Competitive agricultural input markets in Ethiopia: Theoretical promises versus reality

Abstract

AbstractUsing the agency theory framework to develop conceptual frameworks, this study investigates the main challenges to and potential determinants of competitive agricultural input markets by comparing intervention and control districts. Specifically, this study examines the impact of the Agriculture One‐Stop Shop Project on the competitiveness of agricultural input markets in Ethiopia. The paper uses data collected from farmers and project stakeholders through interviews and focus group discussions and compiles recorded price and quantity sold for each agricultural input for four years. The study employs a content analysis, concentration ratio, market margin, and pooled panel regression models to analyze the set of data. The finding shows the existence of weak innovative system functions that is the mirror of unsatisfactory project outcomes in some intervention areas. Overall, the findings indicate that the project has increased competition by reducing market margins and relative prices, delivering a high quantity of high‐quality agricultural inputs, and providing new services and a range of input choices. An input market's level of competitiveness is determined by contractual arrangements, capital, background, and risk management. An agricultural input market's function system is influenced by the structural composition of the public–private partnership network, coordination, and cooperation. The one‐stop‐shop approach, operationalized through institutional arrangements, has the potential to facilitate and coordinate the functions necessary to change competitiveness in the agricultural input market. This study's panel model results show that the project has had statistically significant effects on the competitiveness of the agricultural input markets. The government should replicate this new approach throughout the country going forward.