Financial Analysis of Eucalyptus Woodlot in Comparison with Selected Cereal Crops, the Case of Gombora District in Hadiya Zone, Central Ethiopia
Paper Details
Financial Analysis of Eucalyptus Woodlot in Comparison with Selected Cereal Crops, the Case of Gombora District in Hadiya Zone, Central Ethiopia
Abstract
Farming systems can be integrated to create the best possible combination for a better financial benefit when taking into account the available resources; based on the potential benefits of the farm products and costs associated with the production processes. The purpose of this study was to estimate the household financial profitability of eucalyptus woodlots and selected cereal crops. Ninety-six households were selected through random sampling method. Both primary and secondary data were used. For data analysis, SPSS (Statistical Package for Social Sciences) was employed. As a measure of profitability, Net Present Value (NPV), Benefit Cost Ratio (BCR), and Internal Rate of Return (IRR) studies were utilized. The result indicated that farming was their primary source of income for the farmers’ in the study area. The result showed that 81.25% of the respondents believed that growing Eucalyptus woodlots had beneficial effects on the economic position of the owner. Only 18.75% of the responders mentioned the detrimental effects of the eucalyptus woodlot. The majority of respondents (64.6%) strongly agreed that they had interest towards establishing eucalyptus woodlots. The NPV analysis demonstrated that profitability of cereal crops being 1.94 times more profitable than Eucalyptus woodlots. At a 10% interest rate, the BCR for both farming methods was greater than unity. For the households, investing in cereal crops over 169% interest rate resulted in losses that may reach 566% in the case of woodlot. As a result, combining the two farming methods can increase financial return.
Breitenbach F. 1961. Exotic forest trees in Ethiopia. A.A. Ethiopia Forestry Association; Ethiopian Forestry Review 2, 19-39.
Central Statistical Agency (CSA). 2013. Population Projection of Ethiopia for all Regions at Wereda level from 2014–2017. Ethiopia.
Central Statistical Agency (CSA). 2017. The Federal Democratic Republic of Ethiopia, Central Statistical Agency, Agricultural Sample Survey 2016/7 (2009 E.C.),Volume I, Report on Area and Production of Major Crops (Private Peasant Holdings, Meher Season), Statistical Bulletin 532, Addis Ababa, Ethiopia.
Chiabai A, Travisi CM, Markandya A, Ding H, Paulo AL, Nunes D. 2011. Economic Assessment of Forest Ecosystem Services Losses: Cost of Policy Inaction. Environmental and Resource Economics 50, 405-445.
CSA. (Central Statistical Agency). 2021. Agricultural Sample Survey. Report on Area and Production of major crops, Meher season. Addis Ababa, Ethiopia.
Demel Teketay. 2000. Unpublished, Facts and Experiences on Eucalypts in Ethiopia and Elsewhere: Ground for Making Wise and Informed Decision. A paper presented at a workshop on “Eucalyptus Dilemma” held at Ghion Hotel, Addis Ababa.
Dereje Jenbere, Mulugeta Lemenih, Habtemariam Kassa. 2012. Expansion of eucalypt farm forestry and its determinants in Arsi Negelle District, south central Ethiopia. Small-scale Forestry 11(3), 389-405. http://dx.doi.org/10.1007/s11842-011-9191-x
Dessie AB, Abtew AA, Koye AD. 2019. Analysis of smallholder farmers’ cooperation in eucalyptus woodlot production in Wegera District, Northern Ethiopia. Small-scale forestry, 18, 291-308 p. https://doi.org/10.1007/s11842-016-9349-7
Eshetu SB, Pretzsch J, Mekonnen TB. 2018. Financial Analysis of Smallholder Farmers Woodlot and Homestead Agroforestry Systems and its Implications for Household Income Improvement, the Case of Hawassa Zuria District, Southern Ethiopia. Journal of Agriculture and Food Research 9, 236.
Food and Agriculture Organization (FAO). 2011. Eucalyptus in East Africa, Socio-economic and environmental issues, by Gessesse Dessie, Teklu Erkossa. Planted Forests and Trees Working Paper 46/E, Forest Management Team, Forest Management Division. FAO, Rome (unpublished) 42 p.
Forrester DI, Bauhus J, Cowie AL, Vanclay JK. 2006. Mixed-species plantations of Eucalyptus with nitrogen-fixing trees: a review. Forest Ecol. and Management, 233, 211–230. https://doi.org/10.1016/j.foreco.2006.05.012
GWARDO. 2020. Gombora woreda agricultural and rural development office, the annual report. Gombora, Ethiopia.
GWFEDO. 2020. Gombora woreda finance and economy development office, the annual report. Gombora, Ethiopia.
Jiregna Gindaba. 2006. Overview of Water and Nutrient Relations of Eucalyptus and Deciduous Tree Species and Implications for their use in Land Rehabilitation. J. Drylands, 1(1), 15-25.
Kilimo T. 2011. “Eucalyptus Hybrid Clones in East Africa; Meeting the Demand for Wood through Clonal Forestry Technology”. Occasional Paper No.1.
Liang E, Leuschner C, Dulamsuren C, Wagner B, Hauck M. 2016. Global warming-related tree growth decline and mortality on the north-eastern Tibetan plateau. Climatic Change 134, 163-176. https://doi.org/10.1007/s10584-015-1531-y
Mekonnen Z, Kassa H, Lemenh M, Campbell B. 2007. The role and management of eucalyptus in Lode Hetosa district, Central Ethiopia. Forests, Trees and Livelihoods 17(4), 309-323 p. https://doi.org/10.1080/14728028.2007.9752606
Merga B, Haji J. 2019. Factors impeding effective crop production in Ethiopia. Journal of Agricultural Science 11(10), 1–14. https://doi.org/10.5539/jas.v11n10p98
Mmopelwa G. 2006. Economic and financial analysis of harvesting and utilization of river reed in the Okavango Delta, Botswana. Journal of environmental management 79, 329-335. https://doi.org/10.1016/j.jenvman.2005.07.01.0
Oballa P. 2005. The performance of Eucalyptus Hybrid clones and local landraces in various agro-ecological zones in Kenya. International Service for the acquisition of Agri-Biotechnology Applications (ISAA).
Rahman MA, Kholilullah MI. 2017. Use of Solar Panel at Rural Areas in Bangladesh: Impacts, Financial Viability and Future Prospects. International Journal of Science and Research (IJSR), 6, 398-404. https://doi.org/10.21275/ART20177028
Rassaeifar M. 2013. Allelopathic effect of eucalyptus globulus essential oil on seed germination and seedling establishment of Amaranthus blitoides and Cyndon dactylon. Trakia Journal of Sciences 11 (1), 73-8.
Florio M, Morretta V, Willak W. 2018. Cost-benefit analysis and European Union cohesion policy: Economic versus financial returns in investment project appraisal. Journal of Benefit-Cost Analysis 9(1), 147-180 p. https://doi.org/10.1017/bca.2018.4
Tadele D, Assefa A, Teketay D. 2014. Effect of Eucalyptus camaldulensis stands Conversion into Crop Production on Growth and Yield of Maize: the case of Koga Watershed Areas in north western Ethiopia. Momona Ethiopian Journal of Science (MEJS), V6(1), 58-69.
USAID. 2020. Agriculture and food security. Ethiopia_FactSheet_Ag-Food-Security_Oct-2020.
Yohannes Horamo More, Shiferaw Teshale Erango, 2024. Financial Analysis of Eucalyptus Woodlot in Comparison with Selected Cereal Crops, the Case of Gombora District in Hadiya Zone, Central Ethiopia. Int. J. Biosci., 25(6), 245-256.
Copyright © 2024 by the Authors. This article is an open access article and distributed under the terms and conditions of the Creative Commons Attribution 4.0 (CC BY 4.0) license.