Financial Analysis of Fruit Tree Based Agroforestry Practice in Hadero Tunto Zuria Woreda, Kembata Tembaro Zone, South Ethiopia

Abstract

Shortage of land and farmer’s switching from agroforestry practice to expand monocropping is the main problem in the study area. This study was carried out to evaluate the profitability of fruit tree based agroforestry practice against monocropping. The study employed both participatory research methods (focus group discussions, Key informant interviews, and flied observations) and household survey for data collection and used both descriptive statistics and financial analysis. The result shows that fruit tree based agroforestry system in the study area is omnipresent. The financial analysis indicated that fruit tree based agroforestry practice is not only more profitable than monocropping system but also less sensitive for changes in price, output and discount rate. In general, the fruit tree based agroforestry practice is superior for both its economic and environmental benefits as well as its less sensitive features to external factors than monocropping system. Therefore, the government and other responsible bodies should give due attention to help smallholder farmers in order to use agroforestry land use for sustainability of smallholder agriculture that has been constrained by soil nutrient depletion, skyrocketing price of fertilizer and climate variability. Above all, it is the land use system recommendable in the area, where the problem of land shortage is very pressing.

Key words: Benefits, cost benefit analysis, Smallholders, sensitivity analysis,