Determinants of commercialization and its impact on the welfare of smallholder rice farmers by using Heckman’s two-stage approach

Abstract

This study is designed to assess the factors that affect smallholder rice farmer’s participation in market. In addition it also examines the effect of commercialization on the welfare of smallholder farmers. The method of Heckman two-stage model is used to obtain the desired objectives. Random sampling technique is used to collect data from 249 smallholder farmers. Result of the study indicates that gender of the household head, age, number of family member who assist in farming, household size, vocational training, and the farmer being landlord and farm size were the major determinants of market participation. The welfare of the farmer depends whether the farmer participate in the rice output market. The result also indicated that rice output, off-farm income, access to credit, and income from the sale of rice were important factors influencing the welfare of the household. The participation in market can be increased by providing subsidized prices for their production, cold storage houses, vocational training, introducing new technology, increasing contact with extension agent and providing genetically modified seeds. Keywords: Market participation, Smallholder rice farmer, Heckman two-stage model, Welfare