Determinants of Cereal Crop Commercialization Among Smallholder Farmers in Central and Southern Oromia, Ethiopia

Abstract

Although agricultural commercialization is widely recognized as a key driver of sustainable economic growth and rural transformation in Ethiopia, its level remains relatively low. Based on cross-sectional primary data collected from 685 smallholder farmers in central and southern Oromia, examined the determinants of both the level and extent of cereal crop commercialization. An Ordered Logit model was used to analyze the level of commercialization, measured by household commercialization categories (low, medium, and high), while a Tobit model was employed to assess the extent of commercialization, measured by the continuous Household Commercialization Index (HCI). Results showed an average HCI of 0.54, with 38.54% of households classified as highly commercialized, 27.45% as subsistence-oriented, and 34.01% as moderately commercialized, indicating substantial variation in market participation. Key factors positively influencing commercialization included education, extension services, access to market information, access to credit, irrigation, training, farm size, livestock holdings, and crop diversification, while it was negatively affected by household size and residence in North Shewa, West Arsi, and West Shewa. The findings suggest that policies aimed at strengthening human capital, extension systems, and access to productive assets can significantly enhance cereal commercialization. Expanding irrigation infrastructure, promoting efficient land use, and improving access to mechanization and market information are critical for advancing sustainable commercialization and improving rural livelihoods.