Analysis of Cost and Return of Soybean Production Under Small Holder Farmers in Pawe District, North Western Ethiopia

Abstract

This study aimed at identification and estimation of cost components of soybean production as well as assessing its profitability under small holder farmers. Descriptive method and enterprise budget were used to analyse data collected directly from field records of selected farmers. Results of descriptive analysis indicate that soybean production involved mainly human labor and contribution of female farmers was lower than male but more during weeding. The enterprise budget analysis depicted that sampled farmers obtained gross margin of Ethiopian birr 2025.36 per hectare from soybean production and the gain is statistically significant at 1% level. Moreover, benefit cost ratio of 1.46 was obtained. Sensitivity analysis considering a 10% change in grain price, yield and total variable cost of soybean resulted in higher sensitivity of gross margin due to change in grain price and yield than total variable cost. Thus, the benefits from soybean production indicate that soybean production is a profitable business and it could be enhanced and soybean production could be more attractive through promoting technology packages that improve soybean yield and reduce price volatility like market information system and group marketing.

Keywords: Soybean, Gross margin analysis, Sensitivity analysis, Pawe district