Does the adoption of agricultural machinery improve smallholder farmers food security? Evidence from Arsi Zone, Oromia Region, Ethiopia

Recent evidence from developing countries demonstrates the positive impact of agricultural machinery on productivity. However, there is a research gap regarding its impact, particularly on food security. This study examines the effect of agricultural machinery on farm revenue and food security (HFIAS). The analysis is based on data collected from 413 smallholder farmers in the Arsi Zone in the Oromia region of Ethiopia. To avoid selection bias, an endogenous switching regression (ESR) is used, along with propensity score matching (PSM) for robustness. The first-stage ESR results show that factors such as cooperative membership, extension contact, and farm size positively influence machinery adoption, while crop diversification and tropical livestock units reduce the likelihood of adoption. The treatment effect reveals that machinery adoption increases farm income by 70% and reduces food insecurity likelihood by 51%, Counterfactual analyses show that non-adopting households could have enjoyed comparable benefits had they adopted agricultural machineries. These findings are consistent with PSM results. The finding suggests that strengthening extension services is crucial, as they can encourage machinery adoption and enhance food security for smallholder farmers. This research emphasizes the importance of targeted policies to boost machinery adoption, improving productivity and food security.