Seeds of change: The impact of Ethiopia's direct seed marketing approach on smallholders' seed purchases and productivity

Abstract While multiple factors explain low adoption rates of improved varieties by small‐scale farmers in sub‐Saharan Africa, a key supply‐side constraint is the limited availability of seed embodying new traits in the volume, quality, price, and timeliness required by farmers. This constraint is partly attributable to classical failures in the market for seeds and traits. Historically, governments have remedied this failure by allocating public resources to varietal improvement and seed distribution. In 2011, the Government of Ethiopia launched a novel experiment—the direct seed marketing approach—to encourage private seed investment in the country's seed system and to reduce the state's footprint in the system. Direct seed marketing incentivized seed companies to sell directly to farmers rather than through state distribution channels. This study provides the first quantitative assessment of the impact of direct seed marketing based on key indicators of a robust seed system: access to seed and farm‐level productivity. Using a quasi‐experimental difference‐in‐differences approach suitable to handling variation in treatment timing, we find that direct seed marketing increased the share of farmers purchasing fresh maize seed by 15 percentage points. It also raised the quantity of maize seed purchased by 45% and improved maize yields by 18%. In contrast, direct seed marketing had no effect on wheat seed purchases and yields. These crop‐specific differences likely reflect underlying differences in the reproductive biology of maize and wheat, highlighting the importance of crop‐specific policy design, institutional arrangements, and market development strategies to accelerate the adoption of improved varieties.