This study evaluates the individual and joint effects of input subsidies and agribusiness matching grants on smallholder market participation in Uganda. It examines whether and how these instruments implemented alone or in combination translate productivity gains into increased marketed output. Using a multinomial endogenous switching regression framework, the study accounts for endogenous selection into multiple support regimes and identifies regime-specific impacts. The aim is to provide robust evidence on the complementarities between production- and market-oriented interventions and inform the design of coordinated agricultural policies that enhance smallholder market participation.
The study uses a balanced two-period household panel dataset (2018–2019 and 2023) of 1,486 smallholder farmers participating in Uganda's Agricultural Cluster Development Project (ACDP). Households are classified into four regimes: non-participation, input subsidies only, matching grants only and joint participation. The outcome is the annual value of marketed crop output. To address non-random program participation, the analysis applies a correlated random effects multinomial endogenous switching regression (CRE–MESR) model, which estimates regime-specific effects while correcting for selection bias. Identification relies on valid exclusion restrictions; with robustness checks conducted using alternative estimators.
Observable household and market access factors have limited explanatory power for marketed output, underscoring the role of unobserved factors and endogenous selection. Input subsidies and matching grants alone yield positive but insignificant effects, whereas joint participation produces significant and robust gains. The results highlight strong complementarities between production and market-oriented interventions, with impacts varying by household capacity. Distributional evidence confirms higher marketed output among joint participants alongside substantial heterogeneity. Robustness checks support these findings, demonstrating that integrated support, rather than standalone interventions, is more effective in enhancing smallholder market participation.
The empirical strategy assumes that households select participation regimes according to utility-maximizing behavior and that the selected covariates adequately capture factors influencing regime participation and marketed output. However, participation regimes are treated as time-invariant, and the estimates remain sensitive to identification assumptions, limited institutional data and small sample sizes in some regimes. In addition, the Ugandan ACDP context may limit generalizability. Future research should therefore examine dynamic transitions across support regimes, incorporate richer institutional and market information, apply alternative identification strategies and conduct comparative studies across policy settings.
This study contributes to the literature by providing robust empirical evidence on the effects of agricultural support instruments on smallholder marketed output while accounting for endogenous selection across multiple participation regimes using a multinomial endogenous switching regression framework. It offers a unified comparison of input subsidies and agribusiness matching grants, highlighting their complementarities. The findings reveal significant heterogeneity in impacts across households and regimes, emphasizing the role of household capacity. Importantly, the study shows that integrated support packages are more effective than standalone interventions, informing policy on coordinated strategies to enhance smallholder market participation.
