Journal of Agricultural Economics, Extension and Rural Development

ISSN 2360-798X

Econometric analysis of factors affecting market participation of smallholder farming in Central Ethiopia


Accepted 6th June, 2014


It is evident that for a developing country, agriculture forms the basis for every economic activity. It plays an active role in determining the economic, social, and political system of a society of a developing world. The title of the study is Econometric Analysis of Factors Affecting Market participation of Smallholder Farming in Central Ethiopia. The main objective of this study was to identify and examine the demographic and socioeconomic factors determining market participation of smallholder farmers. The findings from the multinomial logistic regression analysis revealed what factors influence the probability of being commercial farmers. Accordingly, age, being male, urea application, labor expenditure, and land size cultivated had positive sign and significantly affect the probability of being commercial farmer. Nevertheless, use of improved seed, number of oxen owned, and water harvesting had unexpected negative sign, but they are statistically insignificant. Finally, there is still the potential of integrating non-participant farm households with the market if better support services in the form of technical advice and capacity building training to use technology and intensify production are provided. Moreover; if additional funds for agricultural research activities dealing with high-yield seed varieties are allocated and if investments in irrigation projects are made, it is possible to better integrate smallholder farmers to the market.  


Keyword: Degree of market participation, commercialization, Adaa District, and multinomial logistic regression analysis