Analysis of Maize Commercialization among Smallholder Farmers: Empirical Evidence from North Western Ethiopia

Abstract Agricultural commercialization is a process of transformation from subsistence farming system to market oriented production system. Promoting smallholder farmers to produce beyond their consumption and enabling them to be profit oriented should be given priority in order to foster the economic growth in developing countries where agriculture is the pillar of the economy and smallholder farmers are the largest section of the country like Ethiopia. However, due to a number of reasons smallholder farmers’ level of commercialization is very low and insignificant. There are only few studies conducted about agricultural commercialization in Ethiopia but the studies are not focused to specific crop. Therefore, the aim of this study was to analyse the factors that determine market participation and degree of commercialization by smallholder maize producers in North Western Ethiopia. Data were collected from 385 smallholder maize producers in three districts where maize is produced potentially through multistage sampling method. Interview schedule, focus group discussion and key informant interview were used to collect the required primary data. In order to achieve the study objectives, Tobit model was employed to analyse both market participation and intensity of commercialization. From the analysis education level, livestock holding, frequency of extension contact, training, off/non-farm income activity, quantity of maize and lagged price were found to have significant effect on market participation whereas intensity of commercialization was significantly influenced by education level, livestock holding, training, frequency of extension contact, off/non-farm activity, quantity of maize produced and lagged price. Finally based on the findings, smallholder maize producers should be supported regularly by extension agents in order to increase their practical skills which results enhancement of their market participation and intensity of commercialization.