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Can the land rental market facilitate smallholder commercialization? Evidence from northern Ethiopia

Listed author(s):
  • Gebru, Menasbo

    (Mekelle University)

  • Holden, Stein T.

    ()

    (Centre for Land Tenure Studies, Norwegian University of Life Sciences)

  • Tilahun, Mesfin

    ()

    (Centre for Land Tenure Studies, Norwegian University of Life Sciences)

The paper utilizes household panel data to investigate whether the land rental market can facilitate improved access to land for land-poor tenant households over time and thereby facilitate expansion of their farming activity. The paper utilizes data 8-17 years after land certification to assess the long-term effect of land certification on the allocative efficiency in the land rental market in areas where land certification stimulated land renting in the early years after certification. The paper uses three rounds of balanced panel data collected from 320 smallholder farmers in 2006, 2010 & 2015 from rural Tigrai, northern Ethiopia. Random effects dynamic probit and Tobit models were used to assess factors that may explain access, participation, and intensity of participation on the tenant side of the tenancy market. Tenants’ access to land was found to be severely constrained. Previous access and participation had strong positive effect on access and participation and intensity of participation in later periods. Non-convex transaction costs and entry barriers, therefore, appear as severe constraints towards the land rental market facilitating smallholder commercialization through tenancy access to land. More active land rental market coordination interventions are needed to boost the land rental market as a vehicle for facilitation of smallholder commercialization.

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File URL: https://www.nmbu.no/download/file/fid/27427
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Paper provided by Centre for Land Tenure Studies, Norwegian University of Life Sciences in its series CLTS Working Papers with number 10/17.

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Length: 27 pages
Date of creation: 16 Aug 2017
Handle: RePEc:hhs:nlsclt:2017_010
Contact details of provider: Postal:
Centre for Land Tenure Studies, Norwegian University of Life Sciences, P.O. Box 5003, NO-1432 Aas, Norway

Phone: (+47) 6496 5700
Fax: (+47) 6494 3012
Web page: http://www.umb.no/clts

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  1. Marcel Fafchamps, 2004. "Market Institutions in Sub-Saharan Africa: Theory and Evidence," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262062364, January.
  2. Holden, Stein T. & Deininger, Klaus & Ghebru, Hosaena, 2007. "Impact of Land Certification on Land Rental Market Participation in Tigray Region, Northern Ethiopia," MPRA Paper 5211, University Library of Munich, Germany.
  3. Sharp, Kay & Eva, Ludi & Samuel, Gebreselassie, 2007. "Commercialization farming in Ethiopia: which pathways?," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 16(1).
  4. Gebrehaweria Gebregziabher & Stein T. Holden, 2011. "Distress rentals and the land rental market as a safety net: contract choice evidence from Tigray, Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 42, pages 45-60, November.
  5. Songqing Jin & T. S. Jayne, 2013. "Land Rental Markets in Kenya: Implications for Efficiency, Equity, Household Income, and Poverty," Land Economics, University of Wisconsin Press, vol. 89(2), pages 246-271.
  6. Samuel Benin & Mohamed Ahmed & John Pender & Simeon Ehui, 2005. "Development of Land Rental Markets and Agricultural Productivity Growth: The Case of Northern Ethiopia," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 14(1), pages 21-54, March.
  7. Jeffrey M. Wooldridge, 2005. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(1), pages 39-54.
  8. Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics,in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318 Elsevier.
  9. Teklu, Tesfaye & Lemi, Adugna, 2004. "Factors affecting entry and intensity in informal rental land markets in Southern Ethiopian highlands," Agricultural Economics, Blackwell, vol. 30(2), pages 117-128, March.
  10. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
  11. Holden, Stein T. & Westberg, Nina Bruvik, 2016. "Exploring technology use under climate risk and shocks through an experimental lens," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 11(1), March.
  12. Bliss, C. J. & Stern, N. H., 1982. "Palanpur: The Economy of an Indian Village," OUP Catalogue, Oxford University Press, number 9780198284192.
  13. Emmanuel Skoufias, 1995. "Household Resources, Transaction Costs, and Adjustment through Land Tenancy," Land Economics, University of Wisconsin Press, vol. 71(1), pages 42-56.
  14. Deininger, Klaus & Ali, Daniel Ayalew & Holden, Stein & Zevenbergen, Jaap, 2008. "Rural Land Certification in Ethiopia: Process, Initial Impact, and Implications for Other African Countries," World Development, Elsevier, vol. 36(10), pages 1786-1812, October.
  15. Clive Bell & Chalongphob Sussangkarn, 1988. "Rationing and Adjustment in the Market for Tenancies: The Behavior of Landowning Households in Thanjavur District," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(4), pages 779-789.
  16. Stein Holden & Klaus Deininger & Hosaena Ghebru, 2011. "Tenure Insecurity, Gender, Low-cost Land Certification and Land Rental Market Participation in Ethiopia," Journal of Development Studies, Taylor & Francis Journals, vol. 47(1), pages 31-47.
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