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This study identified decision variables influencing fertilizer adoption and optimal fertilizer rates among smallholder farmers in the Ethiopian highlands. The fertilizer adoption and fertilizer use were examined in four regional states using a questionnaire survey, which was administered to 2880 farm households. A double hurdle model was used to analyze factors influencing the two independent decisions of adoption of fertilizers and use of fertilizers. The model estimates of the first hurdle revealed that the probability of fertilizer adoption increased by 1.2% as household education status improved, by 1.4% for an increased number of active family members, by 5.6% with improved access to credit, by 3.4% with cooperative membership, by 3.3% with an increase in farm size, by 4.6% when soil and water conservation practices are employed, and by 3.4% when agroecology of the farm is located in the medium to highland zone. Conversely, the probability of fertilizer adoption reduced by 0.9% for an increase in family size, 0.6% with 1 km distance from all-weather road, 1.6% for a kilometer further to farm plots, and 0.9% for an increase in number of parcels. The intensity of use of fertilizers was influenced by education status of the household head, family size, access to credit, membership to cooperatives, use of crop rotation, annual income, number of farm plots owned, use of soil and water conservation, and agroecology. Therefore, a concerted effort is needed to encourage fertilizer adoption and optimum fertilizer use intensity by improving households’ resource endowment, institutional capacity to deliver services, and infrastructure development.
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