EFFECTS OF CLIMATE VARIABILITY ON CROP YIELD, INCOME AND RURAL LABOR DISPLACEMENT IN CENTRAL ETHIOPIA

Ethiopian smallholder farmers are the most vulnerable group of societyto the effects of climate variabilitybecause they have nature dependent economic system. This study examinedtheeffects of climate variability on five major cereals yield,crop income and rural labor displacementin thecentral highlands and Arsi grain plough farming systems of Ethiopia. The seven round unbalanced panel data (1994-2009) collected by Ethiopian Rural Household Survey from 15 kebeles of the seven farming systems was the base to use panel data in this study. After managing one round survey in 2014 from six sampled kebeles of the two farming systems the research hadeight-round unbalanced panel data (1994-2014). Meteorological data from central observatory of Ethiopia showed that long run trend of cropping season temperature and rainfall of the country showed greater variation with frequent extremes in short periods of interval. The stochastic frontier regression result revealed that inorganic fertilizer and draught power significantly increased cereals yield. Cropping season rainfall and temperature have different effect on yield of the five cereal crops as to the model result. Cropping season temperature increment would increase yield of wheat and barley, while it reduces teff, maize and sorghum yield. Yield ofteff and barley would significantly increase if there were cropping season rainfall rise in the study area.GLS regression result revealed that shocks sourced from climate variabilitysignificantlyreduced smallholders’ technical efficiency of producing cereals. Fixed effect regression result disclosed negative and significant effect of climate variability elements including cropping season rainfall, temperature, shocks and rainfall inconsistencies on smallholders’ crop income. The model result also indicated positive effect of agricultural inputs such as cropland and draught power on crop income. Smallholders’ in the two farming systems had 12.04% probability of adopting thefour alternative strategies (changing the sowing time, modern technology, alternative income sources and conservation) at a time. MVP model result showed that covariates includingrainfallshortage, distance from the main road and crop price increment were common factors that stronglyaffectthe probability of adoptingall thestrategies simultaneously. Frequent cropping season rainfall shortage initiated smallholders to adopt strategies related to changing sowing time and alternative income sources. The studyalso identified that most of the rural migrants were youth who were below 25 years. Instrumented random effect two stage least squares regression result showed that crop income, education, livestock owned, participation in off-farm activities and draught powersignificantly reducedthe proportion of family members who displaced due to climate variability. Any of the parameters that reduce crop income would directly aggravate the labor displacement from the study area. In general, climate variability sourced from rainfall inconsistencies commonlyaffectedthe crop production, income and rural labordisplacement in the two farming systems of Ethiopia.Crop production inputs like fertilizershould be made easily available for households of the study area to use them as to the standard level to enhance cereals yield.Both material and labor budget should be ready to reduce effect of pest infestation and harvesting season rainfall on smallholders’ crop yield and income. Crop yield and income of households could be improved if there is due effort to have consistent moisture availability.Displacement of the rural labor could be reduced if alternative income sources are there to supplementhousehold’s main source of income, crop production.