Market Participation of Smallholder Farmers and Food Crop Productivity: Evidence from Burkina Faso

Abstract

Subsistence farming is frequently viewed as a low yielding and inefficient to ensure sustainable food security in sub-Sahara Africa. Commercial agriculture induces profit maximization and promotes on-farm investment. However, for most farmers in Burkina Faso, home consumption is the main objective of the agricultural production activities. Using survey data collected over 1178 farm households, this paper analyses the effects of participation of smallholder farmers in the output market on input use and food crop productivity in Burkina Faso. We estimate a Tobit model of the relationship between market participation (measured by the proportion of crop sold) and fertilizer use. The results show that an increase in level of sale leads to an increase in the level of fertilizer adoption. We also estimate a model of production using the instrumental variable regression approach to correct for the endogeneity of the crop commercialization index. The findings indicate that agricultural commercialization has a positive and significant effect on food crop productivity. This means that higher integration of farmers to markets increases their incentives to adopt new technologies which results in yield growth. Therefore, the findings confirm the need for promoting market participation of smallholders to induce technological change and productivity growth of agriculture in Africa.