Diversification across crops and land in small holder agriculture in Ethiopia: the case of shewa administrative region

The opportunities available for consumption smoothing can be expected to influence the ways in which rural households respond to income risks and thereby impact on the degree of diversification and adoption of risky activities. By assuming that diversification is a risk reduction mechanism, this paper deals with the diversification across crops and plots in Ethiopian small-holder agriculture. Specifically, the incidence and levels of land fragmentation and cereal crop diversification is analyzed in relation to the households' consumption security provided by liquid asset stocks (livestock). It is hypothesized that more endowments, specifically in terms of livestock assets will lead to less diversification (more specialization). A four year rotating panel data from the "Rural Integrated Household Survey Program" of the Ethiopian Central Statistical Authority (CSA) collected during 1988 to 1991 in Shewa, Ethiopia is employed. Contrary to the expectation of a safer strategy, land fragmentation was found to have a positive relationship with the level of asset ownership (though insignificant) and land holdings. This result, coupled with the positive relationship between population density and fragmentation, and the absence of land markets in rural Ethiopia, suggests that farmers were supply constrained. When the rural population is growing faster than the number of off-farm jobs, agriculture is the only career option for many. As more people try to make a living from a limited land base, pressure to divide and sub-divide farms and fields will increase. This calls for measures to ease barriers to land transactions which may then induce greater consolidation of plots thereby setting in motion a wide range of social and economic benefits. It also calls for enhancing the attempts being made to facilitate the introduction of appropriate technology, to create off-farm employment, and to curb population growth. On the other hand, it was found that, apart from climatic and agronomic factors, there is a systematic bias towards more crop diversification as the level of asset ownership and land holdings decline. Households with higher levels of livestock asset ownership and/or farm size have relatively lower levels of crop diversification. Thus, households with the ability to bear more risk (through their asset position) are found to have greater concentration on fewer cereal crops. The traditionally developed strategy of closely integrating crop and livestock enterprises to buffer against uncertainty in peasant agriculture is under threat due to the ever expanding cultivation of crops into grazing land, feed shortages, and overgrazing of existing pasture. This limits the possibility of poorer households entering into livestock rearing and those who have already done so may be forced to give it up