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Abstract

This paper presents a financial and risk analysis of improved versus traditional maize production technology in Ethiopia, based on yields simulated with the CERES-Maize crop growth model (Schulthess and Ward, 2000). The purpose is to analyze the potential performance of the SG2000/Ministry of Agriculture program technology under less favorable meteorological conditions (rainfall level and distribution), and in areas with lower agroecological potential than those covered by the SG2000/MOA program through 1998. At the time of this study, expansion of the MOA program into lower potential zones seemed likely. Results show that use of fertilizer and improved seed is highly profitable under a variety of assumptions about crop growth conditions, maize prices, and fertilizer costs. Risk is examined using simple sensitivity and breakeven analysis, and stochastic dominance analysis.

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