DETERMINANTS OF SMALLHOLDER FARMERS PRODUCTION AND COMMERCIALIZATION OF MALT BARLEY IN DIGALU TIJO WOREDA, ARSI ZONE, OROMIA REGION, ETHIOPIA

Abstract

Shifting the smallholder subsistence farmers into a market-oriented production system as a way to increase the smallholder farmer’s income and reduce rural poverty has been in the policy spotlight of many developing countries, including Ethiopia. This study has identified household level determinants of the output side commercialization decision and level of commercialization in malt barley in Digalu Tijo woreda, Arsi zone, Oromia National Regional State of Ethiopia. Cross-sectional data obtained from a sample of 95 smallholder malt barley producers randomly from five kebeles in the woreda. A double hurdle model was applied to analyze the determinants of the production and market participation decision and level of commercialization or volume supplied and marketed. In first hurdle, the result of Probit Regression Model revealed that, price trend, type of seed used, access to market information and production cost played a significant role in smallholder production participation decision. In the second hurdle, the result of Truncated Regression Model shown that, age of the household, household level of education, total land holding size, prevailing price trend, and transaction cost during marketing of malt barley were the key determinants of the volume of supply to the market or the level of commercialization by the households. From the synthesis of double hurdle model, the price trend for malt barley was determinants of both smallholder malt barley production participation decision and volume of supply in the market. The study recommends the importance of focusing on the improving the service and availability of technologies to the smallholder farmers in collaboration with private companies and development partners with the leadership of public institutions.