Competitiveness and comparative advantage of haricot bean and onion production: A study in Dugda district of Oromia National Regional State, Ethiopia Deggu Zemed Lecturer, Public Service College of Oromia, Agribusiness and Value Chain Management Department, Ziway, Oromia Region, Ethiopia Online published on 19 November, 2016. Abstract The study was conducted with the main objectives of examining the profitability, comparative advantage and extent of government intervention on haricot bean and onion production in Dugda district of Ethiopia. The study used a cross-sectional data collected from a total of 122 sample rural households and ten traders. Moreover, secondary data were also collected. The Policy Analysis Matrix (PAM) methodology was employed in which basic policy indicators (the nominal and effective protection coefficients, private cost ratio and domestic resource cost ratio], using SPSS version 20.0, were derived. The results of the study revealed that the financial and economic profits for both products were positive indicating that both haricot bean and onion production in the study area were profitable for the producers in particular and for the country at large. The divergence between private and social values, which showed the net effect of policy distortion and market failure, was negative indicating that households of both products were implicitly taxed on their output while subsidized on the use of tradable inputs. On the other hand, households producing haricot bean and onion were implicitly subsidized and taxed on the use of domestic resources, respectively. The effective protection coefficient (EPC), taking into account both the output and tradable input markets together, revealed a net disincentive for both products as their EPCs were 0.8489 and 0.7426, respectively. The domestic resource cost (DRC) ratio values, which were 0.4066 and 0.4363, for haricot bean and onion production, respectively, confirmed the comparative advantage of producing both crops in the study area given the present inputs used and outputs produced with their associated prices, production technologies, existing policies and market failures. Furthermore, sensitivity analysis with various scenarios was carried out in order to assess the effect of different strategies on the production of haricot bean and onion. In this study, in order to sustain and improve the competitive and comparative advantage of both haricot bean and onion products, intensively continue with a participatory, consultative, innovative and proactive approach for awareness creation, trader's business skill development, provision of appropriate infrastructure, reduction in import tariff on imported agricultural inputs and the gradual foreign exchange liberalization as well as use of improved and efficient agricultural technologies have a paramount importance. Top Keywords Competitive Advantage, Comparative Advantage, Policy Analysis Matrix, Domestic Resource Cost, Effective Protection Coefficient. Top |