Impact of cluster-farm participation on wheat efficiency and commercialization: practices from Northwest Ethiopia

Introduction Cluster farming has increasingly been promoted as a collective agricultural approach to improve smallholder productivity, market integration, and rural livelihoods in Ethiopia. Using Collective Action Theory, this study examines the factors influencing farmers’ participation in wheat cluster farming and its impact on production efficiency, and household wheat commercialization. Methods A multi-stage sampling procedure was used to collect cross-sectional data from 384 wheat-producing households in Northwest Ethiopia. The association between cluster farming participation and wheat efficiency and commercialization level was estimated using an endogenous switching regression model. Results The probit results show that sex, family size, land size, livestock holding, cooperative membership, extension contact, cluster farming-specific training and awareness are positively associated with participation in cluster farming, while distance from the cluster farming site is negatively associated with participation. The ESR estimates further suggest that participation in cluster farming has a significant positive impact on production efficiency and commercialization. The estimated ATT shows that participation increases technical efficiency (0.383), allocative efficiency (0.252), economic efficiency (0.105), and commercialization level (0.252). Similarly, the ATU estimates indicate significant potential benefits for non-participating households if they participate, with increases of 0.398, 0.291, 0.152, and 0.274 in TE, AE, EE, and HCI, respectively. The robustness propensity score matching result also confirms the ESR findings. Conclusion The results imply that collective farming is associated with farm performance through better access to productive resources, improved institutional support, reduced transaction costs, and enhanced market integration. The results highlight the need for fostering inclusive cluster farming through specific extension services, support to cooperatives, and better access to cluster sites, which is associated with the efficiency and commercialization level of farmers.