In less favoured areas such as the highlands of Ethiopia, farmers manage risk through land allocation to crops and varieties since they cannot depend on market mechanisms to cope. They also grow traditional varieties that are genetically diverse and have potential social value. Supporting the maintenance of crop and variety diversity in such locations can address both the current needs of farmers and future needs of society, though it entails numerous policy challenges. We estimate a model of crop and variety choice in a theoretical framework of the farm household model to compare the determinants of crop and variety diversity, revealing some of these policy considerations. Farm physical features and household characteristics such as wealth and labour stocks have large and significant effects on both the diversity among and within cereal crops, varying among crops. Policies designed to encourage variety diversity in one cereal crop may have opposing effects in another crop. Trade-offs between development-related factors and diversity in this resource-poor system are not evident, however. Market-related variables and population density have ambiguous effects. Education positively influences cereal crop diversity. Growing modern varieties of maize or wheat does not detract from the richness or evenness of these cereals on household farms.