Interdependence of smallholders’ net market positions in crop and livestock markets: Evidence from Ethiopia

Jaleta, M. and Gebremedhin, B. 2011. Interdependence of smallholders’ net market positions in crop and livestock markets: Evidence from Ethiopia. IPMS Working Paper 27. Nairobi, Kenya: ILRI.

Using simultaneous-equation models, this paper examines whether there is interdependence between smallholder’s net market positions in crop and live animals markets under mixed crop–livestock system. Household level data collected in 2009 from 1075 sample households in 10 districts of Ethiopia are used for the analyses. Results confirm the existence of interdependence between household’s net positions in crop and live animals markets and, relatively, the net position of households in the live animals market is dictated by their net position in the crop market. The interdependence between the two market positions shows that households stock live animal asset through selling surplus crops produced and finance crop purchase through live animals sales. The relative strength of the net market position in crop markets shows that prior to their involvement in live animal market, farm households analyse their position in crop production, consumption, marketable surplus, and the household’s ability to meet cash requirements through crop sale. Thus, policies/strategies enhancing smallholders’ participation in crop and live animals markets in mixed crop–livestock system should pay attention to the production and marketing of both commodities simultaneously.