Staple Crops Prices versus Smallholders’ Constrained Agricultural Output Maximization: Case of Enderta Woreda, Tigray, Ethiopia

The international and the domestic market in Ethiopia is experiencing an alarming price rise in all agricultural and industrial goods and services. The price rise,at least theoretically, is expected to motivated farmers to produce more agricultural output. Here, our objective is mainly to examine the effect of crop prices on farmers agricultural output maximization. To examine important question, we have collected primary data from 260 respondents from four Tabias of EndertaWoreda selected using systematic random sampling. Supplementary secondary data was collected from Tigray Agricultural Marketing Promotion Agency (TAMPA). We have applied seemingly unrelated regression technique to see the output maximization of wheat, barley and teff in the study area. In  a multi-equation regression analysis since the error terms are assumed to correlate, seemingly unrelated regression model is used to address the effect of these error terms correlation on the estimation result. The result of this estimation shows price of wheat, barley and teff have a significant positive effect all at one percent level of significance on wheat output maximization, barley output maximization and teff output maximization respectively. Land size, ownership of oxen, demand for oxen, distance from the next market, amount of money paid to purchase fertilizer, irrigation use have their own contribution on these staple crops output maximization. Providing market price information to farmers, transport services and using resources like land efficiently are some of the policy implication we forwarded.