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THE FINANCIAL RETURN OF CEREAL FARMING FOR SMALLHOLDER FARMERS IN THE CENTRAL HIGHLANDS OF ETHIOPIA

Published online by Cambridge University Press:  22 December 2009

LALISA ALEMAYEHU DUGUMA ,
IKA DARNHOFER  and
HERBERT HAGER
LALISA ALEMAYEHU DUGUMA*
Affiliation:
Institute of Forest Ecology, University of Natural Resources and Applied Life Sciences, Peter-Jordan-strasse 82, A-1190 Vienna, Austria
IKA DARNHOFER
Affiliation:
Institute of Agricultural and Forestry Economics, University of Natural Resources and Applied Life Sciences, Feistmantelstrasse. 4, A-1180 Vienna, Austria
HERBERT HAGER
Affiliation:
Institute of Forest Ecology, University of Natural Resources and Applied Life Sciences, Peter-Jordan-strasse 82, A-1190 Vienna, Austria
*
‡Corresponding author: lalisa222@yahoo.com
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Summary

A study was conducted in Suba area, central highlands of Ethiopia, to assess the net return, land and labour productivity, and the return to scale of cereal farming practice. Seventy-five farmers belonging to three local wealth classes (poor, medium and rich) were randomly selected and interviewed about inputs and outputs related to cereal farming for the production year 2007/2008. Farm soil properties were investigated to check the variability in soil quality among the wealth classes. Benefit:cost ratio (BCR), net returns and annual profit were used to indicate the worthiness of the cereal farming activity. The return to scale was estimated by using the Cobb–Douglas production function. The results show that cereal farming is a rewarding practice, with the rich households gaining more profit than the poor. Farm size was the most important variable that affects the net return. There is an increasing return to scale. However, it is unlikely that farmers will have more land than they own at present because of the land shortage problem in the country caused by the increasing human population. Thus, attention should be given to minimizing the costs of production through proper regulation of domestic fertilizer costs and increasing labour productivity especially for the poor and medium households. The use of manure and compost as an additional fertilizer should also be promoted.

Type
Research Article
Information
Experimental Agriculture , Volume 46 , Issue 2 , April 2010 , pp. 137 - 153
Copyright
Copyright © Cambridge University Press 2009

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