The impact of avocado production on smallholder farmers’ income: evidence from North Mecha Woreda, Amhara Region, Ethiopia

Abstract Avocado has emerged as a high-value crop with expanding domestic and export market potential. However, empirical evidence on the drivers of participation and associated welfare impacts among smallholders in Ethiopia remains limited. This study examines the determinants and income effects of smallholder participation in avocado production in North Mecha Woreda, Amhara Region, Ethiopia. Specifically, it identifies key behavioral, institutional, and livelihood factors associated with participation decisions and assesses the impact of avocado production on smallholder income. Guided by an integrated conceptual framework that combines the Theory of Planned Behavior, the Diffusion of Innovations, and the Sustainable Livelihoods Framework, this study employs a quasi-experimental design. Primary data were collected from 360 rural households (180 avocado producers and 180 non-producers) selected through a multistage sampling technique in North Mecha Woreda. The analysis proceeds in two stages: a binary logit model identifies the determinants of participation, and Propensity Score Matching (PSM) is used to estimate the income effect of participation while addressing potential self-selection bias. Participation in avocado production is associated with an average income gain of ETB 63,016.93 among participating households, corresponding to a 22.8% increase relative to the income they would have earned in the absence of participation (counterfactual income) ( p < 0.01). Participation is positively associated with human capital (education), livelihood assets (land holdings and livestock ownership), institutional support (access to extension services, credit, irrigation, training, and improved seedlings), and social networks. Male-headed households are more likely to participate, while older age is negatively associated with participation. Gender-based disparities in access to productive resources are also associated with lower participation rates. Market distance shows a negative but statistically non-significant association with participation, suggesting that physical access constraints may be less binding than institutional and informational factors, or that distance does not fully capture transaction costs. Diagnostic tests support the robustness of the empirical estimates (Hosmer–Lemeshow χ 2 = 6.72, p = 0.567; mean VIF = 1.09). The findings suggest that avocado production represents a viable pathway for income diversification and livelihood resilience among smallholder farmers. This study provides empirical evidence to inform inclusive, gender-responsive, and institutionally supported policies aimed at promoting high-value horticultural crops in Ethiopia and similar developing country contexts.