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Abstract
The argument for promoting cash crops in developing countries has generally been
based on their contribution to small farmer incomes and their impact on other
household activities such as household crop production through interlinked markets.
While these arguments are supported by some empirical results, there is little
information on the impacts cash cropping can have on these household activities in
the absence of interlinked markets. In addition, the impacts of cash cropping may
depend on the types of cash crops studied, time and place. Perennial cash crops
(PCC) can relax household liquidity constraints for purchasing productive inputs,
maintain soil fertility and moisture and save inputs such as seeds and draft power,
which can be used for food crop production even in the absence of arrangements for
interlinked markets. In this study we build on previous studies by developing key
hypotheses by which PCC (Chat, coffee and sugarcane) affect food crop production
and the implication for household food security. In addition, we look at the link
between perennial food crop, enset (Ensette venttricosum), and other annual food
crops. We empirically measure these effects using survey data on 150 rural
households collected in 1999 in Ethiopia. Our results indicate that-after controlling for
conventional inputs, household wealth variables, education and other variables,
higher chat (Catta edulis) production is associated with reduced value of food crop
yields and total value of food crop production. On the other hand, higher sugarcane
production is correlated with higher value of total food crop production and
productivity. Moreover, more intensive coffee production is associated with more
intensive enset production. However, production of coffee and enset do not have
significant effects on food crop production and productivity. These results suggest
that while farmers can gain from sugarcane production through cash income and its
impact on food crops, coffee and enset can be produced to bring additional income to
the household at no significant cost to food crops. The real impact of chat on the
welfare of households should be viewed in terms of its opportunity costs and its
contribution to household income