This paper aimed to evaluate the causal impact of adoption of improved technology of pulse crop on market integration of smallholder farmers in the highland of Ethiopia. It did so through an empirical investigation of the relationship between technological change of faba bean and marketed surplus of smallholder farmer from two districts of Arsi Zone. Since improved technology is not assigned randomly among adopters and non-adopters but farmers select themselves into the technology, the paper tackled this methodological issue using treatment effect model. The study also examined the driving forces behind farmers’ decisions to adopt agricultural technologies. Results show that adopting improved faba bean varieties significantly increase farmers’ integration into output market. Specifically, on average, adoption of improved faba bean technologies increased marketed surplus of adopter by 193 kg as compared to non-adopter, ceteris paribus. Our results imply that promoting adoption of improved technologies is essential to inducing broader-based market integrations of smallholder farmers in well-integrated market. Technology adoption by farmer, however, was constrained by liquidity constraints, inefficiency of factory market, lack of human and social capital, and high transaction cost. Reaching the poor with better technologies and improving their market integration thus, requires policy support for improving access to credit and seed, developing labor and land markets and market outlets that simulate adoption.

Keywords: Technology adoption, improved faba bean varieties, marketed surplus, impact