Estimating the impact of fertilizer adoption on poverty in rural Ethiopia: an endogenous switching regression approach

Abstract

Agricultural productivity increments through the use of modern technologies, such as fertilizer application are a critical avenue for increasing farm income, consumption and reducing poverty. To this end, this paper examines the impacts of fertilizer adoption on poverty using household level data in rural Ethiopia. The study used a multinomial endogenous switching regression model to measure the effect of fertilizer adoption on poverty with consumption expenditure per adult as a proxy. Using data from 2316 rural households, the results revealed that adopters of any fertilizer packages have higher consumption expenditures per adult per annum. The results confirmed that the adoption of organic fertilizer and/or inorganic fertilizer has a positive and significant effect on increasing household consumption expenditures while also reducing household poverty. Moreover, the highest impact is attained when farmers adopt a combination of organic and inorganic fertilizer than in isolation. These results suggest that widening the adoption of alternative fertilizer packages significantly reduces the poverty status of farm households.