Impacts of contract farming on asset accumulation of malt barley farmers in Northwestern Ethiopia

Figures & data

Figure 1. Map of the study area (North Gondar Administrative Zone).

Figure 2. Sampling procedures.

Table 1. Conditional expectations, treatment, and heterogeneity effects

Sub-sample	CF participation Decision Stage		Treatment Effects
	Participants	not participants
Contract farmers	$\mathrm{E}({\mathrm{y}}_1|\mathrm{I}=1)$	(c) $\mathrm{E}({\mathrm{y}}_0|\mathrm{I}=1)$	ATT
Non-contract farmers	(d) $\mathrm{E}({\mathrm{y}}_1|\mathrm{I}=0)$	(b) $\mathrm{E}({\mathrm{y}}_0|\mathrm{I}=0)$	ATU
Heterogeneity effects	BH1	BH0	ATH

Source: own summarization, 2023

Table 2. Explanatory variables and their expected sign used in the ESR model

Variables	Participation in CF	Asset Accumulation
Sex (1,0)	+	+
Age (years)	±	±
Household size (MDE)	±	±
Education (years of schooling)	+	+
Total land holding (ha)	+	+
Off-farm income (1,0)	±	±
Social activities participation (1,0)	±	±
Cooperative membership (1,0)	+	+
Frequency of extension contact (number)	+	+
Training (1,0)	+	+
Farming Experience (year)	+	+
Field day participation (1,0)	+
Mobile phone (1, 0)	+
Distance to market (wt*)	-	-
Distance to FTC (wt*)	-	-
Credit access (1,0)	+	+
Row planting (1,0)		+
Cluster farming (1,0)		+

Table 3. Equality means tests for contract participants

Variables	Pooled	Participants	Non-participant	Mean difference	p-value
	Mean	Mean	Mean
Age of the household head	44.73	45.88	43.68	2.2	0.022^b
Malt barley experience(year)	4.99	5.42	4.59	0.83	0.002^a
Household size (count)	6.78	7.09	6.49	0.6	0.008^a
Own land size(ha)	1.05	1.13	0.98	0.15	0.041^b
Livestock holding (TLU)	4.15	4.23	4.09	0.14	0.597
Distance-market (minutes)	71.62	74.08	69.40	4.68	0.319
Distance-FTC (minutes)	35.81	34.5	37.00	−2.50	0.396
Annual extension contacts (count)	6.86	7.96	6.85	1.11	0.001^a
Education (year)	2.09	2.23	1.93	0.32	0.250
Malt barley yield (kg/ha)	1710.86	1796.27	1633.62	162.66	0.0001^a
Malt barley produce price (ETB/kg)	37.77	38.26	37.32	0.94	0.020^b
Malt barley revenue (ETB/ha)	64876.66	68772.51	61353.61	7418.90	0.000^a
Cost for malt barley (ETB/ha)	23264.52	25041.53	21657.56	3383.98	0.000^a
Malt barley Gross income (ETB/ha)	41612.14	43730.98	39696.06	4034.92	0.011^b
Livestock asset (TLU)	1.4	1.62	1.3	0.32	0.070^c
Livestock asset (ETB)	20745.49	25545.34	17062.33	8480.10	0.002^a
Asset (ETB)	24783.17	29363.86	21066.96	8296.9	0.005^a

Notes: ^a, ^B, and ^c are significant at 1, 5, and 10% probability levels, respectively.Source: Own Computation, 2023.

Table 4. Association tests for contract participants

Variables	Response	Participants		Non- participants		Pooled		X^2(p)
		Freq.	(%)	Freq.	(%)	Freq.	(%)
Credit	Yes	143	75.7	113	54	256	64.3	20.17 (0.000) ^a
	No	46	24.3	96	36	142	35.7
Sex	Male	185	97.9	202	96.7	387	97.2	0.561 (0.454)
	Female	4	2.1	7	3.3	11	2.8
Cooperative membership	Yes	147	77.8	133	63.6	280	70	9.52 (0.002) ^a
	No	42	22.2	76	36.4	118	30
Cluster farming	Yes	177	93.7	104	49.8	281	71	92.11 (0.000) ^a
	No	12	6.3	105	50.2	117	29
Row planting practice	Yes	144	76.2	51	24.4	195	49	106.52 (0.000) ^a
	No	45	23.8	158	75.6	203	51
Participation in Field Day	Yes	174	92.1	109	52.2	283	71	55.26 (0.000) ^a
	No	15	7.9	100	47.8	115	29
Mobile ownership	Yes	107	56.6	110	52.6	217	54.5	0.63 (0.426)
	No	82	43.4	99	47.4	181	45.5
Participation in social organization	Yes	57	30.2	54	25.8	111	28	1.91 (0.167)
	No	132	69.8	155	74.2	287	72
Training participation	Yes	163	86.2	138	66	301	75.6	22.0 (0.000) ^a
	No	26	13.8	71	34	97	24.4
Off-farm participation	Yes	103	54.5	111	53.1	214	53.8	0.0768 (0.782)
	No	86	45.5	98	46.9	184	46.2

Notes: ^a, ^b, and ^c significant at 1, 5, and 10% probability levels, respectively.Source: Own Computation, 2023.

Table 5. Full information maximum likelihood estimates of the switching regression model

Variables	CF participation		Asset
	Selection (n = 398)		Participants (n = 189)		Non-participants (n = 209)
	Coefficient	R.S.E	Coefficient	R.S.E	Coefficient	R.S.E
Constant	−1.11	1.38	8.28^b	1.26	−7.14^a	0.96
Sex	−0.64	0.47	−0.18	0.53	−0.02	0.29
Age	−0.01	0.01	−0.02^b	0.01	−0.05^b	0.02
Credit	4.00^a	0.38	0.23	0.21	0.32^a	0.14
Social organization	0.38	0.27	0.12	0.32	0.32	0.25
Household size	0.04	0.05	0.04	0.03	0.09^a	0.03
Land size	−0.02	0.19	0.27 ^c	0.11	0.09	0.11
Cooperative	−0.32	0.32	0.51^a	0.18	0.65^a	0.21
Extension	−0.04	0.04	0.01	0.03	−0.005	0.02
Training participation	0.03	0.34	−0.28	0.19	0.12	0.23
Distance from market	−0.003	0.003	−0.002	0.002	0.003	0.002
Distance from FTC	−0.003	0.004	0.01	0.02	−0.003	0.003
Off-farm	−0.30	0.34	0.48^a	0.16	0.63^a	0.16
Education status	0.59^b	0.29	−0.04	0.15	0.15	0.13
Malt barley Experience	0.003	0.07	−0.004	0.039	−0.05	0.03
Mobile	−0.39	0.25
Field day participation	0.62^b	0.29
Row planting			0.281	0.18
Cluster farming			0.15	0.28
Farming experience					0.05^a	0.014
/lnsigma (lnσi)			−0.15^a	0.05	−0.22^a	0.05
/r			0.35^c	0.18	0.42^c	0.22
Sigma (σi)			0.86^a	0.04	0.802^a	0.04
Rho (ρ1 and ρ0)			0.39^b	0.19	0.33^b	0.16
Wald X^2 (15) = 204.01^a, Prob > X^2 = 0.000; Log pseudolikelihood = −443.75
Wald test of independent equations: X^2 (2) = 7.03^b; Prob > X^2 = 0.02

Notes: ^a, ^b, and ^c are significant at 1, 5, and 10% probability levels, respectively Source: Own Computation Based on Model Output, 2023

Table 6. Impacts of CF on asset accumulation using the ESR model

Treatment effects	Decision stage		ATE (treatment effect)	t-value
	To participate	Not to participate
CF (ATT)	(a)29381.2	(c)19728.5	9652.70	6.20a
NCF(ATU)	(d)28495.2	(b)21077.9	7417.3	3.63^a
Heterogeneity effects	BH1 = 886(t = 1.25)	BH0=-1349.4 (t = 5.56^a)	TH = 2235.4	5.3 ^a

^ais significant at 1% probability level. ATT=Average treatment effect on treated; ATU=Average treatment effect on untreated, ATE=Average treatment effect, BH=base heterogeneity, TH=transitional heterogeneitySource: Own Computation, 2023.

Table A1. Amhara region’s malt barley supply, demand, area coverage, and beneficiaries

Malt barley production and Supply in Amhara region 2011/12 to 2020/21 Crop season
Year	Land allocated (ha)	MB collected by GMF(Qt)	Beneficiary Farmers
			Contract	Non-contract	Total
2011/2	5272.00	15400.00
2012/3	3345.00	22091.00
2013/4	4928.00	28732.93
2014/5	4445.00	57259.67
2015/6	11794.00	83068.62
2016/7	14119.00	89650.71	5202.00	28580.00	33782.00
2017/8	15056.50	57421.81	6293.00	30976.00	37269.00
2018/9	12581.00	35825.00	4917.00	30695.00	35612.00
2019/20	9793.75	27319.46	2644.00	28498.00	31142.00
2020/21	7929.75	32203.86	2070.00	22955.00	25025.00
The Supplies of malt barley (Qt) to Gondar Malt Factory
Year	Amhara	Oromia	Imported	Or+Im	Total
2012/3	37491.00		95212.21	95212.21	132703.21
2013/4	28732.93		189212.39	189212.39	217945.32
2014/5	57259.67		164321.77	164321.77	221581.44
2015/6	83068.62		136000.00	136000.00	219068.62
2016/7	89650.71	44258.41	92486.32	136744.73	226395.44
2017/8	57421.81	51237.21	120840.98	172078.19	229500.00
2018/9	35825.00	76218.99	102313.40	178532.39	214357.39
2019/20	27319.46	131111.37	82456.12	213567.49	240886.95
2020/21	32203.86	81215.98	25217.41	206433.39	238637.25

Table A2. Test on the validity of the selected instruments for asset accumulation

variables	Participation in CF (1/0): Probit		Asset accumulation: OLS
	coff(SE)	ME(dx/dy)	CF(coff(SE))	NCF(coff(SE))
Constant	−4.15 (1.24)^a		8.34(1.3)^a	6.99(1.09)^a
Sex (male=1)	−0.566(0.467)	−0.224	−0.43(0.52)	−0.07(0.39)
Age (year)	−0.007(0.009)	−0.003	−0.016(0.01)	−0.05(0.02)
MB experience (year)	0.053(0.034)	0.021	−0.008(0.035)	−0.09(0.03)^a
Household size (count)	0.072(0.032)^b	0.03	0.029(0.036)	0.10(0.03)^a
Land size (ha)	−0.072(0.13)	−0.03	0.24(0.11)	0.07(0.12)
Extension contact (count)	0.08 (0.04)^b	0.03	−0.012(0.034)	−0.01(0.02)
Distance from the market (minutes)	0.001(0.001)	0.0003	−0.002(0.002)	0.0040.002)
Distance from the FTC (minutes)	−0.004(0.003)	−0.002	0.008(0.003)^a	−0.004(0.003)
Mobile ownership (Yes=1)	−0.29(0.25)	−0.061	0.25(0.16)	0.06(0.16)
Social participation (Yes=1)	0.103(0.277)	0.041	0.14(0.37)	0.33(0.28)
Cooperative membership (Yes=1)	0.351(0.186)^c	0.14	0.53(.22)^b	0.57(0.22)^a
Off-farm participation (Yes=1)	−0.111(0.167)	−0.044	0.51(0.17)^a	0.68(0.17)^a
Education status (year)	0.235(0.148)	0.10	−0.15(0.17)	0.12(0.15)
Training access (Yes=1)	0.519 (0.195)^a	0.21	−0.36(0.23)	0.15(0.21)
Credit access (Yes=1)	0.652(0.152)^a	0.26	0.12(0.19)	0.28(0.14)^b
Field day participation (Yes=1)	1.14 (0.19)^a	0.451	0.35(0.28)	0.151(0.16)
Farming experience				0.044(0.032)^a
Row planting (Yes=1)			0.315(0.20)
Cluster farming (Yes=1)			0.053(0.33)
Wald chi^2(16)	88.51^a		F(18, 170) = 1.34	F(17, 191) =1.38
Prob > chi^2	0.0000		Pro>0.1713	Pro>0.0.1447
Sample size	398		189	209
Pseudo R^2	0.2029		R^2=0.1239	R^2= 0.134
Log pseudolikelihood	−219.49		adj-R^2=0.0311	adj-R^2=0.0366

^a,band ^c are significant at 1, 5, and 10% probability levels, respectively. Values in the parentheses refer to the Robust standard errors.

Source: own computation, 2023

Table A3. Descriptive statistics for malt barley farmers

Variables	Pooled samples			CF Participants			CF non-participants
	SD	Min	Max	SD	Min	Max	SD	Min	Max
Age	9.59	20	70	9.24	25	68	9.79	20	70
Malt barley experience	2.64	1	13	2.64	1	13	2.59	1	10
Household size	2.27	1	13	2.3	1	13	2.21	1	10
Own land size(ha)	0.72	0.25	4	0.76	0.5	4	0.68	0.25	3.5
Livestock (TLU)	2.63	0	14.92	2.50	0	14.92	2.75	0	14.73
Distance-market (minutes)	46.73	18	300	50.56	18	300	42.99	48	210
Distance-FTC (minutes)	29.4	12	300	27.78	12	180	30.81	30	300
Annual extension contacts	3.47	2	10	2.92	4	10	3.84	2	8
Education (year)	2.82	0	12	2.98	0	12	2.67	0	10
Malt barley yield (kg/ha)	425.53	708.33	3650.01	422.76	708.333	3650.01	414.33	800.00	3330.02
Malt barley produce price (ETB/kg)	4.29	35	39	0.44	38	39	5.87	35	38
Malt barley revenue (ETB/ha)	17934.61	24126.35	138700.5	16365.66	26916.65	138700.5	18589.64	24126.35	129870.6
Cost for malt barley (ETB/ha)	3988.88	16095.56	52965.07	3885.62	19207.89	52965.07	3355.36	16095.56	32899.98
Malt barley Gross income (ETB/ha)	17547.64	14500.25	118137.3	16499.96	3755.102	118137.3	18272.19	14500.25	102848.7
Livestock asset (TLU)	2.17	0	5.2	2.17	0	5.2	2.59	0	3.34
Livestock asset (ETB)	590.13	0	65200.00	499.67	0	65200.00	736.85	0	57522.00
Asset (ETB)	990.44	0	95600	990.44	0	95600	505.51	0	81236.00

*Values in the parentheses refer to the SD =standard deviation; Source: own computation, 2023

Figure A1. Malt Barley (MB) Supply to Gondar Malt Factory (GMF) in Amhara Region.

Figure A2. Malt Barley (MB) Beneficiaries in Amhara Region.

Figure A3. North Gondar Zone malt barley productivity and Area coverage trends for the last four years.