Effects of agricultural market imperfections on rural multidimensional poverty: Evidence from the Sidama region of Ethiopia

Abstract

This study investigated the relationship between agricultural market imperfections and multidimensional rural poverty in Ethiopia’s Sidama Region in 2022. And this study used qualitative and quantitative methodologies. A multi-stage sampling method was used to select 400 sample sizes. Descriptive statistics method was used to find out modes of agricultural market imperfections, and Tobit model was employed to capture the effects of agricultural market imperfections on multidimensional rural poverty. And the multidimensional poverty index (MPI) technique was employed to measure the severity of multidimensional rural poverty. Apart from what they have traditionally done by themselves, about 23% of people lack knowledge about how to produce and where to sell using modernized information. The Tobit model was also employed to figure out how market imperfections affected multidimensional poverty in the study area. This study showed that 43% of farmers transport their goods by carrying them on their shoulders to the market. For farmers with asymmetric information, the multidimensional poverty index (MPI) is expected to have a value of 0.4354 higher than those with symmetric information. Furthermore, the Tobit model’s findings showed that labor, improved seed, farm size, cooperative membership, and commercialization experience significantly negatively impacted multidimensional rural poverty. And asymmetric information, transaction cost, and infrastructure inaccessibility had a statistically significant and positive impact on multidimensional poverty. Hence, improving input usage and creating access to agricultural market information is a foundation for reducing multidimensional rural poverty.

Keywords:

• imperfect market
• MPI
• multidimensional poverty
• Tobit model

PUBLIC INTEREST STATEMENT

Agriculture is the backbone of the Ethiopian economy. Most Ethiopians are farmers and have faced the severity of multidimensional rural poverty. Imperfect agricultural markets constrain them from escaping multidimensional poverty. And the inaccessibility of information to produce and sell their agricultural products is a major problem. Therefore, it requires taking critical actions to solve it. This article addresses the key problems to the country’s policymakers, academic workers, researchers, farmers, and other stakeholders to plan to solve the problems in the future. Furthermore, it is used for utilizing the country’s agricultural productivity and accessibility of the markets to improve the living standard of rural households. Hence, this study aimed at the effects of agricultural market imperfections on multidimensional rural poverty in the Sidama Region of Ethiopia. Moreover, appropriate policy implications have been forwarded in this paper.

Acknowledgments

The authors are grateful to the Ethiopian Ministry of Education and the Andhra University of India for providing support. We also thank the Sidama Development Association and Hawassa City Administration for their support.

Disclosure statement

The author declares that there are no conflicts of interest regarding the publication of this article.

Additional information

Funding

Ministry of Education and Hawassa University funded research work. But authors received no funding for this publication from any organization.

Notes on contributors

Bealu Tukela Bekata

Bealu Tukela Bekata was a research scholar (Ph.D. student) in the Economics department of Andhra University in India. And former Assistant Professor of Economics at the Hawassa University of Ethiopia. He researched and published articles on efficiency, productivity, savings, poverty, the livelihood of farmers, the roles of information for farmers, and the relationship between financial development and economic growth and e.t.c. This article is a part of my Ph.D. thesis work of the first author.

Ch. Appa Rao

Ch. Appa Rao and Prof. G. Nagaraja, are research guides. Moreover, Prof. Ch. Appa Rao is a Professor of the Economics at Andhra University, India.

G. Nagaraja

G. Nagaraja is a Professor of Economics at Andhra University. They are also involved in several projects focusing on different demographic, socioeconomic, and institutional issues in India.