INCOME
RISK AND CROP PRODUCTION PATTERNS OF SMALL-SCALE FARMERS IN EASTERN OROMIYA
REGION OF ETHIOPIA
Abstract:
Income risk
associated with crop production was analysed using the Quadratic Risk
Programming Model for users and non-users of maize production technologies in
Dadar district in Ethiopia. The E-V results revealed that both categories of
farmers have the same degree of risk aversion as reflected by the degree of risk
aversion coefficient (
). In addition, the optimisation model results showed that improved maize
production is associated with higher income risk as no more than the minimum
subsistence constraint was chosen under higher degrees of risk aversion. While
an increase in fertilizer prices reduced maize area cultivated for package
users, the sensitivity analysis results for increases in maize prices showed a
substantial rise in the area allocated to improved maize. However, for increased
maize prices, area allocated to maize remained at subsistence level for
non-users of the package. The development and promotion of new agricultural
technologies need to take into account the yield and income risks associated
with maize production in the area. In addition, expansion of rural road
infrastructure, the promotion of post-harvest crop storage technologies and food
processing industries should be given emphasis as strategies to stabilize prices
and reduce income variability arising from crop production in the area.
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