The effects of commercialization of cereal crops on multidimensional poverty and vulnerability to multidimensional poverty among farm households in Ethiopia

Abstract

ABSTRACT The study examined the effects of cereal commercialization on multidimensional poverty among farm households in teff-based mixed farming areas of Ethiopia. It applied instrumental Tobit regression and conditional mixed-process models to estimate the overall and dimensional effects of commercialization on household multidimensional poverty (MP) and vulnerability to multidimensional poverty (VMP). The result showed that the mean commercialization scale of the farm households was 38%. The headcount ratio (H) was found to be 58%, implying the poverty situation continues to pose major challenges upon the well-being of farm households. The average estimate of multidimensional poverty index (MPI) and household vulnerability to MP among sampled rural farm households was 0.31 and 0.52, respectively, with a statistically significant mean difference of commercialization status being at 1% level. Ceteris Paribus Assumption, a 10% increase in the degree of cereal commercialization is likely to reduce MPI deprivation, MPI poverty, and VMP by 5.4%, 16.3%, and 2.2%, respectively. Cereal commercialization also significantly reduces MPI dimensions that are measured exclusively through living standard and wealth dimensions. Thus, the commercial transformation of smallholders through a well-integrated market and improved infrastructure are key areas of policy intervention to improve the well-being of farm households in rural areas.