Secondary towns, agricultural prices, and intensification: evidence from Ethiopia
This working paper (PDF) by IFPRI and the Ethiopian Development Research Institute (EDRI) analyses how cities and secondary towns affect agricultural practices in their rural hinterlands. While most of the population in sub-Saharan Africa resides in cities and secondary towns, this relationship is not well understood. To fill this gap, a conceptual model was developed to analyze how farmers’ proximity to cities of different sizes affects agricultural prices and intensification of farming. Then, these predictions were tested 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. The results show 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. The results show that while more farmers may benefit from urban spill-over effects on agricultural prices and access to modern inputs due to their proximity to secondary towns, the size of the benefits they realize is smaller.