The Effect of Rural Road Transport on Crop Commercialization: Evidence from the Ethiopian Living Standard Measurement Survey

Abstract

Ethiopia has adopted commercialization of smallholder agriculture as a policy tool for agricultural development and rural transformation thereby to improve rural welfare. Towards this end, the government has given policy focus to rual road infrastracture. The objective of the study is, therefore, to estimate the effect of acess to rual road on commercialization of smallholder farmers in the country. The study used the Ethiopian Socio- Economic Survey, a nationally representative panel data prepared by Central Statistics Agency of Ethiopia and the World Bank. Descriptive statistics as well as Econometric techniques are used to analyze the effect of rural accessibility and mobility on agricultural market participation and commercialization. The descriptive statistics reveals that the commercialization index for households in villages with access to all weather roads is 19 percent against the corresponding figure of 16 percent for their counterparts. The econometrics estimation also tallied with this finding. More interestingly, mode of transport used for agricultural purposes is found to have a positive and significant effect on commercialization. The result indicates that commercialization level for farmers using modern mode of transport is 17 percentage points higher than those who did not use any. In the same manner, the result indicates that commercialization level of farmers using traditional mode of transport is 12 percentage points higher than those who did not use any. Thus, integrating remote areas with urban centers through rural transport infrastructure development that addresses both access and mobility demand of rural communities should be given priority.

Keywords: commercialization, market participation, rural road access, mobility