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Secondary towns, agricultural prices, and intensification: Evidence from Ethiopia

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  • Joachim Vandercasteelen
  • Seneshaw Tamru
  • Bart Minten
  • Johan Swinnen

Abstract

Urbanization is happening fast in the developing world and especially so in sub-Saharan Africa where growth rates of cities are among the highest in the world. While cities and, in particular, secondary towns, where most of the urban population in sub-Saharan Africa resides, affect agricultural practices in their rural hinterlands, this relationship is not well understood. To fill this gap, we develop a conceptual model to analyze how farmers’ proximity to cities of different sizes affects agricultural prices and intensification of farming. We then test these predictions using large-scale survey data from producers of teff, a major staple crop in Ethiopia, relying on unique data on transport costs and road networks and implementing an array of econometric models. We find that agricultural price behavior and intensification is determined by proximity to a city and the type of city. While proximity to cities has a strong positive effect on agricultural output prices and on uptake of modern inputs and yields on farms, the effects on prices and intensification measures are lower for farmers in the rural hinterlands of secondary towns compared to primate cities.

Suggested Citation

  • Joachim Vandercasteelen & Seneshaw Tamru & Bart Minten & Johan Swinnen, 2017. "Secondary towns, agricultural prices, and intensification: Evidence from Ethiopia," LICOS Discussion Papers 39317, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  • Handle: RePEc:lic:licosd:39317
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    File URL: https://feb.kuleuven.be/drc/licos/publications/dp/dp-393/
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    1. Ameye, H., 2018. "Secondary Towns The Nutritional Sweet Spot. A study of East Africa," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277211, International Association of Agricultural Economists.

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    Keywords

    urbanization; cities; secondary towns; Ethiopia; sub-Saharan Africa; agricultural prices; intensification;
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