ALEMAYA UNIVERSITY

SCHOOL OF GRADUATE STUDIES

SMALLHOLDER FARMING SYSTEMS AND THEIR POTENTIAL

FOR OPTIMUM UTILIZATION OF RESOURCES IN NORTH
WOLLO, ETHIOPIA: A CASE OF MEKET DISTRICT

BY
ANTENEH TEMESGEN.

DECEMBER, 2000
ALEMAYA

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SMALLHOLDER FARMING SYSTEM AND THEIR POTENTIAL FOR OPTIMUM
UTILIZATION OF RESOURCES IN NORTH WOLLO,
ETHIOPIA: A CASE OF MEKET DISTRICT

A Thesis Presented to the School

of Graduate Studies
Alemaya University

In partial Fulfillment of the Requirement for the Degree of

Master of Science in Agriculture
(Agricultural Economics)

By
Anteneh Temesgen

December, 2000

Alemaya University
School of Graduate Studies

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SMALLHOLDER FARMING SYSTEM AND THEIR POTENTIAL FOR OPTIMUM
UTILIZATION OF RESOURCES IN NORTH WOLLO, ETHIOPIA:
A CASE OF MEKET DISTRICT

By
Anteneh Temesgen

Faculty of Agriculture
Department of Agricultural Economics

Approved By Board of Examiners:

_____________________________________ _____________
Chairman, Department Graduate Committee Signature

______________________________________ _____________
Advisor Signature

______________________________________ ___________
External Examiner Signature

______________________________________ ___________
Internal Examiner Signature

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 BIOGRAPHY

The researcher Anteneh Temesgen, was born in East Gojjam zone, near Debremarkos town. He attended an

elementary and junior secondary school in Sidamo, Hagereselam town and completed his secondary school

in Deberemarkos comprehensive high school in 1982. Then he joined the Alemaya university of Agriculture

and graduated with B.Sc. degree in agriculture (Animal science) in 1986.

After graduation he was employed by MOA and worked in Amhara regional state of South and North Wollo

administrative zones. Then he Joined the school of graduate studies at Alemaya university in September

1998 for M.sc degree in agricultural economices.

ACKNOWLEDGEMENT

First and foremost my great appreciation goes to my major advisor Dr. D. K. Grover for his advise and

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constructive comments in the thesis writing work. I also thank him for facilitating my work by returning the
comments of thesis in time. I greatly appreciate Dr. Wolday Amha for his constructive comments by
sacrificing his valuable short period of time. His contribution is a lot for the improvement of this work. I
thank my former major advisor Dr. Belay Kassa, for his comments and guidance in developing the research
proposal. I want to express my gratitude to Hassen Beshir for his support during data analysis.

My thanks goes to SOS Sahel and SCF (UK) for their financial support in the process of research project. It
is great pleasure to extend my appreciation to Mr. Justin of SOS Sahel and Mr. Ben Foot and Wonduwessen
Bekele of SCF (UK) for their understanding of my problem and their effort to support my research work;
without their kind cooperation my thesis work would have not been so successful. I would also to thank
other staff members of SOS Sahel and SCF (UK) for their valuable support during my work.

It is great pleasure to extend my appreciation to North Wollo Administrative Zone Executive Committee,
Department of Agriculture, as well as Amhara Regional State Executive Committee and Regional Bureau
of Agriculture for their permission to join the M.Sc program. My gratefulness is due to the kind,
commendable and humorous staff members of North Wollo Zone Department of Agriculture. I do not fail
to register the support and respect given by Meket wereda office of agriculture staff members during the
selection of appropriate research study sites and recruiting enumerators among the appropriate staff
members on data collection. I want to tank the enumerators for finishing the tedious data collection work in
time. I am deeply grateful to all people who have assisted me through all stages of the study.

I also want to express my gratitude to my relatives and families: Baye Motebayhon, Moges Shibesh, Solome
Motbaihon, Astede W/kidan, Yeshita Anteneh, Melaku Anteneh and Getachew Anteneh for their
encouragement in successful completion of my graduate study.

TABLE OF CONTENT
BIOGRAPHY .............................................................................................................................................................................................i

ACKNOWLEDGEMENT........................................................................................................................................................................i

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TABLE OF CONTENT............................................................................................................................................................................ii

LIST OF TABLES....................................................................................................................................................................................iv

LIST OF APPENDICES .........................................................................................................................................................................vi

LIST OF MAPS .......................................................................................................................................................................................vii

ABSTRACT...............................................................................................................................................................................................ix

1. INTRODUCTION.................................................................................................................................................................................1
1.1. BACKGROUND OF THE STUDY ...............................................................................................................................................................1
1.2. STATEMENT OF THE PROBLEM ..............................................................................................................................................................6
1.3. OBJECTIVES OF THE STUDY ...................................................................................................................................................................9
1.4. SIGNIFICANCE OF THE STUDY ................................................................................................................................................................9
1.5. SCOPE AND LIMITATION OF THE STUDY..............................................................................................................................................10
1.6. HYPOTHESES........................................................................................................................................................................................11
1.7. ORGANIZATION OF THE THESIS ............................................................................................................................................................11
2. REVIEW OF LITERATURE ...........................................................................................................................................................13
2.1. GENERAL .............................................................................................................................................................................................13
2.2. REVIEW OF APPLICATION OF LINEAR PROGRAMMING (LP) MODEL IN AGRICULTURE.....................................................................16
2.3. ADVANTAGES OF LINEAR PROGRAMMING .........................................................................................................................................19
2.4. LIMITATIONS OF LINEAR PROGRAMMING ...........................................................................................................................................20
3. OVERVIEW OF THE STUDY AREA............................................................................................................................................23
3.1. GEOGRAPHICAL SETTING ....................................................................................................................................................................23
3.2. AGROECOLOGY AND CLIMATE............................................................................................................................................................26
3.3. LAND USE............................................................................................................................................................................................26
3.4. LAND TENURE SYSTEM.......................................................................................................................................................................27
3.5. POPULATION AND DEMAND FOR FOOD...............................................................................................................................................28
3.6. ANIMAL HUSBANDRY..........................................................................................................................................................................29
3.7. SOCIO-ECONOMIC DEVELOPMENT AND INFRA STRUCTURAL FACILITIES .........................................................................................30
3.8. THE AGRICULTURAL EXTENSION SYSTEM .........................................................................................................................................31
3.9. SOIL AND WATER CONSERVATION PRACTICE ....................................................................................................................................32
3.10. OFF-FARM ECONOMIC ACTIVITY......................................................................................................................................................33
3.11. INSTITUTIONS OF FARMING COMMUNITY:........................................................................................................................................34
3.11.1. Zone and Wereda Administration:..........................................................................................................................................34
3. 11.2. Agricultural Offices.................................................................................................................................................................35
3. 11.3. Co-operative Offices ...............................................................................................................................................................35
3.11.4. Non-Governmental Institutions:..............................................................................................................................................36
3.11.5. Agricultural Finance................................................................................................................................................................36
4. METHODOLOGY .............................................................................................................................................................................38
4.1. SELECTION OF THE STUDY AREA ........................................................................................................................................................38
4.2. THE SAMPLING METHOD ....................................................................................................................................................................38
4.3. SOURCES AND METHOD OF DATA COLLECTION ................................................................................................................................39
4.4. DATA ANALYSIS AND ANALYTICAL TOOLS........................................................................................................................................40
4.5. STRATIFICATION OF FARM HOUSEHOLDS ...........................................................................................................................................41
4. 6. SPECIFICATION OF THE LP MODEL.....................................................................................................................................................46
4.6.1. The Objective Function..............................................................................................................................................................47
4.6.2. The Activities ..............................................................................................................................................................................48
4.6.3. The Constraints ..........................................................................................................................................................................52
4.6.4. Other Restrictions.......................................................................................................................................................................56
4.6.5. Estimation of Technical Coefficients.........................................................................................................................................59
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5. DESCRIPTION OF THE FARMING SYSTEMS IN THE STUDY AREA ............................................................................62
5.1. FAMILY STRUCTURE AND EDUCATIONAL STATUS .............................................................................................................................62
5.1.1. Labor usage................................................................................................................................................................................63
5.1.2. Educational status......................................................................................................................................................................66
5.2. LAND RESOURCE AND USE .................................................................................................................................................................68
5.2.1. Average land size........................................................................................................................................................................68
5.3. THE CROP PRODUCTION......................................................................................................................................................................69
5.3.1. Production pattern .....................................................................................................................................................................70
5.3.2. Land fragmentation....................................................................................................................................................................72
5.3.3. Crop calendar and method of operation...................................................................................................................................73
5.3.4. Seed and fertilizer rate ...............................................................................................................................................................74
5.3.5. Crop and straw productivity......................................................................................................................................................75
5.3.6. Soil management practices........................................................................................................................................................76
5.3.7. Soil conservation practices........................................................................................................................................................78
5.3.8. Crop production problems.........................................................................................................................................................78
5.4. ANIMAL PRODUCTION .........................................................................................................................................................................79
5.4.1. Contribution of livestock to the farming system........................................................................................................................79
5 4.2. Livestock feed. ............................................................................................................................................................................82
5.4.3. Livestock production problem.s.................................................................................................................................................82
5.5. EUCALYPTUS TREE PRODUCTION .......................................................................................................................................................84
5.6. FARM INCOME AND RESOURCE PRODUCTIVITY.................................................................................................................................85
6. LINEAR PROGRAMMING OPTIMAL SOLUTIONS.............................................................................................................90
6.1. BASE MODEL RESULTS .......................................................................................................................................................................90
6.1.1. Production Pattern.....................................................................................................................................................................90
6.1.2. Resource Use under the Base Model ........................................................................................................................................94
6.1. 3. Farm Income and Resource Productivity ................................................................................................................................95
6.1.4. Marginal Value Product of Major Resources ..........................................................................................................................96
6.2. ALTERNATIVE MODEL PLAN RESULTS ...............................................................................................................................................97
6.2.1. Land Use and Cropping Pattern (Alternative Optimum Plan)................................................................................................97
6.2.2. Resource Use under the Alternative Plan.................................................................................................................................99
6.2.3. Farm Income and Resource Productivity (Alternative Plan) ...............................................................................................100
6.2.4. Marginal Value Productivity of Resources (Alternative Plan)..............................................................................................101
6.3. SENSITIVITY TEST ..............................................................................................................................................................................102
6.3.1. Impact of Output Price Reduction...........................................................................................................................................103
6.3.2 Impact of Input Price Variation................................................................................................................................................110
6.3.3 Impact of Output Reduction.....................................................................................................................................................117
7. SUMMARY AND CONCLUSION...............................................................................................................................................123

8. REFERENCES ..................................................................................................................................................................................129

9. APPENDICES....................................................................................................................................................................................134

LIST OF TABLES

TABLE 3.1 DISTRIBUTION OF AREAS AND POPULATION OF NORTH WOLLO IN DIFFERENT26AGROECOLOGICAL ZONE 26
TABLE 3.2 LAND SITUATION IN THE ZONE.................................................................................................................................................27
TABLE 3.3 PEOPLE IN NEED OF FOOD AID AND FOOD AID DELIVERED IN N. WOLLO ZONE. (1995-1999) 29
TABLE 3.4 THE LIVESTOCK POPULATION IN THE ZONE AND WEREDA FOR THE YEAR 1997/98................................................................29

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TABLE 4.1. SAMPLE PA’S, POPULATION AND FARM FAMILY HEAD (FFH), (NUMBER)............................................................................39
TABLE 4.2 AVERAGE VALUE INDICATORS USED IN THE STUDY FOR CLASSIFICATION OF THE FARMERS. ................................................43
TABLE 4.3 FINAL CLUSTER CENTERS, F-VALUE AND T-VALUE FOR THE MAJOR SELECTED
VARIABLE FOR TWO GROUPS:- .........................................................................................................................................................45

TABLE 5. 1 DISTRIBUTION OF AVERAGE FAMILY MEMBERS BY AGE GROUP SAMPLE FARMERS, 1999/00..............................................62
TABLE 5..2 FAMILY SIZE AND THE LABOR FORCE OF SAMPLED RESPONDENTS, 1999/00.........................................................................63
TABLE 5.3 ESTIMATED FAMILY LABOR AVAILABLE FOR FARM ACTIVITY.................................................................................................66
TABLE 5.4 EDUCATIONAL STATUS OF THE SAMPLED HOUSEHOLD HEADS 1999/00 (NUMBER AND PERCENTAGE) 67
TABLE 5. 5. EDUCATIONAL STATUS OF THE SAMPLED HOUSEHOLD MEMBERS (NUMBER AND PERCENTAGE).......................................67
TABLE 5. 6. AVERAGE LAND USE AND CROPPING PATTERN, SAMPLE HOUSEHOLDS, 1999/00................................................................69
TABLE 5.7 THE CROP CALENDAR FOR MAJOR CROPS IN THE STUDY AREA...............................................................................................74
TABLE 5.8 AVERAGE SEED AND FERTILIZER RATE PER HECTARE USED BY THE FARMERS
IN THE STUDY AREA, 1999/00 ..........................................................................................................................................................75

TABLE 5.9 AVERAGE PRODUCTION OF GRAIN AND STRAW PER HECTAR UNDER NORMAL
AND IMPROVED PRACTICES, 1999/00 ..............................................................................................................................................76

TABLE 5.10 CROP PRODUCTION PROBLEMS AND THEIR RANK..................................................................................................................79

TABLE 5.11 LIVESTOCK POPULATION MAINTAINED PER THE SAMPLE HOLDINGS, 1999/00 .....................................................................80
.TABLE 5.12 SOURCES OF CASH INCOME AND EXPENSES OF THE SAMPLED FARMER (BIRR), 1999/00 ...................................................86
TABLE 5.13 SOURCES OF TOTAL FARM AND NON-FARM INCOME FOR DIFFERENT GROUPS OF SAMPLED
FARMERS(BIRR), 1999/00................................................................................................................................................................87

TABLE 5.14 MARGINAL VALUE PRODUCTIVITIES OF VARIOUS RESOURCES ON SAMPLED HOLDINGS (BIRR) .........................................88
TABLE 5.15 TOTAL INCOME FROM DIFFERENT CROPS AND THEIR RELATIVE CONTRIBUTION TO
THE SAMPLED FARMERS. (IN BIRR) .................................................................................................................................................89

TABLE 6.1 EXISTING/OPTIMAL CROPPING PATTERN AND LAND USE ON SAMPLE HOLDINGS, 1999/00....................................................92
TABLE 6.2 LIVESTOCK NUMBER UNDER EXISTING AND OPTIMAL CONDITION, SAMPLE FARMERS, 1999/00...........................................93
TABLE 6.3 LABOR, OXEN POWER AND WORKING CAPITAL USE UNDER THE BASE MODEL.......................................................................94
TABLE 6.4 CHANGE IN FARM INCOME AND RESOURCE PRODUCTIVITY UNDER OPTIMAL BASE MODEL
OVER THE EXISTING ONE, SAMPLE HOLDINGS, 1999/00 .................................................................................................................95

TABLE 6.5 SHADOW PRICES OF LIMITING RESOURCES UNDER BASE MODEL ............................................................................................97
TABLE 6.6 CROPPING PATTERN IN THE ALTERNATIVE PLAN SAMPLE HOLDINGS, 1999/00 ......................................................................98
TABLE 6.7 LIVESTOCK NUMBER UNDER ALTERNATIVE PLAN CONDITION.................................................................................................99
TABLE 6.8 LABOR, OXEN POWER AND WORKING CAPITAL USE UNDER THE ALTERNATIVE PLAN......................................................100
TABLE 6.9 FARM INCOME AND RESOURCE PRODUCTIVITY UNDER THE ALTERNATIVE PLAN ................................................................101
TABLE 6.10 SHADOW PRICES OF LIMITING RESOURCES UNDER ALTERNATIVE PLAN .............................................................................102
TABLE 6.11 IMPACT OF OUTPUT PRICE VARIATION ON THE CROPPING PATTERN UNDER BASE PLAN (1999/00). 104
TABLE 6.12 IMPACT OF OUTPUT PRICE VARIATION ON THE OPTIMUM RESOURCE USE RESOURCE
PRODUCTIVITY AND FARM INCOME UNDER BASE MODEL. ...........................................................................................................105

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TABLE 6.13 IMPACT OF OUTPUT PRICE VARIATION ON MARGINAL VALUE OF RESOURCES UNDER BASE MODEL 106
TABLE 6.14 IMPACT OF OUTPUT PRICE VARIATIONS ON CROPPING PATTERN IN ALTERNATIVE PLAN ....................................................107
TABLE 6.15 IMPACT OF OUTPUT PRICE VARIATION ON THE OPTIMUM RESOURCE OF LIVESTOCK IN ALTERNATIVE PLAN108
TABLE 6.16 IMPACT OF OUTPUT PRICE VARIATION ON THE FARM INCOME, OPTIMUM RESOURCE USE,
PRODUCTIVITY AND MV OF RESOURCES ON ALTERNATIVE PLAN ................................................................................................110

TABLE 6.17. IMPACT OF INPUT PRICE INCREMENT ON THE CROPPING PATTERN OF BASE MODEL..........................................................112
TABLE 6.18 IMPACT OF INPUT PRICE INCREMENT ON THE LIVESTOCK COMPOSITION OF BASE MODEL. ................................................113
TABLE 6.19 IMPACT OF INPUT PRICE VARIATION ON FARM INCOME, RESOURCE PRODUCTIVITY AND
MV OF PRODUCTS OF BASE MODEL.........................................................................................................................................................114
TABLE 6.20 IMPACT OF INPUT PRICE VARIATION ON CROPPING PATTERNIN ALTERNATIVE PLAN .........................................................115
TABLE 6.21 IMPACT OF INPUT PRICE INCREMENT ON THE OPTIMUM RESOURCE USE, FARM INCOME AND
MV OF RESOURCES UNDER ALTERNATIVE PLAN...........................................................................................................................116
TABLE 6.22 IMPACT OF OUTPUT REDUCTION ON CROPPING PATTERN OF BASE MODEL........................................................................118
TABLE 6.23 IMPACT OF OUTPUT REDUCTION ON THE OPTIMUM RESOURCE USE AND
FARMINCOME UNDER BASE MODEL..........................................................................................................................................................119

TABLE 6.24 IMPACT OF OUTPUT REDUCTION ON CROPPING PATTERN OF ALTERNATIVE PLAN (1999/00) ............................................120
TABLE 6.25 IMPACT OF 10 PER CENT AND 25 PER CENT OUTPUT REDUCTION ON THE OPTIMUM
RESOURCE USE AND FARM INCOME UNDER ALTERNATE PLAN. ...................................................................................................122

LIST OF APPENDICES

APPENDIX 1 CONVERSION FACTORS USED TO STANDARDIZE HOUSEHOLD SIZE IN TERMS OF ADULT EQUIVALENT..............................134

APPENDIX 2 CONVERSION FACTORS USED TO STANDARDIZE HOUSEHOLD SIZE IN TERMS OF MAN EQUIVALENT............................134

APPENDIX 3 ASSUMPTIONS USED IN THE MODEL.....................................................................................................................................134

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APPENDIX 4 PRICE OF LIVESTOCK AND CROPS (BIRR) .............................................................................................................................136

APPENDIX 5 SUBSISTENCE REQUIREMENT OF EACH GROUP ...................................................................................................................137

APPENDIX.6. CONVERSION OF LIVESTOCK NUMBER INTO LIVESTOCK UNIT (LU) ..................................................................................137

APPENDIX 7 NUMBER OF DAYS, WORKING HOURS, AVAILABLE LABOR FORCE AND OXEN POWER......................................................137

APPENDIX 8 CROP CALENDAR .................................................................................................................................................................138

APPENDIX 9 QUESTIONNAIRE USED FOR COLLECTION OF DATA..........................................................................................................139

APPENDIX 10 SKELETON OF LP MATRIX..................................................................................................................................................144

LIST OF MAPS

3.1. MAP OF NORTH WOLLO ZONE 24

3.2. MAP OF MEKET WOREDA. 25

ABBREVIATION

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ACSI Amhara Credit and Saving Institute.
AE Adult Equivalent.
AESE Agricultural Economics Society of Ethiopia.
ANOVA Analysis of variance
ANRS Amhara National Regional State
BPED Bureau of Planning and Economic Development.
CI Cash Income.
CSA Central statistics Office
DA Development Agent
DAP Diammomium phosphate
DD Demand
DOA Department of Agriculture
DOPED Department of Planning and Economic Development.
DODPP Department of Disaster Prevention and Preparedness.
F Female
EPID Extension and Project Implementation Department
FAO Food and agriculture organization.
FFH Farm family head
GDP Gross domestic product.
GM Gross margin.
HIG High income group
Hrs. Hours
ILCA International Livestock Center for Africa.
KA Kebele Administration
Kg Kilogram.
Km Kilo meter
Lab. Labor
LDCs Least developed countries.
LIG Low income group.
LP Linear programming.
Ltd. Limited
LU Livestock unit. viii
M Male
Smallholder farming systems and their potential for optimum utilization of resources in North Wollo,
Ethiopia: A case of Meket district

By

Anteneh Temesgen

Research Advisor : D. K. Grover (Ph.D.) Alemaya University , College of Agriculture, Ethiopia.

Abstract

The main objective of this study is to examine the potential for optimal utilization of resources in North
Wollo, which contributes towards designing appropriate plan and development strategies in the future. The
main aim of this comparative analysis is to investigate whether the existing patterns of production are
optimal or not and indicate ways and means of efficiently using the resources of smallhalders in order to
maximize farm incomes.

The study attempts to identify and characterize the farming systems to determine the constraints of
agricultural production, analyze productivity of different resources as well as the level of the farm income
and develop optimal plan for existing and improved farming system with the available resources.

The study uses primary information through farm survey. 110 farm households from 4 peasant associations
are selected through multistage proportionate random sampling. A cluster analysis is used for the
classification of the households based on land to labor ratio, oxen number, tropical livestock unit (TLU),
crop production, family number, and fertilizer use. The two groups are statistically tested and are found to
be significantly different. Thus, there exists a significant difference in resource endowments, input use,
production pattern and farm income. The overall average land holding size for the sample farmers is 1.03
hectare, with 1.76 hectare for the high income group and 0.78 hectare for the low income group.
The high income group possesses an average land labor ratio of 0.5, 1.9 oxen, 7.41 tropical live stock units,
spends Birr 284 per year for fertilizer, average family size of 6.6 and produces 20.60 quintals of grains per
year. The low income group possesses an average 0.3 unit of land to labor ratio, 0.83 oxen, 3.2 tropical live

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stock units (TLU), family size of 5.1, an average of 7.20 quintal of grain production and spent Birr 60.70 per
year for fertilizer.

Shortage of Land, weather variability, soil degradation, pest problem, poor management practice, lack of
improved technology, inappropriate allocation of resources, shortage of inputs etc. are some of the main
problems which hinder farmers` productivity and farm income increment in the study area.

Optimal allocation of resources brings improvement in Gross margin by 9.4 per cent and 8 per cent for high
income group and low income group respectively. This change occurs mainly by shifting the area allocated
to enterprises using improved seeds and fertilizers. In the base optimal plan, the average area for
enterprises using improved wheat and fertilizer production increases by 272 per cent and 1350 per cent for
high income group and low income group respectively.

Furthermore, the analysis of the alternative optimal plans over the base model with allocation of enough
working capital shows a better prospect for increasing more farm income than could be realized from the
re-allocation of existing resources for both groups. As a result there is an increment in gross margin by 22,
2 and 10 per cent for high income group, low income group and overall sampled farmers respectively.

A sensitivity test is conducted to test the stability of the optimal plan. The analysis brings out that
consequent upon increased input price and output reduction by 25 per cent, the optimal solution becomes
infeasible. However, such an increment in input price / output reduction is very common in the study area.
This calls for measures such as facilitating of resettlement programs on voluntary bases, construction of
dams, supplying of various inputs to the farmers at reasonable prices and increasing of non-farm activities
to prevent the occurrence of such risks.

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 1. INTRODUCTION

1.1. Background of the study

Ethiopia is one of the poorest and least developed countries in the world. According to FAO (1997), the

country had a real per capita GDP of less than US $100 in 1995, and over 60 per cent of its population live

in absolute poverty. The United Nations Development Program’s (UNDP) human development report of

1997, ranked Ethiopia 170th out of 175 countries in terms of its human development index, which

combines economic factors with other factors, such as education, health nutrition and life expectancy.

According to the Word Bank (1995), the size of the country is about 1.14 million sq. km, two thirds of

which consist of highlands with an altitude range of 1500- 4000 meters above sea level. Ethiopia

encompasses about 50 per cent of the total highland areas in tropical Africa (Gryseels, 1988). The country

is endowed with diversity of natural resources. It is, nonetheless, observed that the natural resources such

as soil and forest are declining over time. Depletion of forests and poor land conservation measures have

led to wide spread land degradation (FAO/WFP, 1997). For instance, forests, which at the turn of the

century covered over 40 per cent of the land area, have been reduced to 4 per cent, as a result of expansion

of agricultural frontiers to feed the rapidly increasing population and to satisfy the growing demand for

wood for construction and fuel.

Agriculture, being the mainstay of the Ethiopian economy, accounts for about 40 per cent of gross national

product. At present nearly 85 per cent of the total population depend on agriculture for their livelihood at

subsistence level. Agriculture provides basic food supply for the urban population, raw materials for agro-

industries, and exportable surplus of commodities to earn foreign exchange, required for strengthening the

1
industrial base of the economy. It is believed that, agriculture is the base for industrial development and the

means for overall economic development of this country.

The 1997/98 agricultural sample survey results indicate that out of total area of 114 million hectares, 9.06

million hectares were used for different purposes. Out of it 7.01 million hectares (77.37 per cent) were

under temporary crops, 558.21 thousand hectares (6.16 per cent) was covered with permanent crops,

597.21 thousand hectares (6.59 per cent) were used for grazing land, 503.99 thousand hectares (5.56 per

cent) of land was kept as fallow land, 35.30 thousand hectares (0.39 per cent) were used as wood land and

356.70 thousand hectares (3.93 per cent) were used for some other purposes (CSA, 1998).

The land holding of the private peasants varies among regions and according to climatic situation of these

areas. In the highland areas the land holding is comparatively small, whereas in the low lands, it is

relatively bigger. According to CSA (1998) Agriculture sample survey, on land utilization by size of land

holdings were classified in 7 groups: - These are Group I under 0.10 hectare, Group II 0.1-0.5 hectare,

Group III 0.51 - 1 hectare, Group IV 1.01 -2 hectares, Group V 2.01- 5 hectares, Group VI 5.01 -10.00

hectare and Group VII above 10.01 hectares and from this out of the total private holdings under temporary

crop, over one - third (35.85 per cent) of them fall in group IV (1.01 - 2 hectares). On the other hand, most

of the holdings under permanent crops (54.43 per cent) fall in group II (0.1-0.5 hectare). The survey result

also indicated that 37.57 per cent of grazing land holdings and 46.14 per cent of land kept as fallow fall in-

group II. It was also noted that 35.24 per cent of the total land used for wood fall in-group I. The largest

estimate (30.18 per cent) of total area of peasant holdings is found in-group IV. The survey result indicates

the total number of agricultural householders in rural area (excluding nomadic areas) is estimated to be

9.29 million and average land holding per household to be 0.98 hectare (CSA, 1998).

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The average rural sedentary agricultural household size is 5.20. With regard to the education level of the

farmers, the same source reveals that most of them (72.84 per cent) are illiterate, 15.11 per cent attended

grade 1-3, and 0.52 per cent completed 12 grade. The remaining 11.53 per cent had an educational level

that varies between grade 3 and 11. The average life expectancy is reported to be 49 years for males and 52

years for females. (NBE, 1998)

Nearly 90 per cent of the total export earnings of the country is derived from the agricultural sector.

However, Ethiopian agriculture is characterized by its subsistence nature where, the quasi-totality of the

production comes from smallholder farmers. Most of small-holders are practicing mixed farming (77.68

per cent) with only 20.31 per cent practice crop production and 2.01 per cent on livestock production

(CSA, 1998). The decomposition analysis of the agricultural sector reveals that about 60 per cent of the

output in value terms comes from crop production, 33 per cent from livestock, and 7 per cent from forestry

(FAO, 1992).

Small-holders are characterized by almost exclusive use of family labor for the production process, direct

dependence on farm produce for subsistence requirements, low level of productivity, absence of farm

mechanization and low degree of specialization. However, they have a considerable capacity for change

and improvement (Ruthernberg 1980). This has been seen practically in the “Sassakawa Global 2000’’

efforts, where farmers were able to achive substantial increments in the yields of various crops by using

improved technologies, i.e. seeds, fertilizers, credit availability, and extension support, etc.

Although Ethiopia is one of the poorest countries of the world, yet, it is endowed with enormous

agricultural potential that remains untapped so far. For instance, of the total 68.5 million hectares of arable

3
land (60 per cent of total available land), less than 15 per cent was put under cultivation (CSA, 1998). A

significant proportion of the Central, Southern and Western parts of the country is endowed with fertile

soil and reliable climatic conditions. The country has also vast and regionally spread water resources that

could be used for agricultural production. Only 0.86 per cent of the three million hectares suitable for

irrigation have so far been developed in the year 1997/98 (CSA, 1998). In terms of livestock population,

Ethiopia stands first in Africa and seventh in the world (FAO, 1990).

Despite the country’s immense agricultural potentials, the capacity of the agricultural sector to meet the

domestic and export requirements has been handicapped by its low productivity. It is paradoxical that a

country with such immense agricultural resources could not feed its population and continues to rely on

external food aid and commercial grain imports.

The Ethiopian population which is estimated at 61.7 millions has been growing at a rate of 2.9 per cent per

annum and is, expected to reach 77 millions by the year 2010 (NBE,1998). In order to feed this ever-

increasing population, agricultural production should grow at a rate of more than 3 per cent per annum.

Keeping in view the ever-expanding food requirements, on the one hand, and the poor productivity of the

agricultural sector, on the other, it becomes pertinent to make an efficient/optimal utilization of the

available limiting resources. Civil war and recurrent droughts have been among the main bottlenecks that

affected the country’s development effort. Drought has become the most frequent phenomenon beginning

the 1974/75 drought years. For instance, during 1980s, the domestic food production was, on an average

able to cover only 70 per cent of the recommended minimum food intake and it only rose to 76 per cent

when food aid was included (Takele 1996). More specifically, there has been a substantial long term

decline in food self-sufficiency. There is a sharp increase in the gap between production and consumption

4
as indicated by a large increase in commercial food import. The volume of food imports increased from

177.8 tons in 1979 to more than 1 million tons in 1991/92 (Tesfaye and Debebe, 1995). As a result of food

shortage, the number of famine victims has been considerable; between 1983 and 1985 the number of

people who died due to famine was estimated at over 1 million (Joachim, 1990). In recognition of these

problems and challenges, there is increasing emphasis on strategies and mechanisms of institutional and

policy reform aimed at improving agricultural productivity in the face of population growth possesses one

of the greatest challenges in satisfying the increasing demand for food and creating exportable surpluses

(Winrock International, 1992).

Significant growth of agriculture production were registered in the last few years as a result of the new

extension program. The 1997 FAO/WFP crop and food supply assessment mission to Ethiopia, witnessed

that in recent years, the growth rate of the agricultural production tended to keep ahead of population

growth rate but production was reported to be highly variable due to heavy dependence on erratic rainfall.

The Agricultural Sample Survey results of the Central Statistics Authority, revealed that agricultural

production has grown at the rate of 3.4, 14.7, 3.44, -7.6 per cent per year in the period of 1994/95, 1995/96,

1996/97 and 1997/98 respectively. The explanation for the fluctuation in the growth rate of agricultural

production is variation in the amount and distribution of rainfall. For instance, in 1996/97 the country

received a favorable rainfall but in 1997/98 because of the el nino effect, production declined sharply. As

to the total agricultural production, in 1996/97 ‘meher’ season, private peasant producers (sedentary rural

population) produced 96,452.4 thousand quintals of major crops. Of this total production, cereals

accounted for the highest share (89.5 per cent), followed by pulses (8.3 per cent) and other crops like neug,

linseed, rapeseed, fenugreek, sunflower and sesame (2.2 per cent). A comprehensive study undertaken by

the Ministry of Agriculture depicts, that in 1997/98, yield per hectare for cereals was 11.6 quintals (17.5 for

5
Maize, 14.1 for wheat, 11.5 for barley and 7.5 for teff), 8.12 quintals for pulses, 3.77 quintals for nueg and

sunflower, and 4.47 quintals for other crops.

Of total area under major crops in 1996/97 production season, improved seeds were applied only on 165.4
thousand hectares (2 per cent), pesticides were applied on 624.2 thousand hectares (8 per cent) and
fertilizers were applied on 2,844.9 thousand hectares (35 per cent) respectively (National Bank of Ethiopia,
1999). This indicates that concerted efforts need to be made to familiarize private peasant holdings with
the intensive use of improved agricultural inputs as they are still at low levels of input application.

The crop productivity of small-holder farmers has to be increased considerably and quickly if self-

sufficiency in food production is to be achieved. If the productivity of these farms can be increased to the

level where they could achieve self-sufficiency and have surpluses for sale, then there will be a much

expanded opportunity for improvements in rural welfare and, indirectly for industrial development

powered and led by agricultural surpluses. This has been observed in India after the “green revolution”.

Currently agriculture in India is leading industrial growth by earning foreign exchange through export of

agricultural surpluses, and through capital transfer and demand creation to sustain economic growth

(Rajagoplan, 1981)

1.2. Statement of the Problem

In highlands of Ethiopia the demand for land has been increasing significantly in the last three decades.

Available evidence shows that, over the years, the total land holding per household is becoming smaller

and smaller. Given the rapidly growing population and consequent degradation of natural resources, the

opportunity to increase smallholders` productivity through area expansion is limited. The proportion of

cultivated land in potentially productive highlands is perhaps of the order of 50 to 70 per cent of total land

and the remaining land is mostly water logged or steep slope (World Bank, 1984). The reduction of

6
cropping land, due to increasing human population, soil erosion, deforestation and deterioration in fertility

of land is the principal challenging problem observed in the study area. Cropping, grazing and tree

plantation (Eucalyptus tree) etc. are the major competing agents for this limited land in the study area.

Any attempt to improve agricultural productivity requires a detailed study on existing farming systems.

Results of such studies help to look for alternatives to the existing farming systems and there by identify

the effects of various activities (crop and livestock) on farm plans. With respect to the study area, it is

possible to say that only very few of farmers incorporate improved inputs in their farming practice.

However, it is common knowledge that the introduction of new techniques and methods of production

creates a variation in the productivity and farm income, so that selection of high productive, high income

technologies should be expanded. Currently, the Ethiopian Government has accorded high priority to the

dissemination of inputs, credit availability and training of development agents (DAs). to increase

agricultural production.

In fact, the new extension package adopted from “Sassakawa Global 2000” has given more emphasis to

the expansion of the area under major cereals (wheat, teff and maize) with the aim of promoting food self-

sufficiency. This can be made possible only at the expense of other enterprises for it diverts scarce

resources to the production of major cereal crops (Hassen, 1999). Hence, conflicts may emanate from the

farmers` priority of managing multiple enterprises and the Government’s objective of promoting major

cereal production. So that, even though the basic objectives of agricultural policy in the country had always

been food self-sufficiency, generation of export earnings and employment creation, the performance of the

agricultural sector remained very poor. The aforementioned technical problems call for the need to

investigate farmers’ practices in optimally allocating scarce resources among their competing uses.

7
Optimizing production pattern and resource utilization can be defined as to what crop and livestock

activities to undertake, how much land to allocate to each crop activity and what method and combination

of inputs to use on each activity so that farm returns can be maximized. The question of optimum

allocation of resources is one which is answered within a farm as an individual business firm, within a

nation for a distinct society or for producing units of any other magnitude. Moreover, if high level of

efficiency is to be attained in the economy, constant reallocation of resources must be a continuous activity,

based on changes in human wants the kinds and quantities of resources available, and the available

technology (Leftwich and Eckert, 1985). Therefore, to exploit the resources at their disposal, farmers

should be assisted to achieve their objectives by efficiently allocating their resource to the enterprises from

which they can relatively benefit more.

Hence, it is necessary to closely examine the traditional cropping patterns as well as improved practices

and identify optimum plans that could maximize farm income under a given set of constraints, using

available resources and technologies at farmers` level. In actual practice, the optimal plans are designed in

such a way that they capture all possible interactions between food, livestock activities and tree planting, so

that farmers could fulfill their subsistence need from their own resource along with earning maximum

incomes.

1.3. Objectives of the study

This study has been mainly designed to analyze the smallholders` existing farming systems and to explore

their potential for improvement in North Wollo Zone. The specific objectives of the study are:

8
1. To identify and characterize the farming systems and to identify the constraints of agricultural

production in the study area.

2. To analyze the productivity of different resources as well as the level of farm income in the

study area.

3. To develop optimal plan for existing and improved farming systems with the available

resource in the study area.

1.4. Significance of the study

The task of establishing whole set of new production methods and farming system requires a study on the

nature of constraints within which small farmers operate so as to identify and assess possible changes in

the method of production (Dalton, 1975). Farmers who are operating in different agro-climatic and socio-

economic conditions are confronted with different constraints and thus may not adopt the same

innovations. An understanding of the smallholders` farming systems and their demand for suitable

9
innovations is an essential pre-requisite for the organization of technical research, the design of

development policies and for shaping the direction of action for smallholders` development. In case of

acute land shortage and existing low land productivity, farmers face difficulty to self-sustain on the

existing farming practices. There is a need to assess the ways of increasing productivity by proper

allocation of existing mixed farming practices from the stand-point of the scarcity of resources. There is a

particular need, to improve their resource allocation in order to increase yields, without depleting the

resources upon which they rely. Farm planning should be given more attention to ensure the best use of

limited resources through introduction of improved methods of production.

This study, therefore, seeks to contribute to a better understanding of the smallholder`s farming system

for performing further research, the design of development policies, and for shaping the direction of

action for smallholders' development. Furthermore, it assists in improving the planning process and

developing the strategy of smallholders optimal allocation of existing limited resources. Thus, study

attempts to provide directions for further planning, research, and extension and development schemes

and for identifying the potential techniques that would benefit farming population.

1.5. Scope and Limitation of the Study

Due to time and financial constraints, this research has been limited to only one district in North Wollo

zone, with particular topographic and climatic situation, as well as soil type. The study covered only the

major crops grown in the study area. Moreover, the study used a single visit interview technique on 110

farm households. Moreover, the analytical model makes use of inputs measured in stock rather than in

flow. As a result, the analysis may suffer from inaccuracies in some aspects of measurements. Of course,

10
results would be sound if repeated visits of sample households were made throughout a year. Because of

the above limitations the results of this study could hardly be used for inference purposes. However, the

results of this study are expected to be of paramount importance in providing first hand information

regarding the optimal allocation of scarce resource among multiple uses.

1.6. Hypotheses

The hypotheses that this study attempt to test include: -

- Farmers are operating at a sub-optimal level, and there is a possibility of increasing their farm income by

proper allocation of resources; and

- Different farm households have different resource endowments and are exposed to different farm

problems.

- The productivity of household resources are at low level, and there will be a possibility of increasing

the productivity by using improved practices.

1.7. Organization of the thesis

This thesis is organized in eight chapters. Chapter one - introduces the problem and background of

Ethiopian economy, in chapter two - relevant literature has been reviewed. Chapter three describes the

local agro-climatological features of the study area and the socio-economic characteristics of the

households. Chapter four presents the methodology and procedures employed to accomplish the objectives

of the study. Chapter five describes the farming systems and resource endowments. Chapter six presents

11
outputs of the LP model. The last chapter summarizes the major findings and policy recommendations of

the study.

12
 2. REVIEW OF LITERATURE

2.1. General

The majority of the rural population in developing countries is small scale farmers or tenant farmers. One

principal characteristic of smallholders is their limited access to farm resources, mainly land and capital. If

“solutions” are to be found to the problem of households, those solutions must involve better use of their

scarce resources (Hardaker, 1979)

Many countries in sub-Saharan Africa are experiencing rapid population growth, increasing degradation of

the natural resource base, and declining per capita food production (Omiti, 1995). In Ethiopia, eventhough

agriculture is the dominant and most promising sector for dealing with socio-economic problems of the

country, its productivity is very low. Farming, particularly crop and livestock compete for various

resources such as land and labor. However, practicing a mixed farming is complementary to mutually

benefit from their manure and crop residues. Considerable differences exist between households in factor

endowment and farming practices, which lead to complex household decisions on selection of enterprise

combinations and production techniques. In fact such decisions have important implications for farm

incomes and the sustainablity of the farming system(s) (Omiti, 1995). Food self-sufficiency is brought

about by achieving the desired level of production in crops and livestock through proper planning and use

of resources. The more efficient a country′s agriculture is, the better fed its people will be, and the more

resources there will be to satisfy peoples` needs and aspirations beyond the essentials of food and fibres

(Dillon, 1968). The potential of agriculture should be prioritized on improving a nation’s economic

standard. The accumulation of knowledge, the development of structures, and the build-up of capital,

required to give the developing world an adequate and secure food supply in the long term is the major

13
challenge the world faces (Cunningham, 1992). Farm size in peasant agriculture is a main constraint in the

way of efficient production as well as providing adequate living conditions for the households. Those

farmers who cultivate small areas of land have more shortage of oxen, heads of other cattle, low income,

low family expenditure and are forced to buy more grain from the market to supplement subsistence from

their own produce. Problems of production like shortage of capital to buy inputs such as fertilizer, shortage

of land and oxen for crop production and food shortage for the farm family and inability to produce and to

earn enough food and cash both at present and in the future are also found to be more frequently perceived

by the small-sized farmers. The reaction of the smallholder farmers to land shortage, and their adjustment

strategies, show some relation to farm size even within small range of the size differences among the

farmers. Cropping pattern could not be found to be much influenced by farm size. For the smaller sized

farmers yield of major annual crops and, hence, return per hectare of cultivated land are relatively higher

than those who cultivate large areas (Bezabih et al, 1991)

The basic economic problem of “scarcity” provides the need for efficient allocation of limited resources.

The economic rationality of peasant agriculture has been a controversial issue among economists. Many

studies have attempted to examine this issue and came out with two opposing conclusions: - Singh et al.

(1978) showed that in the case of India, under existing cropping pattern, farm resources were not utilized

optimally and the optimal plan resulted in significant increment in farm returns over the existing one. It

was further stressed that even with the limited cash resources at the disposal of the small-scale farmers, a

change in cropping pattern would positively affect the existing farm income.

Solomon (1993) indicated the existence of a substantial potential, of increasing farm income and

employment in Sidamo zone through optimum use of existing resource, by adopting improved technology

14
and with extended supply of labor. Similarly, many research findings (Bezabih et al (1991) Getachew

(1995), Hassen (1999)) in Ethiopia showed the possibility of increasing farm income through efficient

allocation of resources and incorporation of improved farm practices on the existing one.

On the other hand, Schultz (1964) proposed that smallholder farmers do maximize profits and therefore

use their resources efficiently within the limits of traditional technology. He stressed that the allocation

efficiency in most peasant agriculture is generally high in the content of prevailing technical possibilities

and of factors and product cost relationship. Similarly, Solomon (1996) showed there is no significance

deviation in resource allocation between the base model and the current farmer practices.

As a result, there are no clear-cut conclusions on the behavior of smallholders economy with respect to

allocation of resources. The controversies on the issue will continue as far as their dissimilarities among

peasants of various forms with regard to their objectives, motivations and constraints.

Subsistence, smallholder mixed farming systems generally prevail throughout the highlands with crop and

livestock typically produced within the same management unit. There is a high degree of integration

between crop and livestock production systems. The farm integration function refers to all the different

effects of livestock on crop and vice versa on the productivity of the resources engaged in Agriculture.

Mixed farming in smallholder is assumed to be more productive than crop or livestock enterprise alone.

Livestock may provide agricultural inputs, like power, manure and working capital, and render cropping

enterprise more productive and more secure by using residual capacities of production factors with low

opportunity costs like non-arable land, excess labor and child labor, by converting crop residues into high

value animal products, by balancing production and marketing risk, etc. According to Jahnke (1982), a pair

15
of animals used for agriculture work increase the work capacity of a farm two to three folds resulting in an

increase in income.

The poor performance of the peasant agriculture in Ethiopia calls for an investigation of means to improve

the existing situation. One possible way of improving the situation is by reallocating the farm resources

with or without technical innovations. In the study area, where shortage of resources especially shortage of

land is high, farmers need assistance in resource allocation so as to mitigate and eventually overcome the

prevailing sub-optimal resource utilization.

2.2. Review of Application of Linear Programming (LP) Model in Agriculture.

Linear programming is a mathematical technique based on matrix algebra where by a stated objective is

either maximized or minimized while satisfying various linear constraints. The production possibilities for

the farm, their resource needs, gross margins and the resource constraints are brought together in a tableau

called a matrix from which the optimum plan is produced (Johnson, 1982).

Planning and optimizing techniques (farm budgeting, program planning, linear programming, and recently

project planning) are essential for solving the problem of low farm productivity in peasant agriculture,

through improving the resource productivity available to farm households and measuring net income effect

of recombining their resources and enterprises. Linear programming (LP), as one of the various methods of

farm planning, has become a basic and widely recognized empirical tool particularly in solving problems

related to allocation of resources among alternative lines of production and to identify an optimum

enterprise mix that could maximize income or profit. The technique has already found many important

applications in determining optimum enterprise patterns for maximum profit and in identifying resource

16
constraints. It also serves as an important management aid to farmers in evaluating the merits or demerits

of introducing new techniques. Exploratory researches in application of the LP model to such and other

types of problems reveals its usefulness. The economic significance and strength of LP, especially in

connection with peasant farming, has been justified by several economists.

According to Low (1978), Linear programming is a powerful tool to analyze farm management data in

order to determine farm plans that will yield maximum profits under different situations. It is also

important to model the behavior of a group of small-scale farmers with regard to their goals so that

policy-makers can better formulate actions to help them. Further, the strength of the linear programming

model lies in its ability to handle a large number of interrelated variables and to cope with peasant

farming systems which are characterized by a high degree of interdependence between production,

consumption, investment, resource availability, social and cultural constraints. LP is advantageous in that

it allows one to test a wide range of alternative adjustments and to analyze their consequences thoroughly

with a small input of managerial time (Beneke and Winter Boer 1973).

LP has been used as a research tool by agricultural economists to solve various agricultural problems. For

instance, Kahlon et al (1975) in their study of relative profitability of dairy enterprise vis-à-vis crop

cultivation in Punjab India, used linear programming analysis for developing optimal plans. Bogahawatte

(1984), formulated a linear programming model for describing the crop-livestock integrated farming

systems in the Moneragla district of Sirilanka to evaluate the system in terms of maximizing farm incomes

from the different crop and livestock components of the system. Singh et al.(1989) used LP for examining

the resource requirements, their better utilization for the village as a whole and to explore economic

feasibility of co-operative farming in the Haryana state of India. Similarly, many researchers applied LP to

17
African agriculture. The first application was made by Clayton (1961) in his study, on effect of the

constraints on profitability of typical farms in the central province of Kenya. Abalu (1975) used LP to

identify resource constraints of small farmers in Nigeria. R. Emonger and S.C. Mbogoh, (Cited in Sisay

1983), used linear programming model to test the optimal resource allocation and economic

competitiveness of rain-fed rice on smallholder farms in Amkura division, Busia District Kenya. Tibaijuka

(1994) had selected LP model to investigate gender roles on peasant farms in the Kajera Region

(Tanzania).

Woubeshet (1985) used a whole-farm linear programming model to assess the technical and economic

performance of sheep enterprises under smallholder farmers` management conditions around Debreberhan.

Gryseels (1988) adopted linear programming to allow incorporation of cross-bred cows in farm operations

of smallholders around Debreberhan, Ethiopian highlands, where cows were fed a mixture of oats and

vetch, grass hay and straw of cereals. Tesfaye (1989) made use of LP to make economic analysis of co-

operative farming in the highlands of Ethiopia. Debebe (1992) applied LP to assess the impact of

diversification with tobacco in smallholder farms in Awassa zuria aweraja. Bezabih (1992) applied LP to

evaluate the effect of reallocation of resources on the cropping patterns and the associated incomes of the

farmers and to evaluate the effect of improved technologies on the cropping patterns and incomes of the

households in the Hararghe highlands of Ethiopia. Solomon (1993) had indicated a substantial potential in

Sidamo region for increasing farm income and employment through optimum use of existing resources

more so with the adoption of improved technology and with extended supply of labor in the LP

optimization model. Panin and Brokken (1993) applied linear programming to evaluate the economic

efficiency of single ox and cow traction technologies to identify major constraints to increase farm income.

Omiti (1995) employed LP in his study on economic analysis of crop-livestock integration in Ethiopian

18
highlands. Hassen (1999) used LP model in his study on the crop-livestock integration on smallholders`

farms and their potential for improvement in Deberesina and Tehulederie districts of South Wollo zone.

2.3. Advantages of Linear Programming

Compared with ordinary farm budgeting and simplified programming, LP has the following advantages

- LP guarantees the optimum solution when there are a wide range of resources which can be used in many

different ways, something which is difficult if not impossible with ordinary budgeting techniques (Reddy,

1999)

- Most LP computer routines make it possible to see the effect of the optimal plan of changing prices,

resources as well as input/ output coefficients (Reddy, 1999). This is laborious to do using ordinary

budgeting techniques and for this reason seldom done by simple budgeting methods.

- LP algorithm is operational on most digital computers, so the major proportion of professional time

investment in farm planning using LP is in data collection, appraisal and model formulation, not in the

actual calculation of results.

- LP provides additional useful economic information about the optimum plan such as shadow prices and

range results. Shadow prices or the marginal value products of scarce resources are useful in indicating

where there will be a payoff to improved technical efficiency. Those scarce resources with relatively higher

marginal value products than the others in the optimal solution, if it increased in supply, will give higher

returns to the gross margin. Range results provide the range of quantities of inputs, outputs and prices to

vary over which the optimal solution would not change (Dillon and Hardaker, 1980). There are several

complex LP options that can be more appropriate and theoretically suitable to smallholders` farm planning.

Some of these models include: dynamic (multi period) and quadratic (stochastic) etc. programming. The

19
main reasons as to why these complex LP models are not used in this study are: Substantial data is required

for these multi-period LP options, requirement of complex computer programming for the realistic model

were unreliable.and Setting up of the models needs too much preparation, time and experience.

The LP model used in this study is a simple computer-based procedure that can be used for smallholders

farm planning, within certain limitations. This simple model determines a mix of activities, which

maximizes total gross margin (Reddy 1999)

2.4. Limitations of Linear Programming

LP, like most planning techniques, has certain limitations for it was designed to be applicable under a

given set of assumptions. A number of assumptions underlying linear programming restrict its

application and interpretation. The general model of linear programming represents the linear, static

deterministic and non-integer programming model. For this to be effective, various requirements must

be met, including the standard and primary requirements of linearity objective function and every

constraint function, proportionality of activity levels to resources, additivity and divisibility of resources

and activities, and single-valued prices of technical coefficients and resources. The use of linear

programming is subject to important limitations: These include:

The assumption of linear input-output relation overlooks the non-linear rates of substitution between

factors or products that arise from the law of diminishing returns or from scale effects. Taking

diminishing returns into account is troublesome, because more activities must be included in the model.

However, production relations of this type can be handled realistically. Discrete points on the function

can be represented as separate activities in the matrix. For instance, wheat produced with improved

20
seeds can be treated as one activity and wheat produced with local seeds as an another activity. A choice

among any number of different levels can be handled in this way. A similar procedure can be followed

wherever a choice among different levels of inputs is desired provided the amount of output per unit of

input decreases as the input is used more intensively.

Linear programming assumes activities and resources to be additive and divisible. The additivity

assumption causes a problem if activities are complementary. However, this can be tackled by defining

new activities that accommodate these interactions. Divisibility problem can be solved by making minor

adjustments in the solution to bring activities to integral levels. “Rounding off” the answer to the nearest

integer or whole number usually doesn’t affect the result significantly.

The assumption of single-valued expectations specifies that resource supplies, input-output coefficients,

and prices are known with certainty. The resulting plan does not take into account the risk preference of

the operator. However, it is possible for the operator to exclude or consider activities to be risky by

eliminating them from the range of activities offered or by restraining their level. Furthermore, Prices

and production coefficients can be raised and “sensitivity analysis” can illustrate the resource allocation

and income impacts of alternative sets of prices and production efficiencies. This information can be

quite useful in evaluating the implication of price or yield variability. Alternative modification of linear

programming, such as stochastic and MOTAD programming procedures can be used to incorporate risk

dimensions in the analysis although they are of additional complexity and data requirements.

Regardless of these limitations, linear programming has been used to solve various types of farm

management problems.

21
The technique has been employed in this study after making some possible adjustments on the problem

formulation so that it could reflect as nearly as possible the actual farming practices and socio-economic

conditions of the study area. In this regard, the necessary modifications that were made on the specification

of the activities and constraints include segregation of family labor by sex, age, and inclusion of minimum

subsistence requirements for the family. In this study LP was used to analyze the production pattern,

productivity of resources and marginal value of resources etc. In addition to these, LP helped to derive

optimum farm plans for two levels of farm technologies i.e. optimization models at current and constraint

released level. Moreover, sensitivity analysis has also been carried out to test the stability of optimal plans.

22
 3. OVERVIEW OF THE STUDY AREA.

3.1. Geographical Setting

North Wollo zone is situated in the North Eastern part of the country. It is one of the eleven

administrative zones of Amhara National Regional State (ANRS). It is bounded in the North with

Tigray National Regional State and Wag Hamira zone, in the East with Afar National Regional State, in

the South with South Wollo Administrative zone, in the West with South and North Gonder zones. The

zone is divided into 9 weredas consisting of one town (Woldia) and 8 rural (Gubalafto, Kobo, Habru,

Gidan, Bugina, Meket, Wadela and Delanta) weredas. Meket wereda is the district selected for this

study. It is found in the western part of the North Wollo as is displayed in the figure. The distance from

Addis to Woldia (town of North Wollo zone) is 520 km, and that of Flakit (town of the wereda) is 665

km.

23
3.1 MAP OF NORTH WOLLO ZONE.

3.2 MAP OF MEKET WOREDA.

24
3.2. Agroecology and Climate

North Wollo zone is divided into different agroecology and climatic conditions. The zone is

mountainous and is situated in the rift valley. There is a great variation in Meket wereda in elevation

25
with lowlands to highlands, ranging between 1500 to 3200 MSL. The distribution of areas and

population of this zone in different agro-ecological sub-zone has been depicted in table 3.1.

Table 3.1 Distribution of areas and population of North Wollo in different

Agroecological Zone
Total area Population
Particular (hectares) (number) Dega W/dega Qolla
% % % % % %
pop. area pop. area pop. area
N. Wollo zone 1,070,000 1,490,853 28 28 50 48 22 24
Meket Wereda 182826 227,872 20 36 57 37 23 27
Source :- North Wollo DOA, 2000, Woldia.

Table 3.1 shows that Dega and W/dega account for more than 70 per cent of area and population of the

North Wollo zone and Meket wereda. There are significant climatic variations within the zone. The

rainfall situation is inadequate and erratic in its distribution. There is bimodal rainfall situation in the

zone: the main rainfall season extends from June to September where as the short rainy season starts

from end of January up to end of April. This makes North Wollo as one of the most frequently stricken

zones by recurrent droughts. The occurrence of drought in this area is mainly the result of drastic weather

variability and erratic nature of rainfall in quantity and distribution over time and space. Among these

serious ones are the droughts of 1974 and 1984.

3.3. Land Use.

Since the area is mountainous and inappropriate for plowing, only small portion of the total area is

arable. Out of total 1,070,000 hectares, only 255,163 hectares are useful for plowing which is less than

25 per cent of the total area, for meher, belg and with irrigation. Other areas are inappropriate for

26
plowing because of the mountainous nature of the zone. Some of the areas are plowed twice a year

based on the rainfall distribution. When the belg rainfall condition is high the amount of two-times

plowed land (belg plowed land) per year will increase, on an average a total of up to 262,100 ha of land

is plowed per year for the three farming types in North Wollo zone (DOA, 1997). The average land

holding in the zone is 0.78 hectare, and that of the sampled households is 1.03 hectares. This average

masks differences in land holding among farmers in the study area, which varies between 0.25 to 2.5

hectares. Table 3.2 gives a brief account of the land situation in the zone.

Table 3.2 Land situation in the zone

Land Type (per cent)
Flat land Mountain Valley Uneven Marshy area
N.Wollo zone 38 29 13 18 2
Meket Wereda 43 17 40 - -
Source: DOA, 2000, Woldia.

3.4. Land Tenure System

Land as per constitution, is owned by the state and the farmer has a user right but he can not sell and

exchange the land. The land tenure system has been a controversial issue in Ethiopia. Some believe that

the existing land tenure arrangement has contributed towards increased degradation of farmer’s land, i.e.

permanent conservation activities were not done on the land, and the farmer fails to plant or is

discouraged from planting permanent trees on his land. This aggravates the soil erosion problem and

reduces the productivity of various crops. Others believe that, if the farmers are given the right to own

land privately and are allowed to sell, many of the farmers will start selling their land and at the end

become landless. Since, there are very limited non-farm activities available; the farmers will be exposed

to serious economic hardships and evictions. These controversies have to be solved through discussions

and referendum i.e. the farmers need to be advised accordingly.

27
Starting 1997 the Amhara National State started to distribute the hill sides to individual farmers for

forest land, and this has contributed to conserve the mountainous areas and some forest remnants started

to regenerate because the land was protected and different varieties of forest seedlings were planted on

the mountain by individual farmers.

3.5. Population and Demand for Food

The population growth level is 2.9 per cent per year; the situation is similar to North Wollo and Meket

wereda. The total number of people in the year 1999/00 was 1,490,853 and 227,872 in North Wollo and

Meket wereda respectively. Most of the people live in rural areas.

The food requirement in the zone is not fulfilled. In normal season, less than 85 per cent of the food

requirement is fulfilled. In the event of bad weather, the food deficiency reaches up to 50 per cent. This

deficit is mostly fulfilled through aid and by performing non-farm activities. As seen in table 3.3, the

number of food aid dependent people is increasing year after year. This may be attributed to the

inadequate rains received in the belg season during the last four years i.e. from 1995/96 to 1998/99.

Table 3.3 People in need of food aid and food aid delivered in

N. wollo Zone. (1995-1999)

Number of Amount of grain helped
Year people (quintal)
1995 134075 100167
1996 166548 164993
1997 337121 202345
1998 456840 293499
1999 642883 368433
Source: North Wollo Department of Planning and Economic(DOPE, 2000)
28
3.6. Animal Husbandry

Since the farming system is mixed, livestock equally play as important role as that of crop production.

The livestock holding per household varies among households. The livestock productivity of the zone

and wereda is generally very low. The livestock population are shown in table 3.4.

Table 3.4 The livestock population in the zone and wereda for the year 1997/98

Type Unit North Wollo zone Meket wereda

Cattle Number 985254 143513
Sheep ,, 927242 102576
Goat ,, 447491 71252
Donkey ,, 263599 14119
Horse ,, 45145 4720
Mule ,, 9577 1172
Camel ,, 3753 -
Poultry ,, 1359850 95544
Source: North Wollo Zone (DOA), 2000, Woldia.

3.7. Socio-Economic Development and Infra Structural Facilities

North Wollo zone is poor by all socio-economic and infra structural indicators.
Education

Similar to the rest of the country, most of people in the zone are illiterate. There are 212 elementary and

6 high schools in the zone. There are 41,812 male and 31,423 female students enrolled in these schools.

There are 7462 male and 6043 female students in Meket wereda.

Health

Access to health facilities is also far from satisfactory. There are only 2 hospitals, 8 health centers, 60

29
clinics and 53 health stations in the zone and 1 health center, 8 clinics and 8 health posts in Meket

wereda.

Roads

There are two main roads connecting North Wollo zone with other regional states and zones. Besides,

these roads are not all-weather roads. During rainy seasons, there is no transport connection with two of

the weredas. Meket wereda is one of the weredas in which the main Woldia-Woreta road crosses and a

new road is under construction that passes through Gashena and Lalibela towns. There are also some

other roads constructed by NGOs (such as Meket-Serko constructed by SOS Sahel) in food for work

activity that connects one kebele with the other.

Potable water

The available potable water facilities are inadequate for the rural population. Wereda towns and only
few villages near to the main road are getting pure potable water. The water problem is acute,
particularly in the low land areas of the zone and during dry seasons, where people have to travel more
than 10 km to fetch drinking water.

3.8. The Agricultural Extension System

Agricultural extension attempts to change farmers` behavior and increase productivity of their enterprise.

To fulfill the national long-term target of food self-sufficiency and food security, improving the

productivity levels of the rural smallholders is essential. Various extension approaches were developed at

different times. These include: first and second minimum package program (MPP1 and MPP2), the

Extension and Project Implementation Department (EPID), Peasant Agriculture Development and

Extension Project (PADEP) and Training and Visit Program (T and V) etc. But all these extension

approaches could not help much to change living conditions of the rural poor. The prevailing national

30
extension system called Participatory Demonstration and Training Extension System (PADETES) is in the

process of implementing the various extension activities from regional to the smallest grass-root institution

at the peasant associations(PAs) and/or kebele administration (KA) levels. The regional PADETES plans,

have one extension agent or development agent (DA) for one PA/KA comprising 5000 people and/or 1000

farm households, but at present, the number of DAs. has increased while the number of farmers per DA

has declined. Furtherrmore, farmers have formed working teams of 10-20 members to plan and implement

various rural development programs. The efforts made in the country as a whole and at the grass-root level

in order to expand the new extension system has helped farmers to increase farm income and agricultural

productivity.

Some of the extension services rendered for farmers at regional, zonal and wereda levels include: delivery

of different improved seed varieties, inorganic fertilizer, improved poultry breed (Rod Island Red),

improved dairy cows, improved fodder crops, improved ram, improved beehives, credit facilities coupled

with strong supervision by DAs.

3.9. Soil and Water Conservation Practice

The soil fertility problem is one of the serious problems in the study area. It should be addressed

immediately.

There are efforts of soil and water conservation activity in North Wollo zone. Every year more than 25,000

hectares of arable land are being covered with terraces. Other related soil conservation activities performed

in the zone include pond construction, derange ferrous, gully control measures, afforestation practices etc.

The conservation practics are being conducted every year by mobilizing the community basis during slack

31
seasons when farmers are free. During the meher season, farmers perform conservation activities starting

January up to March. The conservation activities are performed on a voluntary basis. Farmers are

organized into groups; each group with a supervisor and a team leader selected from the members of the

group will be trained by the agricultural experts in the wereda`s agricultural office. Then the farmers

formulate their own rules to implement their activities through DAs and kebele leaders.

Though, the soil and water conservation effort of course has many advantages, yet, it has some problems

too. These include :-

(1) The conservation activities were not supported by other related practices such as vegetative coverings.

(2) Although the farmers are aware of the advantages of soil conservation practices, they destroy and

distract previous years` terraces and reconstruct new ones above or below the previous terraces in order to

use previous years` conserved fertile soil.

(3) Farmers also complained that terracing takes farming space which would eventually reduce their land

size.

In spite of the above problems, the soil conservation practices are the only remaining main option to reduce

soil degradation in the area. The concerned government officials, NGO`s and the community have to

provide due emphasis to the soil conservation activities by integrating it with other vegetative coverage

practices.

3.10. Off-Farm Economic Activity

In addition the crop - livestock mixed farming system, there are also off - farm activities in the study area.

Both the high and low income groups participate in off-farm activities. The relatively high income groups

32
participate in petty trading, lending their property including money with high per cent of interest repayment

and hiring mules and horses; where as the low income groups participate in food-for-work activities,

hiring-out family labor, weaveing, pottery-making, black-smithing, local tanning and so on.

Trading activities include the collection of hides and skins from the surrounding area and resale to larger

merchants, bringing factory products from the town for sale to the surrounding people, and the collection

of grains from the neighbouring markets where prices are low (at harvesting season) for resale at relatively

high prices in the lean season. The high income group also lends their money and other property such as

food grain etc., in order to be repaid during harvest time usually at double of the amount they lent. They

lend their money with 10 per cent interest per month and double repayment for the amount of property

such as grain borrowed within a year`s time. Some farmers participate in hiring-out of their mules and

horses for tourists and surrounding merchants in order to transfer goods and human beings from place to

place. Tourists pay a certain amount of Birr per round trip to go to “Abune Aron rock hune church” which

is about 10 km from the study site. The road is extremely difficult to cover on foot because of the

mountainous nature of the area.

Low income groups hire-out their labor to the surrounding, relatively richer farmers for plowing, weeding,

harvesting and threshing purposes at very low pay. They are paid either in the form of ox for plowing

purpose or grains. Their children are also employed to herd the livestock of the richer farmers. In addition

to food, the payment ranges from 50-100 Birr per year. Poor farmers also participate in food-for-work

activities in the area which includes soil and water conservation activities and nursery activities. The pay

for these activities is 3 kg of wheat and 120 ml. of edible oil per day. This opportunity is only available for

some poor farmers who are selected by considering their poverty status and ability to work. The selection

33
is usually done by DAs and leaders of Kebeles` peasant associations.

3.11. Institutions of Farming Community:

3.11.1. Zone and Wereda Administration:

In the Amhara National Regional State, there is a strong administrative institutional system which starts

from kebele administration at grass-root level. Above the kebele, we have the wereda and zone. Each

kebele is sub-divided into sub-kebeles and up to 35 family households organized into one group. This

group in the kebele is the starting point for planning and implementing development activities in the

community. These groups participate in mass mobilization activities. The community selects his leaders

so that they will attend and control the average activity in each administrative stratum. All economic,

social and political activities at the grass-root level are performed by these groups. The grass-root level

institutions are aware of all the services provided to the farmers. The kebeles are the main institutions

which help in the implementation of the development activity.

3. 11.2. Agricultural Offices.

The hierarchy of MOA exists at all levels. At regional level it is Bureau of Agriculture, at zonal level it

is Department of Agriculture, at wereda level it is Office of Agriculture and at kebele level it is

Agricultural Station. These institutions are mainly government structures supportting the farming

system. The grass root-level institutions are responsible for the overall improvement of the farmers`

production and living conditions through extension services. The activities of these institutions involve:

34
- Provision of improved seeds;

- Provision of fertilizer;

- Provision of credit facility or assistance in obtaining financial services from NGOs, government;

- Procuring improved livestock breeds from the breeding centers etc; and

- Regulating and controlling disease, pests, hide and skin defects, forest products etc.

3. 11.3. Co-operative Offices

It is an institution that is established to help farmers to tackle their problems together. It helps farmers to

take their products together to the market place and bring factory-products to their surrounding area for

members. There are 91 service co-operatives in North Wollo zone (BPED, 1998). The service co-

operatives in the zone are participating in input-supply (fertilizer), food-grain marketing, and factory-

product supply to the farmers and in provision of mill services.

Although cooperatives are useful institutions for development, they were used as an instrument of the

government during the Derge period. The co-operative resources were embezzled by committee

members reflecting bad image to the newly emerging cooperatives.

3.11.4. Non-Governmental Institutions:

There are many NGOs, bilateral, and multilateral organizations that work to support the farmers. There

are 7 multilateral and 6 bilateral organizations and 9 NGOs participating in the zone. Among these, 4

multilateral, 1 bilateral and 3 NGOs are working in development activity in Meket wereda. These non

government institutions provide solid support to the community. Some of the activities in which these

institutions participate involve the provision of inputs, grains for food-for-work, different farm

equipments, improved livestock breeds, beehive and pullets. They are also active in soil and water

35
conservation, agro-forestry (forest protection and seedling development) activities; in the construction of

veterinary clinics, seed-banks, drug stores; provision of vehicles, radio communications; organization of

seminars, training for different professionals, development agents, farmers; in spring and irrigation

water developments; in provision of credit; in pest and disease control and in promoting the extension

activity and demonstrative trials.

3.11.5. Agricultural Finance.

Farming activity requires financial resources. These resources are obtained either from own savings or

credit. Farmers can get the credit from the formal or non formal sectors or semi- formal sectors. There

are government as well as non-government organizations which supply credit to the farmers in the

formal way. Among these, office of agriculture, service co-operatives, Amhara Credit and Saving

Institutions (ACSI), Meket microfinance institution and different NGOs supply credit to the farmers.

The presence of these institutions in the area has partly solved the farmers` demand for financial

resources and helped them to obtain improved farm inputs on credit in order to increase farm

productivity. The lending interest rate of MFIs in Meket varies from 10 to 12.5 per cent per year

In addition to these microfinance institutions, local money-lenders serve as a source of credit to farmers.

The local money-lenders are also useful to the poor farmers providing credit for purchase of food grains,

purchase of farm input and emergency purposes. The interest rate paid for the money-lenders depends

mostly on the relation they have with the debter and the creditor-debtor agreement reached at the time

the deal is made. However the charge has always been discribed as exhorbitant when contrasted with

rates charged by formal sector of finance.

36
37
 4. METHODOLOGY

4.1. Selection of the Study Area

Meket wereda is selected for the purpose of this study on the ground that it can represent the highland

weredas in North Wollo. The highland weredas of North Wollo have high population pressure with low

land holding. Land scarcity is one of the crucial problems in the study area Observing the possibilities for

optimal allocation of this scarce resource by considering Meket wereda as a representative of the highland

areas of the zone is the main issue.

4.2. The Sampling Method

A multi-stage random sampling method was used to select farmers. Sample farmers were selected in two

stages. In the first stage, a total of 4 peasant associations (PAs) were purposively selected from 35 PAs in

the study district based on ease of accessibility, climatic condition, consultation with the experts of Wereda

Office of Agriculture and extension workers. Thereafter, a total of 110 farmers were chosen randomly. The

number of farmers selected, were proportional to the number of households of each PA. The selection was

made only from the highland and medium altitude of the study area. In Debeco, some parts of the kebeles

are low land area. This study did not include low land kebeles, so therelivant household population in this

PA was only 886.

Table 4.1. Sample PA’s, population and farm family head (FFH), (Number).

38
 Peasant Population Family Sample
Association Male Female Total Head Farmers
Tsbelat 4466 4254 8720 2138 41
Gerelie 2912 2720 5632 1233 25
Hamusit 3770 3711 7481 1434 27
Debeco 3139 3188 6327 886 17
Total 14287 13873 28160 5691 110
Source: Wereda Office of Agriculture (1999)

4.3. Sources and Method of Data Collection

The relevant data in this study have been collected from both primary and secondary source. Primary data

were obtained from 110 randomly selected farmers. Towards this end, a structured questionnaire was

designed, pre-tested to prove its fitness and was refined.

Enumerators were recruited from the study area. The enumerators were composed of diploma holders and

extension agents who completed high school and had additional training on agricultural field. The

enumerators were selected based on their active participation in their assignment, and knowledge of the

study area. Moreover, adequate farm visits, direct observations and informal interviews were undertaken

both by the researcher and the enumerators. The secondary data were collected from studies conducted by

various researchers and information documented at various levels of Ministry of Agriculture, Planning and

Economic Development Offices, NGOs, Serinka Research Center, and other relevant institutions found in

the study area.

Primary data were collected pertaining to crop and livestock activities in the study area. The production,

39
selling, purchasing, financing, and consumption of each type of crop and livestock activity was considered

for the study. The required information was based on the actual farming practices of the sample farmers.

Data were also collected on demographic variables; crop and livestock activities that are considered in

production process; the amount of input required per unit of activity; the prevailing market price for each

input and output; resources (land, labor, and capital) available on the farm for production purpose; family

income and expenditure of sample farmers; food consumption (crops and livestock products) availability

and requirement of farmers; type of activities performed by family labor particularly women and duration

of the activities; and problems encountered in crop and livestock farming and their possible solution.

4.4. Data Analysis and Analytical Tools

Empirical evidences are important to identify distinct farming groups that exist because of the

prevalence of certain real difference(s) between or among different systems.

In this regard, statistical tests are required to check whether observable samples are likely to have come

from the same population, i.e., to know whether the sample differences occuring are statistically

significant or not. Accordingly, mean, standard deviation, analysis of variance (ANOVA), t-statistic and

homogeneity of variance with t-test were used in this study.

One-way analysis of variance was used to test the hypothesis that means variables (indicators) of

farming system are equal in order to test whether or not samples are from a common population.

Moreover, t-test was used to test the hypothesis that whether samples could likely be taken from the

same population or not when dealing with only two sample means. For such two groups, test of

40
homogeneity of variance was also applied to test sample variances for their significant differences.

4.5. Stratification of Farm Households

There is a variation among family households with regard to their economic, land holding and other

important variables. Categorizing smallholder farmers based on important variables provide relevant

information for decisions regarding improvement of their income and employment opportunities. A

compromise strategy in an empirical research is to select variables with high discriminating power and to

omit highly correlated variables as suggested by purpose of the research and the researcher`(s) intuition

(Omiti, 1995). Also, Omiti in his study of crop-livestock integration in Ethiopian highlands stated that

within any farming system, households differ in family size and resource endowments and they often face

different constraints and welfare enhancing opportunities. He further indicated that households with similar

resource endowments and similar enterprise combinations may experience similar socio-economic and

institutional constraints and bear similar development needs which require similar technical and policy

intervention.

Information about the differences between households would enable allocation of research and extension

resources through co-ordinated interventions according to household groups, technology and policy

packages. Without proper categorization of households and prioritization of farmers` problems, valuable

resources may be wasted on developing short term solutions to problems of unidentified clientele (Smith,

1994).

The decision how to classify depends on the need for analysis, and distinguished for their own study

41
between systems of low income and higher incomes although these have similar activities (Shanner et al,

1982). For instance, production and marketing variables have been applied to categorize households in

Niger (Williams, 1994). Omiti had used household size, size of individual crop land, irrigated and pasture

land, number of working oxen, cows, sheep and donkeys and distance from the road and other economic

variables to categorize farmers as crop farmers, livestock farmers, or crop-livestock farmers in Ethiopian

highlands. Moreover, Bezabih (1991) classified farming systems of Hararghe highlands of Ethiopia based

on (1) land-labor ratio; (2) share of major crops in the cultivated area; (3) cropping intensities; (4)

livestock units; (5) market orientation; (6) off-farm employment. Hassen (1999) used family size, total

crop land per man equivalent, meher and belg crop produce, livestock unit, improved seed use, fertilizer

use, large cereal crops, and per cent share of cash crops to classify farming systems in South Wollo zone of

Amhara Regional state.

In this study, variables considered for the classification of farms were: Land-labor ratio, Total Live stock

Units, Number of oxen, Fertilizer use, Average family size and Crop production. Average values of

indicators considered for testing the differences between the two groups, are presented in table 4.2

Table 4.2 Average value indicators used in the study for classification of the farmers.

Indicators Unit HIG LIG

1 Land - labor ratio ha/ME 0.5 0.3
2 Number of oxen Number 1.9 0.83

42
 3 Tropical livestock unit Number 7.41 3.2
4 Fertilizer use Birr 284.36 60.7
5 Average Family size Number 6.60 5.13
6 Crop production Kg 2060 720
HIG: High income group, LIG: Low income group, ME: man equivalent

Stratification was done to identify factors that contribute for variation among groups of farmers in the two

farm groups. Selecting the most important variables that differentiate one set of observation from another

was considered. After selecting major variables that will discriminate most each farm into a homogeneous

group, the next step is to decide method of classification.

For such purpose, cluster analysis was applied to obtain a relatively similar group of farms. The objectives

of cluster analysis is to group the observations into clusters so that each cluster is as homogeneous as

possible with respect to the cluster variable (Sharma, 1996). Clustering aims to allocate a set of individuals

to a set of mutually exclusive, groups such that individuals with in a group are similar to one another while

the individual in different groups are dissimilar. In cluster analysis several methods are available for

stratification of observation and all these methods perform the same task. Of all these methods, non-

hierarchial cluster analysis is used in this study.

In non-hierarchical clustering, the data are divided into K portions or groups with each portion representing

a cluster. Therefore, as opposed to hierarchical clustering, the number of clusters must be known a priori.

In non-hierarchical clustering, the observations are assigned to the cluster to which they are the closest.

Consequently, one has to know a priori the number of clusters present in the data set. Non-hierarchical

clustering techniques also present the user with a number of different algorithms that differ mainly with

43
respect to how the initial centers are obtained and how the observations are allocated among clusters. This

involves several algorithms which are differed mainly with respect to how distance between two clusters

are computed. It involves examining the data several times to estimate the cluster centers and to separate

the cases well. If the clusters centers are not known prior to classification, k-means cluster analysis is an

important non-hierarchical clustering method (Norusis,1992). It involves examining the data several times

to estimate the cluster centers and to separate the cases well. After several iteration process, K-means

cluster analysis yields various information regarding clusters for the selected variables, such as F-test, t-test

and final cluster centers.

Based on the survey result and statistical output (table 4.3), the 110 household members were grouped into

two. Group I denoted as High Income Group(HIG), consisting of 28 households and group II denoted as

Low Income Group(LIG) consisting of 82 households.

Table 4.3 Final Cluster Centers, F-value and t-value for the major selected variable for two groups:-

Cluster center F-value t-value

(calculated) (calculated)
Particular Unit HIG LIG
(28) (82)
1 Land- labor ratio - 0.5 0.3 29.1 18.49
2 Number of oxen Number 1.9 0.83 29.2 11.70
3 Tropical livestock unit Number 7.41 3.2 34.1 11.91
4 Fertilizer usage Birr 284.4 60.7 43.0 6.76
44
 5 Average family size Number 6.60 5.13 12.5 28.70
6 Crop production Kg. 2060 720 191.2 0.22
Tabulated value at 5 per cent level of significance and 108 DF F= 3.91 and t= 1.98 with 109 DF

The values of the variables used to characterize the group differences are statistically significant at 5 per

cent level of significance, suggesting the existence of overall difference as a means of the indicators

between the groups. From this we conclude that within each group, there is variation among households in

terms of resource endowment, production practices and resource constraint and in development

opportunities.

High Income Group is characterized with high crop produce, higher livestock holding, higher family size,

higher own-cultivated crop land per man-equivalent, high fertilizer use, high oxen number and hence

comparatively high income. This group mostly share-in land and hire labor for herding of livestock

whenever they have labor shortage. Low Income Group represents relatively the lower strata which is

characterized by lower own-crop cultivated area per man-equivalent, lower input use, lower crop produce,

and lower livestock holding, low fertilizer use, low oxen number and hence comparatively getting low

income. This group hire-out their family labor and some of them share-out their land but some of them

also share in land.

4. 6. Specification of the LP Model

The objective of the model is to maximize the individual farmer's income from his farm operation

without exceeding any of the physical limits he faces. Therefore, LP model was formulated to determine

the optimum resource allocation for a specified number of farm activities (Reddy, 1999). The figures

used were derived by taking into account the normal conditions of production and consumption patterns,

45
and resource performance, as indicated by the farmers. Input and output prices used were averages for

the survey year (1999/00), obtained from concerned institutions (DOA) and respondent farmers. For

local seeds, sowing period prices were used, and for improved seeds prices were obtained from the

DOA. Similarly, average yields were used with some adjustments for outliers.

The assumption of normality was considered as the LP technique used in this study is deterministic and
cannot account for unfavorable climatic conditions or any other disasters which adversely affect the
actual outcome of the farm activities in a specific year.

The model was specified in terms of its objective function, activities and constraints.

Maximize Z = ∑cj xj + ∑cj* xj* Objective function

Subject to

∑aijXj ≤ bi Constrained Equation

xj and xj* ≥ 0 Non-negativity constraint activities

46
where

Z = Gross margin

cj = Price of production activities;

xj = Level of j-th production activity;

cj* = prices of non-production activity;

xj* = level of j-th non-production activity;

aij = the ith resource required for a unit of jth activity;

bi = the ith resource available with the sample farmers;

j refers to number of activities from 1 to n; and

i refers to number of resources from 1 to m.

4.6.1. The Objective Function

In developing optimization models for small farmers, objective is of paramount importance. Among the

several objectives that of a) securing adequate and assured food supply b) earning a cash income to meet

other material needs c) avoidance of risk (survival in uncertain environment) and d) provision for the

future, are important in many studies. The objective function is the gross margin which is to be maximized

subject to resource limitations with the non-negativity value of the activities to be considered after

satisfying family consumption requirements. In analyzing the optimal farm plan, conclusion will be drawn

based on the type of relationship existing among farm activities as complements, supplements, and

competitive. The objective function represents the monetary value of all the activities to be considered.

Farmers are operating in dry land agriculture under risk and uncertainty situations. Nevertheless, finding

47
historical data to capture risk in the farm model is a limitation. Hence the objective function also provides

economic plausibility of the optimal farm plan through conducting sensitivity analysis for changes in price

and yield of selected major resources and levels of crop and livestock enterprises.

The objective function is to maximize gross margin subject to minimum food requirement to ensure the

small farmers against constraints including land, labor, draft power and working capital. Gross margin

was calculated by deducting the total variable cost incurred by farmers from gross farm income realized

(from crop, livestock, trees and non-farm income), and all items included in the objective function

represent monetary value. The average open market price was used for monetizing the activities.

4.6.2. The Activities

Although large varieties of crops and livestock enterprises are managed by farmers in the study area, a

representative farm will be considered, i.e. for the optimization purpose an attempt will be made to reduce

the number of these activities . In this process, the popularity of the activities expressed by the number of

growers will be considered. The actual farming practice served as an indicator to determine the major

farming activity. The activities could broadly be grouped into production, selling, purchasing and

consumption activities. The production activities include both crop and livestock cultivated on a

representative farm. The marketing activities include both disposition of agricultural produce (sale) and

acquisition of products which are required by the farm but not available on the farm. Credit activities

consist of working capital supplemented by borrowing for the farm due to non-availability of cash from

family’s own saving. The consumption activity takes in to account family subsistence requirement.

(a). The Crop Activities

Annual crops such as cereals (wheat, teff, barley, wassera) and pulses (horse bean, field peas, lentil,

48
grass pea) are the predominant form of crop production in the main meher rain-fed cultivation and these

are the major crops included in the model. The cropping system in the study area is characterized by

tremendous diversity where sole-cropping is a common practice and the productivity of different crops

varies based on their variety, agro-ecological condition and technology used. Fallowing is practiced in

the area, thus its contribution to the objective function was also considered in the model. The farmers

are using improved variety of crops especially wheat in their farming practice, thus improved and local

seed productivity were considered together in the model. The impact of crop and livestock production

practices on the gross farm income of existing as well as alternative plan was analyzed.

(b). Eucalyptus Tree

Eucalyptus tree is one of the farmers` source of income and fuel wood in the study area. This was

included in the model as one of the activities. The method of income estimation used was, the actual

time required to reach for sale which has been estimated from the survey. Based on the information,

annual income was calculated by dividing total income by the number of years required for sale.

Actually, the amount of cash obtained from the interview of the sample farmers for the year of study

was greater than the estimated average amount, but for the formulation of the model, the minimum

amount was considered.

(c). The Livestock Activities

Livestock production is another major production activity in the mixed farming system. Mixed crop-

livestock farming system is a risk diversification strategy whereby livestock provides an important

investment opportunity and stabilizes food availability in poor crop production years (Fernandez-Rivera

et al, 1993). Thus, to meet their multi-objective goals, farmers allocate their resources and management

49
skills to crops and livestock production. In the determination of the animal activities, their dependence

on cultivated area, particularly for feed has been given major emphasis. This is because the basic

objective of optimization model is the determination of a balanced farm organization which yields

maximum return from limited land and other inputs. Under the traditional land use system, animals

graze on pasture and crop residues. Crop residues are used for animal feed during shortage of pasture

and plowing time. Purchasing feeds for animals is not considered as an activity in this study because it

was not practiced by most of the sample farmers. There is no well-managed pasture production in the

study area. However, farmers in the study area are protecting certain pieces of their land for grass hay

production as well as some of the communal grazing land during the main rainy season for use at times

of feed shortages. Grazing pasture and grass hay are separate activities and they share mostly common

land.

The livestock components considered in the models were pairs of oxen, cows, sheep, goats, horses,

donkeys, bee-hives, and poultry keeping. The outputs of livestock production considered in the model

were milk, butter, egg, honey, draft power, manure as fuel and live animals.

(d). Selling and Purchasing

The optimization model consider the smallholders` integration with marketing activity. As indicated

earlier, the main objectives of smallholder farmers of Ethiopian highlands are to produce food for their

families and to acquire farm income from sales of any surplus produce to purchase consumable items

and farm inputs (Getachew et al, 1991). Most farmers in the study area, give priority to the production

of food crops to meet household requirements and there after to the sale of surpluse produce. However,

50
in case of food deficit, the gap is met by selling animals, particularly small ruminants and chicken. The

model is built similarly to farmers` objective in such a way that crops needed for consumption are sold

after fulfilling the subsistence requirements. Regarding the purchase and selling prices, local free market

prices were used.

(e). Consumption Activities

Subsistence objective is viewed as insurance against the risk of being unable to satisfy the demand for

food, to meet the diet requirements of family members, and having to pay relatively higher prices

(Niang, 1980). Thus, including this activity ensures smallholders to produce some portion of their

requirements; while purchasing serves to fulfill part of subsistence requirements from market. The

consumption requirement per adult equivalent (AE) per year is determined based on Gryseels and

Anderson (1983). The requirement is 200 kg of cereals, 50 kg of pulses, 30 litres of milk, and 500 kg of

fuel. Household preference for each crop type is determined according to production pattern. That is the

quantity of each crop grain type demanded is calculated by multiplying its percentage share in the total

production of cereal/pulses by the amount of total cereals/pulse grain required. The consumption of

cereals, pulses and milk were incorporated into the model as an activity which should be on the basis of

an amount assuring self-sufficiency regardless of the objective value. Farmers are supposed to consume

crops which grow commonly in the area.

(f). Transfer Activities

These activities help to transfer one activity of the model to another activity. It is rendering of one

activity for accomplishment of the other activity. These activities are also important to replace the culled

animals through reproduction of animals.

51
4.6.3. The Constraints

Major constraints identified in the farming systems of the study area are land, draft oxen, working

capital and human labor. The level of these resources acts as a constraint to optimize the feasible

planning. In addition to these resource constraints, there are other restrictions specified under different

sub - groups in our LP model.

(a) Land

Land constraint is the main discriminating variable among farm households. Thus, as a farm input,

farmland has its effect on the type of crops cultivated and acreage allocated to each crop. The

operational land size used for crop and livestock activities was considered as land constraint. For each

farming system, the total available land size per household was considered in the model. Because of

population growth and traditional technology of production, the practice of leaving the land as fallow is

declining over time in most parts of the study area.

The total land area required for food crop production and fallow is constrained to be less than or equal to

the area of owned and shared land in arable land holding. The total amount of land area that is used for

grazing as well as hay production is also considered to be less than or equal to the area of land allocated

for pasture as shown below.

∑ aij x j ≤ OL

∑ aij x j ≤ SL

∑ apj x j ≤ OP

∑ aej x j ≤ EL

Where OL, SL, OP and EL is amount of owned and shared arable land, owned pasture land and Eucalyptus

52
Tree land-holding respectively;

aij is the area of crop-land required for j-th activity;

aej is the area of Eucalyptus land required for Eucalyptus production; and

apj is the area of pasture land required for grazing or grass hay preparation.

(b) Family Labor

The major source of labor in traditional agriculture is family labor. Family labor (those who are able to

participate in farming and other activities) availability was measured in man-equivalents and was

expressed in man-hours. On the other hand, labor requirements for cropping operations were specified

for four labor periods. These labor periods are (i) February to May (LP1), (ii) June to August 20 (LP2),

(iii) August 21 to October (LP3), and (iv) November to January (LP4). Conversion of family members

(based on age and sex) into man-equivalent is indicated in Appendix 2

In the traditional livestock management system, herding needs more labor than any other livestock-

related activities. Local animals graze mostly on native pasture, fallow lands, and stubble for eight to

twelve hours per day and some supplementary hay and weeds are given (Getachew et al., 1991).

Herding is accomplished by children who do not often participate in cropping activities. In addition,

most of the livestock activities other than herding such as milking, barn cleaning, calf-feeding and so on

are performed by women who are not mainly participating in cropping activities. Thus, this portion of

labor and labor for herding do not compete with labor force for cropping activities and are taken to be

human labor supply for livestock activity based on survey results. The total amount of human labor

required per unit of productive activities in a given labor period is constrained to an amount less than or

equal to the available family labor plus hired labor in the particular labor period i.e.

53
∑atj --ht xj* ≤ Lt

htxj* ≤ At

Where Lt, At are available family and hired labor in the t-th period, respectively;

ht = amount of hired labor required in the t-th period for j* -th activity; and

atj = amount of labor required in the t-th period for j-th activity.

(c) Oxen Power

Because cropping operations such as land preparation and planting (sowing) are almost exclusively

done by oxen, draft oxen, is taken as one of the major constraints in the farming system. Like human

labor constraint, draft oxen constraint was considered for different periods. Plowing activity though

done throughout the year, is critical in two crucial periods.Accordingly, only these two crucial periods

were considered in the model: (i)February to May (OX1) and (ii) June to August 20 (OX2).

Oxen power required for t* -th activity in the i* -th month(s) wtj should not exceed oxen power available wt

per pair of oxen keeping activity xj. i.e.

∑wtj x j - wt xj ≤ 0

Where, wt = amount of power available per pair of oxen in the t-th period. and

wtj = amount of power required per pair of oxen in the j-th period.

(d) Working Capital

Cash is needed to meet expenses for short-term inputs and other expenses on the farm. Besides this,

cash is required to purchase food items other than food grains and clothing, aswell as to meet payments

for land use taxes, hired labor and social services. Farmers keep their saving in the form of livestock

such as cattle, sheep, goats, donkeys and so on. These animals can be sold and readily converted into

54
operating or working capital as needs arise. Although traditional production techniques do not allow the

use of more capital, as new technologies are introduced, farmers learn to develop the capacity to use

more capital (Sisay, 1983). Farm plus non-farm income, net of these expenses will provide cash

available that can be spent on farm activities. In this study, capital was imposed in the LP model to meet

the cash requirements for different activities considered in the model.

Household total expenditure for the j-th activity is constrained to be less than or equal to the sum of

available cash income from crop, livestock, tree sale, borrowed, and off-farm activity.

∑Kij x j ≤ wk

Where, wk = amount of available working capital; and

kij = amount of working capital required for production and non-production activities.

(e) Livestock

In the study area, livestock constitute an important component of the farming system. The available

livestock number is taken to be the maximum level on the right-hand-side of the basic matrix table.

Oxen are bounded at a minimum level of one pair of oxen, and cows are bounded at a maximum holding

level. Horses/mules, and the donkeys are required by the farmer for transporting harvested crops to

threshing areas, grains to the storage, markets, and to milling places and purchased materials back to home;

so horses and donkeys are allowed to enter the optimum solution at their present average holding levels.

hij x j ≤ or ≥Ai

Where, Ai = level of i-th animal owned.; and

hij = level of i-th animal to be kept per unit of the rearing activity.

55
4.6.4. Other Restrictions

(a) Product Balance

(i). Food Crop Balance

Although the primary aim of farmers in the study area is to meet household food consumption needs,

some surplus may be sold, if any. However, sometimes purchasing may take place to fill the gap that has

not been filled by own production.

ΣXyc + ΣXpc - ΣXcc - ΣXsc ≥ 0

Where: Xyc = level of crop c produced;

Xpc = level of crop c purchased;

Xcc = level of crop c consumed; and

Xsc = level of crop c sold.

(ii). Milk Balance

The annual milk balance indicating the quantity of milk that is available in cow-calf activity should be

matched with the quantity consumed and/or transferred into butter. Mathematically, it can be expressed

as follows:

ΣYmXw - ΣXmc - ΣXbp ≥ 0

Where: Ym = level of milk produced per cow per year;

Xw = number of cows per household;

Xms = level of milk consumed; and

Xbp = level of milk used for butter production.

56
 (iii) Butter Balance

The annual butter balance row is used to balance the quantity of butter produced and sold.

Mathematically it can be expressed as follows:

ΣXbp -ΣXbs ≥ 0

Where: Xbp = butter produced; and

Xbs = butter sold.

(iv). Animal Feed Balance

Grazing or hay from natural pasture grasslands and stubble are important basal feeds for livestock.

Animals are also supplemented by hay and weeds. Thus, animal feed production (crop by-product and

pasture) activities and the demand for these should be balanced, and at least minimum quantity of

animal feed has to be provided from crop by-product and pasture land available. The general form of the

constraint is:

ΣXc ≥ Xcm

ΣXp ≥ Xpm

Where Xc and Xp are the Kg dry matter feed of crop by-product c and pasture p for livestock

consumption, respectively. Xcm and Xpm represent the minimum Kg dry matter requirement from crop

by-product c and pasture p, respectively.

(b). Minimum Subsistence Requirement

The minimum subsistence requirements are met either from own-harvest or outside sources (markets).

This constraint places a minimum crop and animal product requirement for subsistence. However, the

57
task of getting a true estimate of food crops consumed by peasant farmers is difficult (Sisay, 1983). In

this study minimum requirement for an adult equivalent (AE) was calculated based on the daily

requirement of 2100 calories as used by Niang (1980) by converting family members into adult

equivalent(AE). Furthermore, in estimating the quantity of each crop to be consumed by an AE, the

percentage of area allocated for a particular crop and its yield per hectare was also considered as farmers

in the study area produce a wide variety of crops. The constraint is mathematically stated as follows:

ΣYjiXj ≥ Sj

Where: Yji= yield per unit of the crop or livestock product j in the ith activity;

Xj= the level of activity in which crop or livestock product j appears in the year; and

Sj= the minimum amount of crop or livestock product j required for subsistence

per household per year.

(c). Livestock Transfer

Transfer rows help in this LP model to transfer one activity of the model to another. These rows also

help us to dispose the culled animals and surplus young animals through sales. In addition, replacement

of different categories of animals would be taking place through reproduction. The model was

developed on the assumption that the animals which are in excess of net replacement could be sold and

the net sales should not exceed net supply of the animals (Bezabih, 1991), and this can be expressed

mathematically as:

± ∑rij x j + rij *xj* ± ≤ 0

Where rij = number of replaced animal i required or culled animal i supplied for j-th activity; and

rij *= number of replacing animal i supplied or culled animal i disposed for j*-th activity

58
4.6.5. Estimation of Technical Coefficients

The most difficult task in setting up a LP problem is to obtain meaningful input-output coefficients. This

difficulty specially arises in the area where there is no farm records, previous results, and technical

studies on production relations as sources of adequate information on per unit resource requirements

and yields of different farm activities. Based on the information obtained on the husbandry of each crop

and livestock activity, the appropriate input-output coefficients could be estimated. However, estimation

of the technical coefficients is a problematic task for the smallholder sector as there are no farm records

and data generation heavily depends on memory and understandings of farmers and the technical

advisors working in the area. Some results from trials and previous studies were also inferred where

available. Hence much effort is required to obtain meaningful coefficients so as to set-up a realistic

model as far as possible. In this work, the required data obtained from the field survey and the secondary

sources on input-output relationships for crop and livestock were used in the empirical LP model.

The input coefficient refers to the number of units of each of the resources required to produce one unit

of activity. Accordingly, the average cropped area and the average labor available were calculated for

each group after converting female and child labor into their respective man-equivalents (Appendix 2).

The available oxen power was also computed on pair basis for the crucial two working seasons. For the

borrowed capital an average repayment period of nine months and an annual interest rate of 12.5 per

cent was assumed. The per hectare yields of annual crops (Table 6.9), and the per head products of

livestock were determined based on the survey and results of previous studies. The straw yield of crops

is calculated using the grain yield to straw ratio norm (Table 6.9). For milk production, a calving

interval of two years with about 410 litters of milk per lactation was taken. To get annual milk yield, the

lactation total yield is divided by calving interval and then multiplied by 365 (Gryseels 1988).

59
Furthermore, a cow and an ox is assumed to economically serve for ten years. Hence, the replacement

rates would be 0.1 per cow and per ox Gryseels(1988). The livestock feed supply comes from limited

communal grazing land and crop by-products. The requirement is determined as 2.5 per cent of the

average live-weight of the animals (Gryseels and Anderson 1983). The livestock labor requirements are

for herding, feeding, milking and barn-cleaning. The total labor requirement was first estimated for the

herd, and divided by the type and number of livestock owned with some provision for cows and oxen.

Minimum subsistence requirements were estimated based on the minimum calorie needs of the average

family (2100 calorie per day per adult equivalent (CSA 1997)). The estimated subsistence food

requirement for the respondents is given in (Appendix 5).

The calculation of input-output coefficients for livestock activity was made by computing feed

requirements and output of a given animal. In addition, the weight of the animal, feed requirement,

mortality and culling rate, economic life, and so on were considered in the specification of input-output

coefficient for different categories of livestock types. The annual egg produced per hen and honey

produced per beehive is entered with the quantity sold with its gross margin. For horse and donkey

keeping the average annual gross margin per head was considered in the model. Average values were

computed for inputs (seed, human labor, ox labor and working capital), yields and gross margins

60
 5. DESCRIPTION OF THE FARMING SYSTEMS IN THE STUDY AREA

The existing farming situation of the study area was analyzed in terms of resource endowments, production

pattern, resource-use productivity, and farm income. The basic farm resources that are used in the

production process include: land, family labor, oxen power and working capital. The overall capacities of

these resources vary for each group. The basic aim of this chapter is to assess and evaluate the current

performance of average farming activities in the area. Therefore, these analytical results are the basis on

which different LP optimum solutions are compared.

5.1. Family Structure and Educational Status

The sampled household heads were mainly men and members of a family are those persons related to the

head and working on the farm. The average number of the household members was found to be 6.6 for

high income group and 5.13 for low income group. (Table 5.1)

Table 5. 1 Distribution of average family members by age group sample farmers, 1999/00

Age group HIG LIG

Years Male Female Total % Male Female Total %
<7 0.6 0.79 1.39 21 0.77 0.72 1.49 29
7-15 1.43 0.82 2.25 34 0.70 0.68 1.38 27
16-50 1.43 1.25 2.68 41 1.12 1.00 2.12 41
51-75 0.21 0.07 0.28 04 0.12 0.02 0.14 03
Total 3.67 2.93 6.60 100 2.71 2.42 5.13 100

Table 5.1 brings out that 59 per cent of the population in both groups are dependent on the remaining 41

61
per cent of the population. Out of the dependent population 21 per cent of HIG and 29 per cent of LIG are

children who will not participate in the farming system, youths and elders will help the family members in

some activities such as herding and house-keeping. The table further highlights that the average family size

of HIG was bigger than LIG. This is because when the resource endowment is high people prefer to have

larger families.

5.1.1. Labor usage

Each of the household members is converted into man-equivalent (ME) based on the working capacity

weight given to each age and sex group of the household members as shown in table 5.2. The ME is the

standardized figure in relation to the working capacity of an adult man. It represents the potential labor

supply both for farming and non-farming activities.

Table 5.2 Family size and the labor force of sampled respondents, 1999/00

HIG LIG Overall

M F T M F T M F T
Family Size (Number) 3.67 2.93 6.6 2.71 2.42 5.13 2.95 2.55 5.5
Adult-Equivalent (AE) 3.39 2.44 5.83 2.43 2.00 4.43 2.67 2.11 4.78
Total Labor Supply (ME) 2.35 1.40 3.75 1.57 1.12 2.69 1.77 1.20 2.97
Labor Force for Farming 2.12 0.84 2.96 1.42 0.68 2.10 1.60 0.72 2.32
(ME)
It was assumed that females are not participating in the plowing activities and both males and females lose

10 per cent of their total working time for unknown forced reasons, such as funeral occasions, sickness of

parents etc. Adult equivalent (AE) of each of the family members was determined by using the conversion

62
factor. (Appendix 2)

Table 5.2 shows that on an average there were 5.83 (3.39 males and 2.44 females) AEs per household

for high-income group, 4.43 (2.43 males and 2.0 females) AEs for low-income group and an average of

4.78 (2.67 males and 2.11 females) AEs for the overall sample. The AE compared with the man

equivalent (ME) helps to determine the extent to which some members of the family depend on the

working group.The labor force for different activities inclusive of farming, in terms of man-equivalent

(ME) was found to be 2.97 ME for average, 3.75 ME for High-income group and 2.69 ME for Low-

income group (see table 5.2).

Apart from household head, other family members also work on the farm and outside the farm.

Commonly, farm work is shared by husband, wife, sons and/or daughters. In fact, the average ME

allocated to farm work is greater for males (2.35 ME for high income group, 1.57 ME for low income

group and an average of 1.77) than for females (1.4 ME for high income group, 1.12 ME for low income

group and an average of 1.2). (Table 5.2).

The difference might be due to the participation of women in various activities other than farming such

as child-care, cooking, cleaning, fetching water, collecting firewood and dung, and trade/marketing,

livestock related activities and so on. However, women are actively involved in cropping activities

during peak working seasons, particularly in time of sowing, weeding and harvesting. On the other

hand, adult men are responsible for almost all farm operations although their participation in household

activities is limited. Youths and children under the age of fifteen also have responsibilities in farm

activities including herding animals and caring for small children in the household. Although the nature

63
of work done by children varies with age and gender of the child, the work performed by children often

represents a substitution of their time for that of their parents (Singh, 1988). This is true especially in

household activities.

One can clearly see from table 5.3 that the allocation of available labor force for farming in both areas is

generally smaller than the potential (available) labor supply. That is, only 64 per cent, 57 per cent, and

60 per cent of the total potential labor force is allocated for farming in high-income, low-income, and

overall income respectively. The remaining labor force, is used for activities such as animal husbandry,

household work, marketing, handicraft, food for work and so on.

In addition to the available family labor force, labor force for farming also depends on the number of

working days per month and the time (hours) spent on farm per working day. To this end, peak and

slack months are identified based on the frequency the respondents have already indicated with

reference to the particular month of the said seasons (as peak or slack). In this regard, May to November

are found to be peak months. The rest of the months are regarded as slack months for farming activities.

In order to calculate the number of days in a month in which farmers engage themselves in farming

activities, religious days, Saturdays and Sundays (during which farmers do not work on their farms) are

subtracted from the total available days in each month.

Table 5.3 Estimated family labor available for farm activity.

Overall
HIG LIG

64
 Lab. Lab. Lab. Lab. Lab. Lab. Lab. Lab. Lab. Lab. Lab. Lab.
1 2 3 4 1 2 3 4 1 2 3 4
Total days 120 81 72 91 120 81 72 91 120 81 72 91
Working day 59 39 34 47 59 39 34 47 59 39 34 47
Available (ME) 3.75 3.75 3.75 3.75 2.69 2.69 2.69 2.69 2.96 2.96 2.96 2.96
Available working
hour per day 6 8 8 7.3 6 8 8 7.3 6 8 8 7.3
Total lab. hrs (per
quarter) (SS) 1328 1170 1020 1290 952 856 731 925 1048 924 805 101
8
Lab. usage(DD) 772 632 797 932 439 416 453 627 501 496 550 720
Crop 530 469 652 601 197 253 308 296 260 333 405 390
Livestock 242 163 145 331 242 163 145 331 242 163 145 331
Per cent labor =ΣDD//ΣSSx100 64 57 60
usage
The total available labor is found by multiplying total working hour with ME of each group (3.75 and 2.69 for HIG and LIG
respectively), SS: Supply, DD demand.

5.1.2. Educational status

The educational status of the sampled household heads is shown in table 5.4. The high-income group

household heads in the study area have relatively better level of education than the household heads of

the low-income group. 39 per cent of the high-income group heads can read and write, and 47 per cent of

them attended school education. Out of them 4 per cent attended high school education. However, 14

per cent, 21 per cent and 19 per cent for high-income group, low-income group and an overall,

respectively of the farmer households are illiterate. On the other hand, in case of low income group, 47

per cent are literate (can read and write) and about 32 per cent have attended school education. In Table

5.5, educational background of all members in each household is, also, computed to assess the

educational level of the members of sample households. Here, it is assumed that children usually go to

65
school at the age of seven and above.

Table 5.4 Educational Status of the sampled household heads 1999/00 (Number and percentage)

Educational HIG LIG Overall

status M F T % M F T % M F T %
Illiterate 3 1 4 14 16 1 17 21 19 2 21 19
Read and Write 11 11 39 36 3 39 47 47 3 50 45
1-4 5 - 5 18 14 1 15 18 19 1 20 18
5-8 7 - 7 25 8 - 8 10 15 - 15 14
9 and above 1 - 1 4 3 - 3 4 4 - 4 4
Total 27 1 28 100 77 5 82 100 104 6 110 100

Table 5. 5. Educational status of the sampled household members (Number and Percentage)

Educational HIG LIG Overall

status M F T % M F T % M F T %
Illiterate 59 61 120 65 124 155 279 67 183 216 399 66
Read and Write 18 9 27 15 53 14 67 16 71 23 94 16
1-4 14 9 23 12 37 10 47 11 51 19 70 12
5-8 12 1 13 7 11 7 18 4 23 8 31 5
9 and above 2 - 2 1 5 1 6 2 7 1 8 1
Total 105 80 185 100 230 187 417 100 335 267 602 100
In relation to the household heads, household members have low educational status. As we have seen

from the table that, 65 per cent of high-income group and 67 per cent of low-income group with an

average of 66 per cent of the farmer household members are illiterate. Similarly, only 15 per cent of high

income group, 16 per cent of low income group with an average of 16 per cent can read and write. And 20

per cent of high income group 17 per cent of low income group with an average of 18 per cent have

66
attended school education, out of whom an average of 1 per cent attended high school education.

5.2. Land Resource and Use

5.2.1. Average land size

Land is the most important and scarce resource contributing to agricultural production in the study area,

and since land use pattern largely determines the pattern of use of other resources, it is taken as a proxy for

overall resource use pattern.

Land shortage is acute in the study area due to topography settings (mountainous and hill side), population

pressure and infertility problems. Nearly one hectare of farming area is expected to sustain about seven

household members. So land is the main constraint of efficient farm production as well as of providing

adequate living conditions for the households in North Wollo zone as a whole

Table 5. 6. Average land use and cropping pattern, sample households, 1999/00.

Farm type Particular Unit HIG LIG Overall

Total own area total ha. 1.76 0.78 1.03
Total share in area ,, ,, 0.75 0.34 0.45
Total share out area ,, ,, - 0.01 0.01
Own pasture land ,, ,, 0.28 0.08 0.13
Communal pasture land ,, ,, 0.14 0.04 0.06
Hay production area ,, ,, 0.13 0.04 0.07
Land for eucalyptus tree ,, ,, 0.05 0.17 0.14
Crop pattern for own area

67
 Wheat per cent 40 34 36
Teff ,, 14 24 20
Barley ,, 16 16 16
Wassera ,, 8 7 7
Horse beans ,, 8 9 9
Field peas ,, 2 6 5
Lentil ,, 9 3 5
Grass pea ,, 3 1 2
Crop pattern for Share in area
Wheat ,, 29 25 26
Teff ,, 15 21 19
Barley ,, 11 6 7
Wassera ,, 12 12 12
Horse beans ,, 14 18 17
Field peas ,, 5 3 4
Lentil ,, 5 3 4
Grass pea ,, 9 12 11

The crop pattern included in the table contains only the major crops There are some other crops which

were not included in the table such as linseed, potato, onions and permanent trees like gesho, bamboo trees

etc.

5.3. The Crop Production

5.3.1. Production pattern

There are two cropping seasons in North Wollo zone, the same is true for Meket wereda. However, the

four kebeles selected for the study are only meher producing kebeles. The major crops grown in the areas

are wheat, barley, teff, wassera from cereals and horse bean, field peas, lentil and grass pea from legumes.

68
The current production patterns and their management practice are briefly discussed below.

Wheat

Wheat is the dominant crop in the wereda as well as in the study site. Now a days due to the introduction

of improved varieties seed and fertilizer, the area coverage and productivity of the crop has increased

significantly. The number of farmers making use of improved technology has increased over time. This

shows the acceptance of the technology in the surrounding area. Some farmers which participated in this

extension system have obtained excess yield (WOA, 1998/99).

Teff

Teff is the next important crop especially in the medium altitude of the study area. For teff, the farmers

were not accepting the introduction of improved variety of seed with fertilizer input, as eagerly as that of

wheat, and are preferring to sow their own seed without fertilizer. There are farmers who sow their own

seed with fertilizer, however, their number is negligible and they complain about shoot fly pest problem.

This is because, the fertilized crop revegetate earlier than the non-fertilized one, there by creating favorable

condition for the multiplication of the shoot fly. Second-hand information obtained from the office of

Agriculture indicates that, even if the problem is present in the area, no effective measures have been

suggested to the farmers for the eradication of this pest because of non-availability of chemicals for its

control and difficulties to protect it manually.

Barley

This crop is the dominant crop next to wheat in the high land area of the study site. No improved seed were

introduced for adoption by the farmers, but, sowing of their local seed with fertilizer a common practice

69
and the productivity has increased up to two folds. However, the prevalence of a frost problem has

hindered further expansionof the crop. The surveyed farmers expressed the view that fertilized barley is

more easily exposed to frost problem than the non-fertilized one. This may be due to increase in its crop

stand. Some farmers told that they will not add even organic fertilizer such as manure and ash to their land

because of the frost problem. However, some farmers have added inorganic fertilizer regardless of the frost

problem in that year to get higher yield. The seriousness of frost problem varies from year to year.

Wassera

Wassera is a combination of wheat and barley which grow together and is a common practice in the study

area. The area coverage is as high as that of teff and barley. This cropping practice is also common in

North and South Wollo zone as a whole. The farmers were sowing the two crops together in order to

secure their crop stand; if one of the crops failed, the other may give better result. The crop is used for all

purposes that wheat and barley are used for and the preparation process for food is similar to that of wheat

and barley. Sowing of wassera with fertilizer is the most common practice and the benefit obtained is very

substantial and it has increased up to two-folds.

Legumes

Legumes sown in the study area predominantly are horse beans, field peas, lentil, grass peas and linseed

etc. These crops are grown mainly for rotational cropping and the farmers instead of fallowing, they sow

legume crops in order to get a good yield for their next cereal production.

Cropping legume by itself is not common because of low productivity per hectare, as well as disease and

pest problems. Some legumes such as horse beans and field peas have become non-productive so that the

70
area coverage of lentil and grass peas has been increasing from time to time. Root rotting is the common

disease problem reported, especially for horse beans in the study area.

5.3.2. Land fragmentation

The number of plots one farmer have vary from 3 to 5 with an average of 4 plots of his own-land and it

reaches up to 8 plots when share-in lands are incorporated in his farming system. This is because each

farmer wants equal share from the productive and less-productive lands. So in order to share these lands

equally the number of plots has increased. In addition to high number of plots, the types of crops that a

farmer grow are many in number. A farmer cultivates almost all types of crops in the area. This is because

he wants to diversify his cropping pattern in order to sustain himself and his family and since the area has

unstable climatic condition, if one crop fails the other will survive so that the farmer avoid risks.

As it was known, land is the property of government, a farmer can use it but he can not sall or buy land,

however, farmers share-in and share-out their land for the following different reasons:-

(1) Those farmers who have no plowing oxen, will share-out their land to those farmers who have oxen.

(2) Female-headed households and elderly farmers, who are unable to plow, usually share-out their land.

(3) Some farmers, with small land parcels, share-out their land and migrate to other area in search of daily

labor work.

(4) Farmers having oxen, high number of family labor and small share of land are those who share-in land.

The sharing agreement is, that those farmers who share-in the land will incur whole variable costs and

labor services and output is shared equally. However, there are some other alternative agreements made

between the farmers; i.e. the share-out farmer will help in labor service and product is shared according to

the agreement. As has been shown in table 5.6, the amount of share-in land is greater than share-out land

because the study site is covering the highlands and medium altitudes, where the land problem is more

71
serious in comparison to its surrounding low-land areas. So most of the share out land is found in the low

land areas of the surrounding kebeles.

5.3.3. Crop calendar and method of operation.

The farming systems of smallholders in North Wollo are predominantly annual crop productions,

following the similar cropping calendar for these crops, both in main rainy season (meher) or short rainy

season (belg). The common practices performed for these annual crops are plowing, sowing, weeding,

harvesting, and threshing. Preparation of plots usually starts in the beginning of March and most crops

are sown from June to August. However, because of crop variety and soil type, variations may appear in

crop calendar for particular crops. The most common practice is to plow the land twice and sow it on the

third round. For some cereal crops, farm lands are generally cultivated more than two times before

sowing. Particularly, teff requires fine soil structure and the land has to be cultivated many times before

sowing. However, this is quite dependent on the availability of draft animals. However, leguminous

crops are either sown in the first plow or sown in the second round. The next phase is the weeding

period which begins just few weeks after the completion of sowing period. Usually, for the majority of

crops it is roughly undertaken from the mid of August to the end of October. Most of the time, small

cereals are weeded only once, except teff and wheat which will be weeded at least two times and no

weeding is done for pulse crops except horse beans which may be weeded one time if necessary. This is

because of shortage of feed for the animals in the area. Farmers assume, after one weeding the crop will

dominate weeds in competition of nutrients and they prefer the amount of feed obtained from the field than

the amount of grain reduction due to weed problem. As soon as crops are harvested, threshing and

winnowing take place within a month or so. However, sometimes the harvested crops are kept un-

threshed in big piles for long periods of time due to shortage of time and storage facilities. Crop

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calendar for major crops is indicated in table 5.7.

Table 5.7 The crop calendar for major crops in the study area.

Farm Operation Feb.-May June-Aug. 20 Aug.21- Oct. Nov.-Jan.

Plowing 80 per cent 10 per cent 10 per cent -
Sowing - 95 per cent 5 per cent -
Weeding - 5 per cent 95 per cent -
Harvesting and - - - 100 per cent
threshing

5.3.4. Seed and fertilizer rate

The introduction of improved seed and fertilizer has started recently in the study area. Before the

introduction of new extension system that has been adopted from “Sassakawa global 2000” some amount

of seed and fertilizer was brought into the area by different NGOs and Government. However, it was not as

much successful because the farmers were not volunteer to use the fertilizer on their land based on the

wrong impression that it will burn their land. They either sold it to merchants at very low price or used it

(especially urea) for decoration of their houses as cement and at times dumped the fertilizer any where and

took the sack for home use. Nowadays, awearness of improved seed and fertilizer has increased and some

farmers are not sowing with-out fertilizer.The amount of seeds and fertilizers used depend on the crop and

soil type of the area. The average amounts of local seed, fertilizer and improved seed used by the farmers

are shown in table 5.8.

Table 5.8 Average seed and fertilizer rate per hectare used by the farmers in the study area, 1999/00

73
 Crop type Component Type of Amount(kg)
fertilizer(s)

Local wheat Seed rate 144

Fertilizer DAP 100
rate
urea 50
Improved wheat Seed rate 150
Fertilizer DAP 100
rate
urea 50
Barley Seed rate 140
Fertilizer DAP 100
rate
urea 50
Wassera Seed rate 155
Fertilizer DAP 100
rate
urea 50
Horse beans Seed rate 160
Field peas Seed rate 120
Lentil Seed rate 60
Grass pea Seed rate 120
Source : Wereda Office of Agriculture and survey result.

5.3.5. Crop and straw productivity

The productivity of crop for both grain as well as straw is varied based on crop type and method of farming

practice. Those farmers who used improved seed and fertilizer get two or three times more relative to non-

users.

Table 5.9 Average production of grain and straw per hectar under normal and improved practices,
1999/00
Local seed Improved seed
Particular Unit Local seed with fertilizer with fertilizer
Grain straw Grain straw Grain straw
Wheat kg/ha. 900 1200 1800 2400 2200 2950
Teff ,, 600 900 1000 1500
74
 Barley ,, 700 1050 1400 2100
Wassera ,, 800 1250 1500 2250
Horse beans ,, 650 875
Field peas ,, 500 650
Lentil ,, 700 850
Grass pea ,, 600 800
Source: Wereda Office of Agriculture and survey results.

5.3.6. Soil management practices

The soil condition in North Wollo zone in general is highly eroded and its fertility level is very low.

Farmers rarely understand soil management practices. Anyhow, because of little or no production obtained

when they continuously plow the land, they are obliged to use crop rotation, fallowing, and/or applying of

inorganic fertilizer as soil management practices. In addition to these, some farmers were applying animal

manure around their home garden.

Fallow

Fallowing is one of the oldest and most widely used soil fertility maintaining practice in the study area. The

farmers fallow their land mostly for an interval of 3 to 5 years. However, because of shortage of land they

sometimes practise continious cropping without fallow even though the productivity of the land decreased

to very low level. In the last few years the introduction of inorganic fertilizer has reduced the amount of

fallow land.

Crop rotation

Crop rotation is practiced by some farmers especially in the medium altitude of the study area. Crop

rotation was followed cereals (wheat, barley, wassera, teff) by legumes (horse bean, field peas, lentil,

linseed, and grass pea). These leguminous plants are mainly planted with the aim of maintaining soil

75
fertility. The farmer, instead of leaving land fallow, he plants legumes to get some additional product

together with increasing soil fertility.

Inorganic fertilizer.

Soil fertility becomes the main concern of the farmer as well as other concerned institutes working in the

field of agriculture. The importance and adoption of inorganic fertilizer has increased in the study area over

time, Those lands which were out of production because of soil fertility problem become productive with

the application of Inorganic fertilizer. Even if its sustainability was in question, generally it was yielding an

interesting result in increasing the productivity of crops. The high-income group use more fertilizer than

low-income group because of endowment with a longer land holding and a higher working capital capacity

relative to the low-income group.

Animal manure

Animal dung is mainly used for fuel purpose rather than as manure. This is because of firewood shortage

in the study area. However, during the rainy season it is difficult to dry and accumulate it until the next dry

season reappear. So farmers distribute the dung on their field, especially in homestead, in order to increase

soil fertility of the land.

5.3.7. Soil conservation practices.

As, it was mentioned in the description of the study area that every year a lot of soil conservation work was

performed. This conservation practice even if its contribution is not as expected, because of disturbance of

the settled terraces by the farmers in need of fallowed soil, it conserves the soil and helps in maintaining

soil fertility.

76
5.3.8. Crop production problems

The crop production problems is a serious problem in the study area. The seriousness of the problem has
been measured by the proportion of the respondents confronted to the problem. Some of the problems were
integrated into the optimization model in order to see the extent to which the problems are limiting. Some
of the major problems of crop production include weather fluctuation, disease and pest problem, land
shortage and soil fertility problems. In addition to these high input cost, pesticide shortage and weed were
affecting to a less extent. As shown in table 5.10. in their assending order, the extent of problems in both
groups is similar with some differences

Table 5.10 Crop production problems and their rank.

Type of problem
HIG LIG Overall
Weather 1 1 1
Pest 3 3 3
Disease 4 6 5
Market access 6 8 8
Small land size 2 2 2
Oxen problem 7 4 6
Fertilizer problem 4 5 4
Labor 5 7 7
Other 8 9 9

The problems of weather fluctuation, small land size and pest infestation were given in similar ranks by

respondents interviwed in both groups of farms which shows the seriousness of these three problems in the

study area, whereas market and labor shortage problems are viewed as less serious occupying relatively

lower ranks to the LIG than HIG. (Table 5.10.)

5.4. Animal Production

77
5.4.1. Contribution of livestock to the farming system.

Livestock production has a major role in traditional mixed farming system, especially in areas where the

crop production is not sustainable. The livestock sector used as a transitional means to continue the

livelihood of the farmers. The primary objectives of keeping livestock are to get milk and meat for

consumption, drought, packing, and to get income by selling them.

As a result of increasing the shortage of the grazing land, it was reported that the number of livestock in the

study area has been decreasing over the years. However, the number of livestock is beyond the carrying

capacity of the grazing land. The main sources of feed are crop residues and limited private and communal

grazing areas.

The number of livestock differ from individual to individual. The high-income group has a relatively larger

number of livestock than the low-income group. This is because of the higher size of their private grazing

land. (Table 5.11).

Table 5.11 Livestock population maintained per the sample holdings, 1999/00
HIG LIG Overall.
Type of livestock. No. TLU No. TLU No. TLU
Cow 1.00 1.00 0.50 0.50 0.60 0.60
Ox 1.93 1.93 0.83 0.83 1.11 1.11
Cow follower 0.50 0.30 0.32 0.20 0.37 0.22
Sheep 3.00 0.39 2.00 0.26 2.30 0.30
Sheep follower 0.84 0.05 0.50 0.07 0.59 0.04
Goat 1.36 0.18 0.30 0.02 0.57 0.07
Goat follower 0.38 0.06 0.12 0.01 0.21 0.01
Donkey 1.32 0.46 0.30 0.10 0.56 0.23
Horse 0.79 0.87 0.20 0.22 0.35 0.39
Poultry 3.00 0.04 1.67 0.02 2.00 0.03
Beehive 0.36 0.20 0.24
Total 4.82 2.23 3.0

78
Cattle

Cattle are kept for drought power, milk, meat and manure for fuel. High number of cattle with a farmer

shows a high economic status. The productivity of the animal is not considered, only the number is given

much importance. So the farmers are keeping their cattle even if they are non productive which aggravated

the shortage of feed in the area. Cattle are used as a form of saving and/or investment, so that they serve as

a means of insurance in case of crop failure.

Sheep and goats

The number of sheep per household is greater than other number of livestock in the study area. Small

ruminants are kept because they reproduce themselves within a short period of time. Thus, they are used as

a means of cash income whenever the farmers are in need of money. Sheep are more adaptable than goats

in the study area. This is because of climatic condition and the absence of browsing plants. Sheep and

goats are the main source of meat during religious festivals and on occassions when some respectable

guests are recived However, even if the number of sheep and goat slaughtered per year differs according to

the economic status of the farmer, the average number is not more than two heads per year. Sheep wool is

used in making carpets and as a means of generating cash income through sale to carpet-makers for

commercial purpose. Farmers shear their sheep once or twice a year in the month of October and March.

Equines

Draft animals are kept for transportation and draught purposes. Donkeys, horses and mules play an

important role in transportation of both people and goods as well as in plowing activity. Plowing with

equines is common in the study area. Equines are used either alone for draught or jointl with an ox.

79
Equines need a guiding person during their plowing time, especially when they are used to plow without an

ox. The amount of land plowed per day with equines is larger than the amount of land plowed per oxen

alone. Equines perform better in second and third plowing than first plow but ox performs better than them

in the first plow. They are important in transportation of goods markets, from low-price areas to high-price

area and they transport farmers whenever they want to travel far. Farmers also hire-out their horses and

mules to other persons and tourists in return for a cash income. More than 90 per cent of the people in the

study area use equines as a means of transportation due to limited availability of modern transport in the

area and the inablity of the farmers to pay for the higher transport cost becouse of their low income status.

Moreover, horses and mules are used as in burial or funeral ceremonies particularly on the occation of the

death of rich farmers.

Poultry

Chickens are kept mainly for production of eggs and reproduction of themselves as a means of cash

income and source of meat. The number of chicken per household is higher for high-income group than for

low-income group. Traditionally chicken are left to scavenge their feed from the surrounding area.

However, nowadays some improved breeds of poultry were distributed to the farmers so that the farmers

feed at least some grain per day to them.

Bee keeping.

Despite the spercity of flowering plants and forest coverage, bee-keeping is an important activity in the

study area. Bees are mainly used as a source of income by selling honey. Most of the beehives are locally

prepared from mud and wood products. However, at the present time a Kenyan top-bar beehive is

introduced to the area by the NGO called SOS Sahel and office of agriculture. The beehive is prepared

80
from local material of the surrounding area while the top-bar was prepared with a machine at any wood-

product processing workshop.

5 4.2. Livestock feed.

Livestock feed is mainly based on natural pasture and straw. Communal and private pasture lands are the

main sources of feed. However, straw obtained from own-land and share-land is also used as a

supplementary feed during dry period and at times of work. Straw is given mainly for oxen and lactating

cows. The total availability of feed is not enough, so the farmers mostly graze their animals during the

rainy season and rely on strow as a feed supplement during the dry season.

5.4.3. Livestock production problem.s

The problems of livestock were identified in a similar way to crop production problems. Livestock is

reared with low quality feed and under low management conditions. The common problems are feed

shortage, disease problem, water shortage, and capital shortage in order of importance. Major problems of

livestock production were related to feed and shortage of pasture land. Feed and pasture shortage

definitely causes the most severe and widespread problems by both income groups. The severity of the

problem is related to stocking rate of animals since grazing land is limited in the study area. Moreover,

feeds obtained from the cultivated area such as crop leaves and residues of cereals are not enough for

animals in both seasons.

Animal health problem is one of the most prevalant problems. Health problems (such as disease and

parasites) are inversely related to altitude. In medium altitude area, the health problems seem to be more

81
severe than in the high altitude area. Even if there are veterinary services delivered by the office of

agriculture, only few farmers take their animals to the veterinary services. This is because of high cost for

the medicine and low productivity of the animal which discourage farmers from making use of veterinary

services. The shortage of water is another problematic area of concern. Long distances have to be

covered to take animals to water sources during the dry season. Shortage of cash to purchase or cover

animals` and animals` related expenses (such as veterinary, mineral salt and so on) is another problem in

livestock production activity in the study area.

5.5. Eucalyptus Tree Production

North Wollo zone is one of the highly deforested area in the country. No indigenous permanent trees are

seen in the study area except for some remnants of those indigenous trees that are to be found around

churches. These permanent trees are not destroyed because the people in the area are orthodox religion

followers who are mindful of the trees around the churches, since they give high respect to churches. So it

could be argued that “churches are the only forest genetic potential preservatives” in the surrounding area.

Eucalyptus is the only common permanent tree found in the area outside the compounds of churches.

Farmers are still planting it every year to a large extent and they use it as source of income and fire wood.

The value of eucalyptus tree differs from time to time. In the event of high building construction activity in

the surrounding area, the price is more. The study area is a source of providing eucalyptus tree for

construction in the North Wollo Zone, Tigray regional state towns and Asmara prior to the Ethiopian-

Eritrean dispute. However, now a days because of the interruption of sending it to Asmara and reduction of

construction work in the surrounding area, the price of the tree has declined. The price of one pole which

requires about 3 to 5 years to reach at this stage which used to be sold for Birr 6 to 8 before the dispute;

82
now price reduced to Birr 2 to 3 only. So, even if we calculate it with the lowest price of Birr 2 per pole, a

farmer can get up to Birr 4000 per hectare per year. This is because the farmers are planting more than the

recommended number of tree per hectare due to land shortage. So planting of eucalyptus tree is mach

beneficial to the farmers, however because of shortage of land for the annual crops and its effect on other

crops growing around it has made a controversial issue for the farmers to grow the eucalyptus tree in their

arable land. The farmers are preferring to grow these trees around their compounds and near the road,

however, crops which were grown near eucalyptus tree will reduce their productivity because of the

chemical that will liberate from it and its shading effect. Now a days the controversy of growing eucalyptus

tree in the arable land was discussed at different regional officials and bureau’s, and even if no effective

solution were made, the region has decided not to cultivate eucalyptus tree in arable lands. Instead, the

regional officials have suggested as an alternative measure, distribution of the surrounding mountainous

area in order to plant eucalyptus as well as other indigenous trees.

The distribution of the mountainous area in the region started three years ago and it seems effective. Some
of the weredas which distributed the land earlier was started to recover because of planting trees over it and
some of the indigenous remnants were starting to revegetate. So the farmers are obtaining income from
selling of grasses and used it as a source of feed for their livestock. However the farmers still prefer to
plant the eucalyptus tree in their compounds and the road near to their home. Because they suspect that
planting in mountainous area may not be successful because of thefts problem, and since these
mountainous areas are eroded, it will not reach for production in short period of time. In addition to these,
those plants grown in mountainous area will dry after some years, because their root will reach to the main
rock and the root will not farther penetrate it after some stage of growth.

5.6. Farm Income and Resource Productivity

The main sources of income for the farmer are derived from both farm and non-farm activities. Based on

83
the existing farm situation and prevailing price levels, farmers of HIG and LIG were obtaining an overall

gross margin of Birr 2765 of which 4491 for HIG and 2176 for LIG. The farmer is covering all his

expenses from this income. The expenses include: subsistence requirements, clothing, land tax, hiring of

labor and other variable input expenses. As indicated in table 5.12, the LIG farm income was not covering

all his expenses. So, the farmer in this group are expected to reduce either the variable costs or subsistence

requirements, which may lead to undernourishment. The LIG farmer to covers his expenses needs

additional income from non-farm activities.

Table 5.12 Sources of cash income and expenses of the sampled farmer (Birr), 1999/00

Particulars HIG LIG Overall

1. Farm Income:
1.1 Gross Margin: 4491 2176 2765
1.1.1 Crops 3625 1552 2080
1.1.2 Livestock 663 443 499
1.2.3 Eucalyptus Tree 203 181 187
1.2 Off-farm income 711 230 352
1.3 Total income 5202 2406 3118
1.4 Expenses
1.4.1 Variable cost 985 470 601
1.4.2 Subsistence 2427 1822 1976
1.4.3 Cost of clothing 129 71 86
1.4.4 Land tax 20 20 20
1.4.5 Hired labor cost 23 6
1.4.6 Other expenses 30 17 20
1.5 Total expenditure 3614 2400 2709
1.7 Farm cash income 2064 354 789
1.6 Net cash income 1588 6 409

Among the various types of farm activities that are currently performed by the farmer, wheat contributes 33

per cent of the farmers income (table 5.13). Even if, the amount of contribution is very small, the livestock

and eucalyptus tree enterprises were two additional sources of farm income. Livestock contributes an

overall of Birr 499 with 663 for HIG and 443 for LIG, while eucalyptus contributes an overall of Birr 187

84
with 203 for HIG and 181 for LIG.

Table 5.13 Sources of total farm and non-farm income for different groups of sampled farmers
(Birr), 1999/00.
Source From own-crop From Share-in crop

Crops: HIG LIG Overall HIG LIG Overall

Improved wheat* 1020.8 230.4 432 176 38.4 73
Local wheat* 172.8 86.4 108 43.2 28.8 32
Local wheat 360 274 296 72 28.8 40
Teff 205 232 225 88.73 54.6 63
Teff * 735 27 39 0 13.65 10
Barley 190 112 132 33.6 5.6 13
Barley* 137 22 52 29.4 33.6 33
Wassera 73 49 55 30.38 1.8 9
Wassera* 182 20 61 20.25 61 50
Horse bean 202 86 116 56.7 0.72 15
Field peas 33 52 47 27.75 6.5 12
Lentil 268 36 95 23.63 18 19
Grass pea 56 11 23 50.4 22.4 30
Sub total 2973 1238 1680 652 314 400
Livestock:
Ox 92.53 40.42 53.69
Cow 38.40 25.60 28.86
Horse 25.60 6.40 11.29
Donkey 13.73 3.17 5.86
Honey 28.80 16.00 19.26
Egg 138.00 76.82 92.39
Sheep 45.12 22.56 28.30
Goat 16.80 3.60 6.96
Butter 236.00 225.00 227.80
Bull 6.94 3.689 4.52
Heifer sale 11.40 13.45 12.93
Lamb sale 4.00 4.08 4.06
Kid sale 5.60 2.08 2.976
Eucalyptus 203.00 181.00 186.60
Sub total 866.00 623.9 685.6
Total farm income 4491 2176 2765
Own-crop 2973 1238 1680
share-crop 652 314 400
Livestock and Tree 866 624 686
Off farm income 711.00 230.00 353
Total income 5202.00 2406.00 3118.00
85
 * indicates a crop with fertilizer.
The resource productivity of each farm type, for both groups in relation to the cultivated land and labor

usage shows that the gross margin per hectare of land is higher for the LIG than HIG. This accounts for an

overall of Birr 2684 with 2552 for HIG and Birr 2790 and for LIG. This may be due to their better

management of land. The available labor productivity of gross margin per man hour(GM/MH) shows the

number of working force per hour, where as gross margin per man equivalent (GM/ME) is the total

number of ME for the representative farm. Employed labor productivity of gross margin per hectare

(GM/ha) has an overall of Birr 1.18 with Birr 1.45 for HIG and Birr 1.12 for LIG and that of available

working force GM/hr is overall of Birr 0.79 with Birr 1.05 for HIG and Birr 0.67 for LIG. Farm cash

income per employed man-hour amounted to an overall of Birr 0.35 with 0.67 for HIG and 0.18 for LIG.

(Table 5.14 ).

Table 5.14 Marginal value productivities of various resources on sampled holdings (Birr)

Resource Productivity: HIG LIG Overall

Land: (GM/ha) 2552 2790 2684
(CI/ha) 1173 454 766
Labor (GM/MH):
Employed 1.45 1.12 1.18
Available 1.05 0.67 0.79
Employed CI/MH 0.67 0.18 0.35
Working capital 985 470 601
(GM, CI, MH, ha means Gross Margin, Cash income, Man-hour and Hectare )

The average resource productivity of major crops per hectare is Birr 3759, 2880, 2656, 2169 and 2025 for

improved and local wheat*, teff*, barley*, and wassera* respectively. Wheat* was the highest productive

of all crops. From legumes lentil and horse beans have better income than other legumes

86
Table 5.15 Total income from different crops and their relative contribution to the sampled farmers.
(In Birr)

Crop productivity HIG per cent LIG per cent Overall per cent
share share share
Improved wheat* 3520 15 3840 16 3759 16
Local wheat* 2880 13 2880 11 2880 12
Local wheat 1440 06 1440 06 1440 06
Teff 1365 06 1365 05 1365 05
Teff * 2438 10 2730 11 2656 11
Barley 1120 05 1120 04 1120 05
Barley* 1960 09 2240 09 2169 09
Wassera 1215 05 1215 05 1215 05
Wassera* 2025 09 2025 08 2025 08
Horse bean 1260 05 1440 09 1394 06
Field peas 1110 05 1295 05 1248 05
Lentil 1575 07 1800 07 1743 07
Grass pea 1120 05 1120 04 1120 05
Total 23028 100 24510 100 24133 100
* indicates a crop with fertilizer.

The productivity of crops sown with fertilizer is better even if we reduce the fertilizer and other costs from

this productivity income, the improved practice is better than the traditional one.

87
 6. LINEAR PROGRAMMING OPTIMAL SOLUTIONS

After identifying farming situation, the next question is to investigate whether the allocation of

resources is optimal. This helps to envisage how the farm resources in the study area should be

reorganized in order to improve farm income with the existing level of technology. In this chapter,

the model outputs and the farmers` practices will be examined. Therefore, production patterns, farm

resource use, shadow prices of resources, households` farm income, resource productivity,

alternative specification of the model and alternative outcomes of the model with yield and price

variation are discussed.

6.1. Base Model Results

The base model results for both income groups show a significant change in the production

pattern, resource use, farm income and returns to farm resources over the existing farm practices.

6.1.1. Production Pattern

The base model results for both farming system areas depict a significant change in the

production pattern, resource use, farm income and returns to farm resources over the existing

farming practices.

Owing to the existing production system and consumption preference of the representative farms,

there is a remarkable change, weather posetive or negative, in almost all the crops. The model

favor wheat for both income groups. The result is compatible with farmers’ enterprise

prioritization for food security goals together with the consideration of production per unit area.

The area allocated to wheat is increased by 80 per cent and 74 per cent for HIG and LIG,

88
respectively over the existing practice. However, the total wheat area is shifted to improved

wheat with fertilizer production in the optimal model, so its increment extended by 272 per cent

and 1350 per cent for HIG and LIG, respectively. Farmers are rational, as those with relatively

smaller cultivable land, use it for wheat cultivation, as its productivity is higher than any other

crop of the area. As, indicated in table 6.1, improved wheat with fertilizer is selected in the

optimal plan. Similarly for other crops a crop with fertilizer is preferred by the model for own-

land crops but the reverse is true for share-land crops. However, since the model is constructed in

such a way that the subsistence requirement should be first fulfilled, all crop types are selected

either on own-crop land or on the share-crop land. The selection of the optimal model is similar

to the situation which was observed in the study area; since the owner of the share holder is the

one who covers the variable cost, he is not interested to incur additional cost for fertilizer and

other costs in the share area because the production is divided equally between the owner and

him.

Table 6.1 Existing/optimal cropping pattern and land use on sample holdings, 1999/00
89
 HIG LIG Overall
Exist Opti %∆ Exist Opti %∆ Exist Opti %∆
ing mal ing mal ing mal
Own land
Improved wheat* 0.29 1.078 +272 0.03 0.435 +1350 0.1 0.6 +622
Local wheat* 0.06 - -100 0.03 - -100 0.04 -100
Local wheat 0.25 - -100 0.19 - -100 0.21 -100
Teff 0.15 - -100 0.17 0.025 -14.7 0.16 -100
Teff * 0.03 0.085 +183 0.01 0.081 +710 0.02 0.08 +400
Barley 0.17 - -100 0.10 - -100 0.12 -100
Barley* 0.07 0.004 -6 0.01 - -100 0.03 -100
Wassera 0.06 - -100 0.04 - -100 0.05 -100
Wassera* 0.09 - -100 0.01 - -100 0.03 -100
Horse bean 0.16 0.163 +2 0.06 0.14 +133 0.09 0.15 +171
Field peas 0.03 0.033 +10 0.04 0.056 +40 0.04 0.05 +34
Lentil 0.17 0.341 +100 0.02 0.042 +110 0.06 0.12 +103
Grass pea 0.05 0.056 +12 0.01 - -100 0.02 -100
Share land 0 0
Improved wheat* 0.1 - -100 0.02 - -100 0.04 -100
Local wheat* 0.03 - -100 0.02 - -100 0.02 -100
Local wheat 0.10 - -100 0.04 - -100 0.06 -100
Teff 0.13 - -100 0.08 0.158 +98 0.09 -100
Teff* - - - 0.01 - -100
Barley 0.06 0.432 +620 0.01 - -100 0.02 -100
Barley* 0.03 - -100 0.03 - -100 0.03 -100
Wassera 0.05 0.318 +536 0.003 0.182 +5966 0.01 0.22 +144
Wassera* 0.02 - -100 0.06 - -100 0.05 8-100
Horse bean 0.09 - -100 0.001 - -100 0.02 -100
Field peas 0.05 - -100 0.01 - -100 0.02 -100
Lentil 0.03 - -100 0.02 - -100 0.02 -100
Gras pea 0.09 - -100 0.04 - -100 0.05
* Shows the crop with fertilizer.

Livestock

The base model plan indicated that there are some differences between the farmer’s existing

practice and the base model. For HIG the numbers of heifers, bulls and lambs are increased by 50

per cent, 521 per cent and 14 per cent, respectively while for the LIG, heifer and lamb numbers

has been reduced by 91 per cent and 43 per cent respectively, but bulls numbers have increased

90
substantially (by 4076 per cent) in the optimal base model relative to the existing practice. The

increment in bull number for LIG is higher than for the HIG because of the presence of low

number of pairs of oxen by the former group under the existing practice. For HIG increasing the

number of heifers and lambs will be profitable for the farmer but the converse holds for the LIG

since they are hindered from increasing the number of hifers and lambs due to shortage of

resources and severe competition between resources to grow other profitable and more basic

enterprises. The land allocated for tree plantation remains the same in both the groups i.e. HIG

and LIG.(Table 6.2)

Table 6.2 Livestock number under existing and optimal condition, sample farmers, 1999/00.

Livestock HIG LIG Overall

Particulars Exist Opti %∆ Exist Opti %∆ Exist Opti %∆
ing mal ing mal ing mal
Ox 1.9 1.9 - 0.83 0.83 - 1.1 1.1 -
Cow 0.75 0.75 - 0.5 0.5 - 0.56 0.56 -
Heifer 0.5 0.75 +50 0.56 0.05 -91 0.54 0.23 -42
Bull 0.32 1.99 +521 0.17 7.1 +4076 0.21 5.8 +2786
Lamb 0.5 0.57 +14 0.5 0.286 -46 0.5 0.36 -72
Horse 0.8 0.8 - 0.2 0.2 - 0.35 0.35 -
Donkey 1.3 1.3 - 0.3 0.3 - 0.55 0.55 -
Sheep 4 4 - 2 2 - 2.51 2.51 -
Goat 1.4 1.4 - 0.3 0.3 - 0.58 0.58 -
Bee hive 0.36 0.36 - 0.2 0.2 - 0.24 0.24 -
Poultry 3 3 - 2 2 - 2.25 2.25 -
Eucalyptus 0.05 0.05 - 0.17 0.17 - 0.14 0.14 -

6.1.2. Resource Use under the Base Model

91
There was no change in the utilization of the total area of land in both the farm groups, except the

variation in the reallocation of area among different crops; so, only changes in the utilization of

resource such as labor, oxen power and working capital were considered. The optimal solution of

the basic model shows a significant change in the utilization of labor, oxen power, and working

capital over the existing one.

The overall labor employment is increased by 28 per cent i.e. 3 per cent in HIG and 45 per cent in

LIG farms. Oxen power utilization also increased by 9 per cent and 23 per cent in HIG and LIG

farms, respectively with an overall increase of 19 per cent. This is because of the fact that highest

proportion of land is covered by wheat and teff, which require more plowing and weeding.

Moreover, the required working capital was increased by 1 per cent and 13 per cent for HIG and

LIG, respectively. This is due to the high variable cost requirement for improved wheat with

fertilizer production.(Table 6.3).

Table 6.3 Labor, oxen power and working capital use under the base model.

Particulars HIG LIG Overall

Exist Optimal Exist Optimal Exist Optimal
ing ing ing
1. Labor (hours):
Employed 3093 3185 (+3) 1935 2812 (+45) 2267 2907 (+28)
Available w. force 4292 4292 3236 3236 3505 3505
% Employment 72 74 (+2) 60 87 (+27) 65 83 (+18)
2. Oxen Power(oxen hour):
Employed 238 260 (+9) 126 155 (+23) 153 182 (+19)
Available 594 594 262 262 347 347-
% Employment 40 44 (+4) 48 59 (+11) 44 52 (+8)
3. W. Capital (Birr) 985 997 (+1) 470 532 (+13) 601 650 (+8)
The figures in the parenthesis show the percentage increase or decrease from existing practice

6.1. 3. Farm Income and Resource Productivity

92
The optimal farm plan indicates the improvement in farm income and resource productivity.

More specifically, under reallocation of resources, the overall gross margin per hectare (GM/ha)

improves by 8.6 per cent i.e. 9.4 per cent for HIG and 8 per cent for LIG. Similarly, cash income

(CI) improvements are also observed with an overall average of 30 per cent i.e. 20.5 per cent for

HIG and 49 per cent for LIG. The result shows that the low-income group were more benefited

than the HIG.(Table 6.4)

Table 6.4 Change in farm income and resource productivity under optimal base model over
the existing one, sample holdings, 1999/00

Particulars HIG LIG Overall

Actual Optimal Actual Optimal Actual Optimal
1. Farm Income (Birr)
1.1 Gross Margin(GM) 4491 4914 2176 2349 2765 3002
(+9.4) (+8) (+8.6)
1.2 Subsistence requirement 2427 2427 1822 1822 1976 1976
1.3 Cash Income(CI) 2064 2487 354 527 789 1026
(+20.5) (+49) (+30)
2. Resource Productivity:
Land: (GM/ha) 2552 2792 2790 3011 (+8) 2684 2914
(+ 9.4) (+8.6)
(CI/ha) 1173 1413 454 676 766 996
(+20.5) (+49) (+30)
Labor (GM/MH):
Employed 1.45 1.54(+6) 1.12 0.74(-34) 1.18 1.03(-13)
Available 1.05 1.14(+8.6) 0.67 0.72(+7.5) 0.79 0.85(+7.6)
Employed (CI/MH) 0.67 0.78(+16) 0.18 0.19(+5.5) 0.31 0.34 (+9.6)
The numbers in the parenthesis show the percentage increase or decrease from existing practice

Table 6.4 indicated that land productivity increased in base model by 8.6 per cent, 9.4 per cent

and 8 per cent for overall sample farmers, HIG and LIG, respectively. In the case of labor

productivity, gross margin per man hour (GM/MH) for employed persons are increased for HIG

because the increase in farm income is higher than the increase in labor usage from the existing

practice. But for LIG and overall, the increase in farm income is lower than the increase in labor

93
usage. Thus, GM/MH decreases. The GM/MH for available persons increased by 6.6 per cent,

8.6 per cent and 7.5 per cent for overall, HIG and LIG, respectively and cash income per man

hour (CI/MH) for employed is increased by 9.6 per cent, 16 per cent and 5.5 per cent for overall,

HIG and LIG, respectively.

6.1.4. Marginal Value Product of Major Resources

The marginal value result shows that land in all farm groups is the limiting factor. The marginal

value (shadow price) of land is about Birr 1305 and 960 per hectare for HIG and LIG,

respectively. The marginal value of land for LIG is small compared to HIG, due to the

inadequacy of capital available for farmers in the LIG hindering the cultivation of highly

productive crops. Besides, working capital and labor at weeding time (August 21 to October)

show a scarcity for both the groups. The existence of marginal value of labor especially for the

LIG is not clear. This may be due to their migration in search of work and they may be employed

by the HIG. Generally, the low income group has much higher excess to labor. Working capital

has marginal value of Birr 1.837 and 2.7 for HIG and LIG respectively. Labor has a marginal

value of 0.24 per person per hour. This implies that the values of the objective function would

increase by these amounts if an additional unit of these resources was made available. However,

the price of labor in the study area is still higher than the obtained marginal value, implying that it

is not profitable to hire the labor. (Table 6.5).

Table 6.5 Shadow prices of limiting resources under base model

Resources HIG LIG

1. Cropped Land (Birr/ha.) 1305 960

94
 2. Labor (Birr/MH)
August 21 to October 0.24 0.24
3. Working Capital (Birr) 1.837 2.7

6.2. Alternative Model Plan Results

The optimal alternative plan is prepared to find ways in which the productivity of existing

resource increased, by solving some of the existing constraints. In this case an optimal plan is

considered on changes of constraint components of the farmer such as working capital constraint.

This is because the farmers have a capital constraint as it is observed from the model result. So

the farmers are assumed to be borrowing enough amount of additional capital i.e. Birr 1506 for

HIG and Birr 697 for LIG. from the different organizations and using it for buying of improved

seed and fertilizer as well as buying of different improved livestock breeds. Even if a farmer has

other more serious problems, such as shortage of land, it is not possible to increase the holding

size in the study area under the existing circumstances.

In this model changes in resource endowment and production pattern in comparison to the basic

model would be observed, by assuming that a farmer in any of the groups is using borrowed

working capital.

6.2.1. Land Use and Cropping Pattern (Alternative Optimum Plan)

The alternative optimum plans result in a significant change in the levels of some farm activities

as compared to the basic plan.

The crop area for HIG:- The area under own-wheat with fertilizer, own-teff with fertilizer and

field peas is increased and own-teff, lentil and grass pea areas are reduced. Similarly, for LIG, the

area under local wheat with fertilizer, teff, share-teff, field peas, lentil and grass pea is increased

while the area for teff, field peas, wassera, and share beans is reduced. The percentage of each

95
crop type is presented in table 6.6. In this regard, the direction and level of changes of activities

are associated with the relative competitiveness of the enterprises.

Table 6.6 Cropping pattern in the alternative plan sample holdings, 1999/00

HIG LIG Overall

Base Alternate Base Alternate plan Base Alternate
Crop model plan model model plan
Own land
Improved wheat* 1.078 1.437 (+33) 0.435 0.523 (+20) 0.6 0.76 (+27)
Local wheat*
Local wheat
Teff 0.025 - (-100) 0.019 - (-100)
Teff * 0.085 0.085 0.081 0.133 (+64) 0.082 0.12 (+46)
Barley
Barley* 0.04 0.12 (+200) 0.001 0.03(+2900)
Wassera - 0.089(+100) - 0.02 (+100)
Wassera* - 0.055(+100) - 0.04 (+100)
Horse bean 0.163 - (-100) 0.14 0.027 (-81) 0.15 0.02 (-87)
Field peas 0.033 - (-100) 0.056 - (-100) 0.05 - (-100)
Lentil 0.341 0.03 (-91) 0.042 - (-100) 0.12 0.04 (-67)
Grass pea 0.056 - (-100) 0.014 - (-100)
Share land
Improved wheat*
Local wheat*
Local wheat
Teff 0.158 - (-100) 0.12 - (-100)
Teff*
Barley 0.432 - (-100) 0.11 - (-100)
Barley*
Wassera 0.318 - (-100) 0.182 - (-100) 0.22 - (-100)
Wassera*
Horse bean - 0.326(+100) - 0.229(+100) - 0.253(+100)
Field peas - 0.067(+100) - 0.111(+100) - 0.1 (+100)
Lentil - 0.246(+100) - 0.06 (+100)
Grass pea - 0.112(+100) - 0.03 (+100)
The numbers in the parenthesis show the percentage increase or decrease from existing practice

The alternative plan for livestock production shows no significant change except in case of

heifers where number decreased by 90 per cent for HIG, while the goats number has increased by

1740 per cent for LIG. (Table 6.7)

Table 6.7 livestock number under alternative plan condition.

HIG LIG Overall

96
 Base Alternate Base Alternate Base Alternate
Livestock model plan model plan model plan
Ox 1.9 1.9 0.83 0.83 1.11 1.11
Cow 0.75 0.75 0.5 0.5 0.56 0.56
Heifer 0.75 0.075(-90) 0.05 0.05 0.23 0.056(-76)
Bull 1.991 1.991 7.1 7.1 5.79 5.79
Horse 0.8 0.8 0.2 0.2 0.35 0.35
Donkey 1.3 1.3 0.3 0.3 0.55 0.55
Sheep 4 4 2 2 2.51 2.51
Goat 1.4 1.4 0.3 5.52(+1740) 0.58 4.47(+670)
Bee hive 0.36 0.36 0.2 0.2 0.24 0.24
Poultry 3 3 2 2 2.25 2.25
Eucalyptus 0.05 0.05 0.17 0.17 0.14 0.14
The numbers in the parenthesis show the percentage increase or decrease from existing practice

6.2.2. Resource Use under the Alternative Plan

In this plan also no change occured in the utilization of the total area of land for the two farm

types, but the allocation of cropped area among different crops is varied. So, the utilization of

labor, oxen power and working capital are changed because the resource requirements for

different enterprises are different. As shown in table 6.8, comparing the alternative plan to the

level in the basic plan, an overall improvement is seen in human labor, oxen power and working

capital utilization. Human labor employment is increased by 9 per cent and 6 per cent for HIG

and LIG, respectively with an overall increase of 7 per cent. Oxen power utilization increased by

an overall of 42 per cent, with 72 per cent for HIG and 25 per cent for LIG farms. The increment

of oxen labor is very high compared to human labor for LIG. Moreover, the required working

capital increased by 51 per cent and 31 per cent in HIG and LIG farms respectively with an

overall total increase of 39 per cent for the whole sample of farmers.

Table 6.8 Labor, Oxen Power and Working Capital Use under the Alternative Plan.

Particulars HIG LIG Overall

97
 Base Alternate Base Alternate Base Alternate
model plan model plan model plan
1. Labor (hours):
Employed 3185 3480 (+9) 2812 2980 (+6) 2907 3107(+7)
Available 4292 4292 3236 - 3505 3505
% Employment 74 81 (+7) 87 92 (+5) 83 89 (+6)
2. Oxen Power(ox hr.):
Employed 260 447 (+72) 155 194 (+25) 182 258(+42)
Available 594 594 262 - 347 347
% Employment 44 75 (+35) 59 74 (+15) 52 74 (+22)
3. Working Capital 997 1506(+51) 532 696 (+31) 650 902(+39)
The (Birr)
numbers in the parenthesis show the percentage increase or decrease from existing practice

6.2.3. Farm Income and Resource Productivity (Alternative Plan)

From the alternative optimum plan it is seen that there is a possibility to improve farm income

and resource productivity by proper allocation of resources. As it is observed from table 6.9 the

gross margin and cash income have increased by 22 per cent and 43 per cent for HIG, 2 per cent

and 7 per cent for LIG farms and an overall of 10 per cent and 29 per cent for both groups of

farms, respectively.

Table 6.9 Farm income and resource productivity under the alternative plan

Particulars HIG LIG Overall

Base Alternate Base Alternate Base Alternate
model plan model plan model plan
1. Farm Income (Birr)
1.1 Gross Margin 4914 5981 2349 2387 3002 3301
(+22) (+2) (+10)
1.2 Subsistence 2427 2427 1822 1822 1976 1976-
1.3 Cash Income 2487 3554 527 565 1026 1326
(+43) (+7) (+29)
98
 2. Resource Productivity:
Land: (GM/ha) 2792 3393 3011 3060 (+2) 2914 3231
(+22) (+10)
(CI/ha) 1413 2991 676 724 996 1287
(+43) (+7) (+29)
Labor (GM/MH):
Employed 1.54 1.88 (+22) 0.74 0.77 (+4) 1.03 1.06 (+3)
Available 1.14 1.39 (+22) 0.72 0.73(+1.4) 0.85 0.94 (+11)
Employed 0.78 1.11 (+42) 0.19 0.18 (-5) 0.35 0.42 (+20)
(CI/MH)
The numbers in the parenthesis show the percentage increase or decrease from existing practice

6.2.4. Marginal Value Productivity of Resources (Alternative Plan)

The production option of both groups show relatively more farm resources but cultivable land

still remains the most limiting factor for them; particularly for the LIG, even borrowing of money

does not bring them a significant increment in their total gross income, due to serious shortage of

land. Labor (in some periods) appears to be a constraints in both farm groups. On the other hand,

similar to basic model, oxen power is not again a limiting factor in any of the operation periods

and in any of the groups. However, obtaining ox during plowing period remains to be a problem

for the low income group.

As indicated in table 6.10, shadow prices of Birr 2710 and 3021 are observed for own-crop land

of HIG and LIG farms, respectively. On the other hand, during August 21 to October labor (Lab

3) has a shadow price of Birr 0.24 per man hour for HIG and Birr 0.228 per man hour for LIG

farms. The marginal value (shadow price) of working capital is not seen in this plan because of

enough money availability.

Table 6.10 Shadow prices of limiting resources under alternative plan

Resources HIG LIG Overall

99
 Base Alternate Base Alternate Base Alternate
model plan model plan model plan
1. Cropped Land (Birr/ha) 1305 2710 960 3021 1048 2942
Own (+108) (+215) (+181)
2. Labor (Birr/MH) 0.24 0.24 0.24 0.228 0.24 0.23
August 21 to October - (-5) (-3)
The numbers in the parenthesis show the percentage increase or decrease from existing practice

6.3. Sensitivity Test

While formulating models, the assumption that all parameters under consideration remain

constant usually requires an investigation, because uncertainty is likely to have an effect on

production and income. In reality, farmers operate under both risky and unrisky factors.

Agricultural output and input prices fluctuate between seasons, years and places because of

external factors which affect the demand for and supply of these items. For these reasons, it is

important to perform some sensitivity tests on the plans and observe the subsequent effects on the

optimal solutions provided by the basic plans.

In this respect, the effect of changes in the price of the output and the major input, fertilizer and

improved seed (increment of variable cost) on the production pattern, resource use and farm

income is observed. Even if output price variation is not a serious problem in the study area,

changes in price of these major crops are considered because some times there are price

fluctuations during the period of crop harvesting and the period when foodgrains are distributed

to the needy people in the area. Moreover, because of the new extension system, there is an

increase in production and a price reduction is observed in the area. On the other hand, the price

of fertilizer and improved seed has been fluctuating from year to year.

6.3.1. Impact of Output Price Reduction.

100
 6.3.1.1. Impact of Output Price Reduction on Base Model Solutions

Impact on Cropping Pattern of Base Model

Even if the price fluctuation is not a serious problem in the study area, the survey results and

secondary marketing data from Office of Agriculture show the presence of price fluctuation in

some seasons. Thus, to account for its further impact a 10 per cent and 25 per cent price reduction

is imposed on the model. This price is assumed based on the lowest price record obtained from the

department of agriculture’s weekly market studies of the study year (1999/00). The results as

desplayed in table 6.11 show no variation in cropping pattern for LIG at both levels of price

variation. This may be explained by the fact that most of the produced crop is used for self-

consumption by the LIG and hence price variations do not affect the model. But for HIG, even if

there is no variation at 10 per cent, it does appear at 25 per cent output price reduction. Wheat area

is reduced by 29 per cent and lentil and barley with fertilizer, increased by 104 and 2875 per cent,

respectively. Share areas of wassera and barley are shifted to own-area with fertilizer production.

Horse beans, field peas, and grass peas are shifted from own-land to the share-land area, while and

lentil appeared in own-land as well as share land areas.

Table 6.11 Impact of output price variation on the cropping pattern under base plan
(1999/00).

10 per cent price reduction 25 per cent price reduction

HIG LIG HIG LIG
value %∆ value %∆ value %∆ value %∆

Own land:
Improved wheat* 1.07 - 0.435 - 0.77 -29 0.435 -
Local wheat*
Local wheat
Teff 0.025 - 0.025 -

101
 Teff* 0.085 - 0.081 - 0.085 - 0.081 -
Barley
Barley* 0.004 - 0.119 +2875
Wassera
Wassera* 0.089 +100
Horse bean 0.163 - 0.141 - -100 0.141 -
Field peas 0.033 - 0.056 - -100 0.056 -
Lentil 0.341 - 0.042 - 0.696 +104 0.042 -
Grass peas -100
Share land:
Improved wheat*
Local wheat*
Local wheat
Teff 0.158 - 0.158 -
Barley 0.432 -
Barley* -100
Wassera 0.318 - 0.182 - 0.182 -
Wassera* -100
Horse bean 0.326 +100
Field peas 0.067 +100
Lentil 0.246 +100
Grass peas 0.112 +100
Impact of Output Price Variation on Resource Use

An output price change similar to cropping pattern, has no effect on resource use and

productivity for LIG, but it causes some variations in resource use and resource productivity for

the HIG. The gross margin and gross margin per hectare(GM/ha) were both reduce for this group

by 3 per cent and 6 per cent at 10 per cent and 25 per cent output price reduction, respectively.

Similarly, both cash income and cash income per hectare (CI/ha) are reduced by 5.8 per cent and

12 per cent at 10 per cent and 25 per cent output price reduction respectively. Productivity of

resources for the HIG has also been affected negatively by output price reduction. The labor use

gross margin per hectare (GM/ha) has reduced by 2.6 per cent for both employed and available

labor at 10 per cent and it reduces by 6 per cent for employed and 9.4 per cent for the available

one at 25 per cent output price reduction (Table 6.12)

102
 Table 6.12 Impact of output price variation on the optimum resource use resource
productivity and farm income under base model.

10 per cent price reduction 25 per cent price reduction

HIG LIG HIG LIG
value %∆ value %∆ value %∆ value %∆
1. Farm Income (Birr)
1.1 Gross Margin: 4776 -3 2346 - 4611 -6 2345 -
1.2 Subsistence requirement 2427 - 1822 - 2427 - 1822 -
1.2 Cash Income: 2349 -5.8 524 - 2184 -12 523 -
2. Resource Productivity:
Land: (GM/ha) 2713 -3 3007 - 2620 -6 3007 -
(CI/ha) 1335 -5.8 672 - 1240 -12 672 -
Labor (GM/MH):
Employed 1.5 -2.6 0.74 - 1.45 -6 0.74 -
Available 1.11 -2.6 0.72 - 1.07 -9.4 0.72 -
Employed
(CI/MH) 0.74 -5 0.19 - 0.69 -39 0.16 -

Output price variation has also a reduction effect on cash income per man-hour of employed

personnel. It is reduced by 5 per cent and 39 per cent at 10 per cent and 25 per cent price

reduction, respectively. Generally, a reduction in the output price of farm products has resulted in

reduction in resource productivity, resource usage and farm income of HIG. It also reduces the

improved technology usage, since the producers will not find it beneficiary. So, precautionery

measures have to be taken to protect farmers againist high price reduction.

Moreover, output price reduction has an adverse effect on the marginal value (MV) of resources.

MVs of land and working capital are decreased at both 10 per cent as well as 25 per cent of

output price variation for both farm groups. At 10 per cent, MV of land decreases by 12 and 11

per cent, and at 25 per cent it decreases by 23 and 26 per cent for HIG and LIG, respectively.

Similarly, MV of working capital at 10 per cent decreases by 14 and 13, and at 25 per cent it

decreases by 84 and 34 per cent for HIG and LIG, respectively. However, the MV of labor

103
remains the same at both output price reduction levels. (Table 6.13).

Table 6.13 Impact of output price variation on marginal value of resources

under base model

10 per cent price reduction 25 per cent price reduction

HIG LIG HIG LIG
value %∆ value %∆ value %∆ value %∆
1. Cropped Land 1147 -12 859 -11 1011 -23 707 -26
2. Labor (Birr/MD) 0.24 0.24 0.24 0.24
August 21 toCapital
3. Working October
(Birr) 1.583 -14 2.336 -13 0.286 -84 1.78 -34

6.3.1.2 Impact of Output Price Reduction on Alternative Model

The effect brought no change in cropping pattern and resource use for both farm groups at 10 per

cent as well as 25 per cent output price reduction levels. This shows even if the price reduction

occurred, enough working capital would help to compensate it. (Table 6.14)

Table 6.14 Impact of output price variations on cropping pattern in alternative plan

10 per cent price reduction 25 per cent price reduction

HIG LIG HIG LIG

value %∆ value %∆ value %∆ value %∆
Own land:
Improved wheat* 1.437 - 0.523 - 1.437 - 0.526 -
Local wheat*
Local wheat
Teff
Teff* 0.085 - 0.133 - 0.085 - 0.133 -
Barley
Barley* 0.119 - 0.119 -
Wassera 0.055 -
Wassera* 0.089 - 0.089 -
Horse bean 0.027 - 0.121 -
Field peas
Lentil 0.03 - 0.042 - 0.03 - 0.03 -
104
 Grass peas
Share land
Improved wheat*
Local wheat*
Local wheat
Teff
Barley
Barley*
Wassera
Wassera*
Horse bean 0.326 - 0.229 - 0.326 - 0.229 -
Field peas 0.067 - 0.111 - 0.067 - 0.111 -
Lentil 0.246 - 0.246 -
Grass peas 0.112 0.112 -

Output price reduction has brought about some changes for some of the animal species. Goats
numbers has reduced by 88 per cent at both levels of price variation for HIG, and by 1.4 per cent
and 2.3 per cent at 10 and 25 per cent price variation as well as an insignificant increase in bull
number by 0.1 per cent for LIG. (Table 6.15)

Table 6.15 Impact of output price variation on the optimum resource of livestock in
alternative plan

10 per cent price reduction 25 per cent price reduction

HIG LIG HIG LIG
value %∆ value %∆ value %∆ value %∆
Ox 1.9 - 0.83 - 1.9 - 0.83 -
Cow 0.75 - 0.5 - 0.75 - 0.5 -
Heifer .075 - 0.05 - .075 - 0.05 -
Bull 1.991 - 7.108 +0.1 1.991 - 7.108 +0.1
Horse 0.8 - 0.2 - 0.8 - 0.2 -
Donkey 1.3 - 0.3 - 1.3 - 0.3 -
Sheep 4 - 2 - 4 - 2.0 -
Goat 0.168 -88 5.444 -1.4 0.168 -88 5.399 -2.3
Bee hive 0.36 - 0.2 - 0.36 - 0.2 -
Poultry 3 - 2 - 3 - 2.0 -
Eucalyptus 0.05 - 0.17 - 0.05 - 0.17 -

Eventhough output price variation has not changed the cropping pattern, it certainly brought a

105
reduction effect on farm income and resource productivity. Gross margin (GM) and gross margin

per hectare (GM/ha) is reduced by 14 per cent and 32 per cent price for HIG and 6 per cent and

10 per cent for LIG at 10 per cent and 25 per cent levels, respectively. Cash income (CI) and

Cash income per hectare (CI/ha) also is reduced by 24 per cent and 54 per cent price reduction

for HIG and 27 per cent and 43 per cent for LIG at 10 per cent and 25 per cent levels

respectively. The result brings out that income reduction for the LIG is higher than the HIG.

Labor productivity also declines. Gross margin per man hour (GM/MH) for employed personnel

is reduced by 21 per cent and 38 per cent for HIG and 3 per cent and 6 per cent for LIG.

Similarly, for available personnel GM/MH is reduced by 16 per cent and 32 per cent for HIG and

5 per cent and 10 per cent for LIG at 10 per cent and 25 per cent levels of price reduction,

respectively. CI/MH for employed personnel also is reduced by 24 per cent and 58 per cent price

reduction for HIG and 23 per cent and 39 per cent for LIG at 10 per cent and 25 per cent levels of

price reduction, respectively.

Moreover, output price reduction has also an effect on the marginal value (MV) of resources.

MV of land is reduced by 13 per cent and 32 per cent at 10 per cent and 25 per cent of output

price reduction levels for both the groups. However, it does not bring about any change in

working capital. (Table 6.16.)

106
Table 6.16 Impact of output price variation on the farm income, optimum resource use,
productivity and MV of resources on alternative plan

10 per cent price reduction 25 per cent price reduction

HIG LIG HIG LIG
value %∆ value %∆ value %∆ value %∆
1. Farm Income (Birr)
1.1 Gross Margin: 5140 -14 2234 -6 4046 -32 2140 -10
1.2 Subsistence req. 2427 1822 2427 1822
1.2 Cash Income: 2713 -24 412 -27 1619 -54 320 -43
2. ResourceProductivity:
Land: (GM/ha) 2920 -14 2864 -6 2299 -32 2744 -10
(CI/ha) 1541 -24 528 -27 919 -54 410 -43
Labor (GM/MH):
Employed 1.47 -21 0.75 -3 1.16 -38 0.72 -6
Available 1.19 -16 0.69 -5 0.94 -32 0.66 -10
Employed 0.84 -24 0.14 -23 0.46 -58 0.11 -39
(CI/MH)
3 MV of Resources
1. Cropped Land (Birr/ha.) 2358 -13 2637 -13 1830 -32 2061 -32
2. Labor (Birr/MD)
August 21 to October 0.24 - 0.228 - 0.24 - 0.228 -
3. Working Capital (Birr) - - - -

6.3.2 Impact of Input Price Variation

Agricultural input usage is generally very low in the study area. The most commonly applied

fertilizer inputs are DAP (Diammomium phosphate) and urea (Ammonium Nitrate). The amount

107
of fertilizer applied to a crop varies depending on the crop, soil type and adoption level of the

farmers. According to the new extension system PADETS, the recommended rate was 100 kg

DAP and 50 kg urea per hectare for wheat package (DOA, 1998). The price variation of these

inputs brings a change in the variable cost of cultivation. The impact of 5 per cent and 25 per cent

variation in the variable cost are considered. This is because, even if 10 to 25 per cent input price

variation is common in the study area, more than 10 per cent price change makes the optimum

model infeasible for the LIG. However, at this percentage level there is no significant difference

for HIG. So, to see the impact for both groups clearly, 5 per cent and 25 per cent input price

increments on stability of optimal solution are considered.

6.3.2.1 Impact of Input Price Variation on Base Model

Input Price variation has brought a change in the cropping pattern, farm income, resource use and

productivity. Cropping pattern for HIG has changed, i.e. wheat production is reduced by 5 per

cent and 10 per cent, while lentil area is increased by 14 per cent and 32 per cent at 5 per cent and

25 per cent of input price increment. For the LIG, a 5 per cent input price increment will bring

about a reduction in wheat and teff areas with fertilizer by 2 and 11 per cent, respectively wheras

teff area increases by 72 per cent. An increment of input price by more than 5 per cent for LIG

will make the optimization model infeasible. (Table 6.17).

108
Table 6.17. Impact of input price increment on the cropping pattern of base model.

5 per cent price increment 25 per cent price increment

HIG LIG HIG LIG
Value %∆ Value %∆ Value %∆ Value %∆
Own crop
Improved wheat* 1.022 -5 0.426 -2 0.969 -10
Local wheat* infeasible
Local wheat
Teff 0.043 +72
Teff* 0.085 - 0.072 -11 0.085 -
Barley
Barley* 0.004 - 0.004 -
Wassera
Wassera* -
Horse bean 0.163 - 0.14 - 0.163 -
Field peas 0.033 - 0.056 - 0.033 -
Lentil 0.398 +14 0.042 - 0.45 +32
Grass pea 0.056 - 0.056 -
Share land
Improved wheat*
Local wheat*
Local wheat
Teff 0.158 -
Barley
Barley* 0.432 - 0.432 -
Wassera
Wassera* 0.318 - 0.182 - 0.318 -
Horse bean
Field peas
Lentil
Grass pea

Input Price increment showed no effect on the livestock composition in the base model, (Table
6.18)

109
Table 6.18 Impact of input price increment on the livestock composition of base model.

5 per cent price increment 25 per cent price increment

HIG LIG HIG LIG
Value %∆ Value %∆ Value %∆ Value %∆
Ox 1.9 - 0.83 - 1.9 - 0.83 -
Cow 0.75 - 0.5 - 0.75 - 0.5 -
Heifer 0.075 - 0.05 - 0.075 - 0.05 -
Bull 1.991 - 7.108 - 1.991 - 7.108 -
Lamb 0.572 - 0.5 - 0.572 - 0.5 -
Horse 0.8 - 0.2 - 0.8 - 0.2 -
Sheep 4 - 2 - 4 - 2.0 -
Goat 1.4 - 0.3 - 1.4 - 0.3 -
Bee hive 0.36 - 0.2 - 0.36 - 0.2 -
Poultry 3 - 2 - 3 - 2.0 -
Donkey 1.3 - 0.3 - 1.3 - 0.3 -
Eucalyptus 0.05 - 0.17 - 0.05 - 0.17 -

Impact of Input Price Variation on Farm income, Resource Productivity and MV of

Products

The increment in variable cost or the input price also has an adverse effect on the farm income
and resource productivity. Gross margin (GM) and gross margin per hectare (GM/ha) are reduced
equally by 2 per cent and 17 per cent for HIG at 5 and 25 per cent input price increment. Cash
income (CI) and cash income per hectare (CI/ha) similarly decreases by 4 and 33 per cent at 5
and 25 per cent input price increment. Similarly, for LIG, GM and GM/ha as well as CI and
CI/ha decline by 2 and 9 per cent at 5 per cent but become infeasible at 25 per cent price
increment. Labor productivity is reduced with a maximum of 36 per cent for cash income
(CI/MH) at 25 per cent. Marginal values (shadow prices) of the resources are all reduced, i.e the
MV of land is reduced by 2 and 10 per cent and that of working capital is reduced by 13 and 41
per cent for HIG at 5 and 25 per cent, respectively, whereas it is reduced by 7 per cent for LIG at
5 per cent input price increment shown in table 6.19.

110
Table 6.19 Impact of Input Price Variation on Farm income, resource productivity and MV
of products of Base model.

Particular 5 per cent price increment 25 per cent price increment

HIG LIG HIG LIG
1. Farm Income (Birr)
1.1 Gross Margin: 4817 -2 2301 -2 4097 -17
1.2 Subsistence req. 2427 - 1822 - 2427 - Infeasible
1.3 Cash Income: 2390 -4 479 -9 1670 -33
2. Resource Productivity:
Land: (GM/ha) 2750 -2 2950 -2 2327 -17
(CI/ha) 1410 -4 614 -9 949 -33
Labor (GM/MH):
Employed 1.44 -6 0.71 -4 1.22 -21
Available 1.12 -2 0.70 -2 0.95 -16
Employed(CI/MH) 0.71 -9 0.15 -21 0.50 -36
3. MV of Resources
1. Cropped Land (Birr/ha.) 1278 -2 961 - 1170 -10
2. Labor (Birr/MD)
August 21 to October 0.24 - 0.24 - 0.24 -
3. Working Capital (Birr) 1.6 -13 2.5 -7 1.08 -41

From the table it can be observed that the input price increment has a higher effect on the cash

income of LIG than HIG. This is because, a small reduction in gross margin will have a

substantial impact on LIGs cash income since subsistence requirement has to be fulfilled first,

despite negligable use of inputs.

6.3.2.2 Impact of Input Price Variations on the Alternative Plan.

Similar to the base model, increment in input price (variable cost) has brought about some

changes in cropping pattern, farm income and resource productivity in the alternative plan,

though the magnitude of change is not as much as that of base plan. There is a very little

reduction observed in the area under wheat at both per cent of input price increment levels.

111
Unlike the earlier trend, here production of local wheat with fertilizer has entered and a shift of

barley production from the own-land production to the share-land production is observed. For

LIG the production pattern seems more stable than the HIG as there is no variation in cropping

pattern at all 5 per cent input price increment and minimal change at 25 per cent input price

increment as shown in the table 6.20.

Table 6.20 Impact of input price variation on cropping patternin alternative plan

5 per cent price increment 25 per cent price increment

HIG LIG HIG LIG

Value %∆ Value %∆ Value %∆ Value %∆
Own land
Improved wheat* 1.426 -1 0.523 - 1.409 -2 0.526 +0.06
Local wheat*
Local wheat
Teff
Teff* 0.085 - 0.133 - 0.085 - 0.133 -
Barley
Barley* -100
Wassera -100
Wassera* 0.089 - 0.055 - -100 -100
Horse bean 0.027 - 0.113 +100 0.121 +348
Field peas
Lentil -100 0.042 - 0.153 +100
Grass pea 0.03 +100
Share land
Improved wheat*
Local wheat* 0.046 +100
Local wheat
Teff
Barley
Barley* 0.239 +100 0.157 +100
Wassera 0.318 +100
Wassera*
Horse bean 0.168 -48 0.229 - 0.1 -70 0.041 -84
Field peas 0.067 - 0.111 - 0.067 - 0.111 -
Lentil 0.246 - -100 0.085 +42
Grass pea 0.052 -54 0.112 - - -100

112
The effect of input price increment on resource use shows that both gross margin per hectare

(GM/ha) and cash income per hectare (CI/ha) are reduced by a range of 2 per cent to 45 per cent

which is the highest reduction seen at 25 per cent input price increment in the LIG. The

productivity of land is also reduced up to 45 per cent for LIG, (see table 6.21). As already

observed the effect of input price increment is higher on cash income of LIG than HIG. The

marginal value (MV) of land is reduced by 3 per cent and 13 per cent for LIG and by 30 per cent

and 50 per cent for the HIG. The marginal value reduction of HIG is higher because when the

price of input increases, the incentive of producing high productive crops is reduced and the

farmer will not be interested to incur high cost on the land.

Table 6.21 Impact of input price increment on the optimum resource use, farm income and
MV of resources under alternative plan.

5 per cent price increment 25 per cent price increment

HIG LIG HIG LIG

Value %∆ Value %∆ Value %∆ Value %∆
1. Farm Income (Birr)
1.1 Gross Margin: 5689 -5 2340 -2 5061 -15 2134 -11
1.2 Subsistence req. 2427 - 1822 - 2427 - 1822 -
1.3 Cash Income: 3263 -8 538 -5 2634 -26 312 -45
2. Resource Productivity:(Birr/unit)
Land: (GM/ha) 3232 -5 3000 -2 2875 -15 2735 -11
(CI/ha) 1854 -8 690 -5 1496 -26 400 -45
Labor (GM/MH):
Employed 1.78 -5 0.76 -1 1.58 -16 0.70 -9
Available 1.32 -5 0.55 -25 1.18 -15 0.66 -10
Employed(CI/MH) 1.02 -8 0.17 -6 0.82 -26 0.10 -45
3. MV of Resources
1. Cropped Land (Birr/ha.) 1886 -30 2944 -3 1372 -50 2638 -13
2. Labor (Birr/MD)
August 21 to October 0.24 - 0.228 - 0.24 - .228
3. Working Capital (Birr) - - - -

6.3.3 Impact of Output Reduction

113
The problem of output variation is most serious problem in the study area due to erratic rain

nature, pest infestation and low soil fertility problems etc. In this section the effect of output

reduction on the cropping pattern, farm income and change in the marginal value (MV) of

resources at 10 per cent and 25 per cent has been estimated. This level of output reduction is the

lowest and frequently occurring amount in the study area. So, to observe optimal solutions

stability at lowest output reduction, these percentage levels are incorporated.

6.3.3.1 Impact of Output Reduction on Cropping Pattern of Base Model.

Output reduction has brought a decrease in area of wheat and lentil by 3 per cent and 9 per cent at

10 per cent and 13 per cent and 40 per cent at 25 per cent output reduction, respectively. The

areas under teff, barley, horse bean, field peas and grass peas are increased by 11 per cent, 523

per cent, 11 per cent, 12 per cent and 11 per cent at 10 per cent output reduction for the HIG.

This also increases by 129 per cent, 1825 per cent, 33 per cent, 51 per cent and 34 per cent at 25

per cent output reduction level, respectively for HIG. Similarly, barley production area on share

land is reduced by 8 per cent and 24 per cent at 10 per cent and 25 per cent output reduction, but

that of wassera production area on share land (with fertilizer) is increased by 11 per cent and 33

per cent at 10 per cent and 25 per cent, respectively. The effect of output reduction is more

serious for LIG in that at 25 per cent output reduction the optimal solution becomes infeasible.

For LIG at 10 per cent output reduction wheat area is reduced by 6 per cent but teff area is

increased by 83 per cent. The effect of output reduction does not bring variation in livestock

numbers. (Table 6.22)

Table 6.22 Impact of Output reduction on cropping pattern of base model

10 per cent Output reduction 25 per cent Output reduction

114
 HIG LIG HIG LIG
Value %∆ Value %∆ Value %∆ Value %∆
Own land:
Improvedwheat* 1.049 -3 0.41 -6 0.943 -13
Local wheat*
Local wheat
Teff - -100
Teff* 0.094 +11 0.148 +83 0.195 +129 Infeasible
Barley
Barley* 0.027 +523
Wassera
Wassera* 0.022 +100
Horse bean 0.181 +11 0.15 +7 0.217 +33
Field peas 0.037 +12 -100 0.05 +51
Lentil 0.31 -9 0.047 +12 0.204 -40
Grass pea 0.062 +11 0.075 +34
Share land:
Improved wheat*
Local wheat*
Local wheat
Teff -100
Barley
Barley* 0.397 -8 0.327 -24
Wassera
Wassera* 0.353 +11 -100 0.423 +33
Horse bean
Field peas 0.009 100
Lentil 0.108 100
Grass pea

The effect of output reduction on the farm income and resource productivity shows a decrease in

gross margin and gross margin per hectare (GM/ha) by 11 per cent for LIG at 10 per cent output

reduction. Both are also reduced by 8 per cent and 26 per cent for HIG at 10 per cent and 25 per

cent output reduction, respectively. Similarly, cash income and cash income per hectare (CI/ha)

are reduced by 16 per cent and 51 per cent, respectively for HIG at respective output reduction

levels. Likewise, both are reduced by 49 per cent for LIG at an output reduction of 10 per cent

and the model will become infeasible at 25 per cent level of output reduction for LIG so that the

farmer`s earned cash income, does not cover his expenses, thereby leading to a reduction in his

115
subsistence requirement. The MV of land is also reduced by 12 per cent and 101 per cent and

working capital decreased by 13 per cent and 65 per cent for both income groups, respectively at

10 per cent level of output reduction. Similarly, MV of land and working capital are reduced by

34 and 29 per cent respectively at 25 per cent output reduction for HIG,while the optimal

solution becomes infeasible for the LIG.

Table 6.23 Impact of output reduction on the optimum resource use and farmincome under
base model.

10 per cent output reduction 25 per cent output reduction

HIG LIG HIG LIG
Value %∆ Value %∆ Value %∆ Value %∆
Farm Income (Birr)
1.1 Gross Margin: 4504 -8 2090 -11 3644 -26
1.2 Subsistence req. 2427 - 1822 - 2427 - Infeasible
1.3 Cash Income: 2077 -16 268 -49 1217 -51
2. Resource Productivity:
Land:(GM/ha) 2559 -8 2679 -11 2070 -26
(CI/ha) 1180 -16 344 -49 691 -51
Labor(GM/MH):
Employed 1.38 -10 0.70 -5 1.12 -27
Available 1.05 -8 0.65 -10 0.85 -25
Employed(CI/MH) 0.64 -18 0.09 -53 0.37 -53
3. MV. of Resources
1. land 1147 -12 1927 -101 864 -34
2. Labor (lab. 3) 0.24 - 0.228 - 0.24 -
3. Working Capital 1.683 -13 0.94 -65 1.3 -29

6.3.3.2 Impact of Output Reduction on Cropping Pattern in Alternative Plan

Like the base model, there is a reduction of the wheat area with a maximum of 17 per cent for

HIG at 25 per cent output reduction; while acrage of most other crops is increasing. For the LIG,

the reduction for own improved wheat at 10 per cent level is 9 per cent and for HIG it is 7 per

116
cent. However, the model is infeasible for the LIG at 25 per cent reduction level.

Table 6.24 Impact of output reduction on cropping pattern of Alternative plan (1999/00)

10 per cent output reduction 25 per cent output reduction

HIG LIG HIG LIG
Value %∆ Value %∆ Value %∆ Value %∆
Own.land
Improved wheat* 1.343 -7 0.476 -9 1.189 -17 Infeasible.
Local wheat*
Local wheat
Teff
Teff* 0.094 +10 0.148 +11 0.113 +33
Barley
Barley* 0.142 +19 0.114 -4
Wassera
Wassera* 0.106 +19 0.061 +11 0.127 +43
Horse bean 0.04 +48 0.217 +100
Field peas
Lentil 0.075 +150 0.047 +12 -100
Grass pea
Share-land
Improved wheat*
Local wheat*
Local wheat
Teff
Barley
Barley*
Wassera
Wassera*
Horse bean 0.362 +11 0.216 -6 0.105 -68
Field peas 0.074 +10 0.12 +8.1 0.089 +32
Lentil 0.19 +23 0.407 +65
Grass pea 0.124 +11 0.149 +33

The output reduction has an effect on the farm income, resource usage and productivity. Thus,

both gross margin (GM) and gross margin per hectare (GM/ha) is reduced equally by 17 per cent

and 35 per cent for HIG at 10 and 25 per cent output reduction. Cash income (CI) and cash

income per hectare (CI/ha) similarly decline by 29 per cent and 59 per cent for HIG at 10 and 25

per cent output reduction, respectively. Likewise, for LIG, GM and GM/ha as well as CI and

117
CI/ha are reduced by 5.6 and 24 per cent at 10 per cent level of output reduction wheras they

become infeasible at 25 per cent output reduction. Labor productivity is reduced with a

maximum of 77 per cent for cash income (CI/MH) at 25 per cent for HIG. Marginal value

productivities (shadow prices) of the resources are all reduced. The MV productivity of land is

reduced by 13 and 32 per cent for HIG at 10 and 25 per cent output reduction and by 346 per cent

for LIG at 10 per cent. From these we conclude even though output reduction affected both

groups seriously the effect is hihg for LIG, so that the optimal model become infeasible at 25 per

cent output reduction. (Table 6.25)

Table 6.25 Impact of 10 per cent and 25 per cent output reduction on the optimum resource
use and farm income under alternate plan.

10 per cent price increment 25 per cent price increment

HIG LIG HIG LIG
Farm Income (Birr): Value %∆ Value %∆ Value %∆ Value %∆
1.1 Gross Margin: 4960 -17 2251 -5.6 3894 -35
1.2 Subsistence req. 2427 - 1822 - 2427 - Infeasible
1.3 Cash Income: 2533 -29 429 -24 1467 -59
2. Resource Productivity:

118
 Land:(GM/ha) 2818 -17 2885 -5.7 2212 -35
(CI/ha) 1439 -29 550 -24 833 -59
Labor(GM/MH):
Employed 1.6 -15 0.75 -2.5 1.43 -24
Available 1.15 -17 0.70 -4 0.52 -62
Employed (CI/MH) 0.82 -26 0.15 -17 0.26 -77
3. MV. of resources:
1. Land 2358 -13 677 -346 1830 -32
2. Labor(lab. 3) 0.24 - 0.228 - 0.24 -
3. W/capital - - - - - -

119
 7. SUMMARY AND CONCLUSION

The basic problem of Ethiopia’s agriculture is low level of productivity. Especially in the North

East part of the country, because of inadequate and erratic nature of rainfall, serious soil

degradation, high pest infestation and deforestation, low productivity in agriculture is the major

challenge. For smallholder farmers in the study area, it is difficult to get an additional income after

satisfying their subsistence requirement, at their existing land size and productivity.

This study attempts to investigate ways and means of improving the productivities of smallholders

by way of strengthening their access to improved farm technologies and through efficient

allocation of limited resources.

In this study an attempt has been made to analyze the existing agricultural situation in Meket

wereda by considering a sample of 110 household farms in terms of production pattern, farm

income, resource productivity and differences in marginal values of the limited resources. The

existing farming practices are compared with different optimal plans that have been produced by

using the linear programming model. These optimum plans are developed under a set of options

involving (1) base model; (2) alternative plan with increased working capital; and (3) sensitivity

analysis. The main objective of this comparative analysis is to investigate whether the existing

patterns are optimal or not and to indicate ways and means by which smallholder farmer`s

resources can be effectively organized so that farm incomes are maximized.

The sampled high-income group constituting 28 households in number is characterized by a land

labor ratio of 0.5, 1.9 oxen number, 7.41 tropical live stock unit, expenditure of Birr 284 for

120
fertilizer per year, an overall family size of 6.6 and a production of 20.06 quintal of grains per

year. The low-income group is characterized by 0.3 unit of land-labor ratio, 0.83 oxen number,

having 3.2 tropical livestock unit (TLU), average family size of 5.1, an average of 7.20 quintal of

grain production and an expenditure of Birr 60.70 per year for purchasing fertilizer.

The different enterprises that contribute to the household income depends on resource endowment

and enterprise combination. Under the existing farmer`s practice, the gross margin from all farm

activities amounts to Birr 4491 for HIG and 2176 for LIG. The subsistence requirement share

absorbs 54 per cent and 84 per cent of the total farm income of the HIG and LIG, respectively,

during the year 1999/2000. The LIG is almost producing at subsistence level and some of the

group members cover their expenses from other non-farm income activities, such as petty trade,

labor hiring, fire wood selling and food aid.

The optimization results under current resource base and technology offer visible opportunities for

increasing farm income through a rationalized use of existing resource and correct choice of

cropping pattern. The major changes in production pattern can bring about an improvement in

gross margin by 9.4 per cent and 8 per cent for HIG and LIG respectively. The changes occurr

mainly by shifting the area allocated to different enterprises to those crops which are sown with

improved seed and fertilizer. In base optimal plan, average area of improved wheat with fertilizer

is increased by 272 per cent and 1350 per cent for HIG and LIG, respectively. However, limited

variation encountered in number of livestock except heifers, bulls and lambs. This increase of

farm income supports the hypothesis that there is sub-optimal use of resources in the present

farming system in the study area.

121
Optimal use of resources increase farm income, human labor and oxen power usage. Thus, labor

usage increases by 3 per cent for HIG and 45 per cent for LIG and oxen power usage is increased

by 9 per cent for HIG and 23 per cent for LIG.

The analysis of the alternative optimal plans over the base model with allocation of enough

working capital shows a better prospect for increasing farm income than what could be realized

from the re-allocation of existing resource for both groups of farmers. Thus, an increment in gross

margin by 22, 2 and 10 per cent for HIG, LIG and all sampled farmers, respectively is observed.

After analyzing the optimal allocation of resources, the stability of the models subject to changes

in selected key parameters is reviewed. Thus, a sensitivity test was conducted with reduced output

price, increased input price (working capital) and with reduction in output. The variation shows a

decrease in gross margin, decrease in productivity of resources as well as decrease in marginal

value of the resources. However, the magnitude of reduction is higher in case of reducing output

and increasing the input cost, since the variation in each parameter by 25 per cent from the optimal

plan, caused the optimal solution infeasible. So higher variation in these key parameters need to

be avoided by the policy makers.

The findings of the study show that GM/ha of land for LIG is higher than for HIG, which implies

that the LIG farms are more productive in terms of per unit land area relative to the HIG.

However, the productivity of labor is directly proportional to farm size. The GM/hr and CI/hr for

available as well as employed labor is higher for HIG than LIG in both base and alternative

optimal models.

122
Finally, in view of the above findings, the following concluding remarks have been drawn.

1. The study shows the existence of ways to increase farm income by optimally allocating the

resources and proper choice of enterprise pattern. Thus, the development efforts that will

encourage necessary adjustments in the enterprise pattern should be taken up.

2. The optimal solutions in both base model and alternate optimal plan resulted in an increase in

gross margin. This was obtained by using improved seed with fertilizer. Thus, the availability of

improved seed, fertilizer and other inputs is crucial. i.e. modern inputs should be delivered at right

time and place with a reasonable cost, so that all farmers can afford to use it.

3. Land is the most acute constraint at existing condition as well as in the future. The farmer are

not able to fulfill their expenses. The only solution for the time-being is intensification of the

existing land by using improved technology. However, even with these technologies, the optimal

solution is not stable for high variation in output reduction and increase in input cost. From the

experience exhibited and actual practice, the reduction in output and increase of input cost are

frequently occurring in the study area. Hence, intensification of existing practice only will not be a

long-lasting solution for the surrounding farmers. More serious attention should be accorded to

activities that may bring major changes in the long run. Some of the interventions include:-

a. Taking the resettlement program as one alternative option to reduce the land problem. Many

farmers who were settled forcefully returned to their villages, after the failure of Derge regime and

some of them stayed without having their own arable land. They live by renting in the older or

123
female-householder`s land or they get food aid in addition to small amount of money they obtain

from daily labor work. However, some of these farmers returned to their resettlement area with

their parents and there are a lot of farmers who ask to go to the resettlement area. So, the

resettlement program should be continued keeping in view the interest of the farmers, and the

government should facilitate the program.

b. Implementing project programs such as dam construction, spring development, integrated

water-shed management to reduce the risk of erratic nature of weather problem by supplementing

additional water resources in case of rain interruption.

c. Proper training and supplying of necessary materials for family planning. A continuous

discussion is required with priests, older people, kebele administrative leaders, other respected

people and with the whole community in order to convince them and implement the family

planning program properly.

d. As far as my knowledge is concerned, there is no appropriate and effective research works

which has been undertaken to mitigate the weather situation of the study area. Much emphasis

should be given to research work in order to develop appropriate technology for the surrounding

area.

4. Working capital is another crucial constraint in the study area. The availability of sufficient

operating capital through borrowing enables the farmers to get inputs on time.

5. There is a need to facilitate non-farm employment opportunities such as petty trade, pottery

124
making, weaving and hand-crafting etc.
8. REFERENCES
This would increase income of peasants and

enhance household food security through mobilizing surplus labor.

6. In a mixed farming economy, livestock is the most important sector which supports the crop

production. It serves as a liquid asset for farmers` immediate cash need and adds an important

source of animal protein. Thus, widening the scope of introducing high productive improved

breeds of animals and solving the crucial feed and health problem is necessary. In addition to

these, those activities such as poultry and beehive production which need less or no land should be

expanded and a strong support should be given from the government and concerned NGO’s ,

7. Given the existing acute land shortage and availability of excess mountainous area, planting

eucalyptus on farm-land is not appropriate, and the concerned bodies should work hard to

convince the farmers to abandon such practice. The previous started distribution of mountainous

area to the farmers should continue with strong follow-up, so that the farmers should use the land

thus allocated only for planting of trees.

Ablu , G.O.I (1975) Optimal Investment Decition in Perrenial Crop Production. A LP Approach.
Journal of Economics. Vol. 26. pp. 383-393.

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130
 9. APPENDICES

Appendix 1: Conversion factors used to standardize household size in terms of adult

equivalent.
Age(years) Male Female
<1 0.4 0.4
1-3 0.6 0.6
4-6 0.8 0.8
7-9 0.9 0.9
10-12 1.1 1
13-15 1 0.9
16-19 1 0.8
20-39 1 0.8
40-49 1 0.7
50-59 0.9 0.7
60-69 0.8 0.7
>70 0.7 0.5
Source: Haile-Mariam (1995)

Appendix 2: Conversion factors used to standardize household size in terms of man

equivalent
Age(years) Male Female
8-14 0.5 0.5
15-65 1 0.75
66 and above 0.5 0.5
Source: Haile-Mariam (1995)

Appendix 3: Assumptions used in the model

Assuming dry matter intake of 2.2 per cent of the respective 0.7 livestock body weight (Anderson
and Gryseels 1983), Culling rate for cattle, sheep, goat and hen = 1/economic life span

Cow (local zebu)

Economic life span = 10 years
Average birth per life span = 6 calves
Equal chance of male and female
Average lactation period = 7 months
Milk produced per lactation = 410 litres

131
Butter yield per litre = 0.05 kg
Manure yield per year = 570 kg

Oxen
Oxen economic life span = 10 years
Oxen manure yield per year = 570 kg
Other cattle
Heifer and bull manure yield per year = 310 kg
Calves manure yield per year = 205 kg

Sheep
Economic life span = 7 years
Weaning rate of 150 per cent per year
Manure yield per year per ewe = 66 kg
Manure yield per year per lamb = 9 kg
Wool per large sheep/year = 0.45 kg
Wool per small sheep/year = 0.24 kg

Goat
Economic life span = 6.5 years
Birth rate of 165 per cent per year
Manure yield per year per doe = 66 kg
Manure yield per year per kid = 9 kg

Donkey
Economic life span = 16 years
Manure yield per year = 438 kg
Gross margin per year = Birr 420
Horse
Economic life span = 20 years

132
Manure yield per year = 762 kg
Gross margin per year = 680

Hen
If it is for egg production only
Economic life span = 3 years
Egg produced per year = 204
Gross margin per year in = 64

Bee
Honey produced per year = 8 kg
Gross margin per year =80

Appendix 4: Price of livestock and crops (Birr)

Type of Crop / Unit Average Type of Crop / Unit Average
Livestock / input 1999/00 Livestock / input 1999/00
Teff kg 1.95 Ox head 483.30
Wheat kg 1.60 Cow head 593.30
Barley kg 1.40 Young bull head 383.30
Wassera kg 1.35 Calf head 138.30
Sorghum kg 1.14 Castrated sheep head 223.00
Horse bean kg 1.80 Ewes head 79.00
Field peas kg 1.85 Ram head 40.00
Grass pea kg 1.40 Does head 78.00
Lentil kg 2.25 Buck head 60.00
DAP kg 2.75 Donkey head 169.00
Urea kg 1.57 Horse head 656.00
Dressing chemical kg 16.00 Hen head 3.25
Improved wheat quinta 270 Butter kg 20.00
l
Honey kg 10 Egg pieces 0.25
Beehive pieces 60

Appendix 5: Subsistence requirement of each group

Crop type HIG LIG

Wheat 740 573
133
 Teff 106 186
Barley 179 139
Wassera 143 182
Horse bean 114 113
Field peas 20 39
Grass pea 50 34
Lentil 107 34
Milk. 147 132
Available Adult
Equivalent(AE) 5.8 4.4
Available Man
Equivalent(ME) 3.75 2.69

Appendix 6: Conversion of livestock number into livestock unit (LU)

Animals LU Animals LU
Cows and oxen 1 Sheep /goat(young) 0.06
Young bull 0.8 Donkey (young) 0.35
Heifers 0.75 Donkey (adult) 0.70
Calf 0.20 Horse 1.10
Weaned calf 0.34 Poultry 0.013
Sheep/goat(adult) 0.13 Camel 1.25
Sources: Strock et al. (1991), and ILCA, 1993 in freeman et al. (1996)

Appendix 7: Number of days, working hours, available labor force and oxen power.
Jan. Feb Ma Apr Ma Jun July Au Sep Oct No Dec
Total days 31 28 31 30 31 30 31 31 30 31 30 31
Working day 16 13 16 14 16 15 16 12 14 16 15 16
Av. working 6 6 6 6 6 8 8 8 8 8 8 8
hour per day
Available human labor
HIG 360 293 360 315 360 450 480 360 420 480 450 480
LIG 258 210 258 226 258 323 344 258 301 344 323 344
Available oxen power
HIG 336 258
LIG 148 114

Appendix 8: Crop calendar

134
 Ja. Fe. Ma Apr. May June Jul. Aug Sep. Oct. Nov Dec.
wheat HH TT TT PP PP SS SS SW ww ww
Teff HT TT PP PP PS SW ww ww
Barley TT PP PP PP PS SS ww ww HH HH
Wassera HT TT PP PP PP SS SS ww ww
Beans PP SS S HH
Peas PP SS S HH
Lentil PP SS S HH
Grass pea HH HH PP SS
Where HH: harvesting, SS: Sowing, PP: plowing, WW: weeding, TT: Threshing.

135
Appendix 9: Questionnaire used for data collection.

1. General Information
Name of the wereda __________ Name of the kebele ________ Village name ____________
Name of the farmer __________Date of contact _________Name of enuminator_________
Nearest market name: a) for crop___________ b) for livestock__________
Transportation facilities Km(hour) ________________ _________
Participated in extension and production program or not _______ if participated When_________

2. Demographic characteristics
a) Household situation of the farmer.
Name of the family Age in years Sex Relation to the Occupation Marital status
member head

b) Educational and health status of the family members

Name of family Educational status Health status
members
illiterate basic 1-4 5-8 9-11 12 and when you number of
literacy above sick days

3. Land holding in hectare

Field Distance from Area in Ownership Purpose
number house (k/m) hectare
owned leased grazing wasted cultivated

4. Farming practices
a) Indicate the production method practiced ___________________________________
b) Indicate the topography of the farm (each field)_______________________________
c) Measures to maintain soil fertility (fallowing, guie, chemical fertilizer, animal manure,
green manure etc.), which one of them is priority importance, _____________________
d) Indicate the field number that is more affected by soil erosion ____________________
e) Indicate the measures under taken __________________________________________
f) Importance of the measure _______________________________________________

136
g) Do you practice crop rotation _____________________________________________
- Indicate the usual sequence in cropping activities _______________________________
-Why you choose this practice ______________________________________________
h) Soil type _____________________________________________________________
-Causes of soil erosion _________________________________________________
-Effect of soil erosion __________________________________________________
-Period of siol erosion __________________________________________________
-Are they aware of the problem __________________________________________
I) Type of permanent tree
Amount/size ___________________
Income ____________ If no why? ____________________

5. Labor condition
a) Human labor
- Number of working days in each month ____________
- Is there human labor shortage/Surplus? _______ when it occurs? _______
In which type of farming is serious labor shortage occurred? _______________
What are the solutions to the shortage _________________________________
-Farm operation on monthly basis
Farm operation Months
Jan. Feb. Mar. Apr. May June Jul. Aug. Sep Oct Nov. Dec.

-Labor requirement on labor category and operational wise

Farm operation Your self Wife Sons Daughter Exchange Hired Other

b) Animal power
Types of activities Type of animal Number Hours used

-Is there animal power shortage/Surplus? _______ when it occurs? ____________

In which type of farming is serious labor shortage occured? ___________________
What are the solution to the shortage _________________________________

137
6. Livestock situation
a) Livestock herd amount.

Type Number at born Died/stolen Sold Bought Reproducti Total end of

beginning on in/ out the year

b) Feed and nutrition production

- Source of feed______________________

Problems facing livestock activities

Sequencially____________________________________________________
Solutions to the problems __________________________________________

c) Livestock products

Type of animal Type of products Unit price Total price

7. Crop management practices for different crops

Activity Wheat Teff Wassera Barley Sorghum Horse bean Field peas Others

For each crop type mention

Season ___________________________________
Field no___________________________________
Area cultivated _____________________________
Total labor per day __________________________
Labor source_______________________________
Work - starting date________________ ending date__________________
Method of sowing
broad casting (rate) ____________

138
 row planting ( rate)_____________
filling (rate)___________________
Amount of seed
___________ local_____________ improved
Fertilization
DAP _____ Urea _______ Manure ________ Other _________

Problems facing crop activities

Sequencially____________________________________________________
Solutions to the problems _________________________________________

8. Consumption condition.
Household food requirement____________________________________________
Amount used/ utilized_____________________________________________
How can you meet the additional requirement
Purchase
Source of money _______________ Amount__________________
Other
Source of money _______________ Amount__________________

9. Market situation.
a) Selling activity
Types of product sold Unit price ______________ Total value __________________
b) Purchasing activities
-Types of input purchased purpose_______ Unit price ______ Total value __________
-Farm implements purpose _______ Unit price ______ Total value __________

10. Energy supply

-Source of energy to cook meal_____________________________________________

11. Financial source.

Indicate source of income _____________________________________________

139
 Source of fund Purpose Amount interest rate
_____________ _______ _________ _________
_____________ _______ _________ _________

-Problems encountered due to shortage of financial fund

_____________________________________________________

12. Off farm cash income

- Employment opportunities
- Parent support
Activities income
_____________ _________
_____________ _________

Indicate who works for how often and for what purpose

Appendix 10 SKELETON OF LP. MATRICES FOR A REPRESENTATIVE FARM.

O O O O O O O O O O O O O S S S S S S S S S S S
W W W T T B B W W H F L G W W W T H B W W F L G
H H H E E A A A A B P E P H H H E B A A A P E P
P W W F F R R S S E E N E P W W F E R S S E N E
F F F F L L P W A A T A F F F A L P W A T A
P I P W P W F P P P P P I P P P F P P P
S F F P S P
P P P P
1 2 3 4 5 6 7 8 9 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2
0 1 2 3 4 5 6 7 8 9 0 1 2 3 4
1 OCLAND 1 1 1 1 1 1 1 1 1 1 1 1 1
2 SCLAND 1 1 1 1 1 1 1 1 1 1 1
3 PLAND
4 EQUAL
5 LAB1 + + + + + + + + + + + + + + + + + + + + + + + +

140
6 LAB2 + + + + + + + + + + + + + + + + + + + + + + + +
7 LAB3 + + + + + + + + + + + + + + + + + + + + + + + +
8 LAB4 + + + + + + + + + + + + + + + + + + + + + + + +
9 OXLAB1 + + + + + + + + + + + + + + + + + + + + + + + +
10 OXLAB2 + + + + + + + + + + + + + + + + + + + + + + + +
11 W/CAP + + + + + + + + + + + + + + + + + + + + + + + +
12 OWHY -
13 OWHWFY -
14 OWHWFISY -
15 OTEFFY -
16 OTEFFWFY -
17 OBARLY -
18 OBARLWFY -
19 OWASY -
20 OWASWFY -
21 OHBEAY -
22 OFPEAY -
23 OLENTY -
24 OGPEAY -
25 SWHY -
26 SWHWFY -
27 SWHWFISY -
28 STEFFY -
29 SBARLY -
30 SBARLWFY -
31 SWASY -
32 SWASWFY -
33 SHBEAY -
34 SFPEAY -
35 SLENTY -
36 SGPEAY -
37 OSTROWY - - - - - - - - - - - - -
38 SSTROWY - - - - - - - - - - -
39 PASTY

SKELETON OF LP. MATRICES FOR A REPRESENTATIVE FARM.

O OO O O O O O O O O SO O S S S S S S S S S S
W WW T T B B W W H F WL G W W T H B W W F L G
H HH E E A A A A B P HE P H H E B A A A P E P
P WW F F R R S S E E WN E P W F E R S S E N E
FF F F L L P W A A FT A F F A L P W A T A
IP P W P W F P P IP P P P P P F P P P
S F F P S P
P P P P
1 2 3 4 5 6 7 8 9 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2
0 1 2 3 4 5 6 7 8 9 0 1 2 3 4
40 MILKY
41 MANURP
42 HAYY
43 COWR
44 COWC
45 OXR
141
 46 OXC
47 HEIFER
48 BULLR
49 HIFERS
50 BULLS
51 LAMBP
52 BTP
53 KIDP
54 EGGP
55 HONYP
56 EQCLPY
57 WHCR
58 TEFFCR
59 BARLCR
60 WASCR
61 HBEACR
62 GPEACR
63 FPEACR
64 LENTCR
65 MANCR
66 MILKR
67 COWM
68 OXENM
69 SHEEPM
70 POLTRY
71 BHIVE
72 HORSEM
73 DONKYM
74 GOATM
OBJ. FUN. - - - - - - - - - - - - - - - - - - - - - - - - -

SKELETON OF LP. MATRICES FOR A REPRESENTATIVE FARM.

O S H P E C O H B S P B H D G WT B W H G F L
S S A A Q O X E U H O H O O O H E A A B P P E
T T Y S U WC E L E L I R N A C F R S E E E N
R R P T A K F L E T V S K T F L C A A A T
O O P L R K P R E E Y C C C C C C
W W P K Y
P P
2 2 2 2 2 3 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4
5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7
1 OCLAND
2 SCLAND
3 PLAND 1 1
4 EQUAL 1
5 LAB1 + + + + + + + + + + + + +
6 LAB2 + + + + + + + + + + + + +
7 LAB3 + + + + + + + + + + + + +
8 LAB4 + + + + + + + + + + + + +
9 OXLAB1 + + + +

142
 10 OXLAB2 + + + +
11 W/CAP + + + + + + + + + + + + + +
12 OWHy
13 OWHWFY
14 OWHWFISY
15 OTEFFY
16 OTEFFWFY
17 OBARLY
18 OBARLWFY
19 OWASY
20 OWASWFY
21 OHBEAY
22 OFPEAY
23 OLENTY
24 OGPEAY
25 SWHP
26 SWHWFY
27 SWHWFISY
28 STEFFY
29 SBARLY
30 SBARLWFY
31 SWASY
32 SWASWFY
33 SHBEAY
34 SFPEAY
35 SLENTY
36 SGPEAY
37 OSTROWY - + + + + +
38 SSTROWY -
39 PASTY - + + + + + +
SKELETON OF LP. MATRICES FOR A REPRESENTATIVE FARM.

O S H P E C O H B S P B H D G W T B W H G F L
S S A A Q O X E U H O H O O O H E A A B P P E
T T Y S U W C E L E L I R N A C F R S E E E N
R R P T A K F L E T V S K T F L C A A A T
O O P L R K P R E E Y C C C C C C
W W P K Y
P P
2 2 2 2 2 3 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4
5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7
40 MILKY -
41 MANURP - - - - - - - -
42 HAYY - + + +
43 COWR + -1
44 COWC -
45 OXR - +
46 OXC
47 HEIFER - 1
48 BULLR - 1
49 HIFERS -
50 BULLS -

143
51 LAMBP -1
52 BTP
53 KIDP -1
54 EGGP -1
55 HONYP -1
56 EQCLPY -1
57 WHCR 1
58 TEFFCR 1
59 BARLCR 1
60 WASCR 1
61 HBEACR 1
62 GPEACR 1
63 FPEACR 1
64 LENTCR 1
65 MANCR
66 MILKCR +
67 COWM 1
68 OXENM 1
69 SHEEPM 1
70 POLTRY 1
71 BHIVE 1
72 HORSEM 1
73 DONKYM 1
74 GOATM 1
OBJ. FUN. - - - - - - - - - - -

SKELETON OF LP. MATRICES FOR A REPRESENTATIVE FARM.

M M WT B W H F L G C
S C S G H B L B K E H E
A I H E A A B P E P O
S C H O E U A T I G O Q
N L S F R S E E N E X
T O E A I L M P D G N U
U K F L S A A T A S
R W E T F L B S S S Y A
B C S S S S S S O S P S E S S S L
W S R P
T S S
4 4 5 5 5 5 5 5 5 5 5 5 6 6 6 6 6 6 6 6 7 6 6
8 9 0 1 2 3 4 5 6 7 8 9 0 1 3 4 5 6 7 8 0 RHS 2 9
1 OCLAND ≤
2 SCLAND ≤
3 PLAND ≤
4 EQUAL ≤
5 LAB1 + + + + + + + + + + + + + + + + + + + + + ≤
6 LAB2 + + + + + + + + + + + + + + + + + + + + + ≤
7 LAB3 + + + + + + + + + + + + + + + + + + + + + ≤
8 LAB4 + + + + + + + + + + + + + + + + + + + + + ≤
9 OXLAB1 ≤
10 OXLAB2 ≤
11 W/CAP ≤
12 OWHY 1 ≤

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13 OWHWFY 1 ≤
14 OWHWFISY 1 ≤
15 OTEFFY 1 ≤
16 OTEFFWFY 1 ≤
17 OBARLY 1 ≤
18 OBARLWFY 1 ≤
19 OWASY 1 ≤
20 OWASWFY 1 ≤
21 OHBEAY 1 ≤
22 OFPEAY 1 ≤
23 OLENTY 1 ≤
24 OGPEAY 1 ≤
25 SWHPY 1 ≤
26 SWHWFY 1 ≤
27 SWHWFISY 1 ≤
28 STEFFY 1 ≤
29 SBARLY 1 ≤
30 SBARLWFY 1 ≤
31 SWASY 1 ≤
32 SWASWFY 1 ≤
33 SHBEAY 1 ≤
34 SFPEAY 1 ≤
35 SLENTY 1 ≤
36 SGPEAY 1 ≤
37 OSTROWY ≤
38 SSTROWY ≤
39 PASTY ≤
SKELETON OF LP. MATRICES FOR A REPRESENTATIVE FARM.

M MWT B WH F
H L G C C S G B L B K
E E H S
A I H E A A B P
E E P O C H O U A T I
Q G O S
N L S F R S E E
I N E X O E A L M P D
U G N T
U K F L S A A
F T A S W E T L B S S
A S Y R
B C S S S S
E S S S P S S S L S O
R S P W
S S T
4 4 5 5 5 5 5 5 5 5 5 5 6 6 6 6 6 6 6 6 6 6 7 RHS
8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0
40 MILKY 1 ≤
41 MANURP 1 ≤
42 HAYY ≤
43 COWR ≤
44 COWC 1 ≤
45 OXR ≤
46 OXC 1 ≤
47 HEIFER 1 ≤
48 BULLR 1 ≤
49 HIFERS ≤
50 BULLS ≤
51 LAMBP 1 ≤
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52 BTP 1 ≤
53 KIDP 1 ≤
54 EGGP 1 ≤
55 HONYP 1 ≤
56 EQCLPY 1 ≤
57 WHCR ≥
58 TEFFCR ≥
59 BARLCR ≥
60 WASCR ≥
61 HBEACR ≥
62 GPEACR ≥
63 FPEACR ≥
64 LENTCR ≥
65 MANCR 1 ≥
66 MILKR 1 ≥
67 COWM ≤
68 OXENM ≤
69 SHEEPM ≤
70 POLTRY ≤
71 BHIVE ≤
72 HORSEM ≤
73 DONKYM ≤
74 GOATM ≤
OBJ.FUN. + + + + + + + + + + + + + + + + + + + + +

Activities

1. OWHP Own wheat production

2. OWHWFYP Own wheat with fertilizer production
3. OWHWFISP Own wheat with fertilizer and improved seed production
4. OTEFFP Own teff production
5. OTEFFWFYP Own teff with fertilizer and production
6. OBARLP Own barly production
7. OBARLWFP Own barly with fertilizer production
8. OWASP Own wassera production
9. OWASWFP Own wassera with fertilizer production
10. OHBEAP Own horse bean production
11. OFPEAP Own field peasproduction
12. OLENTP Own lentil production
13. OGPEAP Own grass pea production
14. SWHP Share wheat production
15. SWHWFP Share wheat with fertilizer production
16. SWHWFISYP Share with fertilizer and improved seed production
17. STEFFP Share teff production
18. SBARLYP Share barly production
19. SWASYP Share wassera production
20. SWASWFP Share wassera with fertilizer production

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21. SHBEAP Share horse bean production
22. SFPEAP Share field peas production
23. SLENTYP Share lentil production
24. SGPEAYP Share grass pea production
25. OSTROWP Own strow production
26. SSTROWP Share strow production
27. HAYP Hay production
28. PASTP Pasture production
29. EQUALP Equaluptus production
30. COWK Cow keeping
31. OXC Oxen keeping
32. HEEFRK Heifer keeping
33. BULLK Bull keeping
34. SHEEP Sheep keeping
35. POLTRY Poltry keeping
36. BHIVE Beehivekeeping
37. HORSE Horsekeeping
38. DONKY Donkeykeeping
49. GOAT Goatkeeping
40. WHC Wheat consumption
41. TEFFC Teff consumption
42. BARLC Barly consumption
43. WASC Wassera consumption
44. HBEAC Horse bean consumption
45. GPEAC Grass pea consumption
46. FPEAC Feild pea consumption
47. LENTC Lentil consumption
48. MANUB Manure Burnning.
49. MILKC Milk consumption
50. WHS Wheat Salling
51.TEFFS Teff Salling
52. BARLS Barly Salling
53. WASS Wassera Salling
54. HBEAS Horse bean Salling
55. GPEAS Grass pea Salling
56. FPEAS Feild pea Salling
57. LENTS Lentil Salling
58. CCOWS Culled Cow Salling
59. COXS Culled Ox Salling
60. SHEEPS Sheep salling
61. GOATS Goat Salling
62. HEEFRS Heifer Salling
63. BULLS Bull Salling
64. LAMBS Lamb Salling
65. BTPS Butter produced Salling
66.KIDS Kids Salling
67. EGGS Egg Salling
68. HONYS Honey Salling
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69. EQUALS Equaluptus Salling
70. SSTROWT Share strow transfer.

LIST OF CONSTRAINTS

1. OCLAND Own crop land

2. SCLAND Sare crop land
3. PLAND Pasture land
4. EQUAL Equaluptus land
5. LAB1 Human labor one
6. LAB2 Human labor two
7. LAB3 Human labor three
8. LAB4 Human labor four
9. OXLAB1 Oxen labor one
10. OXLAB2 Oxenlabor two
11. W/CAP Working capital
12. OWHY Own wheat yield
13. OWHWFY Own wheat with fertilizer yield
14. OWHWFISY Own wheat with fertilizer and improved seed yield
15. OTEFFY Own teff yield
16. OTEFFWFY Own teff with fertilizer and yield
17. OBARLY Own barly yield
18. OBARLWFY Own barly with fertilizer yield
19. OWASY Own wassera yield
20. OWASWFY Own wassera with fertilizer yield
21. OHBEAY Own horse bean yield
22. OFPEAY Own field peas yield
23. OLENTY Own lentil yield
24. OGPEAY Own grass pea yield
25. SWHP Share wheat yield
26. SWHWFY Share wheat with fertilizer yield
27. SWHWFISY Share with fertilizer and improved seed yield
28. STEFFY Share teff yield
29. SBARLY Share barly yield
30. SBARLWFY Share barly with fertilizer yield
31. SWASY Share wassera yield
32. SWASWFY Share wassera with fertilizer yield
33. SHBEAY Share horse bean yield
34. SFPEAY Share field peas yield
35. SLENTY Share lentil yield
36. SGPEAY Share grass pea yied
37. OSTROWY Own strow yield
38. SSTROWY Share strow yield
39. PASTY Pasture yied
40. MILKY Milk yield
41. MANUREP Manure production
42. HAYP Hay production
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43. COWR Cow rearing
44. COWC Cow cull
45. OXR Oxen rearing
46. OXC Oxen cull
47. HEIFER Heifer rearing
48. BULL Bull rearing
49. LAMBP Lamb producion
50. HIFERS Heifer sale
51.BULLS Bull sale
52.KID Kid rearing
53. EGGP Egg producion
54. HONYP Hony producion
55. KIDP Kid producion
56. EQUALPY Equaluptus yield
57. WHCR Wheat consumption requirement
58. TEFFCR Teff consumption requirement
59. BARLCR Barly consumption requirement
60. WASCR Wassera consumption requirement
61. HBEACR Horse bean consumption requirement
62. GPEACR Grass pea consumption requirement
63. FPEACR Feild pea consumption requirement
64. LENTCR Lentil consumption requirement
65. MANCR Manure consumption requirement
66. MILKCR Milk consumption requirement
67. COWM Cow maximum
68. OXENM Oxen minimum
69. SHEEPM Sheepmaximum
70. POLTRYM Poultry maximum
71. BHIVEM Beehive maximum
72. HORSE Horse maximum
73. DONKY Donkey maximu
74. GOATM Goat maximum

149