Inclusive Business Models in Ethiopia: The Impact of Value Chain Inclusion on Smallholder Farmers’ Use of Land and Irrigation

Abstract

Numerous studies have found that resource-poor farmers are often bypassed in inclusive business approaches, leading to worsened food security and exacerbated inequalities. However, the studies analysing the impact pathways of smallholder value chain inclusion have predominantly focused on outcomes in terms of income, productivity, or consumption effects. The impact on productive resources has received considerably less attention, yet the households’ access to productive resources indicates long-term effects and holds a central role in food security and welfare. Therefore, an analysis from a resource-based view is required, as smallholder farmers in Ethiopia are highly dependent on land and water resources, in an environment that experiences increasing resource stress. The sustainable livelihood framework underpins the role of natural resources as critical assets that determine the farmers’ livelihood strategies.

Although previous research has examined smallholder value chain inclusion, results have remained mixed and dispersed. Therefore, this study presents a systematic literature review that synthesises the patterns in Ethiopian smallholder farmers’ land and irrigation use after value chain integration. Web of Science, Scopus, and Taylor & Francis databases were systematically reviewed for relevant academic literature, overarching concepts and themes were developed across the final set of articles (n=33) and subsequently explored in expert interviews (n=3).

The analysis identified positive effects of participation on input access, income and productivity gains, contrasted with adverse consequences of input dependence, intensified land and irrigation demand, crowding out, and monocropping practices. Most studies confirmed land size and access to irrigation as inclusion requirements, while few found a lack of effect. Better resource endowment facilitated inclusion and inclusion led to better access to and accumulation of productive resources. The higher resource demand of IB activities poses additional strains on the natural resources, potentially enhancing conflict and competition among the smallholders.