WOLLEGA UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ECONOMICS

THE IMPACT OF INPUT UTILIZATION ON THE AGRICULTURA OUTPUT

(IN THE CASE STUDY OF AIRA WOREDA)

 THE RESEARCH PROPOSAL SUBMITTED TO GEMECHU M.(PhD)

 PREPARED BY: TEKALIGN HABTAMU LEMA ID NO: WU1103372

FEBRUARY, 2021
NEKEMTE, ETHIOPIA
 ABSTRACT
This study will be explain the impacts of inputs on the performance of agriculture with special
focus on the impact of improved seed and fertilizer in determining the performance of
agriculture, due to the presence of low yielding capacity of agricultural land. The paper used
both primary and secondary data collected from Aira woreda and different sources and analyzed
through descriptive data analysis. As data collected shows, the agricultural sector was more
vulnerable to input used thus, the applicability of this input hindered by different constraint of
complimentary input that not fulfilled till now. The study also will identify the problem farmer
face while applying agricultural input like fertilizer and improved seeds. In doing so, the paper
has employed a time series analysis on long-term time series data covering the period from
1974/75 to 2021/11.

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Table of Contents
ABSTRACT......................................................................................................................................................i
ACRYNOMS..................................................................................................................................................iii
CHAPTER ONE...............................................................................................................................................1
INTRODUCTION............................................................................................................................................1
1.1 Background of the Study......................................................................................................................................1

1.2 Statement of the Problem.....................................................................................................................................2

1.3 Objectives of the study.........................................................................................................................................2

1.4 Significance of the study......................................................................................................................................2

1.5 Scope of the study................................................................................................................................................2

1.6 Limitation of the study.........................................................................................................................................3

1.7 Organization of the proposal................................................................................................................................3

CHAPTER TWO..............................................................................................................................................4
LITERATURE REVIEW.................................................................................................................................4
2.1 Theoretical literature............................................................................................................................................4

2.1.1 Agriculture and Economic Development.....................................................................................................4

2.1.2 Improved seeds and agricultural productivity..............................................................................................4
2.2. Empirical Literature Review...............................................................................................................................6

CHAPTER THREE........................................................................................................................................10
RESEARCH METHODOLOGY...................................................................................................................10
3.1 Description of the study area.............................................................................................................................10

3.2 Types of data and source....................................................................................................................................10

3.3 Sampling technique and sample size..................................................................................................................10

3.4 Data collection tools...........................................................................................................................................12

3.5 Method of Data Analysis...................................................................................................................................12

CHAPTER FOUR..........................................................................................................................................13
WORK AND BUDGET PLAN......................................................................................................................13
4.1 Work plan...........................................................................................................................................................13

4.2 Budget plan........................................................................................................................................................13

REFERENCES...............................................................................................................................................15

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 ACRYNOMS
EEA: Ethiopia Economic Association

ACE: Agricultural cooperative in Ethiopia

ICA: International cooperative Alliance

ILO: International labor organization

NCBE: National cooperative business association

ICA: International cooperative agency

FCA: Federal cooperative agency

USAID: United State aid

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 CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Agriculture is processing, marketing, and use of foods, fibers and byproducts from crops and
animals. Agriculture was the key for the development that led to rise of human civilization with
the husbandry of domesticated animals and plants creating food surplus that enabled the
development of more densely population and stratified societies. Cultivation of crops on arable
land and the pastoral herding of livestock on rangeland remain as the foundation of agriculture.
(Arega, 2011).
As in many less developed countries, the Ethiopian economy heavily depends on the agricultural
sector as its mainstay of the economy. A close look at the performance of the Ethiopian economy
also reseals its close correlation with the performance of the agricultural sector. It accounts for
about 50 % of the gross Domestic product (GDP), provides employment for 80 % of the
population, generates about 95 % of the export earnings, and it supplies about 70 % of the
country’s raw material requirement for large and medium sized industries that are agro – based.
Despite its role and importance, due to many natural and man – made factors, the performance of
Ethiopia agriculture has been very weak. Although various policies have been adopted by the
past three regimes, the sector still remains weak and has not brought a tangible impact on the
economy. (EEA, 2000/01).
Changes in technology like improved seeds and fertilizers are the major source of productivity
growth, through changes in factor ratio will also have impact on productivity. Technological
change can increase the productivity of both factors (land or labor) through in practice it will of
necessary be biased in one direction changing the ratio between returns at the margin to one
factor or the other adoption of high value crops or of inputs such as fertilizer for example, is
usually seen as labor augmentation hence, may increase the marginal return to labor relatively to
capital and land input. In line with this the quantity of fertilizers and improved seeds used and
the area they are applied to and the use of pesticides and irrigation by small holders over the
reporting period is discussed both for cereal and non-cereal crops. (EEA, VII 2007/08)

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1.2 Statement of the Problem
The important indicators for the performance of the agricultural sector such as land productivity,
per capita production, and agricultural incomes indicate that the sector continues with its
sluggish performance. The agricultural and allied activities sectoral growth performance account
1.4 % within these same years reflecting the poor performance of the economy due to its
dominance and variability in the growth rate of the sector in the overall economy.
This study investigates the impacts of fertilizer, pesticide, market and intuitional imperfections
on agricultural productivity. The model give more emphasis to impact of low adoption of
fertilizer and improved seed as a decision variables and tries to shows their enhancement in
answering the question of the ever existing debate, whether fertilizer has enhanced Ethiopian
agricultural output or not? Whether the supply of the input has worked or not? And what should
be done?

1.3 Objectives of the study

The overall objective of this study is to investigate the impact of input utilization on the
agricultural outputs in Aira woreda.
Specifically it tries to:
Examine the impacts of fertilizer and improved seed adoption on the agricultural production on
Aira woreda

1.4 Significance of the study

This study will investigate on problem associated with input utilization on agricultural
productivity so it may serve for further researcher on the district and the problem.

1.5 Scope of the study

The study tried to show the impact of input utilization on agricultural productivity of farmers of
Aira woreda. Even if there are many factors affect the agricultural productivity this research
gives more emphasis to fertilizer and improved seeds effectiveness.
Even the research done on the one district of western Wollega (Aira woreda) its conclusion and
recommendation were applicable for the other part of the country that faces the same problem.

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1.6 Limitation of the study
The short coming of the study was due to the limitation of data and finance. The study focused
on the agricultural output and used data was have its own problem i.e. respondent were not give
appropriate data and there are absence of sufficient data from district office. This highly
influences the study undertaken.

1.7 Organization of the proposal

The study will be organized in three principal chapters. The first chapter will includes
introduction of the study, back of the study, statement of the problem, objective of the study,
significance of the study, scope, limitation and organization of the study itself. The second
chapter will contains review of related literature. The third chapter will contains the research
methodology. Fourth chapter includes budget plan and time schedule.

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 CHAPTER TWO

LITERATURE REVIEW

2.1 Theoretical literature

2.1.1 Agriculture and Economic Development

In the present state of agricultural technology, mineral fertilizers constitute one of the most
important single means to increase food production” (FAO, World Food Conference document,
1974).
Sustainable agricultural development is widely acknowledged as a critical component in a
strategy to combat both poverty and environmental degradation. Yet sustainable agricultural
development remains an elusive goal, particularly in many of the poorest regions of the world. In
many of these countries, degradation of agricultural land continues to pose a serious threat to
future production potential and current livelihood of the peasant households. (Scherr et al; 1996)

2.1.2 Improved seeds and agricultural productivity

Improved seeds are critically important technology required for higher yield and productively
but the majority of the farmers use local seeds FAO/WFP(2009) report shows that in the 2008
season at least 95% of all seeds used were local seeds carried over from the previous harvest
either by farmers themselves following the traditional on-farm selection process whereby the
farmer identifies the next year’s seed stock while it is still maturing in the field and gives it
special protection or buying from preferred seed stock kept by other farmers in the same
locality. (EEA, 2007/08)
2.1.3 Scientific technological improvement and agricultural productivity
There are of two types of Agricultural development Strategies: un–modal and bi-modal. In the
case for un–modal agricultural strategy, historical experience and recent technical break through
Green Revolution justify to have an emphasis on increase in total factor productivity (TFP) to
develop agriculture. The experience of Japan and Taiwan tells us that an appropriate sequence of
innovations based on scientific knowledge and experimental methods make possible to follow

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an expansion path for the agricultural sector that is characterized by a large increase in TFP
throughout the agricultural sector. Such strategy enables larger proportion of the working
population in agriculture to be associated with increasing production technology. This uni–
modal agricultural strategy focuses on the introduction of technologies that are divisible and
scale neutral. For instance, fertilizer, small farm implements, improved seeds, insecticides
(IFPRI, 1999).
.
This un–modal strategy encourages more progressive and wider diffusion of technological
(technical) innovations adapted to the factor proportion of the sector as a whole. Small farmers
can use this sequence of innovations that are scale neutral equally. (IFPRI, 1999)

As of the case for Bi–modal agricultural strategy, a frontier firm with high capital to labour ratio
will account for the bulk of commercial production and will have the cash income to make
extensive uses of purchased inputs. However, agricultural products have inelastic demand.
Therefore, under thus strategy, small farmers cannot use purchased inputs and increase their
productivity because they are limited by the demand for their products. Because the commercial
farmers use huge capital there will be FOREX constraint. Firms under this strategy use more
capital than labour while labour is abundant in LDCs. Input of capital is subsidized for the
commercial farms. This makes capital cheaper. Commercial farms hire labour instead of using
family labour and wage for hired labour may be paid based on the minimum wage legislation.
These all result more use of capital than labors. This will increase unemployment and inequality.

Under a uni–modal agriculturist the emphasis is on divisible and scale neutral innovations.
Farmers use family labour (even if use hired labour they pay according to the demand and
supply) and appropriate combinations input that reflects the social opportunity cost. As a result,
this strategy will help in employment and reduce inequality. (IFPRI, 1999)
2.1.4 Agricultural structural change and economic growth
Agriculture has to make a net transfer of factors of production out of the agricultural sector as the
process of structural transformation takes place. And usually the farm provides: foreign
exchange, public and private investment resources and labour to the more rapidly expanding

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sector of the economy as well as increase supply of food and raw materials to support a growing
urban population and manufacturing sectors. (Bongeret, al; 2004)

The more capital intensive Bi-modal strategy emphasizes rapid adoption of mechanical
innovations that is sophisticated and hardly produced locally. This will increase imports and
creates foreign exchange constraints. Therefore, the agricultural sector’s ability to strengthening
the manufacturing sector is limited under the bi – modal agricultural strategy. Less sophisticated
technology use less capital–to–labor ratio. Hence, the un–modal strategy contributes more for the
overall economic growth and structural transformation. (Bongeret, al, 2004).

2.2. Empirical Literature Review

The role of agriculture in economic development has been viewed as passive and supportive role
based on the historical experiences of western countries in economic development was seen as
required a rapid structural activities transformations of economy from one predominantly
focused on agricultural activities to more complex modern industrial and service society. As a
result agriculture primary role was providing sufficient low priced man power to expanding in
economy. The major objective of agriculture and rural development in developing nations is
progressive improvement in rural level of living through increasing in small farming income
outputs in productivities (Legese, 2011).

The impacts of investments in road infrastructure on agricultural output and productivity are
particularly important in Sub-Saharan Africa for three reasons. First, the agricultural sector
accounts for a large share of gross domestic product (GDP) in most Sub-Saharan countries.
Second, poverty is concentrated in rural areas. Finally, the relatively low levels of road
infrastructure and long average travel time result in high transaction costs for sales of agricultural
inputs and outputs, and this limits agricultural productivity and growth. Thus, investments in
road infrastructure and related transport services can have a significant impact on rural and
national incomes through their effects on agriculture (Paul et al., 2012).

2.2.1. Agricultural Production System in Ethiopia

Agricultural production is dominated by smallholder households which produce more than 90%
of agricultural output and cultivate more than 90% of the total cropped land. Smallholders drive

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their income either in cash or through own-consumption from agricultural production. According
to the national accounts, the agricultural sector consists of crop, livestock, fishery and forestry
sub-sectors. Crop production is the dominant sub-sector within agriculture, accounting for more
than 60% of the agricultural GDP followed by livestock which contributes more than 20% of the
agricultural GDP. The contributions of forestry, hunting and fishing do not exceed 10% (Mulat et
al., 2004).
The viability of the agricultural production systems in Ethiopia, as in many areas in developing
countries, is highly constrained by degraded soils and increasing lack of reliability in rainfall
resulting from climate change. There are two main production systems in Ethiopia: the pastoral
nomadic system, and the mixed crop production system. The pastoral livestock production
system dominates the semi- arid and arid lowlands (usually below 1500 meters above sea level).
These regions cover a vast area of lands with a small livestock production. The crop production
system can be classified into smallholders’ mixed farming, producers’ cooperative farms, state
farms, and private commercial farms based on their organizational structure, size, and ownership.
The major objectives of small holder farmers’ production are to secure food for home
consumption and to generate cash to meet household needs such as clothing, farm inputs, taxes
and others (Menale et al., 2010).

2.2.2. Challenges of Agricultural Production and Productivity in Ethiopia

The agricultural production trends throughout the 1980’s up to mid-1990’s were characterized by
wide fluctuations in total output and weak growth, with grain production increasing at rate of
1.37% annually compared to population growth of 2.9 % (World Bank, 2004).

Production in the rural non-farm sector is highly elastic. That is because there is normally a large
supply of underemployed labour, or because labour productivity at very low levels of
productivity can be increased with little or no investment. That contrasts with agriculture, which
because of the land constraint is inelastic in its supply. In agriculture, production is increased by
technological change which shifts the production function

Land degradation is one of the major causes of low and in many places declining agricultural
productivity and continuing food insecurity and rural poverty in Ethiopia. The major interacting
root causes of land degradation in Ethiopia are the following; the impact of natural conditions

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especially periodic drought, inaccessibility of rural areas due to topographic constraints, steady
growth of population and livestock totals without changes in agricultural and other economic
systems, historical patterns of feudal ownership of land followed by government ownership and
despite policy changes uncertain status of land ownership, institutional overlap, duplication of
effort and shortage of financial resources, lack of rural infrastructure and markets, lack of
participation of stakeholders in management decisions especially at the local level, weak
extension services and low technology agriculture, leading to risk aversion and reliance on cattle
as wealth (Berry, 2002).

2.2.3. Prospects of Agricultural Production and Productivity in Ethiopia

Increasing productivity in smallholder agriculture is the Government’s top priority. This

recognizes that: (i) smallholder agriculture is the most important sub-sector of Ethiopia’s
economy; (ii) there remains a high prevalence of poverty among smallholder farming
communities; and (iii) there is a large potential to improve crop and livestock productivity using
proven, affordable and sustainable technologies (MoARD, 2010).

In 2011, Ethiopia was ranked 174th out of 187 countries, with a GDP per capita adjusted with the
Purchasing Power Parity of USD 971 (compared to almost USD 2000 average for Sub-Saharan
countries). After a significant contraction in 2003/04 due to a severe drought that affected
agricultural production, the Ethiopian economy has experienced a broad-based and steady
growth of real GDP. In general, the main determinants of the sustained economic growth are the
good performance of agricultural production, with significant contribution of manufacturing and
services as well as the expansion of the construction sector mainly housing, roads and
hydroelectric dams (UNDP, 2011).

The growth in agricultural outputs was largely attributed to improved productivity aided by
favorable weather condition and conducive economic policy. Cultivated land expanded by 4.6
percent and reached 12 million hectares in 2010/11. Production is estimated to have increased by
about 8.8 percent while productivity rose from 15.7 quintal/hectare in 2004/05 to 16.3 quintal per
hectare in 2010/11. Cereal production accounted for about 87.7 percent of the total production
estimated for 2010/11. Meanwhile, the 15 percent annual growth in industry was largely due to
expansion in electricity and water subsectors. Manufacturing grew by 12 percent with mining

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and quarrying expanded by 57.7 percent. The 12.5 percent growth in service sector which has
gained momentum in recent years was attributed to growth in financial sector, real estate and
hotel and tourism sectors (NBE, 2011).

Building on successful experience with model farmers, the GTP seeks to transform agriculture
by providing incentives for the commercialization of agriculture while continuing to support
smallholders to raise productivity. Thanks to the incentives that the government is providing,
foreign investment in commercial farming is expanding, which is expected to boost food
production and exports of commercial crops. Weather conditions remain a critical factor but
prospects for the agricultural sector to perform well in 2012 and 2013 are favorable in view of
the recent strides in commercialization and the positive response of smallholder farmers to
support services (AfDB, 2012).

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 CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Description of the study area

This research will be conducted in Aira town which is located in Oromia Regional state, Ethiopia
which is 504KM from Finfine, capital city of Ethiopia. This woreda has two kebeles of sub town
and 26 rural kebeles.
The 2007 national census reported a total population for this town were 16,981. The majority of
the Inhabitants Protestantism, with 88.37% reporting that as their religion, while 6.96% observed
Ethiopian Orthodox Christianity and 4.42% is Islam. Out of this populations 87% of the
population in this town engaged in agriculture; while 12% were engaged in trade.
Geographically the town has altitude and longitude of 9 ̊5’59’’North 35 ̊ 23’59’’East with an
elevation of 1852 meters above sea level. It was separated from former Aira Guliso town in
1999. Additionally, the town is far from 504KM to west of Addis Ababa.
The main economic activity of the area is mixed farming which includes crop production and
animal husbandry. Women participate in hand crafts, milking cows and Sell their products. Both
donkeys and horses are used to transport materials and human beings (Negaso Gidada).
Aira town is bounded in north by Gulliso town, in south by Lalokile town, in west by Dalle sadi
town and in east by Yubdo town.

3.2 Types of data and source

Both primary and secondary data sources will be used in the study. The primary data will be
obtained from peoples in the kebeles through distributing questionnaires and interviews. These
questionnaires would prepare in both open and closed ended method of collecting information in
an understandable form. Secondary data would obtain from published and unpublished
documents, books, internets and government office such as central statistical agency (CSA and
Aira town youth and sport office).

3.3 Sampling technique and sample size

I. Sample size

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There are two kebeles under Aira town. The total of all kebeles 18,537. Out of these population
01 and 02 kebeles are 2200 and 1520respectively. The number youth unemployment out of
population in two kebeles are 124 and 240 respectively from 01 and 02 (Aira, town
administrative office, 2016). The number youth unemployment in the two kebele are 364.
II. Sampling technique
The sampling technique employed to selected sample size will be simple random sampling. The
method involves selecting at random from all list of population [sample frame they require
number of subjects for sample 30].
The sample of youth unemployed contains subjects with characteristics similar to the population
has a whole and we are taken 30 youth unemployed using simple random sampling.
In the first stage, two kebeles are selected as sample randomly from 2 existing kebele in the
woreda. Then by dividing total population exist in that selected kebele as employments,
unemployment’s and non-labor force we will apply formula of n= N/1+N (e) 2 in order to take a
total sample size relevant to target study. In addition to this, we are going to use proportionate
sampling that will enable us in taking samples from each kebele which are to be selected from
the target population.
n=N/1+Ne2
Where, n=sample
N=the total number of population (93,339)
e= level of significance (9%) =0.09
93339
n= =123
1+ 93339 ( 0.09 ) 2
Then we apply proportionate sampling to obtain how many respondents are selected from each

n
kebele by using formulas: C= ( ) nj
N
Where, C=sample size allocated to each kebele.
N=the total number of population.
nj =population size from kebele
n =sample size.

Table1.1.Source and system of data collection

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 K e b e l e Total population in kebele Sample from kebele
Employed 4 2 9 1 1 2
Un Employed 3 0 2 8 1 2
Non labor force
T o t a l 7 3 1 9 1 2

Source; own computation from survey data of 2009

3.4 Data collection tools

3.5 Method of Data Analysis

In this study both descriptive and inferential method of data analysis will be employed.
Descriptive data analysis will be employed in order to achieve specific objective of the study,
consequence of youth unemployment by using, table to describe the given data.
Inferential analysis will be used in order to achieve objective of identifying major determinants
of youth unemployment and it will be conducted to show the effect.

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 CHAPTER FOUR

WORK AND BUDGET PLAN

4.1 Work plan

This study will be complete within seven month. This plan time include total work schedule
which couple the various research activities that will evolve with in time frame.
No Activity 2021 2021
Dec. Jan Feb. Mar. Apr May JUN
.
1 Topic Selection
2 Preparation of proposal
submission
3 Collection of useful material
4 Data Collection
5 Data Analysis and writing of
final research
6 Submission of research
7 Presentation of final research

4.2 Budget plan

This is the expected cost to conduct the study.
.No Quantity Duration in day Cost per unit Total birr
in birr
Transportation cost - 6 10 60
personal cost - - - 1200
Equipment and supplies - - - 500
cost
For secretary 1 - 200 200
Pen 5 - 10 50
Paper 1 - 200 200
Bindery 1 - 70 70
Contingency - - 200
Miscellaneous - - 970
Consultancies - 10 5 50

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Questionnaires 10 - 20 200
Flash 8GB - - 300
TOTAL - - - 4000

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 REFERENCES
 Bojo, J, and D. Cassels (1995), Land Degradation and Rehabilitation in Ethiopia: A
Reassessment, AFTES working paper no. 17, Washington DC: World Bank.
 Ellis, f., 1992, Agricultural Policies in Developing Countries, Cambridge.
 FAO in the UN ROME, July 17, 1992, Ethiopia National Fertilizer Project, Preparation
Mission, 1992
 JAckeline Velasco, Agricultural production in Peru (1950-1995) sources of growth
 P.G.H. Barter, problems of agricultural development the Ethiopian Economic Association
 World Bank (1996), “Towards Environmentally Sustainable Development in Sub –
Saharan Africa: a World Bank agenda,” The World Bank, Washington DC.

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