Abstract

Onion crop is one of the most important commercialized horticultural crops among smallholder farmers because they derive benefits such as income, source of food, health care and rural employment. In developing countries like Ethiopia, most smallholder farmers are characterized by poor market participation due to lack of market information, price volatility related to seasonality of supply, and poor performance of the vegetable market. This study has identified household level determinants of the output side commercialization decision and level of commercialization in onion crops in Fogera district of Amhara Region in Northwestern Ethiopia. A stratified random sampling technique was employed to select 150 onion producers from four sample kebeles in the study area. Both descriptive and econometric methods were used to analyze the data. Heckman’s two step sample selection model was applied to analyze the determinants of the commercialization decision and level of commercialization in the onion market. The first-stage probit model estimation results revealed that age of household head, literacy status, distance to nearest urban center, access to training, onion yield, access to extension service and contract marketing affected probability of market participation. Second-stage Heckman selection estimation indicated that livestock holding, literacy status, land allotted to onion, non/off farm income, onion yield, ownership of communication device, contract marketing, agro ecology and marketing group significantly determined volume of onion supply. The results also showed that most of the factors determining decision of participation in onion farm also determine level of participation, suggesting that the two decisions were made simultaneously by onion producers. The  study recommends that local and regional government strength formal and informal education, strengthening the existing onion production system, encouraging the use of labour saving technologies, improving extension system, strengthening the existing rural-telecom and rural-urban infrastructure development, and improving crop-livestock production.

Key words:  Heckman two step, onion, smallholder, commercialization, market participation.