Since the early 1980s, the Fogera Plain has been one of Ethiopia's major rice production areas. The introduction of rice, its commercialisation and the subsequent increased surplus production has led to the ability of smallholder rice farmers to intensify their production through diverse investments, mainly in supplementary irrigation. This has also enabled rice farmers to diversify crop production, mainly during the off-season, through the production of high-value crops like vegetables. Despite this expansion, a recent visit to the Fogera Plain by the authors revealed that most smallholder rice farmers were not able to sell their onions due to the collapse of local markets. To investigate this collapse further, this paper follows the authors' investigation of farmer investments in producing onion, their responses to the collapse of the onion market, and the implications for rural livelihood improvement within the Fogera Plain.