Production risk is one of the quintessential features of agriculture in Ethiopia. Unpredictable weather can expose farm households to significant production uncertainty and serious hardship. Under harsh climatic and agro-ecological conditions, this can result in food insecurity and famine. During the last 40 years, Ethiopia has experienced many severe droughts leading to production levels that fell short of basic subsistence levels for many farm households (REST and NORAGRIC 1995, p. 137). Harvest failure due to drought is the most important cause of risk-related hardship of Ethiopian rural households, with adverse effects on farm household consumption and welfare (Dercon 2004, 2005). When facing prospects of harvest failure, ex ante farm production decisions, such as crop or varietal choice, remain a part of risk-management strategies (Just and Candler 1985; Fafchamps 1992; Chavas and Holt 1996; Dercon 1996; Smale et al. 1998). In dry environments, farmers’ reliance on crop biodiversity is an essential part of ex ante risk management strategies. Thus, the conservation of relevant germplasms is instrumental to hedge against weather related uncertainty.
Diversity in genetic resources embedded in crop seeds can support productivity and help manage risk (Smale et al. 1998). Ethiopia is a recognized global center of genetic diversity for several crops (Vavilov 1949; Harlan 1992). The majority of varieties grown in Ethiopia are farmers’ varieties, or ‘landraces’, which exhibit significant genetic heterogeneity. Understanding the role of such variatiies in supporting productivity and scure harvests is crucial. There are at least two common hypotheses in the literature about on-farm crop genetic resources that relate the diversity of crop varieties to the mean and variance of yields. The first is that farmers match different varieties to the micro-environments on their farms, enhancing overall yield levels and possibly reducing yield variability. A second is that planting more varieties diversifies risk, spreading risk spatially as in an investment portfolio solution. In the first, variety richness leads to more optimal resource use. In the second, variety richness substitutes to some extent for other offsetting sources of income or insurance. For example, in the study by Smale et al. (1998), various indicators of genetic, spatial or temporal diversity in modern wheat varieties had mixed effects in high potential and low potential environments of Pakistan’s Punjab. The variability effect was more evident in the low potential environments. This research will aim to unearth the relevance of crop biodiversity in this setting.
