Presented by Geremew Kefyalew at his MSc defense in International Economics, Addis Ababa University, December 2012

1. Participation of Smallholders in Production
and Marketing of Commercial Crops: The
Case of Sesame in Diga
Geremew Kefyalew, Kindie Getnet, Wassie Berhanu, Katherine
Snyder and Simon Langan
MSc thesis (International Economics)
Addis Ababa University
December 2012

2. Outline
1. Introduction
2. Sesame production and marketing in Diga
3. The study Setting
4. Results and discussion
5. Conclusions and recommendations

3. 1. Introduction
• Agriculture the underpinning of Ethiopian
economy
. employment (>85%)
. export (>90%)
. GDP(>42%)

4. • Dominated by smallholder sub-sector
. covers > 95 % of agricultural output
.Major source of agricultural growth
. characterized by:
. rainfed (only 13 % irrigated)
. subsistence
. low productivity

5. • Government priority (PASDEP, ADLI, GTP)
. Productivity growth
. Smallholder commercialization (market –
oriented crop productions)

6. • Advantage of market-oriented crops
. livelihood diversification
. export-revenue
. poverty reduction

7. 2. Sesame production and marketing
in Diga
• Diga
– One of the N4 sites
– high potential for agriculture (land, water, market
access)
– Mixed crop-livestock farming system
– Livelihood improvement could be assisted through
better participation of smallholders in sesame
production and marketing

8. • The scene in sesame production and
marketing
- Smallholders differently respond to the
available potential and opportunities
- Currently only about 29% of the potential
arable land cultivated under sesame

9. 3. The study setting
A. The research questions
. What factors, in addition to water, determine livelihood
improvement from cash crop production?
. Is production potential supported with market potential, market
access, and market participation?
B. Hypothesis
- Water translate to livelihood development through production and
market participation
- Other internal and external factors influence the possibility to
change the production potentials into livelihood advantages

10. C. The research objectives
(a) To identify determinants of smallholder farmers
participation in production of sesame
(b) To examine factors affecting the level of sesame
production participation
(c) To analyze factors affecting and explaining
marketing of sesame

11. D. Data and Methodology
• Data
 Primary sources (formal questionnaires and
key interviews)
 120 households
 4 PAs
 Purposive (to select PAs) and random sampling
techniques (to select respondents)

12. • Methodology
 Descriptive and Econometrics
 Descriptive- to analyze the common factors
 Econometrics
Probit model
 determinants of household decision to produce
sesame
OLS method
 level of participation in sesame production
 income earned from sesame

13. Variables considered
.external factors
 access to institutional services
 access to input and output markets
.internal (household specific) factors
 asset endowments
hh characteristics

14. E. Specification tests
Multicollinearity problem
. Variance inflating factors (VIF) for continuous variables
. Contingency Coefficient (CC) for discrete variables
. Results - no serious correlation among explanatory
variables (in all cases and models)

15.  Sample selection bias
 Heteroskedasticity – robust standard error
(corrected S.E.)
 Endogeneity problems

16. F. Data summary
.Out of 120 sampled hhs
91 sesame producer in 2011/2012
29 non-producers
104 male headed, 16 female headed
40% illiterate
68% members of cooperatives
66% have access to credit services

17. 92.5 % own land
3.24 ha- average landholding
0.75 ha-average cultivated land under
sesame
96 % use oxen for cultivation
1.63 average sesame produced (in quintal)
2.53 average crop-yield (quintal per
hectare)

18. 4. Results and discussion
• Descriptive results
 Crop production –main source of agrl.
income
 Sesame - major cash crop in the area
 Major sesame production constraints:
. No improved seed varieties
. Pest and disease problems
. Low technology applications (fert.)

19. • Sesame marketing constraints
. High transaction costs
. Lack of trust on traders (scale cheating)
. Traders set the price (predetermined)

20. •Econometric results
1. Determinants of sesame Production participation – probit regression
VARIABLES MARGINAL ROBUST P>|z|
EFFECTS (dF/dx) STAND.ERR.
Age of hh head -.000 .000 0.981
Educational level of hh -.000 .000 0.862
Active family labour .002** .003 0.050
Landholding size .017*** .024 0.000
Number of donkey owned .003** .006 0.024
Number of oxen owned .004*** .006 0.006
Member to cooperatives .010 .019 0.189
Access to credit .011** .018 0.040
Access to non-farm activity .002 .004 0.240
Family food availability .032** .055 0.019
Distance from extension -.0001** .000 0.036
Distance from nearest market -.000 .000 0 261
*** Significance level at 1 percent probability
** Significance level at 5 percent probability
Pseudo R-square = 0.8254
Prob > chi-square = 0.0000
Source:, survey result,, 2012,

21. • 12 potential variables included (8 cont., 4 disc)
• 7 variables significant
 Number of active family labour
 Household landholding size
 Number of oxen owned
 Number of donkey owned
 Availability of family food for the whole year
 Access to credit
 Distance from hh home to extension centers

22. 2. Level of sesame production participation - OLS regression
VARIABLES COEFFICIENTS R.Std.Err. P>t
Landholding size .010 .043 0.805
Active family labour .262*** .068 0.000
Access to credit .533*** .178 0.004
Educational level of hh .014 .035 0.687
Household gender -.313 .298 0.296
Crop yield .181*** .053 0.001
Sesame farming experiences .379** .163 0.023
Production problems -.135 .242 0.579
Number of oxen owned .27** .121 0.029
Constant .80 .544 0.143
*** significance of the coefficient at less than 1 percent probability level
** Significance of the coefficient at less than 5 percent probability level
Prob > F = 0.0000
R-squared = 0.4756
Source: survey result, 2012

23. • 10 variables included ( 6 contin., 4 discrete)
• 5 variables- statistically significant
 Access to credit
 Number of active family labour
 Number of oxen owned
 Sesame crop yield - quintal produced per hectare
 Farmers experience on sesame production

24. 3. Level of income generated from sesame sale - OLS regression
Dependent Variable: Earned income from sesame sale (gross)
VARIABLES COEFFICIENTS Robust S.E. P>|t|
Amount of sesame marketed 1435.10*** 43.10 0.000
Access to market information 302.27*** 90.34 0.001
Time of Sell: IMMIDIATE-reference
One month later -after harvest -147.28 123.20 0.236
Two months later-after harvest -231.35* 116.35 0.051
Three months later- after harvest -442.81** 171.03 0.012
Selling Channels: DIRECT-reference
Selling through Brokers 97.92 93.90 0.301
Sesame market price p 87.93*** 25.46 0.001
Traveling time to nearest market -1.70 *** 0.64 0.010
Major buyers: Local traders-reference
Selling to cooperatives 145.20** 71.17 0.045
Selling to traders 21.62 82.26 0.793
CONSTANT 1318.57*** 464.03 0.006
*; **, **** indicates the statistical significance of the coefficients at 10%, 5% and 1% probability levels,
respectively.
Prob > F = 0.0000
R-squared = 0.9718
Source: Survey result, 2012

25. • 12 potential variables entered regression
• 7 variables- have significant estimated
coefficients
 Amount of sesame marketed)
 Access to market information
 Selling sesame after 2 months
 Selling sesame after 3 moths
 Sesame selling price at market
 Selling to cooperatives
 Traveling time to nearest market

26. 5. Conclusions and recommendations
• Prod. potential necessary but not sufficient
condition for livelihood development through
sesame production
• Household specific factors significantly
influences sesame production and marketing
participation
• Institutional factors (credit, cooperatives)
found to be important in all stages of sesame
production processes

27. • Recommendations:
 Provision of improved sesame seed varieties that
properly fits the Wereda’s agro-ecology
 Development and broadening the basis of institutional
services (credit, cooperatives, contract farming)
 Developing sustainable sesame diseases and pest
infestation control mechanisms
 Provision of reliable information (on production and
marketing) in regular basis

28. Thank you