ii Farmers’ Willingness to Pay for Improved Forage Seed in LIVES Districts of West Shewa Zone, Ethiopia A Thesis Submitted to the College of Agriculture and Environmental Sciences, the School of Agricultural Economics and Agribusiness, School of Graduate Studies HARAMYA UNIVERSITY In Partial Fulfillment of the Requirements for the Degree of MASTER OF SCIENCE IN AGRICULTURE (AGRICULTURAL ECONOMICS) Lemi Gonfa June, 2015 Haramaya University, Haramaya iii APPROVAL SHEET SCHOOL OF GRADUATE STUDIES HARAMAYA UNIVERSITY I hereby certify that I have read and evaluated this thesis entitled Farmers’ Willingness to Pay for Improved Forage Seed in LIVES districts of West Shewa Zone, Ethiopia prepared under my guidance by Lemi Gonfa. I recommend that it can be submitted as fulfilling the Thesis requirement. Lemma Zemedu (PhD) _________________ _______________ Major Advisor Signature Date Berhanu Geberemedih (PhD) _________________ _______________ Co-advisor Signature Date As member of the Board of Examiners of the MSc Thesis Open Defense Examination , I certify that I have read, evaluated the Thesis prepared by Lemi Gonfa and examined the candidate. I recommended that the Thesis be accepted as fulfilling the Thesis requirement for the Degree of Master of Science in Agriculture (Agricultural Economics). Mengistu Ketema (PhD ) _________________ _______________ Chairperson Signature Date Jema Haji (PhD) _________________ _______________ Internal Examiner Signature Date Endrias Geta (PhD) _________________ _______________ External Examiner Signature Date Final approval and acceptance of the Thesis is contingent upon the submission of its final copy to the Council of Graduate Studies (CGS) through the candidate’s department or school of graduate committee (DGC or SGC). iv DEDICATION This thesis work is dedicated to my wife, Atsede Molla for taking care of my lovely son Naol Lemi and little princess Bersabeh Lemi during my absence and for nursed me with affection and love throughout my work. This thesis work also dedicated to my beloved mother, Atsedu Gudetta, who passed away before seeing my end. v STATEMENT OF AUTHOR First, I declare that this thesis is the result of my own work and that all sources or materials used for this thesis have been duly acknowledged. This thesis is submitted in partial fulfillment of the requirements for an advanced M.Sc. degree at Haramaya University and to be made available at the University’s Library under the rules of the Library. I confidently declare that this thesis has not been submitted to any other institutions anywhere for the award of any academic degree, diploma, or certificate. Brief quotations from this thesis are allowable without special permission, provided that accurate acknowledgement of source is made. Requests for permission for extended quotation from or reproduction of this manuscript in whole or in part may be granted by School of Agricultural Economics and Agribusiness or Dean of the School of Graduate Studies when in his or her judgment the proposed use of the material is in the interests of scholarship. In all other instances, however, permission must be obtained from the author. Name: Lemi Gonfa Signature: Date of Submission: June, 2015 School/ Department: School of Agricultural Economics and Agribusiness vi BIOGRAPHICAL SKETCH Lemi Gonfa Debeli was born in West Shewa Zone of Oromiya Region in 1983. He attended his elementary and junior education in Addis Ababa, Keraniyo Medanialem Junior and Secondary School. He attended his high school education in Dejach Wondirad Preparatory School. After completion of his high school education, he joined Jimma University, and graduated B.Sc. Degree in Agricultural Economics in 2010. Immediately after graduation, the author was employed in Wolaita Sodo University as graduate assistant and served for two years. Then after, he joined Haramaya University in 2012 to pursue graduate studies for the M.Sc. in Agricultural Economics. The author is married and has one son and one daughter. vii ACKNOWLEDGEMENTS First and foremost, I would like to praise and extend my unshared thanks to Almighty God, for providing me the opportunity, smoothening of all aspects regarding my study and being with me in all aspects during my stay at Haramaya University and throughout my life. I extend my heartfelt thanks to my major advisor Dr. Lemma Zemedu for his valuable advice, insight and guidance starting from proposal development to the completion of the research work and his provision of reference material. I am again thankful to my co-advisor, Dr. Berahnu Gebremedhin, for his willingness to advise me as well as his valuable guidance and support throughout my research work. Both have worked hard to keep me on the right track and for the accomplishment of the study. I express my sincere appreciation to LIVES (ILRI) Project for funding my research and other study expenses and Ministry of Education for giving me chance to pursue my post graduate study and paying my salary during my study program. I would like also to thank all management and staff members of West Shewa Agricultural Offices for their hospitality and kind cooperation in all aspects. I also remain thankful to all the staff of LIVES project from zone to head office that facilitated and assisted me in running any expenses of my study. My special thank go to my wife Mrs. Atsede Molla for being with me all the time providing me a moral support, encouragement and prayer while shouldering all my families burden with patience and endurance. Finally, I express my heartfelt gratitude to the whole family for their prayer and patience in all inconvenience they had during my absence for academic and research work. viii ACRONYMS AND ABBREVIATIONS APHRD Animal and Plant Health Regulatory Directorate ARDU Arsi Rural Development Unit ASE Amhara Seed Enterprise AWOA Adea-berga Woreda Office of Agriculture BoA Bureau of Agriculture BoARD Bureau of Agriculture and Rural Development BOFED Bureau of Finance and Economic Development CSA Central Statistical Agency CV Contingent Valuation CVM Contingent Valuation Method DBDC Double Bounded Dichotomous Choice DBCV Double Bounded Contingent Valuation EARO Ethiopia Agricultural Research Organization EIAR Ethiopian Institute of Agricultural Research ESE Ethiopian Seed Enterprise ETB Ethiopian Birr EWOA Ejere Woreda Office of Agriculture FAO Food and Agriculture Organization FBSM Farmer Based Seed Multiplication FCUs Farmers Cooperative Unions FLDP Fourth Livestock Development Project GTP Growth and Transformation Plan IFPRI International Food Policy Research Institute ILRI International Livestock Research Institute LIVES Livestock and Irrigation Value Chains for Ethiopian Smallholders MoA Ministry of Agriculture MoARD Ministry of Agriculture and Rural Development MoFED Ministry of Finance and Economic Development MWOA Meta-robi Woreda Office of Agriculture ix ACRONYMS AND ABBREVIATIONS (Continued) NARS National Agricultural Research Systems NGOs Nongovernmental Organizations OSE Oromiya Seed Enterprise RARIs Regional Agricultural Research Institutes RSE Regional Seed Enterprise SRSE Southern Nations Nationalities and Peoples Region Seed Enterprise WTP Willingness to Pay WTA Willingness to Accept x TABLE OF CONTENTS STATEMENT OF AUTHOR v BIOGRAPHICAL SKETCH vi ACKNOWLEDGEMENTS vii ACRONYMS AND ABBREVIATIONS viii LIST OF TABLES xii LIST OF FIGURES xiii LIST OF TABLES IN THE APPENDIX xiv 1. INTRODUCTION 1 1.1. Background of the Study 1 1.2. Statement of the Problem 2 1.3. Objectives of the Study 4 1.4. Scope and Limitation of the Study 4 1.5. Significance of the Study 5 1.6. Organization of the Thesis 5 2. LITERATURE REVIEW 6 2.1. Definitions and Concepts of Seed, Seed System and Willingness to Pay 6 2.2. The Evolution of Improved Forage Seed System in Ethiopia 7 2.2.1. Historical development of improved forage seed system 7 2.2.2. Current improved forage seed system 8 2.2.3. Demand planning and seed supply 10 2.3. Theoretical Background of WTP 10 2.3.1. Methods of valuation of environmental resources 10 2.3.2. Theoretical background of the contingent valuation method 12 2.4. Empirical Studies on WTP 16 2.5. Conceptual Framework of the Study 18 3. RESEARCH METHODOLOGY 20 3.1. Descriptions of the Study Area 20 3.1.1. Location and topography 20 3.1.2. Agro-Ecology 20 3.1.3. Population 21 3.1.4. Agriculture 21 xi TABLE OF CONTENTS (Continued) 3.2. Sampling Design and Methods of Data Collection 23 2.3.1. Sampling procedures and sample size 23 2.3.2. Methods of data collection 23 3.2. Methods of Data Analysis 26 3.3.1. Descriptive statistics 26 3.3.2. Econometric model specification 26 3.3.3. Variables definitions, measurements and their working hypotheses 29 3.3.4. Model diagnostic 33 4. RESULTS AND DISCUSSION 35 4.1. Feed Resources and Improved Forage Seed System of the Study Area 35 4.1.1. Livestock feeding strategies 35 4.1.2. Seed system at study area 36 4.1.3. Challenges of seed system at study area 37 4.2. Farmers’ WTP for Improved Forage Seed 38 4.2.1. Descriptive results of WTP for improved forage seed 38 4.2.2. Econometric results of WTP for improved forage seed 42 4.2.3. Estimating mean WTP for alfalfa, elephant grass, oats and vetch 50 5. SUMMARY, CONCLUSION AND RECOMMENDATIONS 52 5.1. Summary and Conclusions 52 5.2. Recommendations 53 6. REFERENCES 55 7. APPENDICES 61 xii LIST OF TABLES Table Page 1. Agro-Ecological characters of selected districts and West Shewa Zone 21 2. Population and households of the selected districts in West Shewa Zone 21 3. Basic agricultural statistics of the LIVES districts in West Shewa Zone 22 4. Number of sample households taken from sampled Kebeles 24 5. Classification and measurements of variables used in the regression model 34 6. Improved forage utilization trends (2009-2014) 38 7. Distribution of households’ continuous variables 40 8. Descriptive statistics of dummy explanatory variables 41 9. Distribution of willing and non-willing respondents 41 10.