3.5.
Hypotheses and Definition of variables
3.5.1. Dependent variable
To deal with smallholders’ commercialization of wheat, which is the main issue explained in the
present study, the volume of wheat produce sold is used as a dependent variable to measure
commercialization level of wheat production.
3.5.2. Explanatory variables
1) Age of household heads: It is a continuous variable measured in number of years. A study
conducted by (Woldemichael Woldehanna, 2008) confirmed better experience and wise resource
use of older household heads and he reveal positive effect of age on market participation and
marketable surplus. Thus, if the self-sufficiency preference or attitude towards risk of households
would change as the household grows older, we would expect a U-shape or an inverted U-shape
relationship between age of the household and volume of output sold.
2) Sex of the household head: This is a dummy variable that takes a value of one if the
household head is male and zero, otherwise. Male headed households, due to their potential crop
production efficiency advantages over female headed households, are expected to be more
market oriented, and to sell more produce (Haimanot Asfaw, 2014). Similarly, in the present
study, sex of the household head is expected to affect volume of wheat sold positively.
3) Educational status of the household head: It is continues variable that represents number of
grades of schooling of the household head. This variable reflects the ability to retrieve and
interpret information. A study by (Von Broun et.al., 1994) revealed the key role of education to
promote commercialization of agriculture. Literate or households with higher grade education
are expected to have better skills, and better access to information and ability to process
information. This helps them to produce efficiently and thus may be positively associated with a
volume of produce sold.
4) Ownership of oxen: It is a continuous variable measured as the number of oxen owned by the
household heads. The aim of this variable is to know impact of number of oxen on households’
volume of wheat sold through their impact on the volume of wheat produced. Studies conducted
by (Berhanu Gebremedhin and Dirk, 2007), (Samuel Gebreselassie and Sharp, 2007), (Berhanu
Gebremedhin and Moti Jaleta, 2010) and (Goitom Abera, 2009) showed significant positive
effect this variable on commercialization of cereals. Similarly, in the present study, it is
hypothesized that farmers who own more number of oxen will be more output market participant
than others. This is because; oxen ownership would help farmers to carryout agricultural
operations like ploughing, sowing and others on time that would improve productivity.
5) Ownership of equines: Equines are expected to have a positive effect through their role in
reducing marketing (transportation) costs. A study of the economic effects of the Market
Integrated Rural Transport Project in Tanzania concluded that the use of donkeys had enabled
farmers to transport larger harvests from the fields to the market. It also showed that farmers
owning donkeys will be able to use more fertilizer, because it could be transported easily at low
cost from the market place to the homestead and from the homestead to the fields (Sieber, 2000).
Similarly in Ethiopia, donkeys are a major mode of transport Fernando and Starkey, 2002.
Hence, it is hypothesized to relate to the volume of output sold positively.
6) Distance to the market center: It is a continuous variable measured as average distance to
market center in kilometers. Near road accessibility can have important influence on markets
from both the supply and demand side because it reduces the imperfect information and
transaction costs. (Binswanger et al., 1993) identified that the lack of roads is a significant barrier
to the ability to respond to agricultural supply. Similarly in Ethiopia, (Pender and Dawit Alemu,
2007) and (Berhanu Gebremedhin and Moti Jaleta, 2010) and other authors also examined that
marketing costs is completely hindering or limiting the level of smallholder market participation.
Hence, in the present study it is hypothesized to affect volume of wheat sold negatively.
7) Frequency of extension contact: This is a continuous variable measured by number of visits
by extension agents per year. Farmers that contact with DAs frequently will have better access to
information and could adopt better technology as well as they are more likely to know the
advantage of commercialization that would increase their marketable supply of wheat. According
to (Berhanu Gebremedhin and Dirk, 2008), extension service was found to enhance farmer skills
and knowledge and develops their production and market participation. Hence, this is
hypothesized to affect volume of output sold positively.
8) Access to credit: This is a dummy variable which represents whether the farmer has obtained
formal credit or not during the production season. If the farmer has access to credit facility, the
variable takes a value of one and zero, otherwise. Access to credit improves the financial
capacity of farmers to buy modern inputs, thereby increasing production which is reflected in the
marketable supply of wheat. According to (Pender and Dawit Alemu, 2007) and (Lerman, 2004)
credit is found to ease liquidity and input supply constraints. Thus, it is hypothesized that farmers
who have access to credit sources are more efficient and could sell more of their produce than
others.
9) Income from off/non-farm activities: It is a continuous variable measured as the total
income earned from wage employment, self-employment activities and remittances in Birr.
Income from off/non-farm activities are expected to supply the cash requirement of the
household. A study conducted by (Adam Bekele, 2009) found less commercialized group of
farmers following income diversification, share cropping and off-farm and non-farm
employment strategies more than the highly commercialized group during his survey year. The
same authors revealed that, off/non-farm income had significant negative effect on the level of
crops market participation. In the present study too, the impact of this variable is expected to
affect quantity of wheat sold negatively.
10) Household labor size (man equivalent): According to (Berhanu Gebremedhin and Moti
Jaleta, 2010), Wheat is a laborious crop and households with higher family labor supply are more
likely to grow it, given the labor market imperfection in the study area. Moreover, (Samuel
Gebreselassie and Sharp, 2007) indicate that; Keeping other factors constant, farmers
participating in output markets follow more labor-intensive farming since, employing higher
man-days per hectare is expected to affect both production and output markets participation.
Thus, this variable’s is expected to affect volume of produce sold positively.
11) Amount of land allocated to wheat: This variable is a continuous variable measured in
terms of number of hectares allocated to teff and was expected to affect the household market
participation and level of teff marketed surplus positively (Muhammed Urgessa, 2011). This is
36 because, producers who own large area holding can produce more than a producers who own
less area and thus to supply more to the market.
12) Cash expenditure for farming: It is a continuous variable that values the use of modern
farm inputs such as fertilizers, improved seeds and pesticides (measured by cash expenditure on
the purchase and transport of these inputs). This variable indicates the use of modern agricultural
inputs and the degree of commercialization in input side which are the basic preconditions of
output side commercialization. (Samuel Gebreselassie and Sharp, 2007) found that cash
expenditure on inputs such as fertilizer, pesticides, and peak-season hired labor also significantly
affects the total volume of farm output. Hence, this is expected to correlate with quantity of
output sold positively.
13. Access to market information (ACCMIF): its dummy variable that takes values 1 if the
household accessed market information and 0 otherwise. Farmers market decision are based on
market price information, poorly integrated markets may convey inaccurate price information,
and leading to inefficient product movement. It has been hypothesized to positively influence the
volume of wheat marketed of farm households. Because, producers that have access to market
information are likely to supply more wheat to the market. (Mohammed Urgessa, 2011) found
that if wheat producer gets market information, the amount of wheat supplied to the market
increases.
14. Quantity of wheat produced: It is an economic factor and continuous variable that can
affect the household level of wheat marketed surplus and measured in quintals. The variable was
expected to have positive contribution in smallholder marketed surplus of wheat. (Muhammed
Urgessa, 2011 and Habtamu Gemeda, 2015) found that quantity produced affect the marketable
supply and the level of market participation respectively , because a farmer that obtains high
yield can supply more to the market than a producer who had fewer yields. The overall
explanatory variables used in multiple linear regressions are summarized in table 2 below.
Independent variables are variables that cause change in dependent variable(s).The independent
variables for this study will be identified based on review of different literatures those affects
marketable supply of teff production were: Demographic factors: age, education status, family
size, sex of house hold head and house hold labor force, Institutional factors: access to credit,
frequency of extension contact, Socio economic factor: Cultivated farm size, farming income,
owner of oxen, quantity of teff produced, cash expenditure( input use), Market factor: distance to
market and market information.
1) Age of household heads: The better experience and wise resource use of older household
heads will be positive effect of on teff market participation and marketable surplus and the age of
the household has a positive effect on the level of commercialization. The marginal effects of the
output will indicate that a year increase in household head age will increase the probability of
commercialization. It is a continuous variable and measured in number of years. According to
(Woldemichael, 2008 and Alula et al., 2020) study finding shows that positive effect of age on
market participation and marketable surplus and level of commercialization.
2. Education level of household head: It will be positive effect on teff market participation
which is general to promote participatory decision in teff production and marketing. Education
will be improves the producing household ability to acquire new idea in relation to market
participation. It is a dummy variable that will takes a value of 1 if the household head is educated
and 0, otherwise. According to (Israel, 2016); cited by Merga Angerassa(2018) the educational
level of non-poor households has a positive and significant impact on the degree of
commercialization.
3) Sex of the household head: Male headed household would increase the likelihood of teff
market participation. Sex of the household head has a significant and positive effect on the
participation of teff market level. Male headed households, due to their potential crop production
efficiency advantages over female headed households, are expected to be more market oriented,
and to sell more produce. It is a dummy variable that will take a value of 1 if the household head
is male and 0, otherwise (Haimanot, 2014 and Haregitu, 2019). Similarly, in this study, sex of the
household head is expected to affect volume of teff sold positively.
4) Ownership of oxen: It is hypothesize that positive effect on commercialization of teff farmers
who own more number of oxen will be more output market participation. The reason because
oxen ownership will help farmers to carryout agricultural operations like ploughing, sowing and
others on time that will be improve productivity. It is a continuous variable measured as the
number of oxen owned by the household heads. The aim of this variable is to know impact of
number of oxen on households’ volume of teff sold through their impact on the volume ofteff
produced (Berhanu and Jaleta, 2010).
5. Distances to the Market. The closer the household will be to the market, the lower the
transportation cost and the better will be farmers‟ market access. It is hypothesized to be
negatively related to quantity supply. Thus, as the smallholder farmers were nearer to a market,
good opportunity for teff marketing because of access to market information. It is a continuous
variable which will be measured in kilometers. According to Edward (2014) distance from
market has negative influence on commercialization. Therefore, this variable will be negatively
to affect market participation decision and level of commercialization.
6. Cultivated Farm Size: It will be a continuous variable measured in hectares, cultivated farm
size will expected as a critical production factor that determines teff grown and the amount of teff
harvested. The farm size owned by the household farmers affects teff commercialization in terms
of level of production. Welde and Michael (2007) study finding show that a household head that
had large farm size were more likely to participate in commercialization activities. Therefore,
this is hypothesized positively to affect teff market participation decision and level of
commercialization.
7) Access to credit: It will be influence the probability of participation decision in teff marketing
positively on the assumption that access to credit improves the financial capacity of teff
producers to buy more improves inputs like improved seed and chemical fertilizers this implies
that the level of teff\ commercialization increase with greater access to credit. This is measured
as a dummy variable taking value of 1 if the teff producing farmer 0 otherwise. According to
(Isabeli, 2016); cited by Merga Angerassa (2018) the result of access to credit influences the
probability of participation decision in teff marketing positively.
8) Frequency of extension contact: Frequency of extension contact will be positively affect
amount of teff market supply due to the fact that that farmers that have frequent contact with
DAs have better access to information and will adopt better technology that will increase their
production and market supply of teff. This is a continuous variable measured by number of visits
by extension agents per year (Haregitu, 2019.
9) Household labor size (man equivalent): This will be continuous variable measured adult
man equivalent. The farmers participating in output markets follow more labor-intensive farming
since; employing higher man-days per hectare is expected to affect both production and output
markets participation. Therefore, this variable’s will be expected to affect volume of teff produce
sold positively (Berhanu and Jaleta, 2010).
10. Access to market information: It will be hypothesized that Farmers market decision are
depend on market price information, poorly integrated markets may convey inaccurate price
information, and leading to inefficient product movement and hypothesized to positively
influence the volume of teff markets of farm households. Because, producers that have access to
market information are likely to supply more teff to the market. It is dummy variable that takes
values 1 if the household accessed market information and 0 otherwise (Mohammed, 2011).
11. Annual teff production (Quantity of teff produced). It will be taken as a continuous
variable that measured in quintal per hectare. Smallholder farmers who produce teff for the
whole year can participate in the market. The amount teff produced by household will be affects
marketable supply of the commodities positively. High production to have a positive effect on
quantity supplied to the market (Muhammad, 2011). Therefore, this variable will be expected to
have positive contribution in smallholder teff marketable participation.
12. Family size: This is a continuous variable measured in family numbers. Larger family size
requires larger amounts for teff consumption, reducing marketable surplus which will negatively
influence in smallholder farmer participation decision of teff marketing. On the other hand,
family size will have a positive effect with the probability of participation in teff marketing
which increases the level of commercialization activities (Strock, 2011). Therefore this variable
will be hypothesized both negatively and positively affect teff commercialization.
13) Cash expenditure for farming: It will be hypothesized a continuous variable and measured
by birr that values the use of modern farm inputs such as fertilizers, improved seeds and
pesticides (measured by cash expenditure on the purchase and transport of these inputs). This
variable will be expected to the use of modern agricultural inputs and the degree of
commercialization in input side which are the basic preconditions of output side
commercialization. Cash expenditure on inputs such as fertilizer, pesticides, and peak-season
hired labor also affects the total volume of farm output. Hence, this will be expected affect the
quantity of output sold positively (Samuel and Sharp, 2007)
Education level: the variable education level is a continuous variable measured a grade of
formal schooling which had positively influence the probability of market participation and
degree of commercialization of cassava. This indicates that household who were more educated
had better market participation and high degree of commercialization. The positive relationship
could be due to the fact that educated people can more easily contribute to the generation of new
technologies and more readily utilize those technologies (Derso et al., 2016). Furthermore,
educated people manage their fields properly and then this activity results have pushes to get
good production and productivity of the land.
Frequency of extension contact: It is obvious that agricultural extension services play a vital
role in motivating farmers towards accepting and implementing improved agricultural
technologies and agronomic practices. However, the result of this study shows that frequency of
extension contact negatively and significantly influence the probability of maize market
participation and degree of commercialization at 5% level of significance. This might be
smallholder maize producers who have frequent contact with development agent could not get
practical information on new technologies and agronomic practices which might boost their
production and productivity of maize. Instead development agents out of their profession, might
spent their time with farmers talking about politics and other issues which is not directly relevant
to enhance farmers’ production and productivity. Thus, negative but statistically significant
effect of extension service on market participation and commercialization level had been
reported in some other African countries such as in rural Nigeria (Awotide et al., 2016) and in
Ghana (Martey et al., 2012).
Training: training was found to have positive and statistically significant influence on both the
probability of maize market participation and degree of commercialization at 5% significance
level. Thus, Trainings on application of new agricultural technologies, agronomic practices,
harvest and post-harvest loss minimization and other related trainings could build smallholder
farmers’ production capacity. Ultimately, it increases the likelihood of maize market
participation and degree of commercialization for producers. In line with our finding a study
conducted in the northern part of Ethiopia, Tigray Region, confirmed that training on crop
marketing has a positive and significant effect on intensity of crop commercialization (Hailu et
al., 2015).
Off/non-farm income activity: This variable was measured in terms of whether or not
respondents get additional income from off/non- farm income beyond their own agricultural
activity. Off/non-farm income activity had positively and statistically significant influence at 1%
level of significance on the probability of market participation and degree of commercialization.
The positive relationship could be because of farmers who have got additional income from
off/non-farm activities might not face financial shortage to purchase farm inputs to increase their
maize production and productivity which ultimately increases their market participation and
degree of commercialization. This result was in line with the findings of Hailu et al., (2015)
which states that off-farm income is the driving force of increased crop commercialization. In
addition, Matthews et al., (2015) confirmed that the direct effect of off/non-farm income in
enabling smallholder farmers to be technical efficient in maize farming in Ethiopia. This might
increase the production level and market participation of the farmers. Contradicting to this result,
off/non-farm income had shown significant negative influence on farmers’ market participation
was reported by Awotide et al., (2016) and commercialization level by (Martey et al., 2012).
Livestock holding: this variable was a continuous variable measured in Tropical Livestock Unit
(TLU) was found to have negatively and statistically significant at 10% level of significance on
the probability of smallholder maize producer market participation as well as degree of
commercialization. Whereas, the negative relationship could imply that as the households’ have
more livestock endowment, their market participation and degree of commercialization
decreases. The possible reason might be to purchase farm inputs which can enhance production
and productivity like fertilizer, improved seed, pesticides and insecticides, farmers directly sell
their livestock and store their maize output. This finding contradicts with the findings of Abafita
et al., (2016). In their study on smallholder cereal farmers’ commercialization in Ethiopia by
using Heckman two stage models, Ox that is a proxy for total livestock holding had positive
effect on probability of participation on cereal marketing.
Quantity of maize produced (in quintal) this variable was found to have positive and
statistically significant influence on the probability of participation in maize marketing as well as
degree of commercialization at 5% level of significance. As the evidence obtained from sample
respondents, maize producers who produced more had better chance to participate in maize
marketing and supply high amount of maize in to the market. A previous study conducted in
Ethiopia has shown a significant positive effect of value of crop produced on the probability of
market participation and the level of commercialization by smallholder cereal farmers (Abafita et
al., 2016). In addition, the study conducted in rural Nigeria confirmed our result and it indicates
that the positive and statistically significant effect of yield of rice on farmers’ rice market
participation and welfare maximization (Awotide et al., 2016).
Lagged price: which was measured in Ethiopian birr had positive and statistically significant
relationship with probability of maize market participation and degree of commercialization at
1% level of significance. This research finding is in line with the study by Martey et al., (2012)
conducted in Ghana founded the significant effect of unit of price output on intensity of
commercialization was documented in the study by. Therefore, it was due to the fact that lagged
price of maize was high. Accordingly, as High price level of the output in the previous year was
higher it could motivate maize smallholder farmers to produce more in the form of allocating
more land and use of appropriate agricultural technologies and to increase their market
participation and degree of commercialization in Table 2.
Market Participation Decision (MPD) Is a dummy variable that characterizes the participation
of the household in the market that is regressing in the first step of two-step estimation
procedure. Of the respondents who participate (sell) in the market take the value of one. Whereas
it takes the value of zero for the respondent who did not participate (not sell) in the market
during the 2019 Avocado production season.
Quantity of Avocado Marketed (VAM) It is a continuous variable in the second step of the
selected model. It is measured in quintals and represents the actual quantity of avocado marketed
by farm households during the 2019 production season, selected for regression analysis takes
non-negative values.
Independent Variables
The explanatory variables expected to influence the dependent variables were the following.
1.Quantity of Avocado Produced per Land (Yield) It is a continuous variable and measured in
quintals per acre. The variable is hypothesized to have a positive contribution to both
participation decisions and the total extent of avocado that was supplied to the market. Farmers
who produce more output per tree are expected to supply more fruit (Pineapple) to the market
than those who produce less. Abbey (2007) and Adugna (2009) found that the quantity of tomato
and papaya produced by producer farmer households has improved the marketable supply of the
thus crops significantly. Ayelech (2011) indicated that a unit alteration in the quantity of both
avocado and mango in Gomma woreda, Jimma zone, Oromia National Regional state marketed
supply of these crops under consideration increased by 0.939 qt and 0.816qt, respectively. Nega
and Samuel (2017) also indicated that the quantity of mango and avocado produced in the Gedeo
zone positively affected the market supply of the commodities.
2.Avocado Market Experience (AME) It is a continuous variable and is measured in the
number of years one has stayed in avocado marketing. A household with a better experience in
avocado production and marketing is expected to produce more amounts of the product than
those with less experience and as a result is expected to supply more amounts to market.
Therefore, experience in avocado markets is expected to affect both market participation
decisions and intensity positively.
3.Proximity to the Nearest Market (PTNM) It is a continuous variable measured by how far
farmers go to sell their products to the market. If the farmer is in a village or distant from the
market, he is poorly accessible to the market. Therefore, we hypothesized that this variable is
negatively related to market participation and marketable surplus. A similar study was done by
Holloway et al (2000) on milk-market development in the Ethiopian highlands. Their result
shows that distance to the nearest market causes decline in market supply. A similar issue was
studied by Wolday (1994) on the food grain market in the case of Alaba Siraro, he identified that
poor market access has a significant and negative effect on the quantity of food grain supplied.
Nega and Samuel (2017) indicated that households who have access to market information can
supply 0.054qt more than those who do not have access to market information, other things
remaining constant. Mohammed (2011) showed that access to market information is related to
the marketable supply of products and proximity of producers located near to the market.
4.Sex of the Household Head (SEX) This is a dummy variable that takes a value of one if the
household head is male and zeroes otherwise. Both men and women participate in fruit
production. A male household was observed to have a better tendency than a female household
in fruit production and supply of fruit. The sex of sample household heads has a positive impact
on both avocado and pineapple market participation and level of participation in the study area.
Tshiunza et al. (2001) discussed the determinants of market production of cooking bananas in
Nigeria. In their study, male farmers tended to produce more cooking bananas than females.
County (2014), indicated that being a male-headed household increased the proportion of
Avocado and Pineapple sales by 0.0387qt. 800 N. GURMIS AND T. MELESE
5.Family Size (FAMSZ) It is a continuous variable measured in adult equivalent, i.e.,, hence,
consuming the commodity in the household affects the producer’s decisions to participate in the
market. However, the family size is expected to hurt avocado market participation and volume of
sales. A larger family size requires larger amounts for consumption, reducing market
participation and marketable surplus. A study by Singh and Rai (1998) indicated that buffalo
milk marketed surplus was negatively affected by family size. Wolday (1994) also tried to
indicate the quantity of maize marketed is negatively affected by household size. Frequency of
6.Extension Contact (FEXTC) It is a continuous variable measured in number. It is expected
that the extension service widens the household’s knowledge regarding the use of improved
avocado and pineapple production technologies and has a positive impact on avocado market
participation decisions and level of participation. Ababo (2016) found the frequency of extension
contact positively influenced the participation decision of framers in the maize market. This
suggests that improved production technologies were availed through extended contact that will
affect the market participation decision of households. Therefore, the frequency of extension
contact is hypnotized to affect both market participation and level of participation positively and
significantly.
7.Irrigation Access (IRA) This variable is a dummy represented by one if the sample producer
has access, and is zero otherwise. It is expected that if households accessed irrigation they will
produce more and decide to sell these commodities and will also sell more than the previous.
Therefore, this variable hypothesized that it would have a positive effect on both market
participation and the level of avocado and pineapple market participants.
8.Non/Off-farm Income (NFI) It is a continuous variable measured in Birr. Off-farm income
represents the amount of income the farmers earn in the year out of on-farm activity on the farm.
Non-farm income is the amount of income generated from activities other than crop and
livestock production like labor in nonagricultural activities (small-scale industrial activities,
cottage industries, commercial, and others). This additional income improves the households’
financial position, which in turn enables them to invest in purchasing the needed amount of farm
inputs especially fertilizer and improved seed. At the highest level of off/non-farm income,
households tend to participate in cooperatives more intensively (Kidane, 2001). On the other
hand, Beza (2014) showed that non-farm income negatively affected the supply of maize to the
market. The reason might be representatives who generate more income from non-farm
activities, tends to sell less and increase family food consumption. Moreover, Azeb and Tadele
(2017) results showed that income from non-farm activities is positively related to the quantity of
teff supplied to the market. This could be because farmers who have additional income would
have the chance to buy food for consumption at any time and increase their marketable crops.
Therefore, non/off-farm income will affect avocado and pineapple market participation and level
of participation positively or negatively and significantly.
9.Level of Education (Grade) It is a continuous variable measured in years of schooling and
refers to the formal schooling of a respondent up to the survey period. Those household heads
that had formal schooling, increased the acceptance of new idea and technology that will boost
the volume of avocado sales. Therefore, we hypothesized formal schooling to positively
influence market participation and marketable surplus. Astewel (2010) also confirmed this in
paddy supply.
10.Credit Access (Credit) It is a dummy variable measured one if a sample household has
access to credit, zero otherwise. Credit access increases the capacity of avocado producers to
purchase necessary inputs and boost production. Therefore, it hypothesized that access to credit
would have a positive influence on both market participation and volume of Avocado and
Pineapple sales.
