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The commercialization of smallholder agriculture entails that farmers become market-oriented and base their production decisions on market signals, as well as selling a significant proportion of their produce in market. However, previous research has focused almost exclusively on market participation and ignored market orientation. We examine the impact of market orientation on the market participation of smallholder cereal farmers in Ethiopia, drawing on data from the latest 2009 round of the Ethiopian Rural Household Survey (ERHS). Heckman’s two-stage model and IV regressions are employed. Market orientation was found to strongly enhance market participation. Moreover, higher level of crop production, land size, access to credit and all-weather roads enhanced market participation while age of household head and family size reduced participation.

Smallholder commercialization in Ethiopia: Market orientation and participation