Efficiency of small-scale farmers in Ethiopia: a case study in the Baso and Warana sub-district

The objective of this study is to explore the possibilities of improving production and income on small farms through better allocation of resources. It pertains to the area that represents the low potential cereal crops zone (LPCZ) of Ethiopian highlands in the Shoa region. The basic primary data were drawn from 50 randomly selected farms in the area, and secondary data were obtained from ILCA. LP and MOTAD are used as analytical tools. The results of the study indicates a substantial potential for increasing net farm cash incomes by efficient allocation of available resources under current level of technology. The study further revealed that small-scale farmers in the study area operate at a relatively higher risk under the existing situation than would be the case under an-optimal situation. Thus, small-scale farmers should allocate resources optimally not only to increase cash income but also to reduce risk.