Econometric analyses of horticultural production and marketing in Central and Eastern Ethiopia

Keywords: vegetables, food and cash crops, land and labour allocations, crop and market outlet choice, price information, farm households, Ethiopia.The central item of this research is to examine the development of less-favoured areas through commercializing small-scale agriculture that produces crops with export potential, particularly in horticulture.First the role of horticulture, along with other non-traditional agricultural commodities, in stabilizing the export income of Ethiopia is analyzed using a portfolio approach. Next, farm household land and labour allocation decisions to cash and food crop production are investigated using household survey data collected from Central and Eastern Ethiopia. Using the same survey data, crop and market outlet choice interactions at household level are analyzed to examine the impact of institutional arrangements on agricultural commercialization. Finally, farmers' bargaining power on tomatoes transacted at farm-gate under asymmetric price information is examined.The study shows that horticultural products may stabilize export income at tbc macro-economic level and therefore it is worthwhile to explore the possibilities for growth of this sector. At household level, farm capital and motor pump ownership are the major elements, among others, influencing land and labour allocation decisions to cash crop production. For some cash crops, there is interdependence between the share of land allocated to a given crop and the share of the specific crop harvest sold at a farm-gate implying that institutional arrangements influence household crop choices and the level of commercialization. Results from the bargaining power analysis show that well informed farmers are more committed to their initial ask prices than other farmers during tomato price negotiations at a farm-gate. This implies that market price information enhances farmers' bargaining power on prices.In general, institutional arrangements that enhance small-scale farmers' working capital, secure the existence of market outlets for vegetables and provide price information are needed to influence farm household land and labour allocation decisions towards cash crop production. The findings of this thesis help to understand the process of moving towards commercialized small-scale agriculture to bring rural development and better welfare to the rural poor and particularly for those living in less-favoured areas

Farm-gate tomato price negotiations under asymmetric information information

This article provides an empirical analysis of farm-gate tomato price negotiations under asymmetric information. Regression models are estimated to analyze when and by how much sellers stick to their initial ask prices and what explains the variation in the initial ask¿offer price spread. Detailed information on 66 farm-gate tomato transactions and daily tomato wholesale price data from the central vegetable market in Addis Ababa are used for the analysis. Estimation results show that farmers are less committed to their initial ask price when the buyer speaks out the transaction price first, when their quality perceptions of the tomatoes being transacted differ from those of the buyers, and when their tomato farm is at a large distance from the main road. Sellers stick more to their initial ask price when they know that the central market price is high. The initial ask¿offer price spread decreases when the buyer speaks out the initial negotiation price first, but increases in the difference in quality perception between buyer and seller, and in the quantity of tomatoes being transacted

Land and Labour Allocation Decisions in the Shift from Subsistence to Commercial Agriculture

This chapter assesses farm household land and labour allocation decisions under imperfect factor and product markets. A non-separable farm household model is adapted to obtain econometric estimates of land and labour allocation decisions under different market participation regimes. Survey data obtained from a sample of 154 farm households producing both cash and food crops in central and eastern Ethiopia is used for the analysis. Endogenously switching regression estimation results shows that market participation, which is household specific, affects the quantity of land and labour that households allocate to food and cash crop production. There is also a significant regional difference in resource allocation decisions. Farm capital ownership (including motor pump) influences the allocation decisions. Thus, policies improving the efficiency in rural factor and product markets promote farm households' participation in these markets and orient their resource allocation decisions towards more cash crop production and higher farm income