Iowa State University Capstones, Theses and Retrospective Theses and Dissertations Dissertations 1980 An economic analysis of household farm production in the Arssi region of Ethiopia: cases from Chilalo province Sisay Asefa Iowa State University Follow this and additional works at: https://lib.dr.iastate.edu/rtd Part of the Agricultural and Resource Economics Commons, and the Agricultural Economics Commons Recommended Citation Asefa, Sisay, "An economic analysis of household farm production in the Arssi region of Ethiopia: cases from Chilalo province " (1980). Retrospective Theses and Dissertations. 6682. https://lib.dr.iastate.edu/rtd/6682 This Dissertation is brought to you for free and open access by the Iowa State University Capstones, Theses and Dissertations at Iowa State University Digital Repository. It has been accepted for inclusion in Retrospective Theses and Dissertations by an authorized administrator of Iowa State University Digital Repository. 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Requests can be made to our Dissertations Customer Services Department. 5. Some pages in any document may have indistinct print. In all cases we have filmed the best available copy. Uni Internationa! 300 M. ZEEB ROAD, ANN ARBOR. Ml 48106 18 BEDFORD ROW, LONDON WCIR 4EJ, ENGLAND 8103429 ASEFA, SISAY AN ECONOMIC ANALYSIS OF HOUSEHOLD FARM PRODUCTION IN THE ARSSI REGION OF ETHIOPIA: CASES FROM CRILALO PROVINCE Iowa State University PH.D. 1980 University Microfilms Intern Sti onsil 300 N. Zeeo Road. Ann Arbor, MI 48106 An economic analysis of household farm production in the Arssi region of Ethiopia: Cases from Chilalo province by Sisay Asefa A Dissertation Submitted to the Graduate Faculty in Partial Fulfillment of the Requirements for the Degree of DOCTOR OF PHILOSOPHY Department: Economics Major: Agricultural Economics Approved: Signature was redacted for privacy. Signature was redacted for privacy. Signature was redacted for privacy. For thë^ Graduate College Iowa State University Ames, Iowa 1980 ii TABLE OF CONTENTS Page CHAPTER I. INTRODUCTION 1 A Brief Background 1 Problem Situation 5 Study Objectives 9 CHAPTER II. REVIEW OF SOME RELATED THEORETICAL CONCEPTS 12 Introduction 12 General Considerations 13 Models of Household Farm Decision-Making 19 CHAPTER III. AGRICULTURE IN RELATION TO THE NATIONAL ECONOMY 42 Introduction 42 Structure of Agricultural Production and Resources 44 Employment and Industries Based on Agriculture 52 Land Tenure Systems Prior to the Revolution 53 Prerevolution Experiences with Rural Development Programs The Package Projects 59 CHAPTER IV. THE STUDY AREA 67 General Characteristics 67 Crop Production and Traditional Farming Methods 69 Improved Production Technology and the Arssi Rural Development Unit (ARDU) 77 CHAPTER V. METHODS AND MODELS USED AND SITUATIONS ANALYZED 82 Situations Considered and Data Used 82 Methods Used 89 Structure of the Programming Models 92 iii Page CHAPTER VI. PRESENTATION AND ANALYSIS OF RESULTS 103 Introduction 103 Comparison of Actual and Optimal Farm Plans Under Traditional Technology and High Capital Level (K^) 104 The Effect of Introducing Improved Technology on Farm Income, Resource Productivity and Efficiency under Unlimited Capital Level (K^) 107 The Effects of Changes in Supply of Capital on Resource Use, Efficiency and Productivity 112 The Effect of Introducing New Crop Production Technology on Marginal Value Productivity of Capital 124 Value of Marginal Productivity Comparisons for Capital of the Four Average Farms Under Tradi­ tional Crop Production Technology 136 The Effect of Additional Labor Supply Availability During Critical Production Periods on Optimal Resource Use and Productivity 139 The Effects of Removing Minimum Household Con­ sumption Restraint on Optimal Farm Plans 143 CHAPTER VII. SUMMARY AND POLICY CONSIDERATIONS 150 Introduction 150 Brief Summary of Results 151 Towards Progressive Production Policies 157 BIBLIOGRAPHY 159 ACKNOWLEDGMENTS 175 APPENDIX A: SUMMARY TABLES OF RESULTS 176 APPENDIX B: UNITS OF [MEASURE AND CURRENCY 190 iv LIST OF TABLES Page Table 1.1. Agricultural sector's contribution to the Gross Domestic Product (GDP) and its performance in relation to other sectors of the national economy 6 Table 3.1. Land use structure 49 Table 3.2. Crop production pattern 51 Table 3.3. Estimated employment classified by industry 52 Table 3.4. Production and employment in industries 54 Table 3.5. Percentage distribution of holdings by size 56 Table 3.6. Percentage of holdings by tenure 57 Table 3.7. Distribution of loans from the Agri­ cultural and Industrial Development Bank (AIDE) - 1971-1974 60 Table 3.8. Distribution of Ministry of Agriculture (EPID) loans in MPP areas (1971-1973) 64 Table 3.9. Actual and planned expansion of MPP - 1971-1979 66 Table 4.1. Land distribution in the four areas of Chilalo Awraja according to soil fertility 70 Table 4.2. Estimated total crop production in Chilalo Awraja in 1971 71 Table 4.3. Climatic data and distribution of crop operations by calendar months in Chilalo 74 Table 4.4. Actual cropping pattern, resource use, and net return to average farms in four areas of Chilalo Awraja 76 Table 4.5. A comparison of benefits per hectare to tenants and landlords by using improved wheat seed and chemical fertilizer 80 V Page Table 5.1. Annual consumption of food crops per household in quintals 83 Table 5.2. The alternative resource, technology, and objective function model situations con­ sidered on each area farm 87 Table 5.3. Estimates of crop prices in nominal terms 88 Table 5.4. Average yields for crops in the four areas of Chilalo under traditional and new crop production techniques 89 Table 6.1. Comparison of actual and optimal crop pro­ duction patterns in hectares and net income (Birr) under traditional technology and high capital (Kg) level for the four average area farms in Chilalo 105 Table 6.2. Comparison of average productivities of resources (in Birr percent of a resource) under actual and optimal farm plan in traditional technology (resource situation 3) 108 Table 6.3. The effect of improved technology on farm income and net returns (Birr) per unit of land, labor and capital under unlimited capital level (K4) (comparison of Tables A3 and A7) 110 Table 6.4. The effect of three levels of capital availability on optimal resource use, pro­ ductivity and farm income under traditional technology for the four area farms 115 Table 6.5. The effect of four levels of capital supply availability on optimal resource use, pro­ ductivity, and farm income under the combina­ tion of traditional and improved tech­ nologies for the four area farms 120 Table 6.6. Value of marginal productivities under three alternative resource and technology situa­ tions 126 vi Page Table 6.7. Relative values of marginal productivities of capital four the four area average farms under traditional technology 137 Table 6.8 Changes in resource use, productivity and farm income when additional cooperative labor is available during critical production periods under high capital level (K4) and combinations of traditional and improved technologies for the four average farms 140 Table 6.9. Changes in resource use, productivity, and farm income when hired labor is available in addition to household labor during critical periods under high capital level (K^) and combination of traditional and improved crop production techniques 142 Table 6.10, The effect of removing minimum consumption constraint on resource use, income and pro­ ductivity under traditional technology and high capital level (K3) for the four average farms 145 Table 6.11, The effect of removing minimum consumption constraint on resource use, income, and produc­ tivity under traditional and improved technol­ ogy combined and unlimited capital level (K,) for the four area average farms 148 Table A1. Optimal resource use and activity levels under model Situation 1 177 Table A2. Optimal resource use and activity levels under model Situation 2 178 Table A3. Optimal resource use and activity levels under model Situation 3 179 Table A4. Optimal resource use and activity levels under model Situation 4 180 Table A5. Optimal resource use and activity levels under model Situation 5 181 vii Page Table A6. Optimal resource use and activity levels under model Situation 6 182 Table A7. Optimal resource use and activity levels under model Situation 7 183 Table A8.