ii

Farmers’ Willingness to Pay for Improved Forage Seed in LIVES Districts

of West Shewa Zone, Ethiopia

A Thesis Submitted to the College of Agriculture and Environmental

Sciences, the School of Agricultural Economics and Agribusiness, School of
Graduate Studies
HARAMYA UNIVERSITY

In Partial Fulfillment of the Requirements for the Degree of

MASTER OF SCIENCE IN AGRICULTURE
(AGRICULTURAL ECONOMICS)

Lemi Gonfa

June, 2015
Haramaya University, Haramaya
 iii

APPROVAL SHEET

SCHOOL OF GRADUATE STUDIES

HARAMAYA UNIVERSITY

I hereby certify that I have read and evaluated this thesis entitled Farmers’ Willingness to
Pay for Improved Forage Seed in LIVES districts of West Shewa Zone, Ethiopia
prepared under my guidance by Lemi Gonfa. I recommend that it can be submitted as
fulfilling the Thesis requirement.

Lemma Zemedu (PhD) _________________ _______________

Major Advisor Signature Date
Berhanu Geberemedih (PhD) _________________ _______________
Co-advisor Signature Date

As member of the Board of Examiners of the MSc Thesis Open Defense Examination, I
certify that I have read, evaluated the Thesis prepared by Lemi Gonfa and examined the
candidate. I recommended that the Thesis be accepted as fulfilling the Thesis requirement for
the Degree of Master of Science in Agriculture (Agricultural Economics).
Mengistu Ketema (PhD) _________________ _______________
Chairperson Signature Date
Jema Haji (PhD) _________________ _______________
Internal Examiner Signature Date
Endrias Geta (PhD) _________________ _______________
External Examiner Signature Date

Final approval and acceptance of the Thesis is contingent upon the submission of its final
copy to the Council of Graduate Studies (CGS) through the candidate’s department or school
of graduate committee (DGC or SGC).
 iv

DEDICATION

This thesis work is dedicated to my wife, Atsede Molla for taking care of my lovely son Naol
Lemi and little princess Bersabeh Lemi during my absence and for nursed me with affection
and love throughout my work. This thesis work also dedicated to my beloved mother, Atsedu
Gudetta, who passed away before seeing my end.
 v

STATEMENT OF AUTHOR

First, I declare that this thesis is the result of my own work and that all sources or materials
used for this thesis have been duly acknowledged. This thesis is submitted in partial
fulfillment of the requirements for an advanced M.Sc. degree at Haramaya University and to
be made available at the University’s Library under the rules of the Library. I confidently
declare that this thesis has not been submitted to any other institutions anywhere for the award
of any academic degree, diploma, or certificate.

Brief quotations from this thesis are allowable without special permission, provided that
accurate acknowledgement of source is made. Requests for permission for extended quotation
from or reproduction of this manuscript in whole or in part may be granted by School of
Agricultural Economics and Agribusiness or Dean of the School of Graduate Studies when in
his or her judgment the proposed use of the material is in the interests of scholarship. In all
other instances, however, permission must be obtained from the author.

Name: Lemi Gonfa Signature:

Date of Submission: June, 2015
School/ Department: School of Agricultural Economics and Agribusiness
 vi

BIOGRAPHICAL SKETCH

Lemi Gonfa Debeli was born in West Shewa Zone of Oromiya Region in 1983. He attended
his elementary and junior education in Addis Ababa, Keraniyo Medanialem Junior and
Secondary School. He attended his high school education in Dejach Wondirad Preparatory
School. After completion of his high school education, he joined Jimma University, and
graduated B.Sc. Degree in Agricultural Economics in 2010. Immediately after graduation, the
author was employed in Wolaita Sodo University as graduate assistant and served for two
years. Then after, he joined Haramaya University in 2012 to pursue graduate studies for the
M.Sc. in Agricultural Economics. The author is married and has one son and one daughter.
 vii

ACKNOWLEDGEMENTS

First and foremost, I would like to praise and extend my unshared thanks to Almighty God,
for providing me the opportunity, smoothening of all aspects regarding my study and being
with me in all aspects during my stay at Haramaya University and throughout my life.

I extend my heartfelt thanks to my major advisor Dr. Lemma Zemedu for his valuable advice,
insight and guidance starting from proposal development to the completion of the research
work and his provision of reference material. I am again thankful to my co-advisor, Dr.
Berahnu Gebremedhin, for his willingness to advise me as well as his valuable guidance and
support throughout my research work. Both have worked hard to keep me on the right track
and for the accomplishment of the study.

I express my sincere appreciation to LIVES (ILRI) Project for funding my research and other
study expenses and Ministry of Education for giving me chance to pursue my post graduate
study and paying my salary during my study program. I would like also to thank all
management and staff members of West Shewa Agricultural Offices for their hospitality and
kind cooperation in all aspects.

I also remain thankful to all the staff of LIVES project from zone to head office that
facilitated and assisted me in running any expenses of my study.

My special thank go to my wife Mrs. Atsede Molla for being with me all the time providing
me a moral support, encouragement and prayer while shouldering all my families burden with
patience and endurance. Finally, I express my heartfelt gratitude to the whole family for their
prayer and patience in all inconvenience they had during my absence for academic and
research work.
 viii

ACRONYMS AND ABBREVIATIONS

APHRD Animal and Plant Health Regulatory Directorate

ARDU Arsi Rural Development Unit
ASE Amhara Seed Enterprise
AWOA Adea-berga Woreda Office of Agriculture
BoA Bureau of Agriculture
BoARD Bureau of Agriculture and Rural Development
BOFED Bureau of Finance and Economic Development
CSA Central Statistical Agency
CV Contingent Valuation
CVM Contingent Valuation Method
DBDC Double Bounded Dichotomous Choice
DBCV Double Bounded Contingent Valuation
EARO Ethiopia Agricultural Research Organization
EIAR Ethiopian Institute of Agricultural Research
ESE Ethiopian Seed Enterprise
ETB Ethiopian Birr
EWOA Ejere Woreda Office of Agriculture
FAO Food and Agriculture Organization
FBSM Farmer Based Seed Multiplication
FCUs Farmers Cooperative Unions
FLDP Fourth Livestock Development Project
GTP Growth and Transformation Plan
IFPRI International Food Policy Research Institute
ILRI International Livestock Research Institute
LIVES Livestock and Irrigation Value Chains for Ethiopian Smallholders
MoA Ministry of Agriculture
MoARD Ministry of Agriculture and Rural Development
MoFED Ministry of Finance and Economic Development
MWOA Meta-robi Woreda Office of Agriculture
 ix

ACRONYMS AND ABBREVIATIONS (Continued)

NARS National Agricultural Research Systems

NGOs Nongovernmental Organizations
OSE Oromiya Seed Enterprise
RARIs Regional Agricultural Research Institutes
RSE Regional Seed Enterprise
SRSE Southern Nations Nationalities and Peoples Region Seed Enterprise
WTP Willingness to Pay
WTA Willingness to Accept
 x

TABLE OF CONTENTS

STATEMENT OF AUTHOR v
BIOGRAPHICAL SKETCH vi
ACKNOWLEDGEMENTS vii
ACRONYMS AND ABBREVIATIONS viii
LIST OF TABLES xii
LIST OF FIGURES xiii
LIST OF TABLES IN THE APPENDIX xiv
1. INTRODUCTION 1
1.1. Background of the Study 1
1.2. Statement of the Problem 2
1.3. Objectives of the Study 4
1.4. Scope and Limitation of the Study 4
1.5. Significance of the Study 5
1.6. Organization of the Thesis 5
2. LITERATURE REVIEW 6
2.1. Definitions and Concepts of Seed, Seed System and Willingness to Pay 6
2.2. The Evolution of Improved Forage Seed System in Ethiopia 7
2.2.1. Historical development of improved forage seed system 7
2.2.2. Current improved forage seed system 8
2.2.3. Demand planning and seed supply 10
2.3. Theoretical Background of WTP 10
2.3.1. Methods of valuation of environmental resources 10
2.3.2. Theoretical background of the contingent valuation method 12
2.4. Empirical Studies on WTP 16
2.5. Conceptual Framework of the Study 18
3. RESEARCH METHODOLOGY 20
3.1. Descriptions of the Study Area 20
3.1.1. Location and topography 20
3.1.2. Agro-Ecology 20
3.1.3. Population 21
3.1.4. Agriculture 21
 xi

TABLE OF CONTENTS (Continued)

3.2. Sampling Design and Methods of Data Collection 23

2.3.1. Sampling procedures and sample size 23
2.3.2. Methods of data collection 23
3.2. Methods of Data Analysis 26
3.3.1. Descriptive statistics 26
3.3.2. Econometric model specification 26
3.3.3. Variables definitions, measurements and their working hypotheses 29
3.3.4. Model diagnostic 33
4. RESULTS AND DISCUSSION 35
4.1. Feed Resources and Improved Forage Seed System of the Study Area 35
4.1.1. Livestock feeding strategies 35
4.1.2. Seed system at study area 36
4.1.3. Challenges of seed system at study area 37
4.2. Farmers’ WTP for Improved Forage Seed 38
4.2.1. Descriptive results of WTP for improved forage seed 38
4.2.2. Econometric results of WTP for improved forage seed 42
4.2.3. Estimating mean WTP for alfalfa, elephant grass, oats and vetch 50
5. SUMMARY, CONCLUSION AND RECOMMENDATIONS 52
5.1. Summary and Conclusions 52
5.2. Recommendations 53
6. REFERENCES 55
7. APPENDICES 61
 xii

LIST OF TABLES

Table Page
1. Agro-Ecological characters of selected districts and West Shewa Zone 21
2. Population and households of the selected districts in West Shewa Zone 21
3. Basic agricultural statistics of the LIVES districts in West Shewa Zone 22
4. Number of sample households taken from sampled Kebeles 24
5. Classification and measurements of variables used in the regression model 34
6. Improved forage utilization trends (2009-2014) 38
7. Distribution of households’ continuous variables 40
8. Descriptive statistics of dummy explanatory variables 41
9. Distribution of willing and non-willing respondents 41
10. Distribution of responses to double bounded question across the bid sets for alfalfa 42
11. Distribution of responses to double bounded of the bid sets for elephant grass 42
12. Distribution of responses to double bounded question across the bid sets for Oats 43
13. Distribution of responses to double bounded question across the bid sets for Vetch 43
14. Bivariate probit results for alfalfa and vetch 46
15. Marginal effects of explanatory variables of alfalfa and vetch 47
16. Bivariate probit results for elephant grass and oats 50
17. Marginal effects of explanatory variables for elephant grass and oats 51
 xiii

LIST OF FIGURES

Figure Page
1. Commercial seed suppliers and seed flow system 9
2. Conceptual frame-work for determinants of WTP of forage seed 19
3. West Shewa zone and LIVES districts 23
4. Feeding practices of study area 36
5. Livestock production related problems 37
6. Sources of seed used by the sampled farmers 38
7. Major problems of the existing forage seed supply 39
 xiv

LIST OF TABLES IN THE APPENDIX

Appendix Table Page

1. Variance Inflation Factor for explanatory variables 63
2. Contingency coefficients for discrete variables 63
3. Conversion factors used to estimate tropical livestock unit 63
4. Conversion factors used to compute man-equivalent 63
5. Parameter estimates of bivariate probit for mean WTP of alfalfa 64
6. Parameter estimates of bivariate probit for mean WTP of elephant grass 64
7. Parameter estimates of bivariate probit for mean WTP of oats 64
8. Parameter estimates of bivariate probit for mean WTP of vetch 65

Questionnaire used for data collection 65

 xv

FARMERS’ WILLINGNESS TO PAY FOR IMPROVED FORAGE SEED

IN LIVES DISTRICTS OF WEST SHEWA ZONE, ETHIOPIA

ABSTRACT

Higher willingness to pay for improved forage has positive effects on utilization of improved
forage which increases livestock productivity. However, the extents to which farmers are
WTP for improved forage seed has not been studied at study area. Hence, the objective of this
study was to identify determinants of farmers’ WTP for improved forage seed and to assess
the seed system in LIVES districts of West Shewa Zone, Ethiopia. The study includes both
primary and secondary data. A multi-stage stratified sampling technique was used to collect
data from181 farmers. The data were analyzed using descriptive statistics and econometric
model. DBDC elicitation format of contingent valuation method was employed to estimate the
parameters in the bivariate probit model. From the result of the study: lack of proper linkage
between different actors involved in seed systems; inadequate supply of good quality seed at
affordable prices; low level of private sector involvement in the formal system were typical
challenges in the seed system of the study area. The response of households' for scenario
indicated that the mean WTP for alfalfa, elephant grass, oats and vetch was found to be ETB
173.82, 0.54 per cutting, 39.13 and 28.51 per kg, respectively. The results of the model
revealed that on-farm income, land holding, total livestock in TLU, access to credit, family
size and contact with extension agents had positive and significant effects on WTP. While
initial bid prices, off-farm income, distance to all weather roads and input supplier
institutions had negative and significant effects on WTP. The study recommended that well
coordinated and organized seed systems which comprehend all actors and promising
cultivars through well established national extension system should be required in order to
fill the current seed system gaps. Moreover, the farmers’ WTP for improved forage should be
enhanced by raising farm household asset creation, training and providing credit services.

Key words: Seed, WTP, DBDC and Bivariate Probit Model

 1

1. INTRODUCTION

1.1. Background of the Study

Ethiopia is known for livestock population in Africa; the total livestock population was 53
million cattle, 25.5 million sheep and 22.7 million goats (CSA, 2011). However, livestock
productivity is low (ibid) due to low utilization of improved technologies, animal health
problems, inadequate quantity and quality of feed supply and poor coordination of seed
system. Particularly, the seed system is essentially the economic and social mechanism by
which farmers’ demand for seed and various traits they provide met by various possible
sources of supply (FAO, 2006). However, seed coordination system contributes to low level
of adoption of improved forage seed. In addition to these, livestock sub sector has subjected
to poor nutritional feed that lacks energy, protein and micronutrients which results from high
dependency on crop residues containing a high proportion of cell wall (Owen and Jayasuriya,
1989).

Some scholars suggests that utilization of improved forages would reduce the pressure on
natural pastures, improve soil fertility and erosion on marginal lands, improve carbon
sequestration to mitigate climate change, support system sustainability, and enhance natural
assets and system resilience (ILRI, 2009). Thus, governmental (GO) and nongovernmental
organizations (NGOs) has started introducing and popularizing improved and exotic multi-
purpose forage crops and trees through integration with food crops cultivation in the mixed
crop-livestock system in Ethiopia since 1970s to supplement the roughage feed resources
(EARO, 2002; Alemayehu, 2006). There is also promising effort by research centers to
develop improved forage over the last three decades. Some of these seed were disseminated to
smallholder farmers by research centers, NGOs and development workers.

Even if introduction and popularization of improved forage seeds has long period of time, the
issue of livestock feed shortage remain unsolved in Ethiopia. Major reason suggested was low
level of improved forage technology adoption due to scarcity of improved forage seed
(Alemayehu and Getnet, 2012).
 2

Understanding the existing seed system for commercialization and innovation; identifying key
actors and their respective roles and understanding policy and strategies for better livestock
development is vital. Hence, Ethiopia government has accordingly paid due attention to
improving the productivity of the sub sector in the GTP. Despite of improved forage has
numerous benefits and long period in Ethiopia, up dated empirical evidences were scant on
determinants of farmers’ willingness to pay for improved forage seed. Therefore, this study
endeavors to fill the information gap on seed system and determinants of farmers’ WTP for
improved forage seed technologies of the LIVES districts of West Shewa Zone.

1.2. Statement of the Problem

Increasing livestock population pressure and small and decreasing landholdings are serious
problems which result in shortage of livestock feeds, which in turn, lead to low livestock
production and productivity. Poor-quality feed and fluctuating feed supplies with seasonal
feed shortages are major constraints to increase livestock productivity in many tropical
countries particularly in Ethiopia (Kruseman et al., 2002 and Tangka et al., 2002).

Natural pasture comprises the largest feed resource in Ethiopia. With the rapid increase of
human and livestock populations coupled with an increasing demand for food; grazing lands
are steadily shrinking and being converted to arable land. Moreover, the conditions and trends
of grazing lands are becoming key challenges in feeding the increased numbers of livestock
population. Overgrazing and seasonal feed shortages are recurring problems within the
country. Ethiopia’s grazing lands are classified as in “poor” to “very poor” condition and will
deteriorate further without immediate action (ILRI, 2014).

In response to these great challenges, improved forage, especially alfalfa, elephant grass, oats
and vetch has been introduced to the study area because of their higher yield potential per unit
area. In order to improve the productivity and production of livestock, it is important to make
sure that there exists adequate feed supply. Accordingly, more emphasis is given to integrate
livestock feed development with the undergoing natural resources conservation and watershed
development programs in the GTP (MoFED, 2014).
 3

GOs and NGOs are working on the dissemination of improved forage seed on almost free
bases or on contractual bases to solve the often said feed shortage for livestock resources.
However, these methods of distribution are not everlasting due to less seed supply from the
sources. Therefore, it is important to investigate farmers mean WTP for improved forage seed
and consider policy direction. Though a hypothetical value, WTP can help to establish
boundaries for information supply price. It is the minimum expenditure level required to
achieve the initial utility level. As pointed out by Holden and Shiferaw (2002), estimation of
WTP at the household level has both theoretical and empirical implications, because farm
investment decisions depend on consumption as well as production parameters. Indeed,
market imperfections lead to inseparability between consumption and production decisions
(Singh et al., 1986 and De Janvry et al., 1991).

Overall, following Aryal et al. (2009), farmers’ willingness to pay for a given agricultural
technologies is a function of knowledge, attitude, and intention. Socio-economic
characteristics such as age, sex, and income also shape a consumer’s willingness to pay,
because those characteristics affect attitudes toward agricultural technologies. In addition,
market characteristics such as accessibility and prices affect purchase behavior and ultimately
farmers’ willingness to pay. Therefore, this study intended to explore information on
determinants of farmers’ WTP for improved forage seed. The other motive for this study was
absence of empirical study on determinants of farmers’ WTP for improved forage seeds in
Ethiopia in general and in the study area in particular. This study, therefore, was initiated to
investigate determinants of farmers’ WTP for improved forage seed of West Shewa Zone
Oromiya Regional State.
 4

1.3. Objectives of the Study

The general objective of the study was to investigate seed system and farmers’ WTP for
improved forage seed in LIVES districts of West Shewa Zone.

The specific objectives were:

1. To assess improved forage seed system of the study area;
2. To identify factors influencing farmers’ WTP for improved forage seed.
3. To estimate farmers’ mean WTP for improved forage seeds;

Basic research questions

1. Who are the major actors involved in the forage seed system?
2. What amount of price is plausible for forage seed in the study area?
3. What factors influence farmers’ WTP?

1.4. Scope and Limitation of the Study

The scope of this study was to identify determinants of farmers’ WTP and estimate mean
WTP for improved forage seeds. Given time, financial and other resource limitations, the
study considered seven kebeles from three LIVES districts of West Shewa zone of Oromiya
National Regional State. For the same reason, the sample size was 181 respondents. Four
improved forage seeds that were common to the study area were considered. These are alfalfa,
elephant grass, oats and vetch. Hence, the results would have practical validity mainly to this
area. But other areas having comparable or similar contexts (social, economic, and
institutional set up) may use recommendations of the present study with cautions. In addition,
since cross-sectional data were collected of the production season 2013/14, this might not be
enough to generate adequate information because there could be some variables which could
potentially be changed over time. The other main limitation of this study was the absence of
the empirical study previously done specific to this area; is hardly available and when it is
found is not to the specific topic directly. Specifically, inadequate information: previous
 5

studies regarding the evolution of the country’s forage seed system and WTP for improved
forage seed do not exist. Furthermore, as the research uses contingent valuation methodology
(CVM) the study is subject to all limitations associated with the method, though; efforts have
been made to minimize its limitations, thereof.

1.5. Significance of the Study

Farmers who are operating in different agro-climatic and socio-economic conditions are
confronted with different constraints, and thus may not demand innovations equally. The
demand for new technologies appears to be dependent up on number of socio-economic,
cultural, biological, institutional, structural and other factors. Therefore, identifying the
determinants of households’ willingness to pay for improved forage seed and amount they are
willing to pay would provide an insight to policy makers, planners, donors and administrators
who are involved in the promotion of improved forage seed development. It is also believed
that this research output can give information about the demand for improved forage seed in
the study area and derived to other areas of the country with similar context. Furthermore, it is
believed to serve as a spring board for other comprehensive studies in the livestock sub-sector
that contributes to the overall improved feed development and supply in the country. The
research is useful as an input for different organizations to design interventions to address the
main causes of low adoption and mean WTP through their capacity building programmes.
The work also serves as a reference document for researchers to embark on studies of the
same or related kinds in other parts of the country.

1.6. Organization of the Thesis

This thesis is organized in five chapters. The first chapter has already dealt with background,
statement of the problem, objectives, significance and scope and limitation of the study. The
second chapter reviews different literatures which are related to improved forage seed and
others relevant to the topic. Chapter three deals with the methodology and chapter four covers
the result and discussion. The last chapter presents summary, conclusions and policy
implications of the study.
 6

2. LITERATURE REVIEW

This chapter reviews different literatures on improved forage seed system in Ethiopia and
theories and empirical findings on WTP for non-marketed goods/services and marketed one.
The first section presents definitions and concepts. The second section reviews the evolution
of forage seed system and current seed system. The third section reviews theoretical
background of WTP and CVM. The fourth section reviews empirical findings on WTP
(CVM) and the fifth section discusses the conceptual framework of the study.

2.1. Definitions and Concepts of Seed, Seed System and Willingness to Pay

Seed: It is a key input for improving crop production and productivity. It is the beginning of
something which continues to develop or grow. Increasing the quality of seeds can increase
the yield potential of the crop by significant folds and thus, is one of the most economical and
efficient inputs to agricultural development (FAO, 2006).

Seed system: It represents the entire complex of organizational, institutional and individual
operations associated with the development, multiplication, processing, storage, marketing
and distribution of seed in the country (Abebe et al., 2007). Rules and regulations such as
variety release procedures, intellectual property rights, certification programs, seed standards,
and contract laws influence the structure, coordination and performance of the seed system.
A well-functioning seed system is defined as one that uses the appropriate combination of
formal, informal, market and non-market channels to efficiently meet farmers’ demand for
quality seeds.

WTP: It refers to measures the amount of money the individual is willing to pay for an
increase in the quantity or quality of the environmental good. It is the amount that leaves the
household indifferent between the expected marginal utility under the old set of technologies
and the discounted expected marginal utility of the change in future incomes as a result of the
new set of agricultural technologies (Horna et al., 2005).
 7

2.2. The Evolution of Improved Forage Seed System in Ethiopia

2.2.1. Historical development of improved forage seed system

In the 1970s, the Arsi Rural Development Unit (ARDU) first introduced annual forage
legumes and perennial grass species, as well as pastures. ARDU’s forage seed production
efforts were sustained and were well received among farmers where they multiplied starter
seeds of Oats, Vetch and Fodder beet offered by the unit (Alemayeu and Robertson, 2013).

Between 1987 and 1988, the Fourth Livestock Development Project (FLDP) of the MoA
introduced forage production systems. The FLDP project gave more emphasis on herbaceous
and tree legumes and collected seeds mainly from forage development sites and a number of
model farmers. The approaches introduced by FLDP were: Contractual system of forage seed
production, opportunist seed production and specialized seed production enterprise (ILRI,
2014).

Contractual system of forage seed production: This system was introduced by the FLDP
with the aim to produce quality seed at the level of individual farmers and cooperatives at a
reasonably low cost of production, and at the same time to demonstrate improved forages
production and utilization techniques to the producers. Large quantities of forage seed were
produced during the FLDP project period. However, farmer to farmer seed exchange was
minimal. The farmers continued to rely on the government to market their product and this
did not continue.

Opportunist seed production: In this system, forage seed production is coupled with
livestock production in a dual business approach. Seed production takes place when the
farmer expects a good seeding year and favorable market for seed. If not, fodder production
for feeding livestock is practiced. Additional investment needed for this enterprise is low.
What is required of the management would be control of plant density, maintenance of good
crop hygiene, proper nutrition, irrigation and more intensive crop management.
 8

Specialized seed production enterprise: A specialized seed production enterprise requires

high investment with regard to equipment, fertilizer, chemicals, power and labor. In this
system, the seed enterprise is surely a profitable business and the crop is considered to be a
high value crop. A more precise management skill is required including an utmost care in site
selection.

The private sector has only been engaged in forage seed production activities in recent years.
Although participation has grown, its capacity is still limited and is not equipped to meet
Ethiopia’s forage seed demand. Businesses like Eden Field Agri-Seed Enterprise, Sidama
Seed Enterprise and Seid Improved Forage Seed Producers are operating in the production
and dissemination of certified seed (Abebe, 2010).

2.2.2. Current improved forage seed system

Seed systems in Ethiopia can be divided into two broad types: the formal system and the
informal system (sometimes called local or farmers seed system). Both systems are operating
simultaneously in the country and difficult to demarcate between the two. There is however, a
fact that the formal system is the original source of improved seeds in the informal system
(Abebe, 2010).

The formal seed system is called formal because it is mainly government supported system
and several public institutions are also involved on it. Figure 1 demonstrates the major actors
and their linkages. The major actors of the formal system are: National Agricultural Research
Systems (NARS), Ministry of Agriculture (MoA), Ethiopian Seed Enterprise (ESE) and
private seed companies specializing on specific crops like Pioneer. ESE and RSEs are playing
key roles in mass production of improved seeds on own farms, state farms private commercial
farms and on Farmers Based Seed Multiplication Schemes (FBSMS). MoARD is an umbrella
organization which coordinates and leads the various activities of the seed industry. The main
tasks of MoARD’s various departments include the national seed policy, variety registration
and release, seed import/export, seed certification, quarantine and extension. BoARDs in
regional states and Farmers Cooperative Unions (FCUs) play a vital role in seed distribution
 9

while credit is offered by various financial institutions through FCUs. Recently, regional seed
enterprises (RSE) were also established as public seed enterprises (such as Oromiya Seed
Enterprise (OSE), Amhara Seed Enterprise (ASE), and Southern Nations nationalities and
Peoples Region Seed Enterprise (SRSE) and entered into the formal system. All actors have
inter-dependent
dependent roles in the system and inefficiency of one actor will automatically affect
negatively the performances of the rest of the actors. N
NARS
ARS (EIAR & RARIs) is responsible
for variety development and supply of initial seed, and ESE and RSEs are playing key roles in
mass production of improved seeds (Abebe and Lijalem, 2011).

Source: IFPRI (2010)

Figure 1. Commercial seed suppliers and seed flow system

The informal seed system, also known as local system or sometimes as farmers system, is
called informal because it operates under non
non-law
law regulated and characterized by farmer-to-
farmer
farmer seed exchange. According to Cromwell et al., (1992), fivee key features distinguish the
informal from the formal system. These are, the informal system is traditional, semi-
semi
structured, operate at the individual community level, uses a wide range of exchange
mechanisms, and usually deal with small quantities of sseeds
eeds often demanded by farmers.
 10

2.2.3. Demand planning and seed supply

MoARD employs a bottom-up demand assessment, whereby the regional BoARDs develop
annual seed demand statistics with input from woredas (Dawit et al., 2010). Development
agents (DAs), assess individual farmers in kebele about their seed needs. This information is
aggregated into woreda, regional and national demand statistics. The result is a rough estimate
of the types and quantities of seed farmers want to purchase the following year in each region.
This target is loosely apportioned to the various producers (such as ESE and the RSEs). At the
end of the cycle, the government allocates supply proportionally through the cooperatives
based on the original demand, without considering shifts in demand due to changes in rainfall
pattern and market situation. However, in many years, seed supply is well below demand,
because of either variation in the original estimates or supply bottlenecks.

There are three major supply sources for improved forage seed in Ethiopia. These are
Commercial seed suppliers (Public seed Enterprises, Private seed companies and others (state
farms, unions, research centers etc)) (Abebe et al., 2012).

2.3. Theoretical Background of WTP

Following Aryal et al. (2009), farmers’ willingness to pay for a given agricultural
technologies is a function of demographic, socio-economic and market characteristics such as
accessibility and prices affect purchase behavior and ultimately farmers’ willingness to pay.

2.3.1. Methods of valuation of environmental resources

A number of valuation techniques have been developed by economists to value non- market
environmental and cultural amenities consistent with the valuation of marketed goods. The
methods of valuating environmental resources have been distinguished between ‘observed’
methods and ‘hypothetical methods’. These methods are also referred as revealed preference
methods and stated preference methods (Freeman, 2003).
 11

Revealed preference method: It is ascertaining individuals’ valuations of environmental

assets by observing their purchases of market-priced goods that are necessary to enjoy the
environmental good in question. This method infers the value of environmental goods by
studying their actual or revealed behaviour in closely related markets through the application
of some model of relationships between marketable goods and environmental services.
Revealed preference methods are based on actual behavior reflecting utility maximization
subject to constraints (Bochstael et al., 2005). Hedonic pricing method and the travel cost
method are among the commonly used revealed preference methods. They are used in a
situation where markets for environmental goods or services are absent or not well developed
and in a situation in which it is hardly possible to value the environmental impacts of a
particular project by using the market.

The stated preference techniques: It is a direct approach refers to the direct expression of
individuals' WTP or willingness to accept (WTA) in compensation for any change in
environmental quantities, qualities or both. Environmental economists have made increasing
use of stated preference methods in recent years, particularly in the fields of cost-benefit
analysis, policy appraisal and natural resource damage assessment. Although still
controversial, these methods have gained increased acceptance amongst both academic
economists and policy-makers as versatile and powerful methodologies for estimating the
monetary value of non-traded goods and services (Hanley et al., 2003).

Among the frequently used methods of stated preferences, the Choice Modeling (CM) and
Contingent Valuation Method (CVM) are commonly used (Freeman, 2003).

Choice modeling: It has its origin in conjoint analysis, information integration theory in
psychology and discrete choice theory in economics and econometrics (Louviere, 1988). The
contingent ranking and rating methods are variant techniques widely used in marketing
known as conjoint analysis. A common feature of this type of approach is the requirement that
survey respondents consider alternatives which are described in terms of their component
characteristics or 'alternatives'. The alternatives are constructed by combining attributes at
different 'levels' (Bennett and Blamey, 2001).
 12

Contingent Valuation Method: A number of valuation methods have been developed by

economists to estimate the value consumers place on non-market goods and services among
which contingent valuation method (CVM) is the most often used. Contingent valuation is a
well-established method in environmental valuation. Since the 1960s economists have used
contingent valuation to value various environmental and also other types of goods (Mitchell
and Carson, 1989). CVM is among the stated preference valuation approaches and is based on
direct expression of individuals’ WTP in compensation for any change in environmental
quantities, qualities, or both (Freeman, 2003). Because the elicited WTP is contingent upon
the particular hypothetical market described to the respondent, this approach came to be
called contingent valuation method (Mitchell and Carson, 1989).

CVM has been applied for the valuation of a very wide range of issues in an environmental
context; including biodiversity, air and water quality, landscape quality, wildlife conservation,
forests, outdoor recreation and cultural heritage conservation (Bateman and Willis, 1999). It
also can be used to marketed goods/services. Since CVM was used in this study, the
theoretical background of the method is briefly discussed as follows.

2.3.2. Theoretical background of the contingent valuation method

CVM enables economic values to be estimated for a wide range of commodities, which are
not marketable, measured in relation to utility functions through the concepts of WTP and
WTA compensation, as well as through the related measures of consumer’s surplus. The
CVM aims at eliciting people's preferences about public goods. The preferences are elicited
by a carefully designed survey that directly asks respondents WTP (or WTA) for the change
in the provision of the public good.

According to the theory of welfare economics, the value of the good is the most someone is
willing to pay for it. The survey contains a description of the good in question and the
hypothetical market where it is sold and bought. The WTP responses are contingent on the
hypothetical market, thus the name of the method. For example, individuals might be asked
how much they would be willing to pay to enter a national park, conditional on the existence
 13

of a particular charging scheme. The "prices" suggested by the respondents are conditional
upon the constructed (hypothetical) markets presented to them (Mitchell and Carson, 1989).

The two standard monetary welfare measures in environmental valuation are willingness to
pay (WTP) and willingness to accept (WTA). WTP measures the amount of money the
individual is willing to pay for an increase in the quantity or quality of the environmental
good. WTA on the other hand measures the amount of money the individual is willing to
accept as a compensation for a decrease in the quantity or quality of the good. The appropriate
welfare measure depends on the property rights for the good (Mitchell and Carson, 1989).

For an individual, WTP is the amount of income that compensates for (or in equivalent to) an
increase in public good. That is WTP is the positive part of equivalent variation and WTA is
the negative part of compensating variation (Haab and McConnell, 2002).

Agribusinesses such as supermarkets, restaurants, and food processors will be interested in

estimating consumer demand for a new product or attribute; however, agribusinesses such as
seed and chemical companies, technology and equipment dealers, and agricultural service
providers might also be interested in producer (farmer) WTP for a new product or service
(Hudson and Hite, 1990). Although WTP is almost always discussed within the context of
utility maximization of consumers, this concept can also be extended to producers. For this
study, CVM of stated preference (direct survey method) through customers’ survey will be
applied to measure the willingness to pay of farmers for improved forage seed in the study
area.

2.3.2.1. CVM elicitation techniques

CVM survey uses questions to elicit people's preferences of public goods and services by
finding out what they would be WTP for the specified improvement (improved forage seed in
this case). According to Haab and McConnell (2002), the final element of a CV scenario is
the method of asking questions. This part of the questionnaire confronts the respondent with a
given monetary amount, and one way or the other induces a response. Here are the basic
approaches to asking questions that lead directly to WTP or provide information to estimate
preferences.
 14

Open Ended: A CV question in which the respondent is asked to provide the interviewer
with a point estimate of his or her WTP. It is worded as "What are the most you would be
willing to pay for...?" Due to respondents' difficulty in answering the payment question and
the fact that it results in many missing values, the open ended CV elicitation approach is these
days less frequently used.

Bidding Game: A CV question format in which individuals are iteratively asked whether they
would be willing to pay a certain amount or not. The amounts are raised (lowered) depending
on whether the respondent was (was not) willing to pay the previously offered amount. The
bidding stops when the iterations have converged to a point estimate of WTP. The final
amount is interpreted as the respondent's WTP. This approach however, has its own
disadvantages. The first disadvantage of the bidding game approach is that it results in a
starting point bias as the final value is systematically related to the initial bid value. Annoying
or tiring respondents which causes them to answer yes or no to a stated amount in hopes of
terminating the interview is another disadvantage of the bidding game approach.

Payment Cards: A CV question format in which individuals are asked to choose a WTP
point estimate (or a range of estimates) from a list of values predetermined by the surveyors,
and shown to the respondent on a card. The final amount chosen by the respondent can be
interpreted as the respondent's WTP. This approach is also criticized on the ground that the
respondents might limit their announced WTP to the values listed on the card.

Dichotomous or Discrete Choice CV: A CV question format in which respondents are asked
simple yes or no questions of the stylized form: Would you be willing to pay $t? The
dichotomous choice approach has become the presumptive method of elicitation for CV
practitioners. The other three methods have been shown to suffer from incentive compatibility
problems in which survey respondents can influence potential outcomes by revealing values
other than their true WTP. The dichotomous choice approach has become quite widely
adopted, despite criticisms and doubts, in part because it appears to be incentive-compatible in
theory (Haab and McConnell, 2002). This approach mimics the behavior in regular markets
where people usually purchase, or decline to purchase, a good at a posted price (Hoehn and
Randall, 1987). In this approach one does not observe WTP directly, but one can infer that the
 15

respondents WTP amount is either greater than the bid value or less than the bid value. The
mean WTP is estimated by fitting different statistical models of the responses.

2.3.2.2. Critiques on contingent valuation methods

Along with the importance attached to CV’s use has come a heightened scrutiny of its
reliability and criticized for being susceptible to biases though many studies have shown that
CVM can give a reliable result if applied correctly and carefully. Among the different biases
identified in CVM studies, the following are as explained below:

Starting point bias: occurs when the respondent’s WTP is influenced by the initial value
suggested. This problem is encountered when the elicitation format involves starting values.
Boyle and Bishop (1985) give three possible sources for starting point biases. First, starting
point bias may arise if the good being valued is not well defined or when the respondents do
not well perceive the good clearly. Secondly, if the bidding game is used and the starting
value is significantly different from the respondent’s actual WTP, the respondent may get
bored with the process, and stop the bid before her/his real WTP is reached. Thirdly, the
respondent may think the true value for the service to be around the starting point.

Compliance bias: occurs when the interviewer is leading the respondent towards the answer
he/she is expecting. Compliance bias can also come because of the sponsor of the good being
valued. This bias can be reduced by carefully designing the survey, good training of the
interviewers and good supervision of the main survey (Mitchell and Carson, 1989).

Strategic bias: arises when the respondents expect something out of the result of the study
and report not their real WTP but something which they think will affect the research outcome
in favour of them. Respondents may tend to understate their true WTP if they think they have
to pay their reported WTP, but their response will not affect the supply of the good. But if
they think they will not pay their reported WTP and if they want the good to be supplied they
overstate their WTP for the good (Mitchell and Carson, 1989). Giving detailed description of
the good being valued and the whole purpose of the study can reduce this bias.
 16

Hypothetical bias: inherent in CVM is its hypothetical nature. If respondents are not familiar
with the scenario presented, their response cannot be taken as their real WTP. This bias can be
minimized by a careful description of the good under consideration for the respondents.

Part–whole bias: occurs when the respondent fails to distinguish between the parts of the
good being evaluated and the total group of the goods into which that part falls.

Despite all these and other shortcomings, CVM is still the best valuation method available for
elicitation of households’ WTP and many of the biases can be minimized by a careful
designing of the survey, proper training of the interviewer, conducting pilot survey and
monitoring and supervision of the main survey. All these measures were taken as far as
possible to minimize the potential impacts of the above biases on the result of this study.

2.4. Empirical Studies on WTP

There are very few studies that were conducted on the WTP for agricultural technologies.
Among them most of the studies applied CVM.

Research results revealed that the magnitudes of households’ WTP for agricultural
technologies, as well as the type of payment, vary with the nature of the technology.
Holloway and Ehui (2001), for example, looked at the impacts of extension on participation
of dairy producers in Ethiopia’s milk market and the amount that households would be willing
to pay for the extension service. Based on the WTP estimates and the per-unit cost estimates
of the extension visit, the authors found that privatization of extension services is a possibility
in the context of milk market development.

John and Sanyal (2011) conducted a research on joint estimation of farmers’ stated
willingness to pay for agricultural services the case of west and central Africa. In this paper a
multivariate probit approach to investigate farmers’ stated willingness to pay for different
agricultural services including soil fertility management, crop protection, farm management,
improved produce quality /varieties, on-farm storage (post-harvest), improved individual and
group marketing, and disease control were used. Data were from the Uganda National
Household Survey 2005/2006. The results also suggested that land ownership matters; indeed,
 17

increase in the size of land owned by farmers increases their willingness to pay for
agricultural services. As expected, farmers’ income, especially agricultural income
significantly increases farmers’ willingness to pay for agricultural services. Overall, decisions
to pay or not for agricultural services are not independent from each other implying that joint
supply of these services should be recommended.

Sulaiman and Sadamate (2000) estimated the WTP for extension services for Indian
conditions. Farmers were asked directly about their WTP for extension services and valid
agricultural information. The authors used a linear discriminant function to predict farmers’
behavior and evaluate the determinants of their willingness or unwillingness to pay. One
caveat of this approach, as in any contingent valuation exercise, is that the WTP is a
hypothetical value. Hypothetical values cannot always be correlated with capability or
readiness to pay. When farmers are familiar with fee based extension services and can give a
plausible value, as was the case in the Indian study, the methodology is appropriate. By
contrast, financial participation for extension is rare in West Africa. In this study, the WTP
value for information had to be estimated indirectly. Conjoint analysis, most commonly
applied in market research, provides a powerful theoretical basis for doing so. By treating
information about the seed variety as a product attribute, it is possible not only to evaluate
how preferences change but also to estimate the marginal value of the information itself. The
product delivered by extension services is information about new technologies, which are
improved rice varieties. The information variables account for extension activities conducted
during the introduction of the new varieties.

Zelalem and Fekadu (2010) employed a contingent valuation technique to estimate

respondents’ willingness to pay (WTP) for improved rural water supply. The analysis was
done based on data collected from 132 households. The data were collected through double
bounded dichotomous question to elicit respondent’s WTP. Both binary and ordered probit
model were used to examine the determinants of WTP. The regression results indicate that
households who earns better annual income, who participated during the early phase of
project implementation, who are using unreliable water sources and who are spending more
 18

time in collecting water are more likely to pay. Whereas those households with large family
members and those collecting water from convenient water points are less likely to pay.

Two conclusions can be made from the above empirical reviews; first there was no empirical
findings pertinently conducted on determinants of WTP for improved forage seed. Second,
empirical studies reviewed have shown that households’ willingness to use or pay for
improved technologies could be affected by socio-economic, demographic and institutional
related variables pertinent to a particular area. One variable may affect willingness to pay in
one area positively and significantly while that same variable might be insignificant or having
the reverse effect in another area and situation.

2.5. Conceptual Framework of the Study

Farmers’ WTP for different technologies across space and time are influenced by different
factors and their associations. Factors such as personal, socio-economic, institutional and
psychological determine the probability of WTP of technologies such as improved forage
seed technology. It is obvious that different studies have been conducted to look into the
direction and magnitude of the influence of different factors on farmers’ WTP of agricultural
technologies. A factor, which is found to enhance WTP for a particular technology in one
locality at one time, was found to hinder it or to be irrelevant to WTP for the same technology
in another locality. Although some known determinants tend to have general applicability; it
is difficult to develop a universal model of the process of WTP for technology with defined
determinants and hypotheses that hold to everywhere. The dynamic nature of the determinants
and the distinctive nature of the areas make it difficult to generalize what factors influence
which WTP for improved technologies.

Forages can be used to address some of the major problems experienced in West Shewa Zone.
Forages provide high quality feeds that supplement the available crop residues and pasture. In
addition, by improving soil fertility, forage can enable production to be intensified on the
limited land now available. Yields of crops, crop residues and pasture may be raised, thereby
increasing the amounts of food for household and feeds for livestock. The need, and hence,
cost of nitrogenous fertilizers can be reduced by substitutions with forages; for poorest
 19

households who cannot afford fertilizers. Forages may represent the on

only
ly way to increase soil
fertility. Some forage technologies can reduce soil erosion. Multi
Multi-purpose
purpose forage trees may
provide fuel wood (reducing the need to burn crop residues and manure), timber and shade, in
addition to forages. Surplus forage can be sold to other farmers, particularly in West Shewa
Zone, Ejere and Adea-berga
erga districts, providing an additional source of income.

The framework emphasized mainly on the relationship of the explanatory variables with the
dependent variables and among explanat
explanatory variables themselves. Hence, Figure 2 depicted
the most important variables expected to influence the farmers’ WTP of improved forage
seeds technology considering
ring the study area. Demographic and socio- economic variables are
determinants for crop production
ction and livestock production and serve as a source of labor and
demand food, animal feed and cash from institutional variables. While crop and livestock
production serve as a sources for crop products, crop residues, animal products and dung. In
general these variables have influence on WTP for improved forage seed which in turn
improve the life standard of farmers by increasing livestock productivity.

Source: Adapted from Berhanu et al. (2003)

Figure 2. Conceptual frame-work
work for this study
 20

3. RESEARCH METHODOLOGY

This Chapter briefly discusses the research methodology used in the study. It provides
detailed description of site selection process and how sample respondents were drawn, how
the field survey was conducted, and how the individual interviews were conducted. Finally
methods of data analysis and hypotheses of variables included in the study were discussed.

3.1. Descriptions of the Study Area

3.1.1. Location and topography

West Shewa is one of the zones among 18 zones of Oromiya Regional State. It is found
between 80 17” North to 90 60”North latitude and 370 17”East to 380 45’’East longitude. It is
located in the central part of regional state, though some part of its areas do inclined to the
western part. The zone has 18 districts and one urban administration, which are again,
subdivided in to 528 rural and 42 urban kebeles. Neighboring zones of West Shewa Zone are:
Oromiya Special Zone Surrounding Finfine (OSZSF) in the east; Amhara region and North
Shewa Zone from the northern; East Wollega, Horo Guduru zones and Jimma zone in the
west; South West Shewa Zone and Southern Nations and Nationalities Peoples Region
(SNNP) in south. Whereas the zone is 170kms long from north to south it is 183kms wide
from east to west (BOFED, 2011).

3.1.2. Agro-Ecology

Altitude of West Shewa Zone ranges from 1000 to 3500 meters above sea level, where the
largest area lies between 2000 and 2500 meters above sea level. Topography of the zone,
which is mainly leveled field, makes it an ideal place for agriculture. There are three main
drainage basins in West Shewa Zone: Abay, Ghibe and Awash. In addition there is high
potential for ground water and smaller rivers like Berga. Abay river basin, the largest basin,
covers the majority of the districts in the zone including the three districts LIVES are working
in. West Shewa Zone has different agro-ecological zones such as: Dega 37%, Woinadega
 21

56% and Kola 7%. The mean temperature ranges from10-15oc to 20-25oc. the mean annual
rainfall accounts 812-1699mm (Zone’s Annual Report, 2014).

Table 1. Agro-Ecological characters of selected districts and West Shewa Zone

Districts & Climatic and Agro-Ecological characteristics Improved forage producing
zone kebeles
Adea Berga Dega 29%, Woinadega 37% and Kola 34% 2 from Dega and 4 from
Woinadega
Ejere Dega 45% and Woinadega 55% 6 from Dega and 4 from
Temperature 9-28oc and Rainfall 1200 mm on Woinadega
average
Meta Robi Dega 20%, Woinadega 35% and Kola 45% 3 from Woinadega and 2
from kola
West Shewa Dega 27%, Woinadega 56% and Kola 17%
Temperature 10-15oc to 20-25oc and Rainfall
812-1699mm
Source: Zone’s and Districts’ Annual Report (2014)

3.1.3. Population

Based on the 2007 census forecast, the total population of the zone was estimated to 2.13
million (male=1.06 million and female=1.07 million) among this 90.1% was rural population
(CSA, 2007). The population of the LIVES districts were 393,008(male = 199,334 and
female=193,674) (Zone’s and Districts’ Reports, 2014).

Table 2. Human population and households of the selected districts in west shewa zone
Districts & zone Population Households
Male Female Total Male Female Total
Adea berga 70,614 70,474 141,088 19,267 4,036 23,303
Ejere 49,829 49,233 99,062 10,191 3,265 13,456
Meta Robi 78,891 73,967 152,858 21,526 4,237 25,763
West shewa 1,063,095 1,064,698 2,127,793 298,021 43,777 341,798
Source: Zone’s and Districts’ Reports (2014)

3.1.4. Agriculture

Agriculture provides the largest share to the livelihood of the zonal population in West Shewa
Zone. The sector is dependent on rainfall as there is lack of adequate knowledge, skill and
infrastructure in irrigated agriculture. Crop-livestock mixed farming system is the common
 22

practice. Table 3 summarizes the agricultural statistics of the three LIVES districts and West
Shewa Zone.

Table 3. Basic agricultural statistics of the LIVES districts in West Shewa Zone
Adea Berga Ejere Meta Robi West Shewa
1.Livestock and bee hives
• Cattle (head) 163,730 91,800 191,111 1,694,040
• Horse(head) 9,816 9,750 15,213 168,308
• Donkey(head) 13,916 9,840 11,181 126,945
• Mule(head) 462 410 590 13,776
• Sheep(head) 51,988 44,756 59,321 832,815
• Goat (head) 29,279 9,127 58,105 294,867
• Poultry (head) 64,243 42,241 70,008 944,112
• Traditional bee hives 8,079 2,678 16,567 153,842
• Transitional bee hives 636 1,526 3,465 30,327
• Modern bee hives 618 370 150 4,831
2. Crop and land resources
• Rain fed crops(ha) 34,435 31,309 37,720 -
• Irrigated crop(ha) 1,106 1,217 1,375 -
• Communal (open) grazing (ha) 14,464 2,667 1,1775 -
• Controlled grazing (ha) 37 445 - -
• Private grazing (ha) 63 1,334 - -
• Forest (woodland) (ha) - 4,456 - -
Source: Zone’s and districts’ Annual Report (2014)

Figure 3 illustrated West Shewa Zone and the three Lives districts of the study area.

Source: Fanos (2012)

Figure 3: West Shewa zone and LIVES districts
 23

3.2.Sampling Design and Methods of Data Collection

2.3.1. Sampling procedures and sample size

West Shewa Zone was selected purposely from 18 zones of Oromiya region because the
improved forage seeds have been predominantly distributed in this zone, which call it
“LIVES” districts. Similarly, three districts were purposely selected because of LIVES project
implemented its intervention in these districts. Then, the third stage Kebeles were stratified to
producers and non-producers of improved forage. Out of 109 kebeles in the three LIVES
districts; there are 21 improved forage producing kebeles (6 from Adea-berga, 10 from Ejer
and 5 from Meta-robi). Moreover, there are 8, 11 and 2 kebeles in dega, woinadega and kola,
respectively. Among producing kebeles sample were taken proportionately to kebeles and
agro-ecological zones. Based on this, 3 kebeles from dega, 3 kebeles from woinadega and 1
kebeles from kola were selected. Finally, 181 sample households were selected based on
probability proportional to the size of the households in these selected kebeles.Therefore, the
study used a multi-stage stratified purposely sampling from zone to kebeles. The selection of
sample farmers was based on simple random sampling technique from each kebeles to ensure
representativeness of the population.

Table 4. Number of sample households taken from sampled Kebeles

Districts Producing Kebeles Total HHs Sampled Agro-ecol.
kebeles size HHs*
Maru-chobot 595 27 Weinadega
Adea-Berga 6 Bishan-dimo 365 17 Dega
Chiri 722 31 Weinadega
Ejere 10 Damotu 667 30 Dega
Ilu-aga 724 33 Dega
Meta-Robi 5 Luma-tatesa 468 21 Kola
Sandafa-boloya 488 22 Weinadega
Total 4,029 181
*sample proportion = 0.045

2.3.2. Methods of data collection

Both primary and secondary data were collected in the survey. The primary data were
collected from sample of farmers in the study area through semi structured questionnaire
 24

using face to face interview. Besides, the data were supplemented by key informants to
generate qualitative information. The information from the key informants was also used to
refine the questionnaire. The data were collected by seven experienced and competent
enumerators and the researcher. The enumerators were trained on how to conduct and manage
questions and how to approach farmers during the interview.

A pre-test of the draft questionnaire was done on 10 selected respondents who were assumed
to be representative of the households living in the seven Kebeles. The main purpose of the
pre-test survey was to determine sets of bids, to understand about the preference and
perception of farmers about the improved forage seed and to select appropriate wording and
ordering of questions. Moreover, it was targeted to enable the enumerators to develop
experience in conducting the survey. In addition, major improved forage seed producers and
distributers were interviewed decide on the appropriate initial bids. After the necessary
adjustments were made to the draft questionnaire and setting bid prices, the final
questionnaire was developed. The questionnaire started by providing scenario about improved
forage seed and gave clear picture on the description of each variety’s benefits and scientific
recommendations.

CVM was employed in this study to elicit the households’ WTP for the improved forage seed.
Contingent valuation surveys should be opened with general questions and aim at making the
respondent comfortable with participating in the survey and answering questions. The first
part of the questionnaire contains the valuation scenario. In the scenario the researchers tried
to give as much information as possible for the household about the situation in a way that
addresses the important points. The scenario was presented to the respondents before asking
the specific questions related to their WTP.

According to Haab and McConnell (2002), the DBDC format expected to be more efficient
than the single bounded dichotomous choice (SBDC) format in three ways. Firstly, the answer
sequences yes-no or no-yes yield clear bounds on WTP. Secondly, for the no-no pairs and the
yes-yes pairs, there are also efficiency gains because of the additional questions, even when
they do not bound WTP completely, further constrain the part of the distribution where the
respondent's WTP can lie. Finally, the number of responses is increased, so that a given
function is fitted with more observations.
 25

To determine initial bid price for each improved forage seed; first sample prices were
collected from major seed producers and distributers organizations (e.g. ILRI, Holeta
Research Center and Eden Field Agr-Seed Enterprise). Then pretest survey was conducted
using the average price from these organizations. Finally, five sets of price were prepared by
incorporating farmers’ average price for mentioned seeds and then selected as a starting value
(price) for the double bounded dichotomous choice format for each means of WTP. These
values were 15, 22.50, 30, 37.50, and 45 Birr per kg for Vetch frequently stated price selected
as a starting value (price). For Elephant grass 0.25, 0.40, 0.50, 0.60 and 0.75 birr per cutting
selected as a starting value (price). For Oats 12.50, 18.75, 25, 31.25 and 37.75 selected as a
starting value (price). Whereas for Alfalfa 100, 150, 200, 250 and 300 selected as a starting
value (price).

Following Cameron and Quiggin (1994), sets of bids were determined for double bounded
dichotomous choice format by making twice the initial bid if the first response is "Yes" and
half of it if the response is "No". Thus, sets of bids for Vetch were (15, 7.50, and 30), (22.50,
11.25, and 45), (30, 15, and 60), (37.50, 18.75, and 75) and (45, 22.50, 90). For elephant grass
(0.25, 0.125 and 0.50), (0.40, 0.20 and 0.80), (0.50, 0.25 and 1.00), (0.60, 0.30 and 1.20) and
(0.75, 0.40 and 1.50). For Oats (12.50, 6.25 and 25), (18.75, 9.35 and 37.50), (25, 12.50 and
50), (31.25, 15.60 and 62.50) and (37.75, 18.90 and 75.50) were bids set. Whereas for Alfalfa
(100, 50, and 200), (150, 75 and 300), (200, 100, and 400), (250, 125 and 500), and (300, 150
and 600). These bid sets were assigned randomly across the respondents to avoid starting
point bias (Mitchel and Carson, 1989). The bid sets expressed in terms of one species were
assigned to other species bids randomly and proportionally. The main survey was conducted
from September 22 to October 27, 2014 on the selected sample households.

To supplement the primary data, secondary data were also obtained from different offices like
Adea berga Woreda Office of Agriculture (AWOA), Ejere Woreda Agriculture Office
(EWAO), Meta robi Woreda Office of Agriculture (MWOA) and West Shewa Zone
Agriculture Offices (WSZAO), ESE, EIAR, Eden Field-Agri Seed Enterprise, MoARD Input
Directorate Offices.
 26

3.2. Methods of Data Analysis

3.3.1. Descriptive statistics

Descriptive statistics was used to have a clear understanding of the socio-economic,

institutional and demographic characteristics of the respondents’ WTP for improved forage
seeds. Descriptive statistics such as arithmetic means, percentages, standard deviations and
frequency distributions were used in the analysis. The different categories of the sample
respondents were compared and contrasted with respect to the desired characteristics and the
statistical significance of the variables were tested using chi-square and t-tests for dummy and
continuous variables, respectively.

3.3.2. Econometric model specification

The bivariate probit model was employed to analyse the data of CVM. The bivariate normal
density function is appealing to statisticians in the sense that it allows the non-zero
correlation, while the logistic distribution does not (Cameron and Quiggin, 1994). The two
correlated WTP equations (Equation 3.1a and 3.1b below) with jointly distributed normal
error terms are simultaneously modelled as single bounded. This model provides information
on what variables are crucial for each of the responses to the WTP question. They further state
that estimation of the mean WTP is feasible using the bivariate probit CV model since
bivariate normal probability density functions allow for a zero and non-zero correlation. The
general expression for the model is formulated following Greene (2003) two related equations
as:

       ∑     (3.1a)

       ∑
     (3.1b)

Corr  ,  =

Where: Y and Y are the binary responses to the WTP questions;  and B are the bids in the
first and second bid questions;  represents explanatory variables and α’s and β’s are the
 27

coefficients to be estimated. The explanatory variables of model 1 can be different from the
explanatory variables of model 2. But in this study the explanatory variables of both models
are the same (   ).

Following Haab and McConnell (2002), the econometric modeling for the formulation of
double-bounded data is given as:

WTP  µ  ε (3.2)

Where

WTP Is the jth respondent’s WTP and i=1, 2 represents first and second answers;

µ = mean value for first and second response;

ε = unobservable random component.

Setting  =!   allows the mean to be dependent upon the characteristics of the

respondents (demographic and socio-economic variables).

To construct the likelihood function, the probability of observing each of the possible two-bid
response sequences (yes-yes, yes-no, no-yes, no-no) are given as follows. The probability that
the respondent j answers to the first bid and to the second bid given by (Haab and McConnell,
2002):

pr$yes, no*  pr+WTP , t , WTP . t  / = 01$    , t ,    . t *

pr$yes, yes*  pr$WTP 2 t , WTP , t  * = 01$    2 t ,    , t  * (3.3)

pr$no , no*  pr$WTP . t , WTP . t  * = pr$µ  ε . t , µ  ε . t  *

pr$ no, yes*  pr$WTP . t , WTP , t  * = 01$    . t , µ  ε , t  *

The jth contribution to Likelihood function becomes;

56
L $µ/t*  pr+µ  ε , t , µ  ε . t  /

X pr$µ  ε 2 t , µ  ε , t  *55 (3.4)

 28

X pr$µ  ε . t , µ  ε . t  *66

X pr$µ  ε . t , µ  ε , t  *65

Where

t1= first bid price, t2= second bid price

YN=1 for yes -no answer, 0 otherwise;

YY=1 for yes-yes answer, 0 otherwise

NN=1 for no-no answer, 0 otherwise;

NY=1 for no- yes answer, 0 otherwise.

This formulation is referred to as the bivariate discrete choice model. Assuming normally
distributed error terms with mean 0 and respective variances σ21 and σ22, then WTP1j and
WTP2j have a bivariate normal distribution with means µ1 and µ2, variances σ21 and σ22 and
correlation coefficient ρ. Given the dichotomous responses to each question, the normally
distributed model is represented as bivariate probit model. The jth contribution to the bivariate
probit likelihood function is given as:

;< =µ< ;? =µ?

8$ /9*  Φεε $d $ ><
*, d $ σ?
*, d d ρ* (3.5)

Where Φεε = the bivariate normal cumulative distribution function with zero means

d1j= 2y1j -1, and d2j =2y2j -1

y1j= 1 if the response to the first question is yes, and 0 otherwise

y2j=1 if the response to the second question is yes, and 0 otherwise

ρ= correlation coefficient

σ=standard deviation of the error.

After running regression of dependent variable (yes/no indicator), on a constant and on

independent variable consisting of the bid levels, the mean WTP value is determined as
follows depending on the normality assumption of WTP distributions (Haab and McConnell,
2002):

Mean WTP  Bα/β (3.6)

 29

Where Mean WTP= the mean willingness to pay for improved forage seed; α=the
intercept of the model, β = slope coefficient of the bid values.

The determinants were identified by employing seemingly unrelated bivariate probit

(Equations 3.1a and 3.1b above) which is variant of bivariate probit model. Mitchell and
Carson (1989) advocated the use of robust estimators as a way to control the problem of non-
normality and outliers and the potential bias associated with these sources, which was also
employed by Ayalneh and Berhanu (2012). This form of regression is also used to reduce the
problem of heteroscedasticity. Thus, the researcher ran a seemingly unrelated bivariate probit
robust estimation.

3.3.3. Variables definitions, measurements and their working hypotheses

3.3.3.1.Dependant variables

WTP bids: It is a dummy variable in which the individual’s decision to pay an existing bid
or/and higher/lower bid for improved forage seed. Farmers, who are willing to pay the stated
bid say yes and say no otherwise. The dependent variables of the model are Y1 and Y2 in
which both of them have a dichotomous nature measuring the willingness of a farmer to pay
for improved forage seed. They are represented in the model by 1 for a willing household and
by 0 for a non-willing household.

3.3.3.2.Independent variables

Age of household head (AGE): it is the number of years of the household head measured in
number of years. The age of farmer is expected to have a positive effect on WTP for
improved forage seed because of the accumulated experience of older farmers helps
them to make early willing to pay decision. However, because of the close relationship
of age and farming experience, farming experience is excluded from analysis in this
study. Other findings are also in line with this hypothesis (Endrias, 2003).
 30

Initial Bid (BID1): (BID1A), (BID1EG), (BID1O) and (BID1V) are the initial bids price
for alfalfa; elephant grass cuttings, oats and vetch seed respectively. As the bid amount
increases, the respondents would be less willing to accept the bid and that is consistent with
the law of demand (Ayalneh and Berhanu, 2012). So, it is expected to have negative effect on
the WTP of the households.

Education level of household head (LOEHHH): Household heads with higher levels of
education is expected to show higher levels of WTP more, as they might have better access to
information. Education enables farmers to have access to new information and idea. It is
hypothesized that education of household head has a positive impact WTP of forage seed. It is
a dummy variable that takes a value of one if literate and zero otherwise. Previous research
results have also revealed that education would influence WTP positively (e.g. Kebede et al.,
1990; Adebabay, 2003)

Sex of household head (SEXHHH): This is a dummy variable, which takes a value of 1 if
the household is male and 0 if female. The literature indicates that female-headed households
have less access to improved technologies, land and extension than male-headed household
(Green and Ng’ong’ola., 1993). Therefore, it is expected that the male-headed households are
better WTP for improved forage technologies.

Family size (LSS): Human labor is a key operator of agricultural production. A large family
size has available labor. Therefore, a farm with larger number of workers (i.e., more labor in
terms of man-equivalent) is hypothesized to be more likely to buy forage seed. Household
family size was expected to enhance WTP through the availability of labor to meet the
increased labor demand for forage production. Results from other researchers also support
this hypothesis (Mulugeta, 2009)

Participation in off/non-farm activities (OFFINCO): It is an involvement in some

activities out of farming to generate additional income to farming households. This variable
takes away labor from farm operation and is likely to be negatively related to WTP of use of
forage seed. It is a dummy variable and takes value of 1 for non participants and 0 for
 31

participants in off/non-farm employment. Results from other researchers also support this
hypothesis (Mulugeta, 2009)

On-farm cash income (ONFINCO): It is a continuous variable that measures the proceeds
from crops and livestock enterprises in a particular year, the higher the on-farm cash income,
the greater the capacity to WTP for the new technology. This is because of the fact that, farm
activities are the major source of income for rural households. So, it is hypothesized to
influence positively the farm households. Other finding also supports this hypothesis
(Berhanu et al., 2003).

Size of landholdings of the household (SZLD): This is a continuous variable and it refers to
the total land size in hectare the household owned so that farm households that have large
farm size have got a chance of more land allocation to forage seed. Thus, this variable is
hypothesized to be related positively with farm households. Farmers operating on a larger
area of land generally can allocate some of it to agricultural innovation (Sarup and Vasisht,
1994).

Livestock holding (LIVEHOLD): This variable measures the total number of livestock
owned by a farmer in tropical livestock unit (TLU). Feed demand factors (degree of
involvement in livestock production) are expected to enhance WTP. Previous research result
reported by Tesfaye et al. (2001) confirmed that livestock holding have positive influence on
technology.

Extension Contact (EXTCONT): This is a variable indicating number of contacts a farmer

has with an extension agent in his farm or village in a year. The provision of agricultural
extension service helps farmers to be aware of the new knowledge and skill to improve their
productivity. Thus, in this study also extension service is expected to influence WTP
decisions positively. Empirical results revealed that extension contact has an influence on
farm households’ to invest new technology (Nkonya et al., 1997).
 32

Crop residue (CRORESIDUES): A crop residue is the leftover of main crop during and
after harvesting season. It is a continuous variable measured in tones. This variable is
indeterminate because it can be substitute for forage or can be used as supplement for forage.
It is one of the indications of farmer’s resource endowment and either expected to encourage
or discourage WTP for improved forage. Other finding also supports this hypothesis
(Berhanu et al., 2003).

Distance to nearest all weather roads (DTAWR) – It is a continuous variable measured in

walking minutes. The coefficient of distance to all weather roads is expected to be negative
and significant both for the probability of WTP for improved forage seeds. Proximity of
farmers to all weather roads is essential for timely input delivery and output disposal and
results in less transport cost of inputs and outputs. Previous result reported by Kidane (2001)
has revealed that market distance negatively influence adoption of technology. Therefore, in
this study it is hypothesized that distance from all weather roads will relate negatively to the
WTP for forage seeds.

Distance to input supply institution (DISI): It is a continuous variable measured in walking

minutes. Distance to input supply institutions influenced WTP for improved forage
technologies. The coefficient of distance to input supply institutions will be expected
negative sign and was significant for the probability of WTP for improved forage seed.

Access to credit service (ACCTCS): It is a dummy variable which is replied by saying

yes/no. Agricultural credit services can be the major sources of finance to those farmers who
WTP improved agricultural technologies. Previous research result reported by Lelissa (1998)
and Tesfaye and Alemu (2001) confirmed that access to credit positively influence adoption
of technology. Hence, it is hypothesized that access to credit will influence WTP for
improved forages positively.

The potential explanatory variables which are hypothesized to influence the WTP for
improved forages in the study area are given in Table 5.
 33

Table 5. Classification and measurements of variables used in the regression model

Variables Nature of variables Expected sign
Dependent variables
BID1/BID2 (Y1/Y2) Dummy(Yes/no)
Independent variables
Initial bid price for all seeds Continuous in (ETB) -
Size of the landholding of household Continuous in hectare +
Total livestock holding of the household Continuous in TLU +
Participation in off/non-farm activities Dummy (Yes/no) -
On-farm cash income Continuous in ETB +
Crop residues Continuous in tone +/-
Distance to all weather road Continuous in minutes -
Distance to input supply institutions Continuous in minutes -
Age of the household head Continuous in years +
Family size (labor supply) Continuous(man-equivalent) +
Extension contact Dummy (Yes/no) +
Access to credit services Dummy (Yes/no) +
Education Dummy (Yes/no) +
Sex of the household head Dummy +

3.3.4. Model diagnostic

Before proceeding to estimate the data using bivariate probit model, checking the existence of
Multicolinrarity, omitted variables and heteroscedasticity are important. Multicollinearity
(vif) and contingency coefficients among explanatory variables tests were undertaken.
Variance Inflation Factor (VIF): This method is used to detect multicollinearity of continuous
variables. As Ri2 increases towards one, which is as the collinearity of regressor Xi with other
regressors increases its variance inflation factor (VIFi) also increases and in the limit, it can be
infinite. The larger the value of VIFi, the more troublesome or collinear is the variable Xi. As
a rule of thumb, if the VIF of a variable exceeds 10 (this will happen if Ri2 exceeds 0.90), that
variable is said to be highly collinear (Gujarati, 1995). Appendix table 1 shows VIF results.
Similarly, contingency coefficients were computed for dummy variables using the following
formula.
E?
CD (3.7)
FE?
 34

Where, C is contingency coefficient, χ is chi-square value and n = total sample size. A value
less than 0.5 or 50% shows a weak association between the qualitative variables (Edriss,
2013).

Further, post estimation statistics after regression was done to check omitted variables
(ovtest) and Heteroscedasticity (hettest) using STATA version 12.1. In general the
aforementioned post estimation test showed that there is no serious problem on the collected
data.

STATA version 12.1 statistical packages was employed to compute descriptive statistics and
econometric results which used to estimate the Bivariate Probit model in assessing the
determinants of farmers’ WTP for improved forage seed.
 35

4. RESULTS AND DISCUSSION

This chapter presents findings on determinants of farmers’ WTP for improved forage seed in
the LIVES districts of West Shewa Zone. The first section deals with the feeding pattern and
seed system of the study area. The second section deals with descriptive and econometric
results of WTP for improved forage seed
seed. Finally mean WTP for improved forage seeds was
estimated.

4.1. Feed Resources and Improved Forage Seed System oof the Study Area

4.1.1. Livestock feeding strategies

Feeding management consists of a combination of grazing and stall

stall-feeding.
feeding. For part of the
day livestock are herded on private or communal grazing land or roadside verges. Many
households also have areas of standing grass, which livestock are prevented from
fro grazing.
This grass is cut and fed fresh to livestock or stored for later use. Little effort is made to
improve the pasture quality. Crop residues are gathered and stored as a dry
y season feed for
when pastures declines in quality and quantity. Feeding ppractices
ractices common to study area were
grazing of pasture land, crop residues, hay and other feed sources such as commercial mix, oil
seed cake, kitchen wastes etc. Finding from the survey showed that majority (65.2%) of
farmers feed their livestock using graz
grazing as their first sources. Crop
p residues was the second
sources of feeds which accounts 23.8% of the sample farmers and 7.7% of sample farmers
used hay and improved forage as a feed sources for their livestock.

Hay & improved Others source

forage 3%
8%
Crop residues Grazing
24% 65%

Source: Own survey (2014) Figure 4. Feeding practices of study area

 36

From the study, sampled farmers had surplus feed during August to December because of
green fodder become available in large quantity. The shortage of animals feed occurs during
February to June where this is relatively dried seasons of the study area. They overcome the
shortage of feeds using crop residues, hay, kitchen waste and improved forage produced.

Despite the wide range of feeds available, 72.9% of farmers report

reported that shortage of feed,
particularly during the latter
atter part of the dry season and start of the rains, when crop residues
and pastures are limited. Livestock deaths as a result of these feed shortages were common
(personal communication,, 2014
2014).
). The second major problem was lack of veterinary services
which constitute 15.5% of the respondents reported that livestock health was their prime
problem during keeping livestock. Lack of cash and lack of water for their livestock
production was also a stringent problem. Figure 5 depicts these results.

Percentage
Water scarcity 5.5
Lack of cash 6.1
Absence of veterinary 15.5
Feed shortage 72.9

Source: Own survey (2014)

Figure 5. Livestock production
roduction related problems

4.1.2. Seed system at study area

Out of the total sampled farmers 28.2% used improved forage from BoA at districts while
22.7% got from NGOs (LIVES and others)
others). Almost 16% used own saved and 15.98% of
sampled farmers used seeds from other fellow farmers or neighbor.. The rest 17.12% were
non-user
user of improved forage seed.
 37

From BoA at districts

6% 17% From ILRI (LIVES)
28%
From Holeta Research Center
6%
Use own saved seed
16% 23% Buy from others (traders)
From neighbor/ farmers
4% Not to use forage seed

Source: Own survey (2014)

Figure 6. Sources of seed used by the sampled farmers

Table 6 showed improved forage utilization trends by sampled farmers. Out of sampled
farmers 49.7% are increasing in the utilization of improved forage from year to year while
31.5% reported
rted there was no any change on utilization of improved forage whereas 8.3% of
o
the sampled farmers were decreasing. The rest of sampled farmers (10.5%
5%) do not know
because they did not use at all.

Table 6. Improved forage utilization trends (2009-2014)

Change Frequency Percent
Increasing 90 49.7
Decreasing 15 8.3
No changes 57 31.5
I do not know 19 10.5
Total 181 100.0
Source: Own survey (2014)

4.1.3. Challenges of seed system at study area

Major problems of the existing forage seed system at study area are illustrated in Figure 7.
Out of the total sampled farmers
farmers, 47.5% of them reported that price of the existing improved
forage seed is expensive. 45.3% of the sampled farmers of the study area reported that there
was shortage of supply of improved forage seed.
 38

Major problems of the existing seed suply

140
Axis Title 120
100
80
60
40
20
0
High input Shortage of Lack of no problem Other
price supply credit problem
Percent 47.5 45.3 2.8 2.8 1.7
Frequency 86 82 5 5 3

Source: Own survey (2014)

Figure 7. Major problems of the existing forage seed supply

In summary, results from the study indicated that livestock feed was their major constraints to
increase productivity of this sub sector at farm level. If improved forage provided with
considerable prices and at appropriate time and access, they are ready to adopt and solve feed
f
shortage.

4.2. Farmers’ WTP for Improved Forage Seed

This section presents farmers’ WTP for improved forage seed.. The first part discusses
descriptive results and the
he second part presents econometric results on factors influencing
WTP for improved forage seed
seed.

4.2.1. Descriptive results of WTP for improved forage seed

4.2.1.1.Household’s demographic and socio-economic characteristics of the study area

The result indicates that average

verage househ
household size and age was about 7 members and 46 years
respectively; 88.4% of sample farmers were male whereas 11.6% of them
m were female.
female Data
on education of the respondents revealed that 58.6% could read and write whereas 41.4%
could not. The average farm size of the study area was 3.37 hectare. The maximum and
 39

minimum size of land holding was 7 and 0 hectares respectively. Result of this study
indicates, the livestock holding of sample population ranges from 4.5 to 43.47 TLU implying
the existence of variation among the households in livestock holding. The average livestock
holding of the sample population was 14.2 TLU with standard deviation of 7.425. The
average annual on-farm cash income of the sample households was 40,813.8 ETB. The
maximum annual farm income was 95,000 ETB while the minimum was 1,800. A crop
residue is becoming the major sources of feed for livestock of study area. The maximum and
average crop residues used by the sampled farmers were 20 and 7.57 tones respectively (Table
7).
Table 7. Distribution of households’ continuous variables
Variables Total sample (181)
Minimum Maximum Mean Standard
Deviation
Initial bid for alfalfa 100 300 186.5 70.40
Initial bid for elephant grass 0.25 0.75 0.51 0.17
Initial bid price for oats 12.50 37.75 22.80 8.10
Initial bid price for vetch 15 45 30 10.66
Family size 5 9 7.12 1.30
Age 25 74 46.40 9.24
Crop residues 0 20 7.57 3.89
Land holding 0 7 3.37 1.47
Livestock holding(TLU) 4.50 43.47 14.20 7.42
On-farm cash income 18,000 95,000 40813.8 19357.86
Distance to all weather roads 5 120 34.70 22.95
Distance to input supply 7 125 58.05 27.10
institutions
Source: Computed from own survey data (2014)

4.2.1.2. Institutional characteristics of the study area

Access to institutions has great impact on the decision of WTP for improved technology.
Distance to all weather roads and distance from a near market and input suppliers centers
influence farmers’ WTP for new technologies. In this study the sample farmers on average
travel about 34.70 minutes to all weather roads. Distance to input supplier centers negatively
influence farmers’ WTP for new technologies. The average time taken by the sampled
farmers to input supplier institutions was 58.05 minutes. The other important variable was
 40

access to credit by which farmers are using as a source of finance during cash shortage to
purchase improved technologies like improved forage seed. Out of sampled respondents
64.1% had an access to credit institutions like Oromiya Micro-Finance Institution. (Table 8)

Table 8. Descriptive statistics of dummy explanatory variables (N=181)

Variables Frequency percentage
*
0 1* 0 1
Participation in Off/non-farm 120 61 66.3 33.7
employment
Extension access 11 170 6.1 93.9
Access to credit 65 116 35.9 64.1
Literacy 75 106 41.4 58.6
Sex 21 160 11.6 88.4
*0=No, Female and illiterate and *1= Yes, Male and literate
Source: Own survey result (2014)

Out of the total sampled households, 40.9% were willing to pay money and the rest 59.1%
were not willing to pay for alfalfa. The specified reason for all non-willing respondents was
that they cannot afford any cash amount for the scenario. Out of sampled farmers 79.6% were
willing to pay and the rest 20.4% were not willing for elephant grass, 80.1% willing to pay
and the rest were not willing for oats and 55.2% were willing to pay money for vetch and the
rest were not willing at all. Table 9 showed this fact.

Table 9. Distribution of willing and non-willing respondents (181)

Seed type Willing Non-willing
Frequency % Frequency %
Alfalfa 74 40.9 107 59.1
Elephant grass 144 79.6 37 20.4
Oats 145 80.1 36 19.9
Vetch 100 55.2 81 44.8
Source: Own survey (2014)

As indicated in Table 10, one can understand from the joint frequencies of discrete responses
for alfalfa, 21.62% responded “Yes-Yes” for both the first and second bids, 27.02% (out of
which 59.1% were non-willing) responded “No-No” for both bids, 25.67% responded “Yes-
No” and the remaining 22.97% responded “No-Yes”.
 41

Table 10. Distribution of responses to double bounded question across the bid sets for alfalfa
Frequency of Responses Sub Sets of Bids
Yes-Yes Yes-No No-Yes No-No total
7 6 4 2 19 100, 200, 50
5 4 4 3 17 150, 300, 75
2 4 4 4 14 200, 400, 100
2 3 3 5 13 250, 500, 125
0 2 2 6 11 300, 600, 150
16(21.62) 19(25.67) 17(22.97) 20(27.02)* 74
*Numbers in brackets are percentages
Source: Own survey (2014)

Similarly, one can understand from the joint frequencies of discrete responses for elephant
grass, 36.80% responded “Yes-Yes” for both the first and second bids, 31.94% (out of which
20.45% were non-willing) responded “No-No” for both bids, 15.97% responded “Yes-No”
and the remaining 15.27% responded “No-Yes”.

Table 11. Distribution of responses to double bounded question across the bid sets for
elephant grass
Frequency of Responses Sub Sets of Bids
Yes-Yes Yes-No No-Yes No-No total
18 5 0 5 28 (0.25, 0.125, 0.50),
12 5 3 8 28 (0.40, 0.20, 0.80)
10 3 4 10 27 (0.50, 0.25, 1.00),
9 4 7 11 31 (0.60, 0.30 1.20)
4 6 8 12 30 (0.75, 0.40, 1.50)
53(36.80) 23(15.97) 22(15.27) 46(31.94) 144
*Numbers in brackets are percentages
Source: Own survey (2014)

Likewise, one can understand from the joint frequencies of discrete responses for oats,
47.58% responded “Yes-Yes” for both the first and second bids, 9.65% (out of which 20.45%
were non-willing) responded “No-No” for both bids, 28.96% responded “Yes-No” and the
remaining 17.79% responded “No-Yes”.
 42

Table 12. Distribution of responses to double bounded question across the bid sets for Oats
Frequency of Responses Sub Sets of Bids
Yes-Yes Yes-No No-Yes No-No total
24 8 3 1 36 (12.50, 6.25 25),
19 9 4 2 34 (18.75, 9.35 37.50)
15 10 5 3 33 (25, 12.50, 50),
9 12 5 4 30 (31.25, 15.6, 62.50
2 3 3 4 12 (37.50, 18.9,75.50)
69(47.58) 42(28.96) 20(17.79) 14(9.65) 145
*Numbers in brackets are percentages
Source: Own survey (2014)

Finally, one can understand from the joint frequencies of discrete responses for vetch seed,
36% responded “Yes-Yes” for both the first and second bids, 37% (out of which 44.47% were
non-willing) responded “No-No” for both bids, 11% responded “Yes-No” and the remaining
16% responded “No-Yes”.

Table 13. Distribution of responses to double bounded question across the bid sets for Vetch
Frequency of Responses Sub Sets of Bids
Yes-Yes Yes-No No-Yes No-No total
12 5 3 0 20 (15, 7.50, 30),
10 3 2 5 20 (22.50, 11.25, 45)
6 2 4 8 20 (30, 15, 60)
5 1 4 10 20 (37.50, 18.75, 75)
3 0 3 14 20 (45, 22.50, 90)
36(36) 11(11) 16(16) 37(37) 100
*Numbers in brackets are percentages
Source: Own survey (2014)

4.2.2. Econometric results of WTP for improved forage seed

A total of fourteen explanatory variables were entered into the econometric model of bivariate
probit model to identify variables which were found to significantly influence WTP for
improved forage seeds (alfalfa, elephant grass, oats and vetch). However, the explanatory
variables included to fit bivariate probit of vetch seed did not converge to estimate the
 43

parameters. Consequently, the researcher obliged to reduce the number of explanatory

variables which has less influence on the WTP for vetch seed.

Among the variables included in the analysis, the results reveled that variables such as family
size, farm size, livestock holding, on-farm cash income, initial bids, distance to all weather
roads and to input supplying institutions, sex, age and access to credit services were highly
significant in influencing the probability of WTP for improved forage seed varieties. The
empirical result of the study depicted in the following sub sections.

4.2.2.1.Econometric results of WTP for alfalfa and vetch seed

A robust seemingly unrelated bivariate probit model was used to analyze the explanatory
variables that influence households WTP for alfalfa and vetch seed discussed in this sub-
section. Thus, the explanatory variables which had an influence on WTP for alfalfa and vetch
were discussed as follows.

Farm size: The result from the model indicates that farm size was correlated positively and
significantly with the willingness of respondents to pay for alfalfa seed at 5% significance
level. The marginal effect of this variable shows that a unit increase in farm size increases the
probability of being willing to pay for alfalfa seed by 0.16 keeping other factors constant.

Contact with extension agents: This variable had significant and positive effect on WTP for
alfalfa seed and significant at 1% significance level. The marginal effect value shows that the
probability of being willing to pay for alfalfa seed for farmers who have contact with
extension agents increases by 0.21, ceteris paribus.

Sex of the household head: This variable was found to be significantly and positively related
to willingness to pay for alfalfa at 5% significance level. The marginal effect value shows that
the probability of being willing to pay for alfalfa seed for farmers who were male headed
increases by 0.19, ceteris paribus.

Initial Bid (Bid1): For alfalfa and vetch seed the coefficient of initial bid was negative as
expected and statistically significant at 1% significance level. Whereas the second bid which
 44

depends on the response of the first bid is also significant at 1% and 5% and has a negative
coefficient in the second question. As the bid amount increases, the respondents would be less
willing to accept the scenario and that is consistent with the law of demand. Therefore, a unit
increase of initial bid price of both seed decreases the probability of willingness to pay by
0.0045 for alfalfa and 0.017 for vetch seed, ceteris paribus.

Livestock holding: For vetch livestock ownership in TLU was found to positively affect the
willingness of the respondent to pay at 1% significance level in both equations. The marginal
effect of this variable indicates that for each additional increment of TLU, the probability of
being willing to pay both for the first and second bid prices for the vetch seed will increase by
about 0.03, keeping other variables constant at their means. This result is in line with the
studies conducted by Tefera (2006) and Kacha (2011).
 45

Table 14. Bivariate probit results for alfalfa and vetch

Variables WTP Bid1A WTP Bid2A Variables Variable WTP Bid1V WTP
s Bid2V
Coeff. Robust Coeff. Robust Coeff. Robust Coeff. Robust
Std. Err. Std. Err. Std. Err. Std. Err.
BID1A -0.023 *** 0.0049 -0.0022 0.0025 BID1VA -0.0659 *** 0.0200 -0.0274* 0.0163
SZLD 0.5933 * 0.3540 0.3246 0.2454 LOWNERSHIP 0.0876*** 0.0317 0.0894*** 0.0317
LOWNERSHI 0.0292 0.06364 0.0029 0.0439 ONFINCO 0.00002 0.00001 0.000105** 0.00001
*** *
ONFINCO 0.0004* 0.00002 0.00001 0.00001 CROPRESIDU 0.0048 0.0435 0.0515 0.0402
DTWR -0.027 * 0.0140 0.0038 0.0072 DTWR -0.0069 0.0068 -0.0127 * 0.0069
DISI 0.0162 0.0145 0.0042 0.0109 AGEHH 0.0126 0.0188 -0.0025 0.0141
AGEHH -0.0182 0.0224 -0.0184 0.0177 LSS 0.4105 0.2709 -0.3744** 0.1784
CROPRESID -0.0318 0.0466 0.0162 0.0355 OFFNONINCO 0.4801 0.4134 -0.2153 0.0401
LSS 0.7670* 0.4151 0.4664 * 0.2661 SEX 0.3423 0.5876 0.3734 0.4170
OFFNONINC 0.2497 0.5749 0.1687 0.3548 CONS. -4.6736 2.4289 -0.2828 1.4824
EXTCONT 1.9226* 0.9939 -0.0277 0.8170
ACCTCRS -0.5542 0.4252 -0.1063 0.3676
LITERACY 0.6744 0.4294 0.1854 0.3626
SEX 0.4332 0.7817 1.1070 0.6913
CONS. -1.4131 2.7867 -1.7584 2.1780
 0.1794  0.2044
Log pseudo-likelihood -65.244 Log pseudo-likelihood -69.7665
***, **, * significant at 1%, 5% and 10% levels, respectively BID1A=initial bid for alfalfa, BID1V=initial bid for vetch
Source: Own survey (2014)

NB: Major challenges in estimation of the bivariate probit result for vetch improved forage seed was the estimation never
converged to desired output. That is why few variables were used in the model.
 46

Table 15. Marginal effects of explanatory variables of alfalfa and vetch

Alfalfa Vetch
Variables Marginal Std. Variables Marginal Std.
effect Err. effects Err.
BID1ALFA -0.0045 *** 0.0011 BID1VAMOUNT -0.0171*** 0.0047
SZLD 0.1566** 0.0779 LOWNERSHIP 0.0303 *** 0.0080
LOWNERSHIP 0.0057 0.0139 OFFNONINCO -0.1325 0.1025
OFFNONINCO 0.0734 0.1417 ONFINCO 0.00001*** 0.0000
ONFINCO 0.00001* 0.0000 CROPRESIDUE 0.0083 0.0092
DTWR -0.00405 0.0029 DTWR -0.0032* 0.0018
DISI 0.0036 0.0033 AGEHH 0.0021 0.0045
AGEHH -0.0060 0.0053 LSS 0.0284 0.0676
CROPRESIDUE -0.0033 0.0104 SEXHHH 0.1052 0.0893
LSS 0.2094** 0.0847
EXTCONT 0.2127*** 0.0577
ACCTCRS -0.1196 0.1111
LITERACY 0.1498 0.0983
SEXHHH 0.1930** 0.0838
***, **, * significant at 1% and 5%, and 10% level respectively

Source: Own survey (2014)

4.2.2.2.Econometric results of WTP for elephant grass cuttings and oats seed

Elephant grass and oats are grass type crop used as sources of feed for livestock production. A
robust seemingly unrelated bivariate probit model was used to analyze the explanatory
variables that affect households WTP for the elephant grass cuttings and oats seed. Thus, the
explanatory variables which influenced WTP for elephant grass and vetch were discussed as
follows.

Farm Size: The result from the model indicated that the total land owned was found to
positively affect the willingness of respondents to pay for elephant grass cuttings at 1%
significance level. This result is inconformity with the results of Tefera (2006), Anemut
(2007), Mesfin et al., (2011), Kacha (2011) and Alemu et al., (2013). The marginal effect of
this variable shows that a unit increase in land size of the household increases the probability
of being willing to pay for elephant grass by 0.49 keeping other factors constant.
 47

Access to credit: This variable was found to have positive effect as expected and significant
at 5% significance level for oats seed. The marginal effect value shows that the probability of
being willing to pay for oats for farmers who have contact with access to credit increases by
0.20, ceteris paribus.

Age of the household head: For elephant grass, age of the sampled respondent has a positive
sign as expected and it was significant at 1% level. The result is consistent with other studies
done by Paulos (2002), Solomon (2004), Anemut (2007), Ayalneh and Birhanu (2012) and
Alem et al. (2013) in Ethiopia and Chukwuone and Okorji (2008) in Nigeria. The marginal
effect results also shows that an increase in the age of the respondent by one year will increase
the probability of willingness of the farmers to pay for elephant grass by 0.1, keeping other
factors constant.

On-farm cash income: The gross cash income obtained from agricultural activities of a
farmer was found to influence the willingness of the farmer to pay for elephant grass on the
first and second bid at 1% significance levels. This result is also in line with the basic
economic theory, which states that individual's demand for most commodities or services
positively related with income level. Keeping other factors constant, the result of marginal
effect shows that a one birr increase in the annual gross on farm cash income increases the
probability of willingness of the farmer to pay for the adoption of elephant grass by 0.00004.
This result is inconformity with the studies done by Ayalneh and Birhanu (2012) and Mesfin
et al., (2011) though they use the total income instead of cash income from agricultural
activities.

Initial Bid (Bid1): The coefficient of initial bid was negative as expected and statistically
significant at 1% for the first question for both seeds. As the bid amount increases, the
respondents would be less willing to accept the scenario and that is consistent with the law of
demand. The result from marginal effects shows that a unit increase in price of each seed
decreases the probability of willingness to pay for 1.08 and 0.026 for elephant grass and oats
respectively, keeping other factors constant.

Distance to input supply institutions: This variable was found to have negative effect as
expected and significant at 5% level. The marginal effect value shows that the probability of
 48

being willing to pay for elephant grass cuttings for farmers who are farther away by a unit
time decreases by 0.005, ceteris paribus.

Crop residues: It was significant at 1% significance level with positive sign for elephant
grass. The marginal effect results also shows that an increase in a unit of crop residues will
increase the probability of willingness of the household head to pay both the first and second
bid value for elephant grass cuttings by 0.040, keeping other factors constant.
 49

Table 16. Bivariate probit results for elephant grass and oats
Variables WTP Bid1EG WTP Bid2EG Variables WTP WTP
Bid1O Bid2O
Coeff. Robust Coeff. Robust Coeff. Robust Coeff. Robust
Std. Err. Std. Err. Std. Err. Std. Err.
BID1EGA -3.115** 1.225 -0.929 0.905 BID1OA - 0.017 -0.054 0.016
0.057*** ***
SZLD 0.694* 0.370 1.011*** 0.292 SZLD -0.195 0.218 0.525** 0.212
LOWNERSHIP 0.066* 0.038 -0.077* 0.040 LOWNERSHIP 0.0001 0.025 -0.008 0.026
OFFNONINCO 0.826* 0. 459 -0.878*** 0.312 OFFNONINCO -0.636** 0.255 0.024 0.245
ONFINCO 0.0001*** 0.00002 0.00001*** 0.00001 ONFINCO 0.00001 0.00001 - 0.00001
0.00001
CROPRESIDUE 0.107** 0.050 0.042 0.037 CROPRESIDUE 0.021 0.038 -0.062* 0.034
DTWR -0.004 0.007 0.004 0.006 DTWR -0.010* 0.005 -0.003 0.005
DISI -0.003 0.009 -0.015 * 0.008 DISI -0.0005 0.007 -0.001 0.007
AGEHH 0.020 0.016 0.028* 0.016 AGEHH 0.010 0.013 -0.005 0.012
LSS -0.170 0.267 0.126 0.214 LSS 0.082 0.191 -0.154 0.177
EXTCONT 1.205** 0.664 0.734 0.563 EXTCONT 0.657 0.513 -0.236 0.477
ACCTCRS -0.340 0.417 0.264 0.320 ACCTCRS 0.043 0.271 0.625* 0.261
LITERACY 0.558 0.390 -0.217 0.336 LITERACY 0.452 0.288 0.188 0.255
SEX -0.192 0.697 -0.148 0.424 SEX 0.213 0.353 -0.224 0.387
CONS. -5.051 1.956 -5.686 1.632 CONS. 0.688 1.513 2.015 1.451
 0.1258  0.1532
Log pseudo-likelihood -62.77 Log pseudo-likelihood -147.915
***, **, * significant at 1%, 5% and 10% levels, respectively
Note: Bid1is used for first equation
Source: Own Survey, 2014
 50

Table 17. Marginal effects of explanatory variables for elephant grass and oats
Elephant grass Oats
Variables Marginal Std. Variables Marginal Std.
effect Err. effect Err.
BID1EGA -1.080*** 0.384 BID1OA -0.026*** 0.005
SZLD 0.491*** 0.105 SZLD 0.126 0.079
LOWNERSHIP -0.007 0.007 LOWNERSHIP 0.003 0.009
OFFNONINCO -0.087 0.103 OFFNONINCO -0.110 0.084
ONFINCO 0.00004*** 0.00001 ONFINCO -0.000001 0.0000
CROPRESIDUE 0.040 *** 0.015 CROPRESIDUE -0.015 0.012
DTWR -0.00001 0.0018 DTWR -0.003 0.002
DISI -0.005 ** 0.003 DISI -0.003 0.003
AGEHH 0.014 *** 0.005 AGEHH -0.0001 0.005
LSS -0.004 0.083 LSS -0.032 0.059
EXTCONT 0.046 0.178 EXTCONT 0.086 0.157
ACCTCRS -0.001 0.103 ACCTCRS 0.200** 0.092
LITERACY 0.077 0.096 LITERACY 0.136 0.099
SEXHHH -0.097 0.215 SEXHHH -0.023 0.136
***, ** and * significant at 1%, 5% and 10%, level respectively
Source: Own survey, 2014

4.2.3. Estimating mean WTP for alfalfa, elephant grass, oats and vetch

The mean WTP of the respondents for the adoption of alfalfa, elephant grass, oats and vetch
was calculated using the formula specified by Haab and McConnel (2002) which is specified
in equation (3.6) in the methodology part. The coefficients  and  were estimated by running
the bivariate probit model using the first bids and second bids as explanatory variables as
shown in Appendix Tables 5, 6, 7 and 8 for alfalfa, elephant grass, oats and vetch
respectively. Accordingly, the mean WTP estimated from the initial bid and the follow up bid
values ranged from 168.97 ETB to 173.82 ETB per kg for alfalfa seed. The mean WTP
estimated from the initial bid and the follow up bid values ranged from 0.54 ETB to 0.56 ETB
per kg for elephant grass cuttings. The mean WTP estimated from the initial bid and the
follow up bid values ranged from 31.57 ETB to 39.13ETB per kg for oats seed. The mean
WTP estimated from the initial bid and the follow up bid values ranged from 28.51 ETB to
31.70 ETB per kg for vetch seed. The mean WTP from the open-ended question for alfalfa,
oats and vetch was 82.90, 9.46 and 13.92 Birr per kg respectively. And the mean WTP from
the open-ended question for elephant grass was 0.51 per cutting.
 51

According to Haab and McConnell (2002), the researcher must decide which estimates from
the double bounded question to use so as to calculate the mean WTP. They explained that
parameter estimates from the first equation are generally used in the computing mean WTP.
The reason behind is the fact that the second equation parameters are likely to contain more
noise in terms of anchoring bias as the respondent is assumed to take the clue from the first
bid while forming his WTP for the second question. This was also applied by Ayalneh and
Birhanu in (2012). Thus, 173.82, 0.54, 39.13 and 28.51 ETB per kilo gram of alfalfa, elephant
grass, oats and vetch respectively estimated from equation were used in this study to estimate
the mean WTP. These mean WTP values have varied from actual current price on the
improved forage seed markets. Therefore, there should be subsidy and other mechanisms in
order to enable farmers to purchase and use the improved forage technologies such as: alfalfa,
oats and vetch. While the mean WTP and current price for elephant grass was nearly similar.
Hence, awareness creation and frequently training will enable the farmers of the study area as
well as elsewhere to purchase and use this technology.
 52

5. SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1. Summary and Conclusions

Increasing population pressure and small and decreasing landholdings are the most pressing
problems that require increasing agricultural production and productivity. One of the
important strategies to meet increasing food demand is to boost animal production and
productivity. In this regards, improved forage, especially alfalfa, elephant grass, oats and
vetch render greater advantage because of their higher yield potential per unit are essential.
Traditionally, livestock production is produced with limited inputs and less attention for
management. There is a promising effort by research centers to develop improved forage over
the last decade. Some of these seed were disseminated to smallholder farmers by research
centers, NGOs and development workers. However, the extent to which farmers are WTP for
these varieties has not been studied at study area. This study, therefore, was initiated to
investigate factors affecting farmers’ WTP for improved forage seed of West Shewa Zone
Oromiya Regional State. The study was based on the data obtained from rural household
survey during September and October 2014. Seven improved forage producing kebeles were
selected from three districts and a total of 181 households were considered in the survey.

The result of the CVM survey showed that out of 181 sampled respondents 40.9, 79.55, 80.11
and 55.25 percent of them were willing to pay for alfalfa, elephant grass, oats and vetch,
respectively. The bivariate probit model revealed that the mean WTP for the respondents was
ETB 173.82, 0.54, 39.13 and 28.51 per kg for alfalfa, elephant grass, oats and vetch,
respectively. The mean WTP of households could be an indicator to the importance of
improved forage in the households' livelihood and the significance of improved forage seed
technology in the study area.

The findings indicates that farm size, sex of the household head, family size, contact with
extension agents, on-farm cash income and bid values offered were significantly influenced
the households' WTP for alfalfa seed. Likewise, the study indicated that farm size, crop
residues, age of the house hold head and on-farm cash income, distance to input supplier
institutions and the bid values offered were significantly influenced the probability of WTP
 53

for elephant grass cuttings. Similarly results from the study indicated that access to credit and
the bid values offered were significantly influenced the probability of WTP for oats seed.
Finally, the study indicated that livestock holding, on-farm cash income, distance to all
weather roads and the bid values offered were significantly influenced the probability of WTP
for vetch seed.

It can be concluded that the rural households are willing to pay for improved forage
technology if the technologies are available at their access and at affordable prices.

5.2.Recommendations

In order to improve seed quality and increase the seed system;

• The Ministry of Agriculture should enable the private sector to take the lead in production
and sale of certified seeds while the public sector produces breeder, pre-basic and basic
seeds.

• In nutshell, the seed system should improve farmers’ productivity and livelihoods through
an increasingly open and competitive seed production system that provides an affordable
and diversified choice of seeds to farmers, from both the public and private sector by
giving due attention to forage seed system to the study area particularly and in the country
in general.

Based on the major result of the study the following recommendations were made.

The age of the sample household head had a positive and significant effect on probability
of WTP for improved forages. Knowledge gained through experience enables older
farmers to adopt improved agricultural technologies. The application of improved forage
seed should be start from more experienced farmers to less experienced farmers.
 54

The sufficient accessible micro-finance services play a major role on the capital scarcity.
Therefore, the government and stakeholders should encourage the credit institutions to
access farmers at their vicinity able to invest on improved technologies.

Livestock ownership was found to be significant and positively related to the use of and
WTP for improved forage seed. Therefore, it is important that more attention be given to
the livestock sector, specifically provision of sufficient animal feed through adoption of
improved forage seed.

The resource endowment of households like farm size, on-farm cash income and family
size had a positive and significant effect on the WTP for forage technologies, implying
that improving the resource endowment of farmers would boost agricultural production.
This in turn increases on farm cash income which serves as sources of finance for further
economic activities.

Given the critical role of proximity to distance from farmers’ home to all weather roads,
markets and input supply institutions for promoting productivity gains, the existing efforts
of investment in improved roads infrastructure should be continued to achieve increased
production.

Based on the results of this study, it is suggested that the farmers’ WTP for improved
forage seeds could be enhanced by raising farm household asset formation, providing
extension and credit services. Such actions may, in turn, alleviate the current problem of
food insecurity and lead in the long run to economic development.
 55

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Zone, Ethiopia. An MSc Thesis Presented to School of Graduate Studies of Addis
Ababa University, Addis Ababa. 96p.
Sulaiman, R. and V. V. Sadamate (2000). Privatising agricultural extension in India. Policy
Paper 10. T. Haque, P. K. Joshi, S. Selvaranjanet al. New Delhi, National Centre for
Agricultural Economics and Policy Research (NCAP): 95.
Tangka F.K., R.D. Emerson, and M.A. Jabbar. 2002. Food security effects of intensified
dairying—Evidence from the Ethiopian highlands. Socio-economic and Policy
Research Working Paper 44. Nairobi, Kenya: International Livestock Research
Institute.
Tesfaye Zegeye and Alemu Haileye. 2001. Adoption of improved maize technologies and
inorganic fertilizer in Northwestern Ethiopia. Ethiopian Agricultural Research
Organization (ERO). Research Report No.40, Addis Ababa, Ethiopia. 51p.
Tesfaye Zegeye, Bedessa Tadesse and Shiferaw Tesfaye. 2001. Adoption of high yielding
maize technologies in major maize growing region of Ethiopia. Ethiopian Agricultural
Research Organization (EARO), Research Report, No.41 Ethiopia. 35p.
Venkatesan, V.1994. Seed systems in sub-Saharan Africa: Issues and options. Washington,
DC: World Bank. World Bank Discussion Paper No. 266. 112 pp.
WZOA (West Shewa Zone Office of Agriculture). 2014. Annual report for production year
2013/14. Ambo.
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7. APPENDICES
 62

Appendix table 1: Variance Inflation Factor for explanatory variables

Collinearity statistics
Variables Tolerance VIF
SZLD 0.1777 5.63
LOWNERSHIP 0.1702 5.88
OFFNONINCO 0.9090 1.10
ONFINCO 0.2641 3.79
CROPRESIDUE 0.9384 1.07
DTWR 0.9420 1.06
DISI 0.6439 1.55
AGEHH 0.9508 1.05
LSS 0.2177 4.59
EXTCONT 0.8967 1.12
ACCTCRS 0.8659 1.15
LITERACY 0.8440 1.18
SEXHHH 0.8323 1.20
Mean 2.34

Appendix table 2: Contingency coefficients for discrete variables

(1) (2) (3) (4)
EXTCONT(1) 1
ACCTCRS(2) -0.110 1
LITREACY(3) -0.098 0.024 1
SEXHHH(4) -0.098 -0.004 -0.315 1

Appendix table 3: Conversion factors used to estimate tropical livestock unit

Animal category TLU Animal category TLU

Calf 0.25 Sheep and goat 0.13
Heifer 0.75 Chicken 0.013
Cow and ox 1 Camel 1.25
Donkey 0.7
Source: Strock et al. (1991)

Appendix table 4: Conversion factors used to compute man-equivalent

Age group Male Female
<10 0 0
10-14 0.35 0.35
15-50 1.00 0.80
>50 0.55 0.50
Source: Strock et al. (1991)
 63

Appendix table 5: Parameter estimates of bivariate probit for mean WTP of Alfalfa

Variables Coefficient Std. Err.

WTP BID1AL
BID1ALFAMOUNT -0.0061137 0.0022296
CONST. 1.062681 0.4364234
WTP BID2AL
BID1ALFAMOUNT -0.0041284 0.0021488
CONST. 0.69758 0.4235202
ρ -0.1849954 0.1884602
Log-likelihood= -96.081659
Likelihood-ratio test of rho=0: chi2 (1) = 0.929809 Prob.>chi2=0.3349

Appendix table 6: Parameter estimates of bivariate probit for mean WTP of elephant grass

Variables Coefficient Std. Err.

WTP BID1EG
BID1EGAMOUNT -2.595317 0.6553759
CONST. 1.40448 0.355908
WTP BID2EG
BID1EGAMOUNT -1.099736 0.6179352
CONST. 0.611197 0.3334407
Ρ*** 0.5341634 0.1073216
Log-likelihood= -180.65983
Likelihood-ratio test of rho=0: chi2 (1) = 17.6158 Prob.>chi2=0.0000

Appendix table 7: Parameter estimates of bivariate probit for mean WTP of Oats

Variables Coefficient Std. Err.

WTP BID1OA
BID1OAMOUNT -0.0473427 0.01509
CONST. 1.852596 0.3893699
WTP BID2OA
BID1OAAMOUNT -0.0340211 0.0134499
CONST. 1.074332 0.3300626
Ρ*** -0.0522792 0.1530363
Log-likelihood= -167.06596
Wald test of rho=0: chi2 (1) = 0.116274 Prob.>chi2=0.7331
 64

Appendix table 8: Parameter estimates of bivariate probit for mean WTP of Vetch

Variables Coefficient Std. Err.

WTP BID1V
BID1VAMOUNT -0.0669207 0.0113735
CONST. 1.908378 0.4183109
WTP BID2V
BID1VAMOUNT -0.0361875 0.0122119
CONST. 1.146819 0.3819333
Ρ*** 0.6118925 0.1222569
Log-likelihood= -114.48676
Wald test of rho=0: chi2 (1) = 13.2714 Prob.>chi2=0.0003

Questionnaire used for data collection

NB

1. For all closed-ended questions encircle the responses exactly where appropriate
2. For open-ended questions type the responses on the space provided

Name of the village _________________________________________

Name of the enumerator _______________ _____________________

Signature ___________ and Date

PART I: Willingness to pay questions

1.1.Scenario (familiarization with the problem)

Livestock in Ethiopia has traditionally depended largely on natural pastures and grazing but
recent changes in land use resulting in available grazing lands, together with increasing price
of feed, have led to feed shortages and the need for poor smallholder farmers to look for
alternative affordable feeds. This results in pressure on existing resources due to overgrazing,
overpopulation, land degradation, loss of biodiversity, reduction of agricultural productivity
and increasing health cost due to the insufficient feed supply for livestock. As a matter of fact,
to increase the productivity of livestock and overcome feed scarcity problem in study area it is
important to be acquainted with improved forage production. In light of the reasons stated
above, Ethiopian government and other NGOs are advocating dissemination of different
improved forage seeds for farmers in general and the study area in particular. Furthermore,
 65

such programmes incur costs like seed production cost, transportation cost, etc. Dissemination
of improved forage technologies can be promoted if and only if you are willing to pay to buy
the seeds of the improved technology. This study is, therefore, aimed at measuring your
willingness to pay for the seeds/cuttings of Alfalfa, Elephant grass, Oats and Vetch grasses.

1. Have you understood the scheme? Yes=1, No=0 If yes, go to the I, if no explain again

I. Alfalfa
Characteristics of Alfalfa (Medicago sativa)
 Provide high quality forage for livestock feed in tropical highlands and sub-tropical regions.
 Deep rooting perennial persistent legume. Seeding rate is 10-12 kg per hectare.
 Yield about 20 tonnes/ha dry matter per year from about 6 to 8 cuts in well managed stands.
 Protein content of the forage is usually from 20-25% with digestibility of about 70%.
 Poor drought tolerance and require water for year round production.

2. Would you be willing to pay money for Alfalfa seed? 1. Yes 0. No, (if no go to 3)

a. If yes to 2, would you be willing to pay X birr per kg of Alfalfa seed? 1. Yes, (if yes go
to b) 0. No ( if no go to c)
b. Would you be willing to pay BX birr per kg of Alfalfa seed? Where BX>X. 1. Yes, (if
yes go to d) 0. No, (if no go to d)
c. Would you be willing to pay CX birr per kg of Alfalfa seed? Where CX<X. Yes=1 (if
yes go to d) No=0 (if no go to d)
d. What is the maximum money you are willing to pay per kg of Alfalfa?
e. What is the main reason for your maximum WTP money stated in (d).above?
1. I could not afford more 4. because I have no more information
2. I think it worth that amount about it
3. The government should pay the rest 5. Other reason (specify)

II. Napier (Elephant grass)

Characteristics of Napier or elephant grass (Pennisetum purpureum)
 provide high quality forage for livestock feed in sub-humid middle altitudes
 Good for soil stability and as a wind break.
 Fast growing and good palatability in early growth stage if cut often.
 Expect about 40 tonnes per hectare fresh for cut and carry. Protein content of the forage is 9%.
 Not adapted to areas with frost, not suited to water logged areas, will not persist without fertilizer
and coarse, fibrous and sharp leaves if not cut frequently.
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3. Would you be willing to pay money for Elephant grass cutting? Yes = 1 No =0 (if no
go to 4)
a. If yes to 3, would you be willing to pay X birr per cutting of Elephant grass? Yes=1 (if
yes go to b) No=0 ( if no go to c)
b. Would you be willing to pay BX birr per cutting of Elephant grass? Where BX>X.
Yes=1 if yes go to (d) No=0 if no go to (d)
c. Would you be willing to pay CX birr per cutting of Elephant grass? Where CX<X.
Yes=1 if yes go to (d) No=0 if no go to (d)
d. What is the maximum money you are willing to pay per cutting of Elephant grass?
e. What is the main reason for your maximum WTP money stated (d).above?
1. I could not afford more 4. because it gives me more pleasure
2. I think it worth that amount 5. Other reason (specify)
3. The government should pay the rest

III. Oats

Characteristics of Oats (Avena sativa)

 Provide high quality forage for livestock feed in tropical highlands and temperate and sub-tropical
areas. 100 kg per hectare seeding rate
 Tall, annual cereal up to 1.5meters high widely used as fodder, responds to high soil fertility, used
for grazing, cut and carry and silage, tolerates acid soils
 Expects about 5-8 tonnes per hectare dry matter with crude protein from 8-12% when harvested at
the vegetative stage.
 Intolerant to water logging, not tolerant to drought or hot, dry weather and declines in yield at low
soil fertility.

4. Would you be willing to pay money for Oats seeds? Yes = 1 No =0 (if no go to 5)

a. If yes to 4, would you be willing to pay X birr per kg of Oats seeds? Yes=1 (if yes go to
b) No=0 ( if no go to c)
b. Would you be willing to pay BX birr per kg of Oats seeds? Where BX>X. Yes=1 if yes
go to (d) No=0 if no go to (d)
c. Would you be willing to CX birr per kg of Oats seeds? Where CX<X. Yes=1 if yes go to
(d) No=0 if no go to (d)
d. What is the maximum money you are willing to pay per kg of Oats seed?
e. What is the main reason for your maximum WTP money stated in (d).above?
 67

1. I could not afford more 4. because it gives me more pleasure

2. I think it worth that amount 5. Other reason (specify)
3. The government should pay the
rest

IV. Vetch
Characteristics of Vetch (Vicia villosa)
 Provide high quality forage for livestock feed in the highlands.
 Vigorous climbing annual legume with purple flowers, fast growing giving good ground cover in
three months, self-regenerating from seed stock in soil, restores soil fertility.
 Not adapted to areas with frost, not adapted to water logging, cannot withstand heavy grazing and
should not be fed as sole feed. Seeding rate is 20 kg per hectare
 Expects up to 12 tonnes per hectare fresh forage per year. Crude protein is about 15%.

5. Would you be willing to pay money for Vetch seeds? Yes = 1 No =0 (if no go to 6)

a. If yes to 5, would you be willing to pay X birr per kg of Vetch seeds? Yes=1 (if yes go to b)
No=0 ( if no go to c)
b. Would you be willing to pay BX birr per kg of Vetch seeds? Where BX>X. Yes=1 if yes go to
(d) No=0 if no go to (d)
c. Would you be willing to CX birr per kg of Vetch seeds? Where CX<X. Yes=1 if yes go to (d)
No=0 if no go to (d)
d. What is the maximum money you are willing to pay per kg of Vetch seeds?
e. What is the main reason for your maximum WTP money stated in (d).above?
1. I could not afford more 4. because it gives me more pleasure
2. I think it worth that amount 5. Other reason (specify)
3. The government should pay the rest

Part II: Feed sources and Use of new technology (improved forage seeds)
2.1.Livestock Feed sources related questions
2.1.1. What is/are the main feed source(s) for livestock in your area?
No Feed sources Rank (1st, 2nd, 3rd…)
1 Grazing
2 Hay
3 Crop residues
4 Others (specify) ______
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2.1.2. What major problems do you face while you are keeping livestock enterprises?
No Feed sources Rank (1st, 2nd, 3rd…)
1 Absence of veterinary services
2 Lack of feed
3 Lack of Cash
4 Water scarcity
5 Others (specify) ______

2.1.3. Feed availability

2.1.3.1.Mark the months in which the following are available
Type of feed Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

Natural pasture

Hay

Crop residues
1. Teff straw
2. Maize Stover
3. Ensete leaves

Concentrates

Grains

Oil seed cake

Commercial mix

Tree legumes

2.1.3.2.Mark the following months in terms of availability of feed or severity of feed shortage.

Months Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
Attributes
Abundant
Sufficient
Moderate
shortage
Severe shortage
2.1.3.3.What are the major sources of feed for each type of animal by season?
Types of animals Sources of feed Code
Draught oxen 1. Crop residues
Milking cows 2. Communal grazing land
Calves 3. Private grazing land
4. Stubble grazing
Other cattle
5. Hay
Small ruminants 6. Thinning (maize & sorghum)
Equines 7. Grasses and weeds
Others (specify)
 69

Part III. Socio-Economic Characteristics of Farmers in the Study Area

3.1. Farm structure (farm size) in (ha) for 2013/14
3.1.1. Total size of the land (farm size) own (hectare) and number of plots.
Area allotted Area allotted in (ha) for 2013/14
Area allotted to annual crops
Area allotted to tree crops
Alfalfa
Elephant grass
Oats
Area allotted to forage Vetch
The grazing area
Homestead area
Leased- in (for share arrangement)
Leased out (for share arrangement)
Rented in (fixed rent)
Rented out (Fixed rent)
Other (specify)
3.1.2. If you lease-in or rent-in land in 2013/14 cropping season, what was the reason? (more than
one reason can be possible)
1. Because of extra labor force I 3. Because of extra seed I have
have on-farm 4. others specify
2. Because of land shortage
3.1.3. If you lease-out or rent-out land in 2013/14 cropping season, what was the reason? (more than
one reason can be possible)
1. Shortage of seed
2. Shortage of ox (en)
3. Disabled
4. others specify
 70

3.2. Livestock Holding

3.2.1. Do you own livestock during 2013/14? 1. Yes, 0. No , if yes
No Type of livestock Numbers of animals owned during 2013/14 Purpose of keeping *
Local breeds Cross breeds
1 Oxen
2 Cows
3 Young bulls
4 Calves
5 Heifers
6 Goats
7 Sheep
8 Camel
9 Equines
10 Poultry
11 Bee colonies (in hive)
* Purpose of keeping Milk production =1, Draft power =3, Sale =4, others/ specify
=5________________

3.3. Grain Production;

Total grain and crop residues produced from last 2013/14 cropping season in quintal and
3.3.1.
values
No Major crop type Crop Qty in quintal and Value in Birr Crop residues
Quintals Values In local units Values
1 Barely
2 Teff
3 Wheat
4 Maize
5 Pulses crop
6 Sorghum
7 Finger millet
8 Oil crops
9 Others specify

3.3.2. Did you intercrop your crop production during last 2013/14 cropping season? 1. Yes 0. No
3.3.3. If yes, what was the reason?
3.3.4. Adequacy of grain for family need or consumption;
1. Adequate 3. Surplus for sale
2. Deficit

3.4. Labor availability

3.4.1. Did you face any labor shortage over the last 2013/14 cropping season? 1. Yes 0. No.
3.4.1.1. If yes, for which farm operations did you face the shortage of labor?

1. Plowing, 2. Weeding,
 71

3. thrashing, 5. others
4. harvesting

3.4.2. And how did you solve the shortage?

1. Through hiring of daily laborers 3. By using family labor
2. Through debo (by use of communal 4. Through combination of all sources
labor) 5. Others specify ------------

3.4.3. Can you get labor to hire when you are in need? 1. Yes 2. No

Part IV: Income and expenses

4.1. Incomes of the farmers of the study area
4.1.1. What is your main occupation currently?
1) Agriculture only 3) Agriculture, Off-farm and non-
2) Agriculture and non-farm farm activities
activities 4) Other(s) specify

4.1.2. What are your total annual estimated total cash income over the last 2013/14 year?

No Sources of income Annual estimated total income in Birr

1 Crop sale
2 Livestock sale
3 Sale of livestock products
4 Non/Off-farm income
5 Rent/gift
6 Others specify
Total income from all enterprises

4.2. Expenses of the farmers of the study area

4.2.1. Would you tell me the amount of money you have spent in buying input during last one
cropping year?

No Types of expenses Annual expenses (amount in birr)

1 Food
2 clothing
3 School fees
4 Fertilizer
5 Insecticides
6 Farm tool and implements
7 Livestock feeds
8 Others
Total
 72

Part V: Market and Institutions

5.1 Distances
5.1.1 Distance from household home to nearest all Roads and Urban Center in minutes;
Places Time it takes Places Time it takes

Distance to the
Distance to input supply
nearest market institutions

All weather roads
School

Seasonal roads
Clinic

Urban centre
Water supply

5.2 Extension service

5.2.1 Do you have contact with extension agents during 2013/14? 1. Yes 0. no
5.2.1.1 If yes, on average how many days did the development agent contacted you?
1. Once per year 3. Three times per year
2. Twice per year 4. More than 3 times per year
5.2.2 Did you get extension service related to improved forage technologies so far? 1. Yes 0. No
5.2.2.1 If yes, how many times have you received? _________
5.2.3 Have you ever been observing when other farmers were using (alfalfa, elephant grass, oats and
vetch)? 1. Yes 0.No
5.2.3.1 If the answer is yes, what are your sources of information?
1. Other farmer
2. NGOs
3. Extension agent’s
4. Other specify--------

5.2.4 From whom do you get advice on the use of (alfalfa, elephant grass, oats and) seeds other than
extension agents?

1. NGOs
2. Experts in woreda office
3. Radio/ TV
4. Others specify

5.3 Access to Credit: consider credit both in cash and in kind.

5.3.1 Did the household need credit for livestock production purpose during the year? 1. Yes, 0. No
5.3.2 If yes what was the purpose? 1. Feed, 2. For trade 3. Veterinary 4. others (specify)

5.3.3 If yes, did you apply for any loan? 1. Yes, 0. No

5.3.4 If you did not apply for any loan, why? (Give reasons)
5.3.5 If received:
 73

Item Values
Amount received in cash, (birr)
Value received in kind (birr)
Total amount in birr

5.3.6. If yes from which agency did you borrow?

1. OCSI 3. Friends
2. Cooperative 4. Others (specify)

5.3.7. What are the major problems you faced to get input credit?
1. Shortage of capital 4. Distance from the farmer’s residence
2. High interest rate 5. No problem
3. Bureaucracy 6. Others specify

5.4. Technology Utilization

5.4.1. Do you use agricultural technologies like fertilizer, improved seeds, chemicals etc to improve
your farm productivity in 2013/14? 1. Yes 0. No
5.4.1.1. If yes to 5.4.1, give details of the types you use, amount and source technologies?
Type of Techno. Amount Sources
Unit Quantity
Fertilizers
DAP
UREA
Improved seeds
Chemicals

5.4.1.2. If No to 5.4.1, Can you tell us the reasons (put X)?

Type of Techno. Reasons for not using
High Price Lack of Supply Lack of Infrastructure Others (specify)
Fertilizers
DAP
UREA
Improved seeds
Chemicals

5.5. Forage seed system

5.5.1. Are the improved forage seed such as Alfalfa, Napier, Oats, and Vetch available in your area
during 2013/14? 1. Yes 0. No.
5.2.2.1. If yes to 5.5.2, how is seed distributed?
a) How is it marketed?
 74

b) Who markets it?

c) Who supply them? (by rank))
1) Use own saved seed 5) Not to use forage seed
2) Buy from others (traders) 6) Form neighbor/farmers
3) Form ILRI(LIVES) 7) From BOA at district
4) Holeta Research Center 8) Other specify

5.5.2. Do you think the existing price of improved forage is fair? 1.Yes 0.no
5.5.2.1.If no 5.5.3., what has to be done in order to improve the existing price system?

5.5.2.2. How do you perceive the improved forage production since you started planting in the area?
1. Increasing 2. Decreasing 3. No change 4. Do not know
5.5.3. What do you perceive the importance of improved forage seed?(by rank)
1. Efficiency in livestock productivity 3. Minimizes animal diseases
2. Minimizes feed shortage 4. Others (specify)
5.5.4. What are the major problems of the existing forage seed supply system? (by rank)
1. High input price 4. Poor quality
2. Lack of credit 5. no problem
3. Shortage of supply 6. Other specify-------------

5.6. General
5.6.1. What do you think is expected from the concerned parties to disseminate improved forage
seeds?
1. From community
2. From Government
3. From NGOs
5.6.2. Any idea with regard to improved forage seeds adoption?

Part VI: Demographic Characteristics of the Household head

1.1. Name of the interviewee :__________________________
1.2. Sex of the household head 1. Male 0. Female
1.3. Age of the household head in years ____________________
1.4. Religion; 1= Christian 2= Muslim 3= others (specify) ______
1.5. Marital status 1. Single 2. Married 3. Divorced 4. Widow 5. Widower
1.6. Farming experience in number of years; ______________________
1.7. Experience in livestock Production in Number of Years; ____________
 75

1.8. Can you read and write? 1. Yes 0. No

1.9. If yes, level of education grade__________
1.10. Size, and age composition household members;

Categories Sex Total

1 Children <15 years of age Male
Female
2 Adults 15-65 years of age Male
Female
3 Adults > 65 years of age Male
Female

Part VII. Production and supply system related questions

1.1. What is the total area, volume, and agro-ecological zones under improved forage production
over the last production season (2013/14)?
No Major improved Area Volume in(kg) Major producing Agro-eco.
Forage in(ha) regions Zones
1
2
3
4
5

1.2. Trends of major improved forage production over the last five years
Years Volume of production in(kg)
Varieties 2009/10 2010/11 2011/12 2012/13 2013/14

2. Distribution/marketing:
2.1. How is seed distributed?

2.2. How is it marketed?

2.3. Who markets it?

2.4. Prices (over time)

Years Price of forage seeds per kg/year
Varieties 2009/10 2010/11 2011/12 2012/13 2013/14
 76

2.5. Who are the distributors in the market channels?

2.6. Who are the sellers in the market channels?
2.7. Who are the buyers in the market channels?
2.8. What price setting mechanisms are used in the improved forage seed market?
2.9. Seed promotion:
2.9.1. Are there any incentives for use of good quality seed? 1.yes 0.no
2.9.2. If yes, state the incentives done to your organizations.

2.9.3.Are there subsidies (free consultation services by extension) from government? 1. Yes
0.no, state please any subsides done to you.
2.9.4. Are there differential price incentives for produce of certified seed users?1.yes 0.no
3. Role of seed system
3.1. How do you evaluate the role of formal seed system in Ethiopia?

3.2. How do you evaluate the role of informal seed system in Ethiopia?

4. Profitability of seed production sector

4.1. Do you think the seed production and distribution system sector is profitable?
1. Yes 0. No
4.2. Based on your experience how do you evaluate the profitability of your organizations?
1. Lucrative 2. Cost recovery only 3. Make some positive net income
5. Access to Information
5.1. What is the actual origin of seed that farmers are planting?
5.2. How information is available about new varieties and new seed sources?

5.3. Where and from whom do farmers search for new information?
6. Key features of improved forage seed program
6.1. Which of the following Seed quality control activities exist in the seed system? (more than
one activities)
1. Seed certification 5. Laboratory facility
2. National seed quality system developed 6. Regional harmonization
3. Field inspection 7. Technical expertise
4. Laboratory seed testing

6.2. Do the existing Seed policy and regulatory framework such as legal instruments (seed policy,
phytosanitary and intellectual property rights) are conducive for all actors in the seed system?
1. Yes 0. No

1. If no to 6.2., what has to be done by concerned bodies?

2. What should be done for the future in order to increase the demand for improved forage seed, so
that farmers adopt?