Abstract
The lack of land ownership can discourage agricultural technology adoption, yet there is scarce evidence of the impact of land rental contracts on the adoption of improved crop varieties in developing countries. The current study investigates such impact using a nationally representative survey of Ethiopian maize farmers. In contrast to many previous studies, we show in a simple model that cash-renters are as likely to adopt improved maize varieties as owner-operators, while sharecroppers are more likely to adopt given that such varieties are profitable. Empirical analysis reveals a significant impact of sharecropping on improved maize variety adoption, and no significant impact from cash-rental, lending support to the above hypotheses. These results imply that improvements in land rental markets can potentially enhance household welfare through crop variety adoption in agrarian economies where land sales markets are incomplete or missing.
Highlights
Land ownership, or land tenure, has been increasingly investigated as a factor affecting modern agricultural technology adoption in SubSahara Africa (SSA)
“reverse tenancy” is common in Ethiopia, our data show no evidence for either land holding or wealth differentials by land ownership
The significant error correlation in the bivariate probit model suggests the simultaneity of improved maize variety adoption and land rental decisions
Summary
Land tenure, has been increasingly investigated as a factor affecting modern agricultural technology adoption in SubSahara Africa (SSA). While most studies in this literature focus on resource-conserving technologies, modern agricultural technologies include productivity-enhancing ones such as improved crop varieties and fertilizer (Ersado et al, 2004), and possible impacts of land ownership on the latter need to be better understood This literature bias could be partly driven by the belief that land ownership affects only long-term. Resource-conserving practices such as tree planting can be adopted to demonstrate and strengthen claims to land rights (Place and Otsuka, 2002), while productivity-enhancing practices such as organic fertilizer that improves soil capital can be adopted by tenants to increase the chance to continue land operation in the future (Abdulai et al, 2011) In both cases, causality can be reverse, but such potential endogeneity is not commonly recognized (Brasselle et al, 2002; Fenske, 2011). Empirical evidence is robust in support of these hypotheses, suggesting that improvements in land rental markets can potentially enhance household welfare in agrarian economies where land sales markets are incomplete or missing
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