Determinants of Investments in Sustainable Agricultural Intensification Practices in Ethiopian Central Highlands

Abstract

Abstract

Improving agricultural productivity and food security while reducing land degradation and poverty using sustainable agricultural intensification practices (SAIPs) has been a key development policy agenda in Ethiopia. However, investment in sustainable agricultural intensification practices remains low. Using a multivariate probit (MVP) and an ordered probit model (OPM), this paper investigates the factors influencing farmers’ choice decisions and the extent of investments in eight SAIPs including improved crop varieties, inorganic fertilizers, pesticides, organic fertilizers, cereal-legume rotation, vegetation, drainages and soil conservation structures based on 385 household and 1465 plot surveys in the Ethiopian central highlands. Results reveal that some practices in major crop production are complementary while others are substitutable, and the factors had heterogeneous impacts on the choice decisions of farmers to invest in multiple SAIPs. Overall, results reveal variables such as crop income, livestock holding, access to extension and credit services, income diversification, membership to agricultural cooperatives, and agricultural commercialization clusters are important in determining choice decisions and the extent of investments in multiple SAIPs. Complementarity between practices and factors that positively determine investments in sustainable practices should be taken into consideration in agricultural policies. Specifically, strengthening local institutions (extension, microfinance, and cooperatives) and training on SAIPs and income diversification need to be in place to enhance sustainable production.