One of the few systematic field surveys undertaken following the 1975 agrarian reform in Ethiopia, this study analyzes the conditions constraining agricultural productivity of peasant farmers in the Arsi region and examines how farmers view peasant and government organizations established to attain agrarian socialism. Based on data generated through interviews with farmers, peasant association leaders, and extension agents, Dr. Dejene argues that the low prices for agricultural products, shortages of consumer goods, and lack of improvements in farming technology are among the major obstacles to increasing output among peasant farmers. The author also explores the government policy of transforming peasant associations into oollective farming units, which he finds is supported by only one quarter of the farmers interviewed. His study indicates that peasant institutions could best mobilize labor and resources to generate agricultural surplus and undertake conservation activities that would prevent future famine. Thus the author concludes that present government efforts should emphasize strengthening the cooperative movement rather than establishing collective farming.