Three hurdles towards commercialisation: integrating subsistence chickpea producers in the market economy

Enhancing agricultural productivity through the adoption of improved technologies presents a credible pathway to economic development and poverty reduction especially through increased commercialisation of production. We used a triple hurdle (TH) model to estimate the production and commercialisation of smallholder farmers in Ethiopia. In doing so, we account for the adoption of improved Cicer arietinum (chickpea) varieties on commercialisation using a three-wave panel data set. We estimate a correlated random effect model with a control function and find the adoption of improved chickpea to have a significant positive effect on smallholder commercialisation. Our findings that are robust over different specifications and identification strategies also support the role of transaction cost in driving market participation (MP). Finally, we argue that the TH model is a better fit to the commonly used double hurdle model for MP, when not all households in a population produce a particular crop.

Automated summary

Enhancing agricultural productivity through the adoption of improved technologies, especially through increased commercialisation, is a credible pathway to economic development and poverty reduction. Our study finds that the adoption of improved chickpea has a significant positive effect on smallholder commercialisation in Ethiopia, supporting the role of transaction cost in driving market participation.