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Analysis of Smallholder Farmer's Participation In ANALYSIS OF SMALLHOLDER FARMER’S PARTICIPATION IN PRODUCTION AND MARKETING OF EXPORT POTENTIAL CROPS: THE CASE OF SESAME IN DIGA DISTRICT, EAST WOLLEGA ZONE OF OROMIA REGIONAL STATE GEREMEW KEFYALEW GOBENA A THESIS SUBMITTED TO THE SCHOOL OF ECONOMICS IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTERS OF SCIENCE (INTERNATIONAL ECONOMICS) Addis Ababa University Addis Ababa, Ethiopia October, 2012 1 ADDIS ABABA UNIVERSITY SCHOOL OF GRADUATE STUDIES “ANALYSIS OF SMALLHOLDER FARMER’S PARTICIPATION IN PRODUCTION AND MARKETING OF EXPORT POTENTIAL CROPS: THE CASE OF SESAME IN DIGA DISTRICT, EAST WELLEGA, OROMIYA REGION” By Geremew Kefyalew Gobena Approved by the Board of Examiners: ______________________________________ __________________ Advisor Signature _____________________________________ ___________________ Examiner Signature _______________________________________ ___________________ Examiner Signature 2 Declaration I, the undersigned, declare that this thesis is my work and that all sources of materials used for the thesis have been duly acknowledged. Geremew Kefyalew Gobena Signature _______________ 3 Abstract Analysis of Smallholder Farmer’s Participation in Production and Marketing of Export Potential Crops: The Case of Sesame in Diga District, Oromia Regional State Geremew Kefyalew Addis Ababa University, 2012 Agriculture in Ethiopia remains to be the key sector. It is still the main source of foreign exchange earnings (up to 90%) and the largest labour force employer (about 83%). Of the total agricultural output, about 95% was covered by smallholder agriculture sub-sector. However, a number of factors limit smallholder farmers from participating in export potential cash crops. The main objective of this paper is to identify household specific factors determining sesame production and marketing participation. The study was based on data collected from a sample of 120 households drawn from Diga Wereda. The study highlighted that farm landholding size, family labour, number of oxen owned, access to credit, availability of family food, and distance to extension service significantly explain the decision to produce sesame. On other hand, the number of oxen owned, farmers experience on sesame production, number of working family members, sesame crop yield and access to credit service determine the level of sesame production participation considerably. Furthermore, the study verified that in addition to the quantity of sesame marketed, market price, selling channels, selling time, distance from the nearest market and access to market information significantly determines the level of income earned from sesame sale. The implication is that livelihood improvement could be assisted through better participation of smallholders in sesame production and marketing in the area. iii Acknowledgement At the top of all, I would like to extend my extraordinary thanks to the Almighty God for everything of his kindness. Next, I would like to thank International Water Management Institute (IWMI) for financing this research. By continuing, my heart-full thanks go to my advisor Dr. Wassie Berhanu (Addis Ababa University), for his constructive guidance, encouragement, and shaping comments from initial stage up to the accomplishment of this research. I must also greatly thank Dr. Kindie Getnet (My supervisor from IWMI), for his significant contribution to completion of this research. I also please to thank Mrs. Tesfa Waqgari, Tamiru Gemeda, Geneti Ragassa, Tagay Mitiku and Alamayehu Lema, for their valuable assistance during the field wok both as facilitators and enumerators. Special acknowledgements are also due to the kind staff of Diga Wereda Agriculture and Rural development Office; for their kind provision of necessary data, information and worthy helping during my field work, especially for Mr. Desalegn Sori. All farmers informants in Diga Wereda really, deserve special acknowledgement for their cooperation and willingness to answer the interview questions and share a rewarding experience. Special thanks are also due to Mr Tolera, IWMI research site coordinator at Diga, for his various ways contribution to completion of my study. Last but not least, I am grateful to my families, especially my brother Fikadu Kefyalew and my Cousins Olani Gobena and Merga Sima, for their endless supports and encouragements. I also thank my best friend Tesemma Gemechu, for his special contribution to the completion of this paper, hence he deserves special thanks. I thank also my cousin Gemeda Gonfa for his encouragements and supports during my thesis work. Last but not least, “Gkoo!” take especial heart full thanks for your heart full love and encouragement in completion of this paper. iv Table of Contents Contents Pages Abstract .......................................................................................................................................... iii Acknowledgement ......................................................................................................................... iv Table of Contents ............................................................................................................................ v List of Tables ............................................................................................................................... viii Abbreviations and Acronyms ......................................................................................................... ix CHAPTER ONE: INTRODUCTION ............................................................................................. 1 1.1.Background ............................................................................................................................... 1 1.2. Statement of the Problem…………………………………………………………………...………….4 1.3.Objectives ....................................................................................................................................... ………6 1.4.Significance of the Study ........................................................................................................................ 6 1.5.Scope and Limitation of the Study ......................................................................................................... 7 1.6.Organization of the Thesis ...................................................................................................................... 7 CHAPTER TWO: REVIEW OF RELEVANT LITERATURES ................................................... 8 2.Introduction .................................................................................................................................. 8 2.1.The Issue of Smallholder Farmers Cash Cropping in Developing Countries ......................................... 8 2.2.Determinants of Smallholder farmers Cash Propping Participations ........................................... 12 2.3.Sesame Production and Marketing in Ethiopia ..................................................................................... 17 2.3.1. Sesame production in Ethiopia ................................................................................................. 17 2.3.2. Sesame Marketing in Ethiopia .................................................................................................. 18 v CHAPTER THREE: RESEARCH METHODOLOGY................................................................ 20 3.Survey Methodology .................................................................................................................. 20 3.1.1. The setting ........................................................................................................................ 20 3.1.2. Sampling design ................................................................................................................ 21 3.1.2.1. Sample selection and sampling procedures ........................................................... 21 3.1.2.2. Selection of the study sites .................................................................................... 22 3.1.1.3. Selection of respondents ........................................................................................ 22 3.2. Data Collection Process ....................................................................................................................... 23 3.3. Model Specification ............................................................................................................................. 24 3.3.1. Theoretical model ..................................................................................................................... 24 3.3.2. Method of Analysis .................................................................................................................. 27 3.3.3. Empirical model specification .................................................................................................. 30 3.4. Statistical and Specification Tests ....................................................................................................... 35 3.5. Definitions of Model Variables ........................................................................................................... 37 CHAPTER FOUR: RESULTS AND DISCUSSIONS ................................................................. 45 4.1. Descriptive Results .............................................................................................................................. 45 4.1.1. Socio-demographic characteristics of sampled households .....................................................
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