The Impacts of Agricultural Commercialization Cluster Practices on Rural Livelihood Diversification Strategies in Ethiopia: Evidence from South Ethiopia Region

Agricultural Commercialization Clusters (ACC) play a vital role in Ethiopia's agricultural and rural development initiatives, aimed at promoting sustainable livelihoods. This study examines the impacts of ACC practices on the livelihood diversification of rural households in South Ethiopia. Data was collected from 355 households, comprising 177 participants in Agricultural Commercialization Clusters (ACC) and 178 non-participants, using household surveys and qualitative insights from interviews and focus group discussions. Descriptive statistics and econometric modeling, including the Endogenous Switching Regression (ESR) approach, were used to assess the effects of Agricultural Commercialization Clusters (ACC) on livelihood diversification in South Ethiopia. The probit model identified critical determinants of agricultural commercialization cluster, such as education level, total land size, access to irrigation, and proximity to roads and markets. The ESR full information maximum likelihood (FIML) results showed that livelihood diversification was positively influenced by farmland size, access to agricultural extension services, and credit availability. For non-ACC participant households, engaging in ACC practices resulted in an 18.9% increase in livelihood diversification. The results suggest that ACC practices significantly enhance livelihood diversification in the region. In South Ethiopia, achievements of agricultural commercialization clusters significantly contribute to combating unemployment and are directly linked to the Sustainable Development Goals (SDGs), specifically SDG 1, 2, and 3. The study recommends that policymakers and development practitioners enhance access to extension services, credit, markets, roads, and irrigation infrastructure to strengthen livelihood diversification through ACC in South Ethiopia.