Abstract

Increasing demand for Moringa stenopetala suggests that great opportunities exist for a supply-side response amongst rural smallholder farmers, especially in Southern Ethiopia. It needs evidence to understand whether or not smallholders farmers participate or if they benefit from participation in these new market opportunities. This study analyzes the welfare impact of smallholder farmers’ participation in Moringa market (measured in terms of crop income, per-capita annual consumption expenditure and per capita daily calorie intake) in Segen area people zone of Southern Ethiopia. Cross-sectional data from 385 randomly selected smallholder farmers were used in the analysis. Endogenous Switching Regression(ESR) model that accounts for selection bias was used in impact assessment. This was further expanded with the generalized propensity score (GPS) approach to evaluate the effects of level of market participation on the response of the outcome variables. Results from ESR shows that demographic, institutional, socio-economic, and market factors affect participation decision and welfare of the farm households. Overall, Moringa market participation have a positive and significant impact on rural farmers welfare, with substantial differencial impacts between groups. Results from GPS, also shows the same as the welfare of the households has increased with the level of Moringa market participation. Policies aimed at reducing the transaction costs of accessing markets, promoting the tree via different medias, working on rural institution capacity building, encouraging and assisting Moringa associations, designing appropriate support from different stakeholders, encouraging market linkages among diverse market players, and providing farmers with the chance of attending basic education are critical to the improvement of household welfare.

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