This article attempts to demonstrate how proximity to urban centers influences households’ decision to allot their agricultural land to the production of either staple crops or high value cash crops. By applying fractional logit estimation technique on data collected from villages in Wollo of the Amhara Regional State in 2006, it has been found that proximity to urban centers, access to road, and education of the head of the household determine the crop choice in favor of the production of high value cash crops. While the purely liquid wealth positively affects the allocation of land for the production of cash crops, the direction of the impact of livestock on crop choice is found to depend on the particular location of the activities in relation to urban (market) centers. The pattern of crop choice has been translated into a variation in the level of per capita income across villages.
Households operating in those villages located far from urban centers with no access to road are found to be the poorest among the villages covered by the study.
