Smallholder farmer crop production is a mainstay of the Ethiopian economy. A series of agricultural extension programs have been implemented since the 1950s in an effort to improve smallholder productivity. In this study, we argue that the limited attention that is given to cropland allocation by smallholders is one key driver of low performance of crop production as well as a key factor in environmental degradation. Drawing on data from a household survey of 75 randomly selected households in Abaro Kebele, Ethiopia, combined with focus-group discussions, key informant interviews, and secondary data sources, we use linear programming to highlight the impact of cropland allocation decisions on the performance of rural smallholder crop production systems. We find that under current land use practices households are not able to meet their consumption needs. The average profitability of farms under the current cropland allocation is also significantly below the estimated level of profit that could be realized by reallocating cropland while using linear programming. Additionally, survey results suggest that low crop production performance (in terms of meeting both household food crop production needs and profit goals) is the primary reason why households do not participate in conservation efforts and sustainable resource management practices. This study suggests that linear programming-based cropland allocation modeling might be applied to enhance the profit performance of smallholder crop production, help meet household food crop production requirements, and thereby promote the sustainable utilization of environmental resources.