A COST-BENEFIT ANALYSIS OF SMALL SCALE RED HARICOT BEANS PRODUCTION IN ETHIOPIA: INTERCROPPING AS A RISK DIVERSIFICATION MECHANISM

The main objective of the study is to estimate an annual income increase of land constrained Ethiopian households, now growing maize, from either shift to the mono-cropping of red haricot beans or to the intercropping the beans with maize. The study revealed that mono-cropping of red haricot beans is more profitable for the households compared to either maize production or intercropping. The households, however, are reluctant to shift to the mono-cropping practice of red haricot beans production. This can be explained by the level of risk faced by the households in case of crop failure. The Ethiopian households with the limited land holding are generally reluctant to mono-cropping of any commodity. The economic net benefits of the red haricot beans production arising to the different stakeholders, including the government of Ethiopia, were also estimated. A sensitivity analysis was used to determine the main risk factors of the activity.