Africa (SIMLESA) project funded by the Australian Center for International Agricultural Research (ACIAR) and Diffusion and Impact of Improved Varieties in Africa (DIIVA) project funded by Bill and Melinda Gates Foundation (BMGF) through Bioversity International which collaborated with the Standing Panel for Impact Analysis (SPIA) in the CGIAR and CIMMYT. Views in this paper are of the authors. The usual disclaimer also works here.