New Journal Paper on Cattle sharing and rental contracts in an Agrarian economy

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    International Livestock Research Institute

The paper "Cattle sharing and rental contracts in an Agrarian economy: evidence from Ethiopia" written by Million A. Tadesse, Stein T. Holden, Ragnar A. Øygard and John McPeak been published in Agricultural Economics.

New Journal Paper on Cattle sharing and rental contracts in an Agrarian economy

The paper is published as a New Journal Paper and can be downloaded here.

Abstract of the paper
Empirical evidence on the role of cattle sharing and rental contracts in agrarian economies is limited. This article is an investigation of different types of cattle sharing and rental contracts producers in rural Ethiopia adopt. It also investigates why households in rural Ethiopia rely on these contracts that are vulnerable and therefore subject to potential moral hazard problems described in earlier literature. We apply random effect probit and control function econometric methods to household panel data collected in 2005 and 2007 from two agro-ecological zones in Ethiopia.

Controlling for the endogeneity of access to livestock credit, we find that contracts are spatially fragmented and better developed where population density is high and credit and insurance markets are poorly developed. We also find that contracts help cash poor and credit constrained households to improve their herd dynamics, to get access to nonlivestock resources (land, labor and cash) and share risks that could have been difficult without the contract. We show that contracts are rational responses of residents in rural communities characterized by imperfect credit and insurance services, since households with better access to credit are less likely to rely on contracts.

Published 11. July 2016 - 10:33 - Updated 23. May 2017 - 19:12

Norwegian University of Life Sciences (NMBU)

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