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.