Port Rail Connectivity and Agricultural Production: Evidence from a Large Sample of Farmers in Ethiopia

Abstract

Agriculture important in Africa, employing a large share of the labor force and earning foreign exchange. Transport connectivity has long been a crucial constraint in the region. In theory, railways have the advantage of shipping bulky freight, such as fertilizer, at low costs. However, in many African countries, railways were in virtual bankruptcy in the 1990s. Using a large sample of data comprised of more than 190,000 households over eight years in Ethiopia, the paper estimates the impacts of rail transport on agricultural production. The paper takes advantage of the historical event that a major rail line connecting the country to Port Djibouti was abandoned during the 2000s. With the fixed effects and instrumental variable techniques combined, an agricultural production function is estimated. It is found that deteriorated transport accessibility to the port had a significantly negative impact. The use of fertilizer particularly decreased with increased transport costs.

Spatial Autocorrelation Panel Regression: Agricultural Production and Transport Connectivity

“…Regarding the impacts of transport accessibility, port accessibility has a significant impact on crop production: The elasticity is estimated at -0.143, meaning that a 10 percent reduction in transport costs to the port would increase agricultural production by 1.43 percent, which looks like a relatively modest effect. This looks broadly consistent with our companion paper (Iimi et al 2017), which estimates the same impact of port accessibility with micro household data in Ethiopia: The elasticity is estimated at 0.276.…”

“…In practice, however, these may not be the same because of the poor quality of the road network and the lack of competition in the trucking industry. Our companion paper,Iimi et al (2017), uses an alternative transport cost variable, which is based on adjusted VOCs with a 60 percent markup taken into account. The results indicate that VOCs are a good proxy of market transport prices.…”

Agricultural Production and Transport Connectivity: Evidence from Mozambique

“…The coefficient is negative at -0.013 but statistically insignificant. This is a different result from the literature that is often supportive of the importance of port access in African countries (e.g., Iimi et al, 2019). This may be attributed to the fact that Mozambique has a long coastline and three major regional ports.…”

Classification and Roundabout Production in High‐value Agriculture: A Fresh Approach to Industrialization

“…Ethiopia's all‐weather roads still cover less than a third of the estimated required road network. The level and quality of investment in road maintenance has been criticized (Foster and Morella, 2011): one estimate is that only about 30 per cent of Ethiopia's rural roads are in ‘good condition’ (Iimi et al., 2017: 8). A glaring example is the road which heads northeast off the main road south from Adama and runs through the Upper Awash Valley.…”