factors affecting agericulturall Input Supply System and Its Impact on Small-Scale

Farming, the Case of Wondo Genet Woreda, Sidama Zone, SNNPR, Ethiopia

A senior research proposal submitted to Department of Agricultural

Economics In Partial Fulfilment of the Requirement the Degree of Bachelor of
Science in Agricultural Economics

By:
Behayilu Getahun

Advisor: Melese M (MSc)

May, 2010
DILLA, Ethiopia

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Table of Contents Page

LIST OF ABBREVIATIONS...........................................................................vLIST OF TABLES

..........................................................................................................................................................i
ABSTRACT......................................................................................................................................ii
1. INTRODUCTION.......................................................................................................................1
1.1 Back Ground of the Study......................................................................................................1
1.2 Statement of the Problem.......................................................................................................2
1.3 Objectives of the Study..........................................................................................................3
1.3.1 General Objectives..........................................................................................................3
1.3.2 Specific Objectives..........................................................................................................3
1.4 Research Questions................................................................................................................3
1.5 Significance of the Study.......................................................................................................3
1.6 Scope and Limitation of the Study.........................................................................................4
2. LITERATURE REVIEW.........................................................................................................5
2.1 Definition of terms.................................................................................................................5
2.1.1 Actors Mapping, Linkage and Knowledge Flow............................................................5
2.1.2 Characteristics of small-scale farming............................................................................7
2.1.3 Major types of farm production inputs............................................................................8
2.1.4 Farm Input Constraint.....................................................................................................9
2.1.5 Credit constraint and farm input....................................................................................10
2.1.6 Main constraints in agriculture input supply system.....................................................10
2.2 Empirical literature..............................................................................................................11
2.2.1 FERTILIZER PRICE AND SUBSIDY........................................................................11
2.2.2 Agricultural Services and Service Systems...................................................................11
2.2.3 Seeds as Agricultural Resource Base............................................................................14
2.2.4 The Ethiopian Government Agricultural Policy.........................................................15
2.2.5 Input sector reform and emerging market structure......................................................16
2.2.5.1 Seed sub The–sector...................................................................................................16
3. RESEARCH METHODOLOGY...........................................................................................18
3.1 Description of the study area...............................................................................................18

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 3.2 Source and methods of data collections...............................................................................18
3.3 Sampling technique and Sample Size determination...........................................................18
3.4 Definition of Variables and Working Hypotheses...............................................................19
3.4.1 Dependent variable........................................................................................................19
3.4.2 Independent variables....................................................................................................19
4. WORK PLAN.......................................................................................................................22
6. REFERENCES.......................................................................................................................39

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 LIST OF ABBREVIATIONS
ADLI: Agricultural Development Leads Industry

AIDP: Agriculture and Industry Development Program

AMC: Agriculture Market Corporation

CBE: Central bank of Ethiopia

CSA: Central Statistical Agency

DPID: Direct Program and Industrial Development

NB: National Bank

WB: World Bank

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 ABSTRACT
Agricultural input supply embraces the production, economics, and marketing
systems and environmental and development policies. The farming sub-sector of
Ethiopia is characterized by traditional rain fed and low techniques of
production and thus, is prone to the recurrent natural calamity of drought,
which leaves famine and death in its wake. Today, farmers in Ethiopia have
difficulties in feeding their households on their increasingly fragmenting land,
using traditional and backward techniques of production. Hence the drastic
need to improve agricultural productivity and production through the adoption
and adaptation of improved agricultural technologies and techniques is
apparent. For modernize agriculture, a strong support system involving input
Supplies. This study is intended to assess the agricultural input supply and
impact on small scale farming of the study area; to identify their linkages,
knowledge and information flows, to identify influential factors for the smooth
functioning of the system and to identify farm input supply, farm input supply
system challenges in sidama Zone, SNNPR. Structured interview schedule and
questionnaires were used for collecting the essential quantitative and
qualitative data from the sampled respondents and input suppliers respectively.
To generate qualitative data, field observations; informal interview with key
informants; and discussions with separate focus groups were conducted. The
quantitative data were analyzed using descriptive analysis with frequency and

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percentage. The major output of the study indicates that the system is highly
characterized by relatively poor linkage and inefficient knowledge flow between
actors and farmers in the study area. Moreover, input supply was significantly
influenced by household head age, active labor force of the family, access to
market, and type of road used. In addition to this, from the supply sector factors
like organizational mandatory clarity, sufficient and irrigable seed farm, skilled
man power, delay of temporary loan settlement by users, policy environment,
storage facilities at grass root level, efficient marketing system, timely demand
claims from users, clearly defined role and responsibilities of each partner,
availability of improved seeds in terms of their germination, viability and
adaptability, research centers cooperation and willingness to share resources
including knowledge, farmers willingness to take risks and demand for
improved crop varieties were some of mentioned factors that influence the
system positively and/or negatively. As to the enabling policy environment,
pitfalls identified were; inflexibility of rules and regulations, lack of strong
quarantine measures on imported seeds and prolonged time given for variety
release and registration were amongst all. Therefore, it is recommended that,
the government should be establish well organized market structure strategy,
construct infrastructure for the agriculture sector, introduced available
transport system etc., to minimize price fluctuation of these product which affect
product level. And better provision of improved seeds, more amount of fertilizer
and pesticides for farmer giving continuously and regulatory on the farming
season.

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I
 1. INTRODUCTION

1.1 Back Ground of the Study

The farming sub-sector of Ethiopia is characterized by traditional rain fed and low
productive techniques of production and thus, is prone to the recurrent natural calamity of
drought, which leaves famine and death in its wake. Today farmers in Ethiopia have
difficulties in feeding their households on their increasingly fragmenting land, using
traditional and backward techniques of production. Hence, the drastic need to improve
agricultural productivity and production through the adoption and adaptation of improved
agricultural technologies and techniques is apparent. This places a lot of responsibilities
on agricultural support services like agricultural research and extension (AESE, 2005). In
addition, agriculture in Ethiopia is mostly small scale, rain fall dependent, and subsistence
farming with limited access of technology and institutional support service (Desta, 2004).

In Ethiopia around 94.4% of all the farming is practiced by small scale rural farmer house hold
(CSA, 2007). Ethiopia small scale farmer primarily produce for their subsistence and size of their
production unit is small. Small scale rural house hold farmer are also exposed to shortage of food
and other basic needs. In addition to this given the growing land pressure and limited purchasing
power of that small scale house hold farmers, credit or subsidy on farm input like fertilizer,
improved seed for the benefits of resources poor farmer is critical ensure that food securities
(Ghatak ,2015).

The agricultural input supply enterprise (former AISCO, now

AISE has the primary responsibility of input supply (fertilizers, pesticides, seeds and
credit) for the peasant sector. AISE operates under the MOA and collates demands,
arranges the importation and distribution of inputs with strong emphasis on fertilizers and
pesticides. AISCO managed over 600 distribution centers throughout the country
although little has been achieved in certified seed marketing and distribution (Zewde,
2004).
A necessary and integral part of the technology introduction services is the provision of
improved inputs/services such as seeds, seedlings, agro chemicals, drugs, veterinary
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services, heifers, artificial insemination, credit, production and processing tools. Most of
these inputs were supplied through the agricultural offices linked to the package. While
this has contributed to the development of agriculture, several sources indicate that
improved inputs/services are usually in short supply and delivery is often untimely.
Government policy is now stimulating diversification of input/service provision,
involving private sector (Gebremedhin et al., 2006) . In the study area, most farmers are
growing, teff, wheat, barely, sorghum and maize as the main source of
income. In addition, vegetables are cultivated mainly for alternative food source and
market sale.

Now a day, farmers in the study area uses modern agricultural inputs, such as, fertilizers,
improved seeds and plant protection chemicals, which are mostly supplied by the government in
terms of credit (wondo genet woreda, 2007). Despite this fact, input constraint that is unable to
get sufficient input is a condition where the farmers in the study area have faced.

Therefore, this study is made to provide information on actors involved in the input supply
system, their linkage and knowledge flow in input delivery, the influential factors for the smooth
functioning of the input supply system in the study area.

1.2 Statement of the Problem

Majority of Ethiopian farmers have been using traditional way of agricultural practices. This has
contributed for low productivity of the agricultural sector. To solve these problems,
governmental and non-governmental organizations have made efforts to bring about change in
agricultural production system of peasant farmers. They have introduced improved agricultural
technologies like fertilizers, high yielding varieties of seeds, pesticides, farm tools, etc. As a
result, farmers who participated in the extension package program showed relative change in the
style of their production process. To increase production and productivity, the collective
interaction of actors in the sector is a must. Agricultural input suppliers are one of the actors that
are responsible to deliver according to the demand of the farmers (Gebremedhin et al…, 2006).

However, due to the growing demands of the farmers in the study area, for improved agricultural
inputs, the supply sector could not satisfy the needs of the farmers. This indicates that there are
different factors directly or indirectly influencing the input supply system that believed to boost

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up production and productivity of the smallholder farmers. But the reasons why input-supplying
system failed to satisfy the needs of the farmers is not analyzed so far in the study area.
Therefore, this study focused on identification of actors, their linkage and knowledge flow
among actors in enhancing crop production and productivity, influential factors of the system
and the enabling policy environment of agricultural inputs supply system by giving special
emphasis on barley, teff, and maize technologies. Hence it attempts to fill the existing gap of
knowledge regarding input supply system. Researcher pointed out that the mechanism of farm
input supply to rural small scale house hold farmer to be important increasing productivity and
income of farmers (Arage, 2005).

Therefore; this study was initiated to assess the effect of farm input supply on small scale farmer
households in crop farming in wondo genet wereda.

1.3 Objectives of the Study

1.3.1 General Objectives

The general objective of the study was to assess agricultural input supply system and its impact
on small scale crop farming in wondo genet woreda.

1.3.2 Specific Objectives

The specific objectives of the study were;

 To assess the types of farm input and its supply system in the study area.
 To identify the farm input supply system challenges in study area.

1.4 Research Questions

 What are the effects of agriculture input supply on agriculture product and farmers
income in wondo genet woreda?
 What are the factor affecting agricultural input supplies on small scale farming activities?
 What determine the farming activities on small scale farmers?

1.5 Significance of the Study

To raise agricultural production and productivity, the application of modern agricultural inputs is
a necessary condition; this will in turn requires the identification of challenges in this regard.

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To enhance production and productivity of small scale farmers, efficient and effective
input/service delivery system should be on practice. To ensure this goal, relevant actors
within the system should play role for effective linkage and policy implementation as to
bring about change on peasant sector. The result of this study will help to identify actors
involved in input supply system,
their role, linkage and knowledge flow within the system and influential factors that
hamper the smooth functioning. Thus, the study output will help in terms of revealing the
current structure and problems in using farm input in the study area. Furthermore, it will also
serve as a source of information for further investigation.

1.6 Scope and Limitation of the Study

The study has covered one kebele, wondo genet woreda. To analyze the data collected this study
used only a descriptive summary statistics, using percentage, frequency, mean and standard
deviation. The study also covers only a major type of agricultural inputs used in farm production
in the study area.

This study has faced by many problems which have hindered the successful result of the
investigation. To mention some of the problem are: Limited capacity of finance, Transportation
problem, poor performance of language, limited access of technological product like computer
and internet service, Time constraint and lack of obtaining available data were some to mention.

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 2. LITERATURE REVIEW

2.1 Definition of terms

Agriculture is the main stay of Ethiopian economy. It accounts for lion’s share of the total GDP
in foreign currency earns and employment creation (Ibrahim, 2009).

Agriculture in productivities is measured as the rate of agricultural output to production inputs,

which individual products usually measured by weight, their visiting densities make measuring
over all agricultural output difficult (Mulatu, 2004).

Small scale farming is the science of cultivating the soil harvesting crops and rising over stock
(Webster third international dictionary, 2013).

Small scale farming is a family based on nature of production with permanent commitment to the
family labor force .That mean the family head has to all family members, which is not also a
business and the size of production unit is small whether measured in terms of volume of
resource employed or output produced (Thanerettat,1996).

Agriculture input is raw materials which used for the farmers in order to increase their
production (Mulugata, 2004).

2.1.1 Actors Mapping, Linkage and Knowledge Flow

Actors mapping

The purpose of this subsection is to provide information on how actors are functioning within the system-
main actors and organizations in the sector with the specific roles they play; extent of linkage between
actors and organizations and the nature of these linkages for supporting interaction; level of coordination,
and identification any missing actor or role in input demand- supply system.

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Linkage:

Generation of technology is not an end by itself. It must be utilized by end users. This can be
realized through the presence of effective linkage among the major stakeholders in the
agriculture, agricultural knowledge and information system. Linkages between major
institutional actors in agricultural knowledge and information system are widely recognized as
essential for an effective flow of technology and information between research, extension and
farmers. The types and nature of linkage between actors within the agricultural knowledge and
information system directly influence the production and productivity of small holder farmers. It
is commonly recognized by agricultural knowledge and information system stakeholders that
poor performance of the system is often related to linkage problems (Akalu and Enyew, 2006).

According to Hagmann et al., (2002), linkages between service providers in to service delivery
system are critical to ‘make the system work as a system’. The different roles and mandates of
service providers need to be clarified and even more important; they need to ‘learn to play the
roles’ and work together in synergistic way towards making a difference.

Hence, to map the interactions thereby learning among the actors in the service delivery system,
tools for diagnosis and institutional change in agricultural innovation systems are adopted (Hall
et al., 2007). Knowledge Experience and trial and error, within an organization or a learning
community, or from outsiders adapting it to local contexts. Knowledge that rural and farming
communities are typically interested in includes cultural management practices; new agricultural
technologies; diagnostic information about plant and animal disease and soil related problems;
market information on inputs and sales(prices, seller, buyers, retailers Knowledge can be
understood as both information and skills that are acquired through individual); market demand
and quality of products required for these markets; and land records and government policies.
The concerted efforts and practices used by organizations and individuals to identify, create,
accumulate, re-use, apply and distribute knowledge are commonly labeled knowledge
management (Hartwich, et al., 2007).

According to Paul and Engel(1997), knowledge is not simply that is possessed and accumulated,
it emerges out of process of social interaction and should be looked at in terms of social
relationships. What people know and how they go about learning is intrinsically woven in to
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their life as social beings. Knowledge emerges as a result of social efforts to come to grips with
the demands, the social and physical environments in which individuals and groups are
immersed and said about knowledge that to know is to act effectively. Knowledge includes the
ideas, concepts routines and skills people acquire over time to support their livelihood.

Since knowledge is dynamic, it is constantly produced and reproduced, shaped and reshaped and
yields many types of knowledge, differentiated within and between localities (Mango, 2002).

According to Joshi et al., (2004) knowledge continuously evolves as farmers learn both by
evaluating the outcome of previous actions and by observing the environment. This means that
knowledge that enters a locality is not simply internalized, but becomes transformed by various
actors to suit their circumstances.

The important questions need to be answered in the knowledge/information network analysis are
what types of knowledge/information are important for the successful performance of the
system? Who are the source user of these types of knowledge and information? Who or what are
the intermediaries- the actors, printed materials or other media that move knowledge and
information among actors? How effective are the existing communication networks in linking
relevant sources, intermediaries and users of knowledge and information (Salomon and Engel,
1997).

2.1.2 Characteristics of small-scale farming

Unlike manufacture industry, small scale farming is more or less dominated by nature. Natural
resource endowment plays a vital predominant role in its development (Kilby, 2015).

Small scale peasant households produce mainly they are not profit maximizes as firms. Due to
this, they are usually expose to risks like crop failures animal epidemics and other animal
diseases. To overcome these challenges in fact they developed many arguments like reciprocity
and different types of social networks like idir, mahber etc., in Ethiopia (IBID, 2006

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2.1.3 Major types of farm production inputs

Farm land:

In the agrarian economics of rural sectors, land in the major farm controversial (Hussein, 2006).

The economic well-being of the farm house holds depends on the amount of land to which it has
access and the concentration of land. Distribution of land in hands of few farmers which still
exist of latifundio of Latin America and rich land in Asia are the two reasons in which some says
that having small scale farm land creates efficiency on production while others opposed this
satisfaction on the bases of economics scale and scope associated with large size (Maris, 1991).

Fertilizer:

Fertilizer for the application of agriculture any substance such as mixture of nitrate added to soil
or water to increase agriculture productivity. Ethiopia totally depends on import of fertilizer to
meet its annual demand for it. The foreign exchange for fertilizer importation is financed from
foreign loan donor assistance and government treasury. Because the regional demonstration
result of fertilizer program of agriculture led industrialization (ADLI) strategy or national level
has proven that the use of chemical fertilizer could lead to substantial yield increase in most of
the major food crops (MAO ,2006).

Fertilizer market is affected by supply and demand problem. On the supply side, fertilizer access
is constraint by limited involvement of privet sector. On the demand side , fertilizer market is
affected by price of fertilizer ,house hold asset, limited availability of credit and extension ,credit
market service etc. (Taye,2009).

Improved seeds:

Improved seeds are believed to increase productivities. In Ethiopia small scale rarely used
improved seeds supplied to them peasant corporation and input supply branches of agriculture
office (FAO, 2008).

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Labor:

Labor force represents the service of human inputs in production process in least developed
countries agriculture. In addition to this labor is a major input as to land (Todaro, 2000).

Households with large working labor would be in a position to manage the labor intensive
agriculture activities. Moreover, large working labor force in a family means the family may not
need to hire more additional labor and money saved due to the use of labor force could be used
for purchasing other crop production inputs (Rah met, 2007).

Labor utilized on farmer may be either family labor or labor to when wage payment is made ion
daily, weekly, monthly etc. bases according to the agreement between labor and employer or
house hold farmers (IBID).

Plant protection chemicals:

Plant protection products help farmers protect theirs crop against yield losses and damaged
caused by weeds diseases and insects. Keeping problem pests under control is essentials to
provide a sustainable supply of safe affordable, wholesome food. Without plant protection
products, crop yield would fall, many food stuffs would be in short supply, and food price would
be rise. Maintain food production levels would therefore require more land leavings less
available for amenity, recreation and wildlife conservation. Plant production products, also called
pesticides are chemicals or biological substances used to control pests that harm our food, health,
and environment.

There are three main types of pesticides:

Herbicides: control weeds and unwanted vegetation such as thistles and nettles;

Fungicides: combat harmful crop diseases, such as potato blight;

Insecticides: a control insect pests such as sphides.

2.1.4 Farm Input Constraint

Farm input constraint is a condition where the farmers are unable to obtain necessary inputs
required for farming. Thus as farming is hardly without necessary farm inputs and farmer may
decide to farm his or her land it face such as input constraint. The source of farm input
constraints are mainly ,but in developing countries the structure of land owner ships are unequal

9
and this is probability on important determinant of existing inequitable distribution of rural
income and wealth (Bangee, 2001).

2.1.5 Credit constraint and farm input

Credit markets in developing countries are insufficiently due to the market imperfection such as
inflation, high ceiling of imposed by government, man a poly power often excircised by informal
leaders (Bell.et, 2001).

Credit constraint have directed and in directed effect on farm production. Directly, it can affect
the purchasing power of farm input in the short run and to make farm related investment in the
long run. Indirectly it can affect risk behaviors of producer (Guirkingr, 2005).

In general credit failure and limited ability to access of inputs give rise to different resources and
different outcomes farm house holds with unique characteristics (Hussein, 2008).

2.1.6 Main constraints in agriculture input supply system

The development of mechanization in our countries being constrained by several factors,
including those detailed below:

Low purchase power of most small-scaling farmers: low level of crop production leads to low
incomes, which considerably limit the purchasing power of the majority of small scale holder
farmers, making investment in agricultural machinery and impunent difficult.

High cost of agricultural machinery: the price of agricultural machinery has risen sharply in the
last 20 years. Making if unaffordable despite the faced that they handle expensive machines. If
most cases, this leads to poor quality of work and expensive break of machinery, leading to
costly repairs and reduce lifespan of machinery.

Lack of suitable machinery packages for main agricultural operations: the most mechanized
operation is tillage, and transportation to a limited extent. Other operations like planting,
weeding and harvesting are rarely mechanized in small holder farming. This limited the
advantages of mechanization as the subsequent secondary operations are done manually using
the hand hoe, which delays the completion of these operations, leading to decreased crop yields.

Poor quality of important tools, equipment and machinery: some of imported equipment is low
quality, resulting in poor performance. There is little control on the quality of imported
equipment, sometimes leading to importation of substandard tools, implement or machinery at
the expensive of the end user.

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Generally poor technical know-how: inadequate skills and technical know-how own the part of
machinery owners leads to high operational costs, making investment in mechanization expense
and less attractive. Many tractor owners do not have agribusiness knowledge and lack of
business acumen.

2.2 Empirical literature

Kobayo, K.S., 2009, the farming sub sector of Ethiopia is characterized by traditional rain fed
and low techniques of production. According to him farmers in Ethiopia have difficulties in
feeding their house holds on their increasing fragmented land, using traditional and back ward
techniques of production. Hence the drastic need to improve agricultural productivity and
production through involving input supply, adoption and adoption of improved agricultural
technologies and techniques is apparent.

Mulatu, 2003, study on analysis of agricultural input supply in Ethiopia. His finding indicate that
the productivity that can be generated from available land which contain a good soil fertility. But
also the availability of land contains low level of productivity by nature such as less soil fertility.
According to him the reason for low agricultural productivity is that use backwards technology,
fluctuation rain fail and less soil fertility (Mulatu, 2003).

Rural credit activity is the most important source for increasing productivity capacity of
agricultural output. Rural credit activities are vital providing resources that needs for output.
Rural credit generated from bank (not directly rather by government agent), micro finance and
peasant association (Mulatu, 2003).

2.2.1 FERTILIZER PRICE AND SUBSIDY

The price of fertilizer characterized by greater variability. For example when compare the price
of fertilizer in 1993 and1994, its price is increased by 24 % (M.Demeke, 2006).

In addition the government introduced subsidy 15%and it’s aimed was assessing poor farmers
because small farmers living in poverty level need protection from the relative world market
(M.Demeke, 2006).

2.2.2 Agricultural Services and Service Systems

Services to the agricultural sector are extra ordinarily heterogeneous, ranging from agricultural
extension to legal counseling on land tenure issue. According to Helmut (2000), as cited by

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Anteneh, (2008), typical services to the agricultural sector include: agricultural research,
agricultural extension and information services; education and training; rural financing (e.g.
saving, credit) and insurance marketing of agricultural products and market promotion; input
delivery services for plant production (e.g. seed, fertilizer, pesticides, irrigation water,
machines/tools) and animal production (e.g. genetic material, forage, veterinary products,
drinking water, machines/tools); regulatory services often provided by governments (e.g.
certification of seeds and bio-products, quality control of agricultural products, regulations of
water rights etc.) and technical support services i.e. all activities related to the provision of the
technical and social infrastructure for agriculture (e.g. transport, supply of fuel and spare parts,
planning of resettlement schemes etc.

Systems theory or systems science argues that however complex or diverse the world is that we
experience, we will always find different types of organization in it, and that such types of
organization can be described by concepts and principles which are independent from the
specific domain under consideration. Hence, if we could uncover the general laws, we would be
able to analyze and solve problems in any domain, and pertaining to any type of system. The
systems approach is distinguished from the more traditional analytic approach in its emphasis on
the interactions and relationships between the different components of a system. Although the
systems approach in principle considers all types of systems, in practice it focuses on the more
complex, adaptive, self-regulating systems which can be termed “cybernetics”(Görlitz, 1989).

In systems theory, reality is seen as a complex pattern of various relationships between different
elements. A system which can be defined as a simplified reproduction of a part of reality is
composed of elements with attributes, i.e. their perceived characteristics, and describes the
specific relationships between them and their boundaries. What is regarded as a system (i.e.,
which elements and relationships are selected to form a system) depends on the perspective and
the specific objectives (e.g. small-scale farmer obtaining access to agricultural inputs, private
research institutions advising commercial farmers, government institutions privatizing extension
services, development organization designed to improve the agricultural services in a specific
region). The systems, or holistic, approach is useful when seeking to analyze and understand
better the complexity of service systems (Doppler and Calatrava, 2000). In the context of
services to the agricultural sector, five important aspects can be identified:

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Type of service: this comprises the key features (technical aspects, economic
characteristics, quality aspects, effects) of an individual service such as agricultural
extension, research, etc.

• Actors of the service system: this aspect includes the provider sub-system
(Service supply) and the client sub-system (use of service).

• Functional relationships of the service system: this includes the components of

service provision ( financing, delivery, assurance), the interaction of and between
actors and services, and the governance of services (mode and mechanisms).
• Level and scope of the service system: this includes the micro-level (farm-
household), meso-level (region or district) and macro-level (national) as well as the
regional range of the service system.
• Frame conditions of the service system: this includes the technological
(service infrastructure) and ecological conditions in the region in which the service
system is operating, as well as the political, economic and socio-cultural conditions
influencing or being influenced by the system.

Each of the above mentioned aspects can be further differentiated and analyzed in the context of
sub-systems. Numerous possibilities of classifying agricultural services in a system context exist,
with the emphasis shifting away from a simple technical interpretation to the processes and
functional relationships of the service system itself.

Adopting a systems perspective, agricultural services can be categorized as follows (Ibid):

• Services for the application and management of agricultural inputs, such as

water (irrigation), veterinary products (veterinary services), machines and tools
(mechanization), pesticides (plant protection), etc.
• Services for the acquisition and management of agricultural production factors, such
as land (e.g. Provision of land) and labor (e.g. hired labor).
• Services for post-production systems: these include all services related to operations,
from the harvesting of agricultural products to consumption (e.g. processing, transport,
storage, etc.), including the respective actors and all influencing factors and framework
conditions (often referred to as “post-harvest systems”).

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 • Supply-chain services: these include all services related to the production
and postproduction of a specific commodity (e.g. cotton, tomatoes, cocoa, etc.).
• Information and knowledge services: these include services related to the creation and
dissemination of agricultural information and knowledge.
• Services for innovation systems: these include all services related to the development
and dissemination and utilization of a particular innovation (e.g. research, extension,
input supply, etc.).
• Regional services: these include all services related to the production and
postproduction of crops and livestock in a specific region.
• Public sector services: these include all services provided by the public sector as well as
their political and social influence on frame conditions (e.g. legal aspects,
institutional arrangements, etc.).
• Services of interest representation: these include services such as co-
ordination, representation, negotiation, advocacy and lobbyism. These services are
strongly related to the governance of a service system.

2.2.3 Seeds as Agricultural Resource Base

Seeds played a critical role in agricultural development since pre historic man domesticated the
first crops 10000 years ago. The domestication of wild species into crop plants probably started
with the collection, storage and utilization of seeds not only for food, but also for planting a
major step in the evaluation of settled agriculture. The domestication of plants was a gradual
transformation from hunting and gathering to sedentary agriculture rather than a sudden
revolution. During this process conscious and unconscious selection occurred, leading to
significant modification of many our crop plants from their wild ancestors into highly adapted
and diverse population of local land races (Zewde, 2004).

According to (Buddenhagen and Richard, 1988; as cited by Zewde, 2004), domestication of wild
species into cultivated crops has probably altered natural adaptation very little in the Centre of
origin. The migration of human populations and/or diffusion of crops from the centers of crop
domestication exposed crops to new biophysical environments. The landraces, by disseminating
into different agro-ecosystems, have acquired new genes or gene combinations and frequencies

14
to fit into their new environments. Thus, farmers’ selection coupled with natural selection
conditioned the adaptation of landraces to their agro-ecosystems.

The history of seed trade is as old as agriculture itself. Farmers exchanged seed in various
traditional forms such as gifts, barter, labor exchange or social obligations. However,
information on when, where and how organized seed production and trade started, is limited. It is
believed that the introduction of new crops and knowledge- based agriculture including scientific
plant breeding, mechanization, intensification and commercialization at various stages of
agricultural development might have played a key role (Zewde, 2004).
The informal seed system deals with small quantities of seed is semi-structured, operates at the
individual farmer or community level and may depend on indigenous knowledge of plant and
seed selection, sourcing, retaining and management, as well as local diffusion mechanisms. The
informal sector is more flexible and adaptable to changing local conditions and less dependent on
or less influenced by other external factors (Cromwell et al; 1992).

The distribution of improved seeds to farmers started with the launching of the Chilalo
Agricultural Development Unit (CADU) in 1967. In 1978 the Ethiopian Seed Enterprise (ESE)
(formerly known as Ethiopian Seed Corporation) was established as a government parastatal
under the now defunct Ministry of State Farms, Coffee and Tea Development. The primary
objective of the enterprise was to produce and supply improved seeds to state farms and small
farmers (Techane and Mulat, 1999).

2.2.4 The Ethiopian Government Agricultural Policy

Agriculture is the foundation of the national economy and plays a major role in the
socioeconomic development of the country. In 1991, the government launched the agricultural
development- led industrialization strategy where emphasis is put on linking research with
development through well-focused and targeted transfer of appropriate technology to farmers.
The agricultural development strategy is aimed at promoting growth, reducing poverty and
attaining food self-sufficiency while protecting the environment through safe use of improved
technologies. The agricultural package program is spearheaded through demonstration and
provision of improved varieties and required inputs such as improved seeds, fertilizers, and
pesticides as well as better access to credit facilities (ICARDA et al, 1999).

Moreover, Agricultural Development Led Industrialization (ADLI) sets out agriculture as a

primary stimulus to generate increased output, employment and income for the people, and as the

15
springboard for the development of the other sectors of the economy. A ‘green revolution’-like
intensification of smallholder agriculture was seen as central by the government in implementing
the strategy (Keeley and Scoones, 2000).

Policy makers assumed that significant productivity growth could be easily achieved by
improving farmers’ access to technologies which would narrow the gap between farmers’ yield
and what agronomists called ‘exploitable yield potential’. Researchers also reported the existence
of technologies that can make a huge difference and shift upwards farmers’ yield frontier in grain
production. Based on 6 years average data, researchers indicated that maize yield, for instance,
can be increased from current farmers’ yield level of 1.6 ton/ha to 4.7 ton/ha, and wheat from 1.1
ton/ha to 2.8 ton/ha and teff from 0.7 ton/ha to 1.5 ton/ha, if peasants use the right type and
amount of improved seed varieties, fertilizers and other recommended practices (Berhane et al.,
2004).

2.2.5 Input sector reform and emerging market structure

2.2.5.1 Seed sub The–sector

In 1992, the Transitional Government of Ethiopia (TGE) announced the National Seed Industry
Policy (NSIP) with the aim of strengthening the supply of adequate and high quality seed. The
policy envisaged the participation of both public and private enterprises in the production and
marketing of improved seeds. The National Seed Industry Agency (NSIA) was also established
in 1993 with the following objectives:
- To oversee and ensure that the seed industry develops and operates efficiently,
- To ensure that producers and the farming community, industries using agricultural raw
materials and organizations which export agricultural products benefit from the seed
industry,
- To create an enabling environment for capacity building in research development and
training in the fields of genetic resources, conservation, crop improvement and seed
technology.

In spite of the reform measures, the seed industry is still dominated by the ESE. Over 93%
of the total seed supply came from the enterprise in 1996/97(Afri-Tech Consult, 1998, as
cited by Techane and Mulat, 1999). The enterprise owns three basic seed farms

16
(Iteya/Gonde,Arssi,262 ha),Shallo, the former East Shewa, currently West Arssi zone
1870ha- 46.5% of which is currently under use and Kunzia, West Gojam, 500 ha). The Iteya
basic seed farm represents the high lands for the production of mainly basic seeds of wheat,
barley, tef, maize, faba bean , field pea, chick pea, lentil, rape seed, mustard, linseed and
sunflower. Shallo and Kunzia are situated in mid –altitude and are used for the production of
maize, sorghum, haricot bean, sunflower and tef. The ESE has also has five seed processing
plants located at Asela, Kofele, Awassa, Nekemt and Bahir Dar (NSIA, 1999 as cited by
Techane and Mulat, 1999).

According to NSIA (1999), the Ethiopian seed industry is characterized by the following
deficiencies.

• Shortage of improved varieties and inadequate supply of high quality breeder and basic
seeds which serve as the foundation for certified seed production;
• Inadequate specialized seed farms for different agro-ecological zones;
• Inadequate coverage of economically important crops and production regions;
• Absence of an organized system of using local cultivars;
• Inadequate provision for national seed data base and lack of provisions for reserve seed
stock;
• Shortage of trained workforce in seed production, processing and marketing;
• Insufficient availability and supply of agricultural inputs mainly seeds and pesticides;
• No internal quarantine regulation to curtail the movement of seeds from contaminated
area to another area;
• Inadequate follow up of imported materials by the quarantine unit of the ministry of
agriculture.

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 3. RESEARCH METHODOLOGY

3.1 Description of the study area

The study area Wondo genet is located sub cites in sidama zone. Located about 315 km far from
Addis Ababa the capital city of Ethiopia and 10 km far from hawasa town the capital city of
sidama zone. It has attitude and longitude of 71N and 3835E and elevation between of 1723
andl. The main economic activities are cultivation of land, rearing of animals and traditional
activities as source of income for the community.

Most societies are farmers whose income and product based on agriculture practice which
implies 85% of population engaged in agriculture sector and remain 15%practice to other sector
such as government sector ,business sector ,entrepreneur sector (Woreda,2011).

The total population woreda is 155,715, among this 79,664 were female and the remaining were
male (CSA, 2011).

3.2 Source and methods of data collections

The study used both as primary and secondary source of data. The primary data were collected
using questioners and interview, to obtain firsthand information from the farmer. Whereas
secondary data were collected from agriculture office of the woreda, from governmental and
nongovernmental organization; from published and unpublished sources such as journals and
books in addition internet sources were also used.

3.3 Sampling technique and Sample Size determination

In this study both purposive and random sampling techniques were used to draw a representative
sample size. In this study simple random sampling techniques was used from kebele which found
in wondo genet woreda, because of the population homogeneity by their way of production,
consumption and also the number of population is higher.

At First step from wondo genet woreda will be select kebele purposively . At the next step, a
total number of 86 farmer households are randomly select

. The sample size was determined using the following formula given by Miller and Brewer
(2003), which is;

18
 N
n
1  N (e) 2

Where: n = statistically acceptable sample size

N = Total size of target population

e = level of precision (error level) at 90% confidence level (0.1).

In the study area there are 615 household. Using this formula, the statistically acceptable sample
size from the given population with maintaining a 90% confidence level is found to be 86
farmers. Therefore, based on the above formula:

n = 615/1+615*(o.1) ² = 86

3.4 Definition of Variables and Working Hypotheses

3.4.1 Dependent variable

Dependent variable of the study is agricultural inputs-supply (output level). The variable would
operationalized as farmers’ response in terms of the quantity of required and obtained inputs on
the selected crops. It was measured using input-supply systems of the respondents with
structured list of items selected.

3.4.2 Independent variables

For this study, independent variables were hypothesized to influence the dependent variable. Out
of these variables; were continuous, discrete and dummy respectively. Independent variables
include the personal, socioeconomic, situational, and organizational and institutional factors that
may influence the dependent variable. The selection of independent variables is based on the past
research and published literature related to the study.

Age- the age of the farmer has negative effect on using agricultural inputs by contributing for
risk aversion (Abadi and Pannel, 1999). It is hypothesized that as the age of the farmer increases
the demand for agricultural inputs will be decrease. Thus it was expected to have negative effect
on the dependent variable. It was measured in year’s equivalent.

19
Educational level- the level of formal education of the farmer is important variable affecting the
probability of using improved agricultural inputs (Nkonya et al., 1997). The better the education
level the farmer has the better will be his understanding concerning the knowledge of improved
agricultural technologies. Thus educational level was assumed to have positive association with
dependent variable. It was measured using categorical scale.
Family labor- a farmer with larger number of family size engaged on agricultural activities is
more likely to be in a position to try to continue using a potentially profitable production
enhancing inputs (Abadi and Pannel, 1999). Thus a farmer with high family labor will have a
capacity to use labor intensive agricultural inputs. The variable was expected to have positive
effect on the demand-supply of inputs. It was measured by man equivalent.
Access to credit - the existence of credit institution at a disposal of farmers will enhance the use
of improved agricultural inputs. A study conducted by Getahun et al., (2000) revealed that access
to credit, has a significant and positive influence on the adoption of improved technology.
Therefore, the variable was expected to have positive effect on the dependent variable. It was
dummy variable with value of 1 for yes and 0 other wise.
Extension contact - the more contact the farmer has with extension service, the more will be the
information/knowledge s/he has and the better will be the use of agricultural inputs (Haji, 2003).
Packages developed by Board are more or less composed of improved agricultural inputs. DAs
are responsible to transfer knowledge about the recommended packages prior implementation
through their regular contact program. Therefore, it is assumed that farmers who have frequent
contact with DAs are more likely to demand agricultural inputs due to the increased awareness,
and it was expected to affect the dependent variable positively. It was measured using different
levels of frequency scales.
Type of road used- limited infrastructure development influences the production and distribution
of agricultural inputs, because of high transportation and marketing cost (Tesfaye and Shiferaw,
2001). The type of road used for agricultural inputs delivery may influence the availability of
inputs at farmers’ disposal. Therefore the variable expected to influence the dependent variable
negatively. It was discrete variable measured 0 for absence, 1for all weathered and 2 for winter
season road.
Distance from nearest input market- Distance to market is negatively associated with the use of
production enhancing inputs. Those who are far from the market may not have a chance to get

20
agricultural inputs comparing to the nearby farmers (Legesse, 2001). Therefore, the variable was
expected to have negative association with the dependent variable. It was measured in kms.

Access to market- Market access is one of the variables that affect input output marketing in
rural areas. Presence of input/output marketing at farmer’s disposal would increase the uptake of
improved agricultural inputs by farmers. Hence the variable was expected to have positive
influence on the dependent variable. It was dummy variable with value of 1 for yes and 0 other
wise.
Input price- the price of agricultural inputs may encourage/discourage farmers in order to use
production enhancing inputs. Wolday (1999) indicated that price of inputs is significantly related
to use of improved seeds. If the pricing regulation of inputs does not invite farmers, it will have
negative effect on improved agricultural inputs use. Therefore, this variable was expected to
have negative association with the dependent variable. It was dummy variable with value of 1 for
yes and 0 other wise.

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4. WORK PLAN
Table 1: Time schedule
Activities Mar Apr May June

Title selection 

Proposal writing 
Frist draft proposal submision 
Selection of sample respondent 

Data collection  

Data processing and 

Analysis
Research writing 

Research presentation 

22
5. Budget
Table 2: Stationary cost
NO- ITEMS AMOUNT UNIT COST TOTAL COST
1 Pen 2 5 10
2 Printing 40 1 40
3 Copy 40 0.5 20

Table 3: Personal cost

No- Items Amount Unit cost Total cost
1 Food 4 30 120
2 Mobile card 5 15 75
3 Questionnaire 3 20 80
4 Data collection 30 5 150
Total 425 birr

Table 4: Transportation cost

NO- Items Amount Unit cost Total cost
1 transportation 4 round 10 40
Total 40 birr

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Table 5: budget summary
NO- Items Total cost
1 Stationary cost 70
2 Personal cost 425
3 Transportation cost 40
Total 535 birr

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ADAA-ISPA UCA.

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Berhanu G, Hoe Kstra D and Azage T, (2006). Commercialization of Ethiopian

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