New Evidence Using a Dynamic Panel Data Approach: Cereal Supply Response in Smallholder Agriculture in Ethiopia
Increasing agricultural production is essential to improving food availability and farm household incomes in developing economies. This study investigated the dynamic supply responses of major cereal crops to price and nonprice factors in Ethiopia using the Ethiopian Rural Household Survey (ERHS) pa...
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MDPI AG
2020-07-01
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| Series: | Economies |
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| Online Access: | https://www.mdpi.com/2227-7099/8/3/61 |
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| author | Anbes Tenaye |
| author_facet | Anbes Tenaye |
| author_sort | Anbes Tenaye |
| collection | DOAJ |
| description | Increasing agricultural production is essential to improving food availability and farm household incomes in developing economies. This study investigated the dynamic supply responses of major cereal crops to price and nonprice factors in Ethiopia using the Ethiopian Rural Household Survey (ERHS) panel dataset from 1994 to 2009. According to the Nerlovian expectation and adjustment approach in conjunction with the system GMM (generalized method of moments) estimator, both the planted areas and produced yields of major crops (<i>teff</i>, wheat, and barley) are influenced by price and nonprice factors in Ethiopia. The supply of major cereal crops is affected positively by their own prices and negatively by the prices of substitute crops. Nonprice factors such as education, farm size, fertilizer, land quality, and precipitation also affect supply of major cereals. Both the short-term and long-term acreage and yield response elasticities of <i>teff</i> and barley are positive. Moreover, the adjustment coefficients are positive for <i>teff</i>, barley, and wheat. The results suggest that Ethiopian farmers are capable of analyzing market signals and responding positively to price increases of staple crops. The findings also imply that the Ethiopian agricultural sector has been responsive to the cereal price increases observed since 2006. The remarkable growth of Ethiopian agriculture over recent decades is partly explained by the increase in agricultural prices. This study recommends that a fine-tuned balance between government interventions and market solutions is important, in addition to improving farmers’ agronomic practices, for increasing agricultural production. |
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| language | English |
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| spelling | doaj.art-bea1f25a59b344888b183974e811de0e2023-11-20T08:26:14ZengMDPI AGEconomies2227-70992020-07-01836110.3390/economies8030061New Evidence Using a Dynamic Panel Data Approach: Cereal Supply Response in Smallholder Agriculture in EthiopiaAnbes Tenaye0School of Economics and Business, Norwegian University of Life Sciences, 1430 Ås, NorwayIncreasing agricultural production is essential to improving food availability and farm household incomes in developing economies. This study investigated the dynamic supply responses of major cereal crops to price and nonprice factors in Ethiopia using the Ethiopian Rural Household Survey (ERHS) panel dataset from 1994 to 2009. According to the Nerlovian expectation and adjustment approach in conjunction with the system GMM (generalized method of moments) estimator, both the planted areas and produced yields of major crops (<i>teff</i>, wheat, and barley) are influenced by price and nonprice factors in Ethiopia. The supply of major cereal crops is affected positively by their own prices and negatively by the prices of substitute crops. Nonprice factors such as education, farm size, fertilizer, land quality, and precipitation also affect supply of major cereals. Both the short-term and long-term acreage and yield response elasticities of <i>teff</i> and barley are positive. Moreover, the adjustment coefficients are positive for <i>teff</i>, barley, and wheat. The results suggest that Ethiopian farmers are capable of analyzing market signals and responding positively to price increases of staple crops. The findings also imply that the Ethiopian agricultural sector has been responsive to the cereal price increases observed since 2006. The remarkable growth of Ethiopian agriculture over recent decades is partly explained by the increase in agricultural prices. This study recommends that a fine-tuned balance between government interventions and market solutions is important, in addition to improving farmers’ agronomic practices, for increasing agricultural production.https://www.mdpi.com/2227-7099/8/3/61system GMMacreage responseyield responsesupply elasticitydynamic panel data approachmajor cereals |
| spellingShingle | Anbes Tenaye New Evidence Using a Dynamic Panel Data Approach: Cereal Supply Response in Smallholder Agriculture in Ethiopia Economies system GMM acreage response yield response supply elasticity dynamic panel data approach major cereals |
| title | New Evidence Using a Dynamic Panel Data Approach: Cereal Supply Response in Smallholder Agriculture in Ethiopia |
| title_full | New Evidence Using a Dynamic Panel Data Approach: Cereal Supply Response in Smallholder Agriculture in Ethiopia |
| title_fullStr | New Evidence Using a Dynamic Panel Data Approach: Cereal Supply Response in Smallholder Agriculture in Ethiopia |
| title_full_unstemmed | New Evidence Using a Dynamic Panel Data Approach: Cereal Supply Response in Smallholder Agriculture in Ethiopia |
| title_short | New Evidence Using a Dynamic Panel Data Approach: Cereal Supply Response in Smallholder Agriculture in Ethiopia |
| title_sort | new evidence using a dynamic panel data approach cereal supply response in smallholder agriculture in ethiopia |
| topic | system GMM acreage response yield response supply elasticity dynamic panel data approach major cereals |
| url | https://www.mdpi.com/2227-7099/8/3/61 |
| work_keys_str_mv | AT anbestenaye newevidenceusingadynamicpaneldataapproachcerealsupplyresponseinsmallholderagricultureinethiopia |