The Impact of Agricultural Improvement Intervention Through Market Development on the Livelihoods of Rural Farmers in Ethiopia: A Propensity Score Matching Application

Author(s): Wole kinati

A market development program to enhance production, productivity and income of rural peoples was jointly implemented by the government and NGOs in rural Ethiopia from 2009 to 2012. It was claimed to be successful on different occasions creating an interest among policy makers, development practitioners and researchers to quantify the impacts of the intervention. Acoordingly, in 2013, data were collected from a total of 201 farm households comprising both participating and non-participating but comparative groups of farm households. The current study aimed at answering the questions of what changes were brought in the organizational and institutional aspect of the agricultural input/output marketing in the pilot implementation areas as a result of the intervention and what would have been the market orientation, participation, productivity and income outcomes of participating households if the intervention had not been in place. Using Propensity Score Matching (PSM), after controlling for the initial differences, the result of our impact estimate revealed that the program significantly raised the intensity of input use, productivity, commercial orientation and proportion of sales of most of the commodities of intervention for participant households leading to a significant increase in cumulative net income by about 10%. Although the results have shown that the program had succeeded in achieving the ultimate objective of the program, further research is recommended to elicit information on how the benefits were distributed among the different categories of participants and the relative contribution of each commodities of intervention to the outcome variables.

Impact, Market Development, PSM

1. Baker, J.L. (2000) Evaluating the impact of development projects on poverty: A handbook for Practitioners, Washington D.C., World Bank.
2. Berhanu Gebremedhin and Dirk, H. (2009) Staple food crops turning into commercial crops: Case studies of Teff, Wheat and Rice in Ethiopia. Revision submitted to the Ethiopian Journal of Economics. International Livestock Research Institute (ILRI). Addis Ababa, Ethiopia.
3. Caliendo, M. and Kopeinig, S. (2008) “Some practical guidance for the implementation of propensity score matching” IZA Discussion Paper No. 1588, University of Cologne.
4. Cleaver, F. and Hamada, K. (2010) “‘Good’ Water Governance and Gender Equity: a Troubled Relationship”, Gender and Development, 18(1): 27-41.
5. Egziabher, G.K., Mathijs, E., Deckers, J., Gebrehiwot, K., Bauer, H. and Maertens, M. (2013) “The Economic Impact of a New Rural Extension Approach in Northern Ethiopia” Bioeconomics Working Paper Series, Department of Earth and Environmental Sciences, University of Leuven.
6. Heckman, J.J., Ichimura, H., Smith, J. and Todd, P. (1998) “Characterizing selection bias using experimental data”, Econometrica, 66: 1017–1098.
7. Keister, L.A. and Nee, V.G. (2001) “The rational peasant in China. Flexible adaptation, risk diversification and opportunity”, Rationality and Society, 13 (1).
8. Liverpool-Tasie, L.S., Kuku, O., Ajibola, A. (2011) “A Review of Literature on Agricultural Productivity, Social Capital and Food Security in Nigeria” IFPRI, NSSP Working Paper 21.
9. Mendola, M., (2006) “Agricultural technology adoption and poverty reduction: A propensity score matching analysis for rural Bangladesh”, Food Policy, 32(3): 372-393.
10. OBoARD (Oromia Bureau of Agriculture and Rural Development) (2011) “Annual Report on the Progress of Agricultural Improvement Intervention through Market Development Intervention in Kofale Woreda” Arsi Zone, Oromia National Regional State.
11. OBoARD (Oromia Bureau of Agriculture and Rural Development) (2013) “Annual Report on the Progress of Agricultural Improvement Intervention through Market Development Intervention in Kofale Woreda” Arsi Zone, Oromia National Regional State.
12. Pingali, P. (1997) “From subsistence to commercial production systems: The transformation of Asian agriculture”, American Journal of Agricultural Economics, 79(2): 628–634.
13. Reardon, T. and Timmer, C.P. (2005) “Transformation of Markets for Agricultural Output in Developing Countries Since 1950: How Has Thinking Changed”, in: Evenson, R.E., Pingali, P. and Schultz, T.P. (eds) Agricultural Development, Amsterdam, 135-149.
14. Sianesi, B. (2004) “An evaluation of the active labour market programs in Sweden” The Review of Economics and Statistics, 186(1):133-155.
15. Wolday A. (1994) “Food grain marketing development in Ethiopia after the market reform 1990, A case study of Alaba Siraro district” PhD Dissertation, Veriog Koster, Berlin, Germany.