Big cities, small towns, and poor farmers: Evidence from Ethiopia. (June 2018)

• Record Type: Journal Article
• Authors: Vandercasteelen, Joachim; Beyene, Seneshaw Temru; Minten, Bart; Swinnen, Johan
• Is Part Of: World development. Volume 106(2018)
• Page Start: 393
• Page End: 406
• Publication Date: 2018-06
• Subjects: Urbanization -- Cities -- Secondary towns -- Ethiopia -- Sub-Saharan Africa -- Agricultural prices -- Intensification; Economic history -- 1990- -- Periodicals; Economic assistance -- Developing countries -- Periodicals; 330.9
• DOI: 10.1016/j.worlddev.2018.03.006
• Languages: English
• ISSNs: 0305-750X

Abstract

Highlights: Urban population in medium sized cities has doubled in the last decade in Africa. Secondary towns have clear effects for rural migrants, but unclear how they affect rural producers. The paper analyses the impact of city types (primate vs. secondary) and urban proximity on agricultural intensification outcomes of rural teff producers in Ethiopia. Secondary towns affect the proximity relationship between the primate city and the teff prices and modern input use of rural producers. Selling teff in primate cities results in higher teff intensification while (instrumented) urban distance has a negative effect. Abstract: Urbanization is happening fast in the developing world and especially so in sub-Saharan Africa where growth rates of cities are among the highest in the world. While cities and, in particular, secondary towns, where most of the urban population in sub-Saharan Africa resides, affect agricultural practices in their rural hinterlands, this relationship is not well understood. To fill this gap, we develop a conceptual model to analyze how farmers' proximity to cities of different sizes affects agricultural prices and intensification of farming. We then test these predictions using large-scale survey data from producers of teff, a major staple crop in Ethiopia, relying on unique data on transport costs and road networks and implementing an array of econometric models. We find that agricultural price behavior and intensification is determined by proximity to a city and the type of city. While proximity to cities has a strong positive effect on agricultural output prices and on uptake of modern inputs and yields on farms, the effects on prices and intensification measures are lower for farmers in the rural hinterlands of secondary towns compared to primate cities.