Economic Evaluation of Coffee-Enset-Based Agroforestry Practice in Yirgachefe Woreda, Ethiopia: Comparative Analysis with Parkland Agroforestry Practice

Abstract

This study attempts to estimate the production costs and benefits of Coffee-Enset-Based Agroforestry (CEBAF) and Parkland Agroforestry (PAF) practices as well as evaluating the economic performance of the two agroforestry practices of Yirgachefe woreda[1] of Ethiopia. Data were collected from 101 randomly selected households through structured interview. In addition, focus group discussion, key informant interview, field observation and market assessment were employed. The data were analysed by employing Cost Benefit Analysis. Net Present Value (NPV), Benefit-Cost Ratio (BCR), Internal Rate of Return (IRR) and Returns to Labour (RL) of both agroforestry practices were calculated. The results of the Cost Benefit Analysis aggregated over twenty five years indicated that the total production cost of CEBAF practice was 1.33 times higher than that of PAF practice. The total benefit obtained from CEBAF practice was also 9.76 times higher than the total benefits obtained from PAF practice. The NPV, BCR, IRR and RL of CEBAF practice were 33.63, 6.43, 1.22 and 7.6 times higher than that of PAF practice, respectively. From these, it can be concluded that CEBAF practice has superior economic performance and is less risky. Therefore, for the smallholder farmers to maximize net returns from their land and resource inputs, it is recommended that the adoption of CEBAF practice should be promoted in the study area.

Keywords: Cost Benefit Analysis, Net Present Value, Benefit Cost Ratio, Internal Rate of Return, Returns to Labour

[1] Woreda is the 2^nd tier after ‘zone’ in the administrative structure of Federal Regions and it is composed of a number of kebeles.  Kebele is the lower administrative units in the government structure.