The land tenure system has been a controversial issue in Ethiopia: The advocates of the existing land policy believe that if the farmers are given the right to own land privately and are allowed to sell, many farmers will become landless and exposed to various hardships. The critics argues that the existing land tenure arrangements has contributed towards increased degradation of farmers' land resulting in soil erosion and poor productivity level of various crops. Farmers with ownership right and secure land tenure are more likely to make long-term investment in their land. The meager land productivity is not because of the poor soil fertility rather as a result of ill management of the limiting factor of production i.e. land. Programming model was developed using primary information, collected from 110 farmers' households (82 High income group + 28 Low income group) from 4 peasant associations in Meket District of north wollo region of Ethiopia in order to study the potential of land productivity enhancement through better land management and land use planning in the country. The optimal solutions brought out that land productivity increased by 9.4 percent on high-income group and 8 percent on low-income group farmers with an overall improvement of 8 percent in the region if farmers cultivate their land with more vigor and long-term commitments. Thus there is an urgent need to revisit the government policies especially with regard to land use planning, land tenure and ownership right etc for achieving the long term agricultural development.