Adoption of improved agricultural technologies is central to transformation of farming
system and a path out of poverty in developing countries. The aim of the current
study is to provide empirical evidence on the impact of improved agricultural technologies
(HYVs and chemical fertilizer) on smallholders’ output market participation. The
analysis is based on Farmer Innovation Fund (FIF) impact evaluation survey data covering
around 2,675 households collected by the World Bank in 2010-2013 in Ethiopia.
Endogenous treatment effect and sample selection models are employed to account for
the self-selection bias in technology adoption and market participation. Regressions
based on matching techniques are employed for robustness check. The main results
shows that adoption of improved high-yielding varieties (HYVs) and chemical fertilizer
is found to have a positive and robust effect on smallholders’ marketed surplus. We
found evidence that adoption of improved HYVs increases surplus crop production by
757 kg, whereas adoption of chemical fertilizer increases surplus by 285 kg. When
the two technologies are adopted jointly, marketed surplus is found to increases by
635 kg, which establishes the complementarity of the two technologies. The result
also shows that farmers’ surplus crop production and market participation is determined
by access to modern inputs, cereal crop price, farm size, availability of labor,
and infrastructure facility. Access to credit and training fosters technology adoption,
however, we are unable to witness learning externality from neighbors on smallholders
marketed surplus. Therefore, agriculture and rural development policy needs to focus
on supporting agricultural technology adoption.