Impact of agricultural technology adoption on market participation in the rural social network system
Tigist Mekonnen Melesse
#2017-008
This paper provides empirical evidence regarding the impact of
agricultural technologies on smallholders’ output market participation.
The analysis is based on Farmer Innovation Fund impact evaluation survey
collected by the World Bank in 2010-2012 covering 2,675 households in
Ethiopia. Endogenous treatment effect and sample selection models are
employed to account for the self-selection bias in technology adoption
and market participation. Regressions based on matching techniques are
employed for robustness check. The estimation results show that the use
of improved agricultural inputs significantly affects farm households
marketable surplus production. We found evidence that application of
high-yielding varieties increases surplus crop production by 7.39
percent per year, whereas chemical fertilizer use increases surplus by
2.32 percent. When farmers apply the two inputs jointly, marketed
surplus increases by 6 percent which establish the complementarity of
the two technologies. Marketable surplus crop production and market
participation of farmers are determined by access to modern inputs, crop
price, farm size, availability of labor, and infrastructure. Access to
credit and training fosters technology adoption. Therefore, agriculture
and rural development policy need to focus on supporting agricultural
technology adoption.
JEL Classification: D04, O12, Q13
Keywords: Surplus production, technologies, social network, endogenous
treatment effect model, Ethiopia