Smallholder Supply Response and Gender in Ethiopia: A Profit Function Analysis

Abstract

Empirical studies on gender and agricultural productivity are typically based on production function estimates of a single crop or aggregate output, ignoring the role of prices and endogeneity of input choice. We apply the profit function approach to farm-level data from Ethiopia to compare supply response between male and female farmers, incorporating the full range of crops and prices and non-price incentives. Gender-differential in labor productivity is accounted for by including separate variables for adult male and female labor as well as child labor. We find that women respond to price incentives as strongly as men farmers do, but responsiveness largely depends on the type of crops and the relative importance of binding constraints. In contrast to price responses, differences in the non-price effects are not qualitatively different between the two groups, with location-specific factors soliciting significantly larger share of output response than household-specific factors. The data shows that female-headed farmers are more likely to be asset-poor subsistence farmers living in climatically less favored areas; consequently, constrained by limited access to better quality land, male labor and animal traction to diversify into high-yielding fertilizer-intensive food crops. Gender-targeted interventions that explicitly address low endowment of capital by women are likely to pay-off, as well as technologies that improve the productivity of land and labor. Well-integrated pro-poor policies that facilitate access to basic physical capital and credit are equally important. Our findings suggest that broad-based price and fertilizer policies are unlikely to be optimal, as they do not target the prevailing crop and agro-climatic mixes. Broad-based infrastructure and market access policies, on the other hand, are more likely to benefit all farmers