AGRICULTURAL COMMERCIALISATION AND FOOD CROP PRODUCTIVITY AS PATHWAYS TO POVERTY REDUCTION AMONG SMALLHOLDER FARMERS IN RURAL BURKINA FASO

ABSTRACT

Despite the growing interest to promote agricultural commercialisation in Burkina Faso, the majority of smallholders are still mainly subsistence-oriented with generally low level of market supply. However, evidence on the key factors that influence agricultural commercialisation and the extent to which it affects rural poverty is still scanty. This study therefore analyses the determinants of smallholders’ market supply and the implications of agricultural commercialisation and food crop productivity for poverty reduction in rural Burkina Faso. The research uses survey data collected from 1,178 farm households in 270 villages selected across the country. The assessment of the level of agricultural commercialisation (or intensity of market participation) using crop commercialisation index shows a low level of market participation of smallholder farmers. Indeed, the intensity of crop commercialisation for the whole sample is estimated at 17% of crop harvested. Among the 56% of the households that present a positive amount of crop sold, the proportion of sales is estimated at 30%. However, there is a high heterogeneity in the intensity of households’ crop commercialisation on the basis of land endowment, gender of the household head and across regions due to difference in the agro-climatic conditions. The double hurdle model is first used to analyse the factors affecting decisions of farm households to participate in crop markets, and the intensity of crop supply. The findings show that households’ access to productive resources such as farm size per worker, use of animal traction, the quantity of fertiliser used per hectare and access to credit, significantly increase the likelihood of households’ market participation and the intensity of crop commercialisation. Furthermore, indicators of transaction costs such as ownership of communication equipment and quality of rural roads present a significant effect on the likelihood of smallholders’ market participation but not on the intensity of crop sale, once participation decision is made. However, the estimates of Average Partial Effects (APEs) suggest that, in addition to access to productive resources, the overall intensity of crop supply is significantly determined by ownership of communication assets and quality of rural roads. Thus, both access to productive resources and level of transaction costs determine the intensity of smallholders’ crop supply. Secondly, the effect of smallholders’ agricultural commercialisation on input use and food crop productivity is analysed. Estimating a Tobit model, the results indicate a positive and significant effect of intensity of households’ market participation on fertiliser use per hectare. In addition, the effect of commercialisation on food crop productivity is estimated, using the method of instrumental variables to solve the problem of endogeneity of crop commercialisation index. The findings show that the effect of agricultural commercialisation on food crop productivity is positive and statistically significant. Thirdly, the study estimates a Logit regression model to analyse the effect of crop commercialisation on poverty among smallholder farmers and the influence of food crop yield in this relationship. Thus, the model includes an interaction term between crop commercialisation index and food crop yield. The results show that, at low yield of food crops, commercialisation can result in welfare loss and increase in the likelihood of being poor; while with a high level of yield, the intensity of crop supply becomes a crucial factor of poverty reduction. These findings establish agricultural commercialisation and productivity growth as pathways to poverty reduction in Burkina Faso. Therefore, promotion of agricultural commercialisation is crucial to stimulate technological change in agricultural sector, and ultimately to alleviate rural poverty in Burkina Faso. However, this would require public investments to improve rural accessibility and facilitate smallholders’ access to productive resources. In addition, to enhance the contribution of agricultural commercialisation to poverty reduction, policy should also be designed to improve yield of food crops.