Research article · 2024 · Full text
International Journal of Agriculture and Food ScienceDoes social network affect farm income and poverty status? Empirical evidence from farming households in Osun state, Nigeria
Volume 6(2) · Pages 38–46 · DOI: 10.33545/2664844x.2024.v6.i2a.203 ↗
Research areasMicrofinance and Financial InclusionSocial Capital and NetworksAgricultural Innovations and Practices
Abstract
Author-writtenThe agricultural sector has a multiplier effect on any nation's socio-economic and industrial framework as a result of the multidimensional nature of agriculture. The first and second goal of the Sustainable Development Goals (SDGs) targets no poverty and zero hunger and so, this study examined the impact of social network on farm income and poverty status among farming households in Osun State, Nigeria. Membership of farmers’ association is used as a proxy to social network in this paper. Multistage sampling procedure was used to select 379 respondents. Endogenous Switching Regression Model and Recursive Bivariate Probit Model were used to carry out the impact analysis. The empirical findings revealed that years of education, household size, farm size, farming as major occupation, farming experience and land management practice significantly influenced social network (membership of farmers’ association). Furthermore, social network (membership of farmers’ association) increased farm income and reduced poverty status of farming households in Osun State. Conclusively, social network is established to improve farm income while reducing poverty status. Therefore, establishment of more farmers’ association should be encouraged so as to improve the economic status of the farmers and invariably enhance their food security status.
Summary
Source-checkedPlain-language reading of the full paper, prepared with AI and checked against the text. Each point links to the authors' own words.
Why it matters
- The agricultural sector is critical because it has a multiplier effect on a nation's industrial and socio-economic framework. View evidence ↗
- The study is aligned with the first two Sustainable Development Goals, which aim for zero hunger and no poverty. View evidence ↗
The question
- The study aims to examine how social networks (specifically farmers' association membership) impact the poverty status and farm income of households in Osun State, Nigeria. View evidence ↗
What they did
- The researchers used a multi-stage sampling technique to select 379 respondents from farming households in Osun State. View evidence ↗
- The impact analysis was conducted using two models: the Endogenous Switching Regression Model and the Recursive Bivariate Probit Model. View evidence ↗
- Primary data was collected from respondents using structured questionnaires administered by trained field workers. View evidence ↗
What they found
- Factors that significantly influenced whether a farmer joined an association included their farm size, household size, years of education, farming experience, land management practices, and whether farming was their primary occupation. View evidence ↗
- Membership in a farmers' association increased farm income, with members having an expected income of 13.39 compared to 13.31 for non-members, a causal increase of 0.6%. View evidence ↗
- Social networks reduced poverty status, with the probability of poverty dropping from 86% for non-members to 48% for members of farmers' associations. View evidence ↗
- An increase in household size was found to increase poverty status by 5.5% per additional member. View evidence ↗
- Surprisingly, the study found that each additional visit from an extension agent was associated with a 28.3% increase in poverty status. View evidence ↗
What it means
- The authors conclude that social networks effectively improve farm income and reduce poverty among farming households. View evidence ↗
- The authors recommend encouraging the establishment of more farmers' associations to improve the economic status of farmers. View evidence ↗
Visual summary
2 visualsIllustrations explain the paper; charts are replotted from the paper's own table values.
Impact of Social Networks on Farmer Welfare
AI-generated conceptual illustration (Cassava and maize crops in a Nigerian farm setting). It explains the idea and does not show study data.
View source evidence ↗Poverty status headcount: Member of farmers’... vs Non- members of...
Replotted from Table 4 (page 7) of the original paper. Every bar is the paper's own table value.
View source evidence ↗Figures & tables
From the original paperIntroduction
Countries adopted Sustainable Development Goals (SDGs) on September 25 th , 2015 to end poverty, protect the planet, and ensure prosperity for everyone as part of a new sustainable development agenda. There are a total of seventeen goals with each having definite targets to be actualised over the next 15 years but of prominence are Goals 1 and 2 which target no poverty and zero hunger. Goal 2 which is a major concern aims to end hunger, achieve food security and improved nutrition and promote sustainable agriculture within the next fifteen year starting from 2016. Even though Nigeria relies mostly on the oil industry for its budgetary revenue, it is assumed that if the agricultural sector is well managed and improved, it would significantly increase the country's gross domestic product and even substitute oil on the top of the list taking into consideration the vast area of fertile land that is unused in Nigeria. A sturdy and a competent agricultural sector would enable any country to feed its increasing population, create employment, earn foreign exchange and make raw materials available to industries. The agricultural sector has a multiplier effect on any nation's socioeconomic and industrial framework because of the multidimensional nature of agriculture. Effective information sharing among farmers, researchers and extension service agents is greatly aided by interactions in social networks that occur freely through social ties rather than top-down bureaucratic models (Matuschke, 2008) [26] . Valente (1996) [39] described social networks as a pattern of friendship, advice, communication or support which exists among the members of a social system. Ability to learn in social networks is greatly influenced by tie strength, which reflects the closeness and frequency of interactions among the individuals concerned (Granovetter, 2005) [10] . Social ties as a channel for learning determine to a very great extent the nature of information shared in the social system (Haythornthwaite, 1996) [11] .
It is on this basis that being members of farmers' association was used in this paper as a proxy for social network as it is the most common social network among farmers. This helps the members of the association to increase their access to vital information, grants, and improved technology which then brings benefits to the members by promoting production, productivity enhancement and an appreciable surge in income. Becoming a member of farmer's associations is a major factor that helps the farmer to have access to relevant information which ultimately enhances productivity (Bernard et al., 2008; Bachke 2009; Adewakun 2012; Muchopa 2011) [6,5,1,28] . It can be affirmed that being members of a particular farmers association is able to create opportunities for the members to gain access to agricultural credit schemes and support services, market information, and management knowledge (Hellin et al., 2009; Mwaura 2014) [13,29] . Nigeria is currently experiencing a surge in prices of food items and other essential amenities, with inflation on the rise and political instability. Life in the city is becoming difficult not to talk of those dwelling in the rural areas, especially the farmers. The time frame for the achievement of the SDGs is almost here with little or nothing to show as a nation. To the best of my knowledge, empirical studies on social network, farm income and poverty status connection appear to be scarce in Nigeria, especially in Osun State. It is therefore necessary to carry out this study which develops a framework that measures the impact of social network (Membership of farmers' organization) on farm income and poverty status of farmers in Osun State, Nigeria. This was achieved through the following objectives: 1. To examine the impact of social network (Membership of farmers' organization) on farm income of farming households in the study area, and 2. To examine the impact of social network (Membership of farmers' organization) on poverty status of farming households in the study area.
Literature Review
According to Baah (2008) [4] , he reiterated that associations from the cocoa industry in Ghana could help the farmers to strengthen their possibilities of accessing credit loans and market information, and be a means of awareness of new policies and services. These helpful supports will enable farmers to have high productivity and income. Mohamed and Mansaray (2016) [27] emphasized that associations also encourage farmers to join programs of agricultural and rural development which invariably brings significant benefits for farmers in Loko region of Northern Sierra Leone. Membership of associations can help the farmers to access benefits in terms of socio and economic form by actively participating in the group activities of their associations (Fisher and Qaim, 2012) [9] . This was reiterated by Simonovic (2016) [36] , when 28.2% interviewed farmers ascertained that their membership of farmers association assisted them to derive remarkable benefits. Alternatively, according to (Sheilla et al., 2015) [35] , farmers' associations help members through cooperative business activities, improving the livelihood for farmers in rural areas of sub-Saharan Africa (Kenya and East Africa). It can therefore be said that joining associations will help farmers to garner supports in form of capital, technology and latest farming techniques that will ensure a stable selling market. These activities can further create collaboration among members to meet up with market demands and build closer teamwork when working together. In the same vein, Tran (2017) [37] stated that a major way of achieving high productivity for producers is to increase capital for production or joining associations.
Previously, studies have used the linear regressive model to examine the impact of farmers' associations to changes in livelihood and household income. Binomial logit regression model was adopted by Ekepu and Tirivanhu (2017) [7] to test the role of associations and socioeconomic factors that influence the income of sorghum bicolor farmers in Uganda. Tobit model was utilized by Van Hung et al., (2019) [41] to estimate impact factors to the production efficiency of rice farming where they concluded that membership of associations enables farmers to gain more knowledge and experience through sharing and gaining additional information, which ultimately helps in improving their production efficiency. A few studies have used the probit regression model to estimate how membership of farmers association can influence household incomes (Tolno et al., 2015; and Mpiira et al., 2013) [38,30] . On the contrary, Idowu and Oladeji (2019) [18] applied the probit model to calculate levels of impact from cooperatives to income and livelihood of stock farms comprising goat, sheep, poultry, pig, and catfish. He authenticated that the income coefficient has a negative relation with the membership of cooperatives and significance of 10%. This supports the belief that farmers with little capital are often more willing to join associations in order to derive benefits from their membership. In Vietnam, some studies have used the linear regression model in evaluating the role of association to the household's income, but they only examined one aspect of impacts from membership. As far as I know, few studies used OLS, Probit and Tobit models to estimate the impact of farmers membership on their income but in this study, Endogenous Switching Regression model was used to examine the impact of social network on farm income of farming households in the study area because it considers selection bias due to both observable and unobservable issues and suitable for expected outcome that is continuous in nature such as farm income. Recursive Bivariate Probit regression model was adopted to examine the impact of social network on poverty status of farming households in the study area because it accounts for endogeneity and selection bias.
Endogenous switching regression
To estimate the impact of membership of farmer's association on farm income through the use of Endogenous Switching Regression (ESR) framework, a two-stage estimation procedure is involved. At the first stage, the model for the determinants of membership of farmer's association is estimated and second stage involves the estimation of association between the outcome variable (Farm income) and a set of explanatory variables specified for two regimes membership and non-membership of farmers association). Membership and non-membership of farmers' association were represented by R1i and R2i respectively, while the unobserved net welfare of the farmer i is denoted by Ri* = R1i -R2i. The function that specifies the household membership of farmer's association status is indicated as follows;
The basic relationship used here is that net welfare from membership of farmer's association status is stated in relation to a vector of household independent variables (Xi) in a latent variable framework. The relationship, which is the determinants of membership of farmer's association in the first stage, is expressed as follows;
where Ri is a dichotomous variable with 1= farmers that are members of farmer's association and 0 otherwise, X represents all observable determinants of membership of farmer's association status, for example, household characteristics, α is a vector of parameters to be estimated, ɛ is the error term with mean zero, and variance σɛ2 which captures measurement errors and unobserved factors.
The relationship being considered in examining the impact of social network on farm income assumes that vector of outcome variable is a linear function of a vector of explanatory variables (Xi) and membership of farmer's association status which is a dichotomous variable (Ri). The relationship can be expressed as follows:
where variable Yi represents the outcome variables, Ki represents variables of farm and household characteristics, Ri is the membership of farmer's association status, μi is an error term while β and γ are parameters to be estimated.
In the course of carrying out impact evaluation, researchers are only aware of the observed attributes declared by the respondents, while other unobservable factors are known to only the respondents. In view of this, selection bias ensues if error terms of the outcome equation, (μ) in equation 3 and selection equation (ɛ) in equation 1 are influenced by unobservable factors. Therefore, correlation of the error terms (ρ=corr(ɛ,μ) ≠ 0) of the outcome and selection equations will come into play and ordinary least square tends to give biased estimates. Authors such as Nkala et al., (2011) [31] have employed Propensity Score-Matching (PSM) Approach in impact evaluation of technology on household welfare when there is self-selection. Endogenous Switching Regression model approach which was developed by Lokshin and Sajaia (2004) [23] is employed in order to concurrently estimate the determinants and impact of membership of farmer's association with consideration being given to observable and unobservable factors. This considers both endogeneity and heterogeneity.
The specifications for the two regimes in the second stage are as follows;
Regime1 (Membership of farmer's association):
Regime 2 (Non membership of farmer's association):
where Y1i and Y2i are outcome variables for farmers with membership of farmer's association and farmers who are not members of farmer's association, respectively; K represents variables of household characteristics; β represents parameters to be estimated and μ is the error term. The structure of the ESR model gives room for an intersection of X in Equation ( 3) and K of Equations ( 4a) and (4b). However, it is important that at least one variable in X does not appear in K for the purpose of identification. Therefore, this suggests that the same set of variables are used to estimate selection and outcome equation but with additional one variable in the former. Awareness about membership of farmer's association is used as a valid instrument as it is expected to affect membership status and not the outcomes. As explained by Heckman (1979) [12] , the selectivity terms used in the selection equation which represent λ1 and λ2 for farmers with membership of farmer's association and farmers who are not members of farmer's association respectively, covariance terms σ12 and σ1ɛ are included in equation (4a) and (4b) which resulted to equation (5a) and (5b) below;
where the selectivity terms λ1 and λ2 correct for selection bias from unobservable factors and 𝜙 𝑖1 and 𝜙 𝑖2 are the error terms with conditional zero means. Maximum likelihood approach was used in this study as proposed by Lokshin and Sajaia (2004) [23] . The ESR model is used to examine the impact of membership of farmers' association on farm income of farming households by comparing the expected farm income of farming households who are members of farmer's association with the expected farm income of the counterfactual hypothetical cases that farmers who are not members of farmer's association did not have the income.
The expected values of the outcome Y (Farm income) membership and non-membership of farmer's association can be expressed as follows;
According to Lokshin and Sajaia (2004) [23] , average treatment effect on the treated (ATT) is a change in the outcome due to adoption. In this case, ATT is expressed in terms of membership status, which is expressed as follows in equation 7 as the difference in the expected outcomes from equations 6a and 6b.
where σ represents the covariance of the error terms and λ the inverse mills ratios or selectivity term.
Recursive Bivariate Probit (RBP) model
Awotide et al., (2013) [13] ; Kuntashula et al., (2014) [21] have used Heckman two-stage selection method to evaluate impact of a dichotomous variable on a dichotomous outcome. The method was used to account for observed and unobserved heterogeneity between adopters and nonadopters. However, Lokshin and Sajaia (2004) [23] argued that heteroskedastic residuals are generated by two-stage approach, which cannot be used to obtain consistent standard errors without cumbersome adjustments.
Therefore, this study employed RBP model to examine the impact of social network on poverty status of farming households in the study area. In order to overcome the shortcoming as used by (Amare et al., 2012) [2] , the model is expressed as follows;
where variable Sh* is the latent membership of farmer's association status of the farming household; Xh includes all factors influencing poverty status, such as household and farm level characteristics; Yh represents poverty status of the household; Kh is a vector of household and farm-level characteristics (e.g., age, education); Sh indicates farmers' membership of farmer's association; μh and εh are random error terms which are assumed to follow a bivariate distribution; θ and ϕ, and ω are parameters to be estimated. Following Marra and Radice (2011) [24] , the assumption that the error terms follow a bivariate distribution is expressed as follows;
where ρ represents correlation coefficient among unobserved explanatory variables in both equations.
For the purpose of identification as it is in ESR model, it is vital to make sure that the exclusion restriction on the exogenous variables hold, that is Xh and Kh must be different by the minimum of a variable (Maddala, 1983) [25] . The bivariate normal cumulative distribution function is specified in equation ( 11) and if ρ is significant, it indicates that correlation of disturbance terms exists.
The nonlinear conditional expectation expressed in equation ( 12) is meant to estimate the marginal effects, while the average treatment effect on the treated (ATT) is estimated using equation (13).
where YhA is the expected probability of membership of farmer's association, and is the expected probability of poverty head count outcome in the counterfactual case. LGAs proposed for the study, the required sample size was determined using Krejcie and Morgan (1970) [20] with the population proportionate factor stated as:
Methodology
Where S = required sample size, N = the population size, X 2 = the table value of chi-square for 1 degree of freedom at the desired confidence level (95%), normally (1.96 x 1.96 = 3.841). P = the population proportion (assumed to be 0.50), since this would provide the maximum sample size, d = the degree of accuracy expressed as a proportion (0.05). It is also possible to have 0.01 or 0.1 and others depending on the level of precision required.
In this case, the study used the estimated population size (N) equal to 31124 and assumed a population proportion (P) of 0.50, chi-square (X 2 ) for i degree of freedom at 95% confidence level, normally (1.96 x 1.96 = 3.841) and degree of accuracy (d) of 5%. This method of selecting sample size is based on probability assumption and as a result there is likelihood of selecting sample size that will be a good representative of the entire population in the study area. Therefore, the sample size as indicated above is 379. At the last stage, forty two (42) farmers were selected from each of the LGAs chosen except from Iwo where forty three (43) farmers were selected. This then gave a total of 379 respondents.
Method of data collection
This study used data obtained mainly from primary source. The source of the data involved the use of structured questionnaires used to elicit information from the respondents. All the questionnaires were given out accordingly and individual farming households were interviewed by trained field workers used as enumerators. This ensured higher response rates.
Method of data analysis Objective 1: Endogenous switching regression model or Treatment effects model
Objective 2: Recursive bivariate probit regression model
Results and Discussion
Results and Discussion
Farm income impacts
The result shows that farm income exhibited a statistically significant difference between membership of association and non-membership of association regime with former regime (13. 39) recording higher productivity than the latter (13.31). However, this may not be absolutely correct since some other confounding factors are not taken into consideration, but are considered using ATT estimates of the ESR specification. The profit made from the sales of farm products was used to capture farm income in the analysis.
Conclusion
The empirical findings revealed that years of education, household size, farm size, farming as major occupation, farming experience and land management practice significantly influenced social network. A positive relationship existed between major occupation which is farming and non-membership of association establishing a positive farm income. Age of the respondents had an inverse and significant influence on farm income under membership of farmer's association regime. For the non-membership of association regime, years of education is statistically significant and it exhibited a positive relationship with farm income. Furthermore, social network (Membership of farmers' association) increased farm income and reduced poverty status of farming households in Osun State. Conclusively, social network is established to improve farm income while reducing poverty status. Therefore, establishment of more farmers' association should be encouraged so as to improve the economic status of the farmers.
Figures and tables from the paper
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Table 1
Table 2
Table 3
Table 4
Social network and poverty status impacts
Table 4 describes the impact of social network and poverty status from the ATT estimates of the ESR and RBP specifications. To examine the impact of social network on poverty status (headcount index), the average treatments effects (ATT) on the expected outcomes are estimated. ATT estimates account for other confounding factors which include selection bias resulting from potential differences between members of farmers' association and non-members of farmers' association. The results indicate that membership significantly reduces poverty headcount index. Specifically, members of farmers' association are 282 compared to 97 who are non-members of farmers' association. However, there is a negative impact of social network on poverty status headcount from RBP estimates. The implication is that there is increase in the probability of reducing poverty status from 86% from non-members to 48% from members of farmers' association.
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