IDEAS home Printed from https://ideas.repec.org/a/eee/wdevel/v114y2019icp281-293.html
   My bibliography  Save this article

Commercialization of the small farm sector and multidimensional poverty

Author

Listed:
  • Ogutu, Sylvester Ochieng
  • Qaim, Matin

Abstract

Global poverty rates have declined considerably, but the number of people living in extreme poverty remains high. Many of the world’s poor are smallholder farmers. Agricultural commercialization – meaning a shift from subsistence to more market-oriented farming – can play a central role in improving smallholder welfare. Previous studies evaluated the impact of agricultural commercialization on income poverty, but whether income gains from commercialization are really used for satisfying basic needs was hardly analyzed up till now. Here, we evaluate the effect of commercialization on income poverty, as well as on the multidimensional poverty index that looks at deprivations in terms of education, nutrition, health, and other dimensions of living standard. Using data from 805 farm households in Kenya, we estimate average treatment effects and also analyze impact heterogeneity with quantile regressions. Results show that commercialization reduces both income poverty and multidimensional poverty. The magnitude of the income gains is positively correlated with income level, meaning that market-linkage support for marginalized farms may be needed to avoid rising inequality. However, the effect in terms of reducing basic needs deprivations is stronger for the poorest households, suggesting that agricultural commercialization contributes effectively to achieving the sustainable development goals.

Suggested Citation

  • Ogutu, Sylvester Ochieng & Qaim, Matin, 2019. "Commercialization of the small farm sector and multidimensional poverty," World Development, Elsevier, vol. 114(C), pages 281-293.
  • Handle: RePEc:eee:wdevel:v:114:y:2019:i:c:p:281-293
    DOI: 10.1016/j.worlddev.2018.10.012
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0305750X1830398X
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hazell, Peter & Poulton, Colin & Wiggins, Steve & Dorward, Andrew, 2010. "The Future of Small Farms: Trajectories and Policy Priorities," World Development, Elsevier, vol. 38(10), pages 1349-1361, October.
    2. Barrett, Christopher B., 2008. "Smallholder market participation: Concepts and evidence from eastern and southern Africa," Food Policy, Elsevier, vol. 33(4), pages 299-317, August.
    3. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
    4. Meemken, Eva-Marie & Spielman, David J. & Qaim, Matin, 2017. "Trading off nutrition and education? A panel data analysis of the dissimilar welfare effects of Organic and Fairtrade standards," Food Policy, Elsevier, vol. 71(C), pages 74-85.
    5. Moshe Buchinsky, 1998. "Recent Advances in Quantile Regression Models: A Practical Guideline for Empirical Research," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 88-126.
    6. Smith, Richard J & Blundell, Richard W, 1986. "An Exogeneity Test for a Simultaneous Equation Tobit Model with an Application to Labor Supply," Econometrica, Econometric Society, vol. 54(3), pages 679-685, May.
    7. Wossen, Tesfamicheal & Abdoulaye, Tahirou & Alene, Arega & Feleke, Shiferaw & Ricker-Gilbert, Jacob & Manyong, Victor & Awotide, Bola Amoke, 2017. "Productivity and Welfare Effects of Nigeria's e-Voucher-Based Input Subsidy Program," World Development, Elsevier, vol. 97(C), pages 251-265.
    8. Nakano, Yuko & Tsusaka, Takuji W. & Aida, Takeshi & Pede, Valerien O., 2018. "Is farmer-to-farmer extension effective? The impact of training on technology adoption and rice farming productivity in Tanzania," World Development, Elsevier, vol. 105(C), pages 336-351.
    9. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731, December.
    10. World Bank, 2017. "World Development Indicators 2017," World Bank Publications, The World Bank, number 26447, January.
    11. Krishnan, Pramila & Patnam, Manasa, 2013. "Neighbours and Extension Agents in Ethiopia: Who matters more for technology diffusion?," CEPR Discussion Papers 9539, C.E.P.R. Discussion Papers.
    12. Arndt, Channing & Distante, Roberta & Hussain, M. Azhar & Østerdal, Lars Peter & Huong, Pham Lan & Ibraimo, Maimuna, 2012. "Ordinal Welfare Comparisons with Multiple Discrete Indicators: A First Order Dominance Approach and Application to Child Poverty," World Development, Elsevier, vol. 40(11), pages 2290-2301.
    13. Fischer, Elisabeth & Qaim, Matin, 2012. "Linking Smallholders to Markets: Determinants and Impacts of Farmer Collective Action in Kenya," World Development, Elsevier, vol. 40(6), pages 1255-1268.
    14. Rivers, Douglas & Vuong, Quang H., 1988. "Limited information estimators and exogeneity tests for simultaneous probit models," Journal of Econometrics, Elsevier, vol. 39(3), pages 347-366, November.
    15. von Braun, Joachim, 1995. "Agricultural commercialization: impacts on income and nutrition and implications for policy," Food Policy, Elsevier, vol. 20(3), pages 187-202, June.
    16. Muriithi, Beatrice W. & Matz, Julia Anna, 2015. "Welfare effects of vegetable commercialization: Evidence from smallholder producers in Kenya," Food Policy, Elsevier, vol. 50(C), pages 80-91.
    17. Prasnee Tipraqsa & Pepijn Schreinemachers, 2009. "Agricultural commercialization of Karen Hill tribes in northern Thailand," Agricultural Economics, International Association of Agricultural Economists, vol. 40(1), pages 43-53, January.
    18. Alkire, Sabina & Santos, Maria Emma, 2014. "Measuring Acute Poverty in the Developing World: Robustness and Scope of the Multidimensional Poverty Index," World Development, Elsevier, vol. 59(C), pages 251-274.
    19. Ayuya, Oscar I. & Gido, Eric O. & Bett, Hillary K. & Lagat, Job K. & Kahi, Alexander K. & Bauer, Siegfried, 2015. "Effect of Certified Organic Production Systems on Poverty among Smallholder Farmers: Empirical Evidence from Kenya," World Development, Elsevier, vol. 67(C), pages 27-37.
    20. repec:unu:wpaper:wp2012-36 is not listed on IDEAS
    21. Magnan, Nicholas & Spielman, David J. & Lybbert, Travis J. & Gulati, Kajal, 2015. "Leveling with friends: Social networks and Indian farmers' demand for a technology with heterogeneous benefits," Journal of Development Economics, Elsevier, vol. 116(C), pages 223-251.
    22. Papke, Leslie E & Wooldridge, Jeffrey M, 1996. "Econometric Methods for Fractional Response Variables with an Application to 401(K) Plan Participation Rates," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 619-632, Nov.-Dec..
    23. Camilla I.M. Andersson & Christine G.K. Chege & Elizaphan J.O. Rao & Matin Qaim, 2015. "Following Up on Smallholder Farmers and Supermarkets in Kenya," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(4), pages 1247-1266.
    24. Carletto, Calogero & Corral, Paul & Guelfi, Anita, 2017. "Agricultural commercialization and nutrition revisited: Empirical evidence from three African countries," Food Policy, Elsevier, vol. 67(C), pages 106-118.
    25. Muricho, Geoffrey & Manda, Damiano & Sule, Fredrick & Kassie, Menale, 2017. "Smallholder Agricultural Commercialization and Poverty: Empirical Evidence of Panel Data from Kenya," 91st Annual Conference, April 24-26, 2017, Royal Dublin Society, Dublin, Ireland 258618, Agricultural Economics Society.
    26. Olwande, John & Smale, Melinda & Mathenge, Mary K. & Place, Frank & Mithöfer, Dagmar, 2015. "Agricultural marketing by smallholders in Kenya: A comparison of maize, kale and dairy," Food Policy, Elsevier, vol. 52(C), pages 22-32.
    27. Verkaart, Simone & Munyua, Bernard G. & Mausch, Kai & Michler, Jeffrey D., 2017. "Welfare impacts of improved chickpea adoption: A pathway for rural development in Ethiopia?," Food Policy, Elsevier, vol. 66(C), pages 50-61.
    28. Jeffrey M. Wooldridge, 2015. "Control Function Methods in Applied Econometrics," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 420-445.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sicelo Ignatius Dlamini & Wen-Chi Huang, 2019. "A Double Hurdle Estimation of Sales Decisions by Smallholder Beef Cattle Farmers in Eswatini," Sustainability, MDPI, Open Access Journal, vol. 11(19), pages 1-27, September.
    2. Junying Lin & Zhonggen Zhang & Lingli Lv, 2019. "The Impact of Program Participation on Rural Household Income: Evidence from China’s Whole Village Poverty Alleviation Program," Sustainability, MDPI, Open Access Journal, vol. 11(6), pages 1-15, March.

    More about this item

    Keywords

    Agricultural commercialization; Welfare; Multidimensional poverty; Kenya;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:wdevel:v:114:y:2019:i:c:p:281-293. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/worlddev .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.