Effect of Agricultural Extension Program on Smallholders’ Farm Productivity: Evidence from Three Peasant Associations in the Highlands of Ethiopia

This study evaluates the effect of agricultural extension program participation on farm productivity taking three case study kebeles (peasant associations) in Ethiopia. A total of 1112 plot-level data collected from 300 selected farm households, comprising of extension participants and non-participants, were used in the study. The study begins the estimation with simple Ordinary Least Square (OLS) method. To deal with the potential bias due to the existence of observed and unobserved characteristics, we employed Heckman Treatment Effect Model (HTEM) and Propensity Score Matching (PSM). The OLS result shows that extension participation increases farm productivity by about 6%. However, both HTEM and PSM clearly reveal the presence of selection bias in extension program participation which leads to underestimation of the OLS estimates. The participation could have increased farm productivity by up to 20% had it not been to the serious selection bias related to non-farming factors such as involvement in kebele administration, and wealth status of the participants observed during program placement. Our PSM analysis also verifies the positive effect of extension program participation on farm productivity. In conclusion, the extension program has a positive effect on farm productivity in the study area. However, its effect with its current structure and input could have tripled had there been no bias related to extension program participation. This result provides a valuable policy insight in which improving access to diversified and quality agricultural inputs are critically necessary for the participants on top of expanding the program to less resourceful farmers by avoiding any entry barriers in the future.