Impact of Wheat Cluster Farming Practice on Smallholder’s Asset Building in Arsi Zone of Ethiopia

Abstract

Agriculture is the main focus of Ethiopia's economic development. It accounts for about 32.7% of the country’s GDP (NBE, 2020). Wheat is one of the major cereal crops produced by smallholder farmers in Ethiopia. Wheat demand is rising quickly in Ethiopia despite efforts to improve wheat production. Recently, to curb this problem, the government of Ethiopia has set up a cluster farming system for high-potential crops like wheat as a means of improving productivity and maximizing the income of smallholder farmers. In light of the problems and the research gaps identified, this study seeks to address the impact of wheat cluster farming practices on stallholder’s asset building in the Arsi Zone of Ethiopia. Data was collected from 383 sample wheat-producing households. The data was analyzed using descriptive statistics and propensity score matching model. The propensity score matching model of the average treatment effect on the treated result revealed that wheat cluster farming participation had a significant impact on the smallholders’ asset building. It has been found that, on average, participation in wheat cluster farming has increased smallholders' asset building by ETB 8014.13 (148.69$) for wheat cluster participants as compared to non-participants. Hence it was concluded that cluster farming has improve wheat production which is the major source of income to build asset of the study areas smallholders. Therefore, stakeholders should develop strategies to promote and scale up cluster farming practices. As a result, smallholder farmers will use the extra wheat produced by cluster farming to accumulate more assets and thus raise their standard of living.