A review on commercialization of smallholder agricultural producers and its impacts on household livelihoods. Evidence from Ethiopia context

In developing countries like Ethiopia, the agricultural sector commercialization is the primary objective for smallholder agricultural producers to eradicate food insecurity and depart from subsistence farming to profit maximization in a production system in which households produce market-oriented products based on consumer preferences. However, the participation of smallholder farmers in the agricultural sector commercialization remains low due to various factors. These include high population growth with limited landholding system (land tenure), lack of capital and access to credit (collateral), poorly linked market access, high transaction costs, poor infrastructure, and weak institutions causing transaction costs to rise and considerably alter production and market-participation decisions in the commercialization of smallholder farming. The current government introduced market-oriented policies aimed at poverty reduction to overcome all these constraints in the last five years.