Agricultural technology assessment for smallholder farms: An analysis using a farm simulation model (FARMSIM)

In Sub-Saharan Africa, including Ethiopia, agricultural productivity has remained low, with episodes of famines in drought-prone areas. The adoption of new agricultural technologies can lead to increased productivity and food security, but it is often hindered by risk and uncertainty related to production and marketing. Previous models used to evaluate the adoption of agricultural technologies have focused mainly on assessing the ex-post impact of technology without quantifying the profit and risk associated with adoption. However, this study introduces a farm simulation model (FARMSIM) that evaluates the potential economic and nutritional impacts of new agricultural technologies before and after adoption (ex-ante and ex-post). FARMSIM is a Monte Carlo simulation model that simultaneously evaluates a baseline and an alternative farming technology for a representative farm. The farming technologies under study comprise water lifting technologies (pulley and tank, rope and washer pump, gasoline/diesel motor pump, and a solar pump) and fertilizers. The study finds that the use of fertilizers combined with optimal irrigation to grow vegetables and fodder using a motor pump had the highest net present value and profit compared to other scenarios. However, the findings also indicate that the scenario under the pulley system, a low-cost technology, is the most feasible with the highest benefit-cost ratio. Solar pump systems had a lower benefit-cost ratio compared to the pulley and motor pump scenarios due to high initial investment costs. All four water lifting technologies are profitable and suitable for use in Robit kebele. Moreover, due to improved technologies in alternative scenarios, the nutrition simulation results show an increase in food quantities available to the family for calories, proteins, iron, fat, calcium, and vitamin A. The daily minimum requirements per adult equivalent were met for all nutrients under study except for fat and calcium. Supplemental nutrition through production and purchase is recommended for households in Robit kebele. The study uses a case study from Robit kebele, in the Amhara region of Ethiopia, as a demonstration farm. Ethiopia has an agriculture-dependent economy (43% of GDP) that includes crop and livestock production. However, the Ethiopian economy and its agriculture development sector are vulnerable to external shocks such as climate shocks. Drought is the most prominent climate shock that affects not only food and livestock production but also livelihoods. The study's findings have implications for agricultural development in Ethiopia and other developing countries. The use of FARMSIM can help policymakers and farmers evaluate the potential impacts of new agricultural technologies before and after adoption. This can inform decision-making and investment in agricultural development, particularly in areas where irrigation and other inputs are limited.