This study examines the productivity and profitability of teff and wheat technologies in selectedrnvillages of Ethiopia, namely sribana-Goderi, Eteya, Shashemene and Yetmen using Cobb-rnDauglass production function model. The paper indicated improved seed varieties,rnrecommended rate of DAP and Urea, farming management (practices) and environmentalrnfactors have a significant positive impact on productivity. In addition, land under new extensionrnsystem resulted in better yield responses than farmers' practices.rnThe study showed that most farmers did not use improved seed varieties and recommended raternof Urea and DAP which enhance productivity and profitability. High costs of improved seedsrnand fertilizer, lack of money for down payment, lack of credit and loans etc were reasoned out asrnthe major one.rnthe paper also established that the existing technology package was profitable if land cost wasrnnot considered. If land cost was included most of the farmers earned profit less than the marketrnwage rate except Sirbana-Godeti farmers. Thus, hiring-out labor is more preferable thanrnrenting-in for landless farmers. This paper concluded that emphasis should be directed towardsrnthe transformation of the agricultural sector through application of more productiverntechnologies.rnagricultural development Unit (CADU, later called Arssi regional development unit, ARDU).rnIt was established in 1967 through a cooperation agreement between Ethiopian government andrnthe swedish international development authority (SIDA). The second was the WellamornAgricultural Development Unit (WADU) that was .established in 1970 through World Bankrnassistance. WADU was followed by the Ada district development Project (ADDP), whichrnbegan operation in 1972 and was assisted by United States Agency for Internationalrndevelopment (US AID).rnhowever, the experience gained from CADU' and to some extent from WADU as early as 1970rnproved that the intensive package programs were too costly in terms of manpower and financialrnresources for large-scale expansion. An alternative strategy, more commensurate with thernresources of the nation, had to be Oesigned. This alternative strategy was called the MinimumrnPackage Project (MPP) and was launched in 1971 with technical assistance from SIDA.rnThe MPP was designed to reach a large number of farmers with few "proven" innovations thatrnhave been developed or tested by intensive package projects and/or agricultural researchrninstitutes of the nation. The proven innovations essentially consisted of fertilizer, improvedrnvarieties of cereals, and the accompanying cultural practices i.e. method and rate of applicationrnof fertilizer, sowing rate and sowing dates of the improved varieties of seeds. The approachrnemployed in MPP was supposed to be less costly on per farmer bases than CADD, WADU, orrnADDP. But evaluation of the project proved that its objectives was not achieved since thernexpansion of commercial farming seriously constrained the impact of the projects onrnsmallholders agriculture [Mulat, 1989; Dejene 1999].