Determinants of Barley Output Supply Response in Ethiopia: Application of Ardl Bound Cointegration Approach

This study investigated barley output supply response determinant factors in Ethiopia. An ARDL bound test approach was employed as method using secondary data from 1981-2020. The study demonstrated that barley output supply was affected positively and significantly by zero-order lagged seasonal rainfall and crop growing period temperature. The study supports the findings of researchers who reported that warming temperature followed by an increase in the amount of rainfall had a positive impact on barley output supply. The positive impact of temperature was induced because of a rise in the ocean and earth’s surface average temperature, causing more evaporation that increases overall rainfall while reaching over the highland areas. Studies confirm that ENSO and moist winds coming from the Atlantic and Indian Oceans influence the occurrence of rainfall in the western, southeastern, central, and northern highlands of Ethiopia. The study further exhibited that CSMRR and CGPMT had a positive effect on barley output both in the long-run and short-run, implying that climate parameters have minimal effect on barley production. Nonclimatic variables demonstrated that both lagged and current year’s producer prices had a positively significant effect on barley output supply in both the long-run and short-run, implying that barley output supply is highly responsive to any price incentive strategies announced before re-allocation of the area towards barley cultivation. Conversely, the study explored that use of fertilizer in first-order lag had negatively significant impact on barley output supply in both seasons; implying that increased use of fertilizer in lagged period may reduce barley output as a result of inappropriate fertilizers application by farmers. The results generated by this study are useful addendum to the repository of knowledge on elasticity of crop supply at an aggregate level, which can be used in designing strategies and measures for mitigation and adaptation of climate change.