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Population induced urban expansion is a phenomenon of the study area. Due to rural urban migration, more people are flowing to the city which makes the demand for accommodation and other infrastructures eminent. This causes the city to expand to the hinterlands and facilitate the conversion of more and more rural land to urban use. The study was designed to assess the impact of the sprawl of the city on rural land reduction and on agricultural production.For this, 140 sample households were selected from 350 dispossessed households using random digit numbering.The sample households were stratified into four levels of living based on size of farm, additional source of income, annual production and number of cattle. Questionnaires were administered personally. Frequency tables and graphs were used to organize the data and analyzed using descriptive statistics (average) and Pearson correlation coefficient and processed using SPSS. By applying GIS, from the 1965 and 1994 areal photographs and the 2008 satellite image the rate and area of the city was estimated and the future spatial expansion of the city was projected. The result shows huge land and production loss.