FINANCIAL PERFORMANCE OF CUT FLOWER FARMS IN ETHIOPIA: A CASE OF INVESTMENTS PARTIALLY FUNDED BY DEVELOPMENT BANK OF ETHIOPIA

Abstract

Cut flower farms are non-traditional commercial agriculture forms recently introduced in Ethiopia contributing significantly to the foreign earning of the country. The research used Development Bank of Ethiopia funded projects as a case to evaluate their financial performance. Data’s collected using both primary and secondary sources with respect of 40 flower farms which are functional from the introduction of the current credit policy in 2009 to the end of 2014. Both descriptive as well as econometric analysis used to evaluate the relation and impact of independent variables over the dependent variables. With respect of the Econometric analysis the dependent variable used to measure the farms financial performance is earning per hectare and the independent variables included are General Manager, Farm Manager, Geographical Location, and Flower Variety, Planting Media, and Export Market outlet. The finding of the study showed that Farm Manager, Flower Variety, Planting Media and Export Market positively affect the financial performance with significant impact on the dependent variable while General Manager and Geographical Location don’t have significant impact on the financial performance. Based on these findings; having experienced Technical Manager, exporting through auction and direct market channel to Europe, using hydroponic media, planting premium varieties results in better financial performance.