Financial Analysis of Eucalyptus Woodlot in Comparison with Selected Cereal Crops, the Case of Gombora District in Hadiya Zone, Central Ethiopia

Farming systems can be integrated to create the best possible combination for a better financial benefit when taking into account the available resources; based on the potential benefits of the farm products and costs associated with the production processes.The purpose of this study was to estimate the household financial profitability of eucalyptus woodlots and selected cereal crops.Ninety-six households were selected through random sampling method.Both primary and secondary data were used.For data analysis, SPSS (Statistical Package for Social Sciences) was employed.As a measure of profitability, Net Present Value (NPV), Benefit Cost Ratio (BCR), and Internal Rate of Return (IRR) studies were utilized.The result indicated that farming was their primary source of income for the farmers' in the study area.The result showed that 81.25% of the respondents believed that growing Eucalyptus woodlots had beneficial effects on the economic position of the owner.Only 18.75% of the responders mentioned the detrimental effects of the eucalyptus woodlot.The majority of respondents (64.6%) strongly agreed that they had interest towards establishing eucalyptus woodlots.The NPV analysis demonstrated that profitability of cereal crops being 1.94 times more profitable than Eucalyptus woodlots.At a 10% interest rate, the BCR for both farming methods was greater than unity.For the households, investing in cereal crops over 169% interest rate resulted in losses that may reach 566% in the case of woodlot.As a result, combining the two farming methods can increase financial return.