Profitability Analysis of Rain Fed Upland Rice Production Under Smallholder Farmers in Libokemkem District, North Western Ethiopia

Abstract

Cultivation of rice in Ethiopia is a recent phenomenon and the crop provides advantages to rice farmers in regarding productivity basis compared to other cereal crops and contribute a lot towards ensuring food security in the country. With the advantage related to the higher productivity, the ever-increasing of domestic demand as a result of urbanization and population growth, rice production under smallholder farmers is expanding very fast. The study was designed to determine the cost of production and profitability of rice under smallholder farmers in the rain fed upland production ecosystem. Descriptive statistics and enterprise budget were used to analyze data collected from selected farmers. Descriptive analysis result reveals labor cost was the main cost item in rice production which took about 74% of the total variable cost, of which weeding cost took about 37%. The enterprise budget analysis reveals sampled farmers obtained gross margin of ETB 12,084.46 per hectare from rain fed upland rice production with benefit cost ratio of 1.44 and break even price and yield of 6.45 ETB per kg and 2157 kilogram per hectare, respectively and the gross margin was more sensitive for price and yield fluctuations. Thus, upland rice production is a profitable enterprise. Moreover, in order to make the enterprise more attractive, it is important to promote productivity-improving and labor-saving modern technologies and strengthen the market information delivery system and collective action by farmers.