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"Agriculture is an important part of Ethiopia’s economy constituting a significant proportion of it’s Gross Domestic Product (GDP) and total export earnings. The method of agricultural production in Ethiopia has led to increased deforestation and degradation. In order to reverse the trend, government of Ethiopia together with its development partners are in search of strategies to address the situation. Among others, Agroforestry has been considered as a potential strategy that can reduce the increasing deforestation and degradation; whilst at the same time can enhance food production and increased the income of small holder farmers. Khat (Catha edulis), an indigenous shrub species offers the potential to be intercropped with other food crops in an Despite its potential, limited attention has been given to it  in terms of assessing its potential and profitability. The aim of this article is to assess the competitiveness of khat production and commercialization as a complementary source of income for farmers in the West Shewa and East Wollega zones in Ethiopia. Three focus group discussions (FGD) with khat producers were conducted in 3 villages to obtain data for the analysis. This was supplemented with key informant interviews with traders in order to obtain further information about its production and marketing. Porters’ five forces was adopted as the conceptual framework for analysis. The results indicate that demand for khat exceeds its current supply and farmers have power to determine the price. However, there is high level of competition among traders in sourcing from the farmers leading to price competition among traders. The agro ecological suitability for khat production in the area indicates that more farmers can produce it if the awareness of its market potential is created. The study concludes that khat can be promoted as a profitable crop for agroforestry practices in Ethiopia.   Key words: Agroforestry, market analysis, competitiveness, Porter’s five forces, neglected species, market analysis.

The socio-economic potential of under-utilized species to small holder farmers: The case of Khat (Catha edulis) in Ethiopia