The Eleventh Regional Wheat Workshop For Eastern ... - Cimmyt

Economics offertilizer use on durum wheat - Hailemariam and Gezahegn
use of fertilizer is not well considered due to a wide range of factors. According to Workneh
(1989), fanners in Ethiopia apply fertilizer at a rate less than the rate commonly advised by some
extension agents, as fam1ers are not convinced of the economic return from the recommended
rate. Deresse (1985) also identified lack of location specific recommendation about fertilizer
application rate as a major constraint on fertilizer use by peasants ofEthiopia. The economic use
of fertilizers consists of among other things, choosing the right kind and the right rate of fertilizer
and applying it in the right place at the right time including consideration ofprices of input and
output. In addition lack ofprofitability in the use of fertilizer is assumed to be detennined by the
unfavorable relation between fertilizer and crop price, which results in low effective demand for
fertilizer by fam1ers. Nevertheless, to justify the effect of such crop and fertiiizer price
relationship on profitability by empirical studies, it is important to analyze the use of fertilizer
focusing on efficiency and profitability.
OBJECTIVES OF THE STUDY
In line with this, the specific objectives of the study include:
1) To derive wheat response function to the application of nitrogen and
phosphorous fertilizer
2) To detennine an optimum combination of fertilizers that can reduce the cost of
fertilizer use thereby generating profitable returns
3) To assess the effect of price change on the economic optimum levels of
fertilizer use
4) To estimate the gap between fanners' actual use of fertilizer and the optimum
fertilizer level and identifying its impact on returns
MATERIALS AND METHODS
This study employs production function of multiple regression analysis to detennine economic
rate of nitrogen and phosphorous fertilizers that maximize profit. The production function in
economics describes the technical or physical relationship between output and one or more
variable inputs (Ellis, 1988). Production function analysis is the most important of all the
techniques used in production economics due to its simplicity and its power to provide extra
infonnation regarding production and growth and also economic development and planning
(Singh, 1986). It provides not only infonnation about the technical maximum level ofoutput that
can be achieved in the application of a certain variable input, but also gives insight into the
detem1ination ofproductivity of that input. The marginal productivity is defined as the amount
of output obtained from a unit increase in the variable input. It is a highly useful concept to
measure the degree of economic efficiency in allocation of resources between alternative
choices. A production function may be expressed in several fonns one of which being an
algebraic equation. The quantity of a physical output is detennined by the quantity of factor
inputs.
Thus, it can be said that quantity Y depends on factor inputs XI, X 2 , X 3 , •.. , X n , and can be
written in functional fonn as:
Where Y is the amount ofyield ofa given agricultural commodity, the Xs are the inputs required
to produce the agricultural commodity, and f is the fitted functional fonn relating output to the
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