The Impact of Agricultural Technologies on Poverty and Vulnerability of Smallholders in Ethiopia: A Panel Data Analysis

Abstract

AbstractMany studies evaluating the impact of adoption on welfare focused on adoption of a single technology giving little attention on the complementarity/substitutability among agricultural technologies. Yet, smallholders commonly adopt several complementary technologies at a time and their adoption decision is best characterized by multivariate models. This paper, therefore, examines the impact of multiple complementary technologies adoption on consumption, poverty and vulnerability of smallholders in Ethiopia. The study used a balanced panel data obtained from a survey of 390 farm households collected in 2012, 2014 and 2016. A two stage multinomial endogenous switching regression model combined with the Mundlak approach and balanced panel data is employed to account for unobserved heterogeneity for the adoption decision and differences in household and farm characteristics. An ordered probit model is used to analyze the impact on poverty and vulnerability. We find that the adoption of improved technologies increases consumption expenditure significantly and the greatest impact is attained when farmers combine multiple complementary technologies. Similarly, the likelihood of households to remain poor or vulnerable decreased with the adoption of different complementary technologies. We therefore conclude that the adoption of multiple complementary technologies has substantial dynamic benefits that improve the welfare of smallholders in the study area, and given the observed low level of adoption rates, we suggest that much more intervention is warranted, with a special focus on poorer and vulnerable households, to ensure smallholders get support to improve their input use.