Incomplete Markets And Fertilizer Use : Evidence From Ethiopia

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Credit constraint and agricultural technology adoptions: evidence from Ethiopia

“…While many studies indicate lack of significant association, some others find positive or negative link between the two. However, this result is consistent with the one reported by Croppenstedt et al (2003) and Zerfu and Larson (2010) in the Ethiopian context. Zerfu and Larson (2010) rule in the possibility of smaller holding farmers invest greater time and effort into their limited holdings.…”

“…However, this result is consistent with the one reported by Croppenstedt et al (2003) and Zerfu and Larson (2010) in the Ethiopian context. Zerfu and Larson (2010) rule in the possibility of smaller holding farmers invest greater time and effort into their limited holdings. But, if this was the case, we presume that we would have seen positive association between non-farm activities (mostly practiced by smaller holding farmers) and intensity of use.…”

“…While livestock explains intensification decisions positively it is not significant in the empirical specification of main interest. The positive association between the two is in line with finding in Zerfu and Larson (2010). Effectiveness with chemical fertilizer critically depends on the organic content of the soil.…”

“…In a two-stage investigation approach, a probit model of adoption decisions and truncated model of intensity of use are estimated. Some others, more in line with our approach, (including Zerfu and Larson, 2010), employ panel selection model using a sample of farm households different and quite smaller than the sample available to us. In this case, the non-zero population varies over time, making the distinction between the hurdle and selection models less clear (Ahn, 2004).…”

“…There has been considerable research on constraints to agricultural technology adoption in the Ethiopian context too. Lack of access to institutional credits remained a major drag to technical improvement in the Ethiopian smallholder agriculture (Assefa, 1987(Assefa, , 2004Croppenstedt et al, 2003;Zerfu and Larson, 2010;Abate et al, 2016;Mukasa et al, 2017) [4]. The consequence of covariate shocks such as droughts, are acute in Ethiopia, often affecting household's welfare many years after the shock (Dercon, 2004;Dercon and Christiaensen, 2011).…”