Speaker
Description
Value chain development is a market-focused approach that addresses market constraints and facilitates linkages between rural producers and urban consumers along agri-food chains. Agri-food chains, on the one hand, serve to feed a growing urban population in sub-Saharan Africa (SSA) and on the other hand, provide income and business opportunities. Among small-scale farmers, commercialization and diversification of agricultural production systems are important for their food security and household welfare. Entrepreneurship in this context responds to push and pull factors – as a response to needs as well as opportunities. It is a vital component for the transformation of small-scale farming practices and rural economies (Nagler & Naudé, 2017). Entrepreneurship is also a catalyst for the two important agricultural development pathways: farm diversification and commercialization, which not only serve as a risk mitigation strategy against uncertain agricultural and market environments but also provide opportunities within agri-food chains for enhanced income generation (Barrett et al., 2001; Pellegrini & Tasciotti, 2014). It could be associated with increased specialization or requirement for entry into higher income-generating activities. Empirical evidence on entrepreneurship in farming overall is limited and mixed on the entrepreneurship, farm diversification, and commercialization nexus (e.g., Yoshida et al., (2020) and Cieslik and D’Aoust, (2018)).
This study examines the intensity of entrepreneurship and its impact on smallholder crop diversification and commercialization. It uses a 2021 cross-sectional dataset from 745 farming households in rural Zambia randomly sampled following a multi-stage sampling procedure. Zambia’s agriculture is dominated by subsistence cultivation of staple crops, mainly maize, by small-scale farmers. The study contributes to understanding the dynamics and impact of agricultural entrepreneurship by (1) examining correlates of smallholder entrepreneurship, measured using Miller's (1983) theoretical concept of entrepreneurial orientation (EO) – a broadly-validated multidimensional construct that is based on innovativeness, proactiveness, and risk propensity; (2) operationalizing crop diversification in five facets: (i) count (crop richness), (ii) Margalef’s measure of crop richness, (iii) Berger-Parker’s measure of relative abundance, (iv) Shannon’s measure of evenness, and (v) Simpson’s measure of proportional abundance (Smale, 2005). Following standard procedure, commercialization was operationalized by the ratio of crop sales to the total value of crop production and; (3) estimating the effect of entrepreneurship on crop diversification and commercialization using the generalized propensity score (GPS) to generate unbiased estimates of the dose-response function and an inverse probability-weighted regression adjustment (IPWRA) as robustness check.
The result shows that smallholder entrepreneurship is positively associated with the number of active household members, market distance, asset ownership, connection with COMACO (an NGO), and cooperative membership. Further findings from the adjusted GPS parametric function reveal that the intensity of entrepreneurship has heterogeneous effects on various dimensions of crop diversification. The expected values of the count, Margalef, Berger-Parker, and Shannon indices have lower values at lower levels of entrepreneurship (up to EO = ~0.5), but rise sharply above that point. This finding is consistent with those reported by Yoshida et al. (2020), implying that farmers’ crop count, richness, relative abundance, and evenness increase as they become more entrepreneurial. In contrast, higher levels of EO do not increase the Simpson index, suggesting that the crop’s proportional abundance is unaffected by smallholder entrepreneurship.
A different remark is found for overall crop commercialization in the study area. The result demonstrates that as entrepreneurship rises (until EO = ~0.7), the expected value of total commercialization increases, after which it does not translate into increased commercialization. We further find that smallholder entrepreneurship has heterogeneous effects on different crop commercialization, with the effects being more pronounced for maize and soybean than other crops. These findings are robust to alternative entrepreneurship measures and methodological specifications using IPWRA.
The study concludes that entrepreneurship is pivotal for various dimensions of smallholder crop diversification and commercialization. Thus, to diversify and commercialize their crops, smallholders would need to adopt a strategic stance by taking on somewhat risky choices and engaging in proactive farming and marketing innovations. To achieve this, policymakers should prioritize the entrepreneurial training of farming households. Such intervention should both encourage and guide smallholders on the value of being innovative and proactive. This can be done by working with social reference points in farmer’s cooperatives and locally recognized organizations like COMACO. Moreover, policy should encourage the fair provision of productive assets and infrastructure (e.g., property rights, broadcast media, and electricity) that would boost smallholders’ propensity to take risks, as entrepreneurship depends on the household’s asset endowment. Given that active household members (aged 18-64) are important drivers of entrepreneurship, these initiatives should target not only the household heads but also other active members in rural households.
Despite the limitations of the study in terms of the relatively small cross-sectional dataset, the practical significance of the study is in its focus on the nuanced analysis of entrepreneurship, diversification, and commercialization nexus, which can contribute to the expansion of small-scale agribusinesses and the further creation of value chain development interventions.
Keywords: entrepreneurship, entrepreneurial orientation, crop diversification, on-farm commercialization, small-scale farmers, Africa, Zambia
Main references
Cieslik, K., & D’Aoust, O. (2018). Risky Business? Rural Entrepreneurship in Subsistence Markets: Evidence from Burundi. European Journal of Development Research, 30(4), 693–717. https://doi.org/10.1057/s41287-017-0100-9
Miller, D. (1983). The Correlates of Entrepreneurship in Three Types of Firms. Management Science, 29(7), 770–791. https://doi.org/10.1287/mnsc.29.7.770
Morris, W., Henley, A., & Dowell, D. (2017). Farm diversification, entrepreneurship, and technology adoption: Analysis of upland farmers in Wales. Journal of Rural Studies, 53, 132–143. https://doi.org/10.1016/j.jrurstud.2017.05.014
Smale, M. (2005). Valuing Crop Biodiversity: On-farm Genetic Resources and Economic Change. In Valuing crop biodiversity: on-farm genetic resources and economic change (pp. 192–210). CABI Publishing. https://doi.org/10.1079/9780851990835.0192
Yoshida, S., Yagi, H., & Garrod, G. (2020). Determinants of farm diversification: entrepreneurship, marketing capability, and family management. Journal of Small Business and Entrepreneurship, 32(6), 607–633. https://doi.org/10.1080/08276331.2019.1607676
