PROGRESS REPORT

8 PROGRESS REPORT TRANSFORMING AGRICULTURE IN ETHIOPIA 9
The Vision for a Transformed Agriculture Sector in Ethiopia
The Importance of Agriculture in Ethiopia
Ethiopia is Africa’s second most populous nation
with over 96 million inhabitants, over 80% of
whom live in rural areas. Agriculture has been
the dominant sector of the country’s economy,
representing nearly 42% of GDP, 77% of
employment, and 84% of exports. In addition,
the majority of the agriculture sector consists of
smallholder farmers who make their living from
less than two hectares of land. Although the
transformation towards a more manufacturing
and industrially oriented economy is well
underway, there is still more work to be done in
order to better leverage agriculture’s contribution.
Given the key role that agriculture plays in
Ethiopian livelihoods and the country’s economy,
the Government of Ethiopia has long recognized
the importance of agricultural transformation
for poverty reduction, economic growth, and
environmental stability. Since the launch of its
Agriculture Development-Led Industrialization
Strategy (ADLI) in 1993, Ethiopia has put
agriculture at the heart of the development
process and made it a fundamental component in
its vision for overall national development.
This strong commitment has been translated into
solid actions throughout the past 20 years, as
seen in the country’s long and short term growth
plans. Ethiopia’s five-year development plans
– SDPRP (2000-2004), PASDEP (2005-2010),
GTP I (2010-2015) and the current GTP II (2015-
2020) – have all reflected the importance of the
agriculture sector and its contribution to poverty
alleviation and overall national economic and
social development.
“ During the plan period, agriculture will be
transformed to [a] high growth path in order to
ensure the food security challenge of the country
and to curb inflationary pressure, as well as
broadening the export base of the country. The
sector also serves as a spring board to bring
about structural transformation in the long run
through contribution to industrial growth.”
- Growth and Transformation Plan I, 2010/11 - 2014/15
GTP I has been complemented by the
Ministry of Agriculture’s Policy and Investment
Framework (PIF) – one of the current decade’s
key development plans – which outlined a clear
objective for agricultural transformation.
“ The objectives encompass: achieving a
sustainable increase in agricultural productivity
and production, accelerating agricultural
commercialization and agro-industrial
development, including value chains, reducing
degradation and improving productivity of natural
resources and achieving universal food security
and protecting vulnerable households from
natural disasters.” - Agriculture Sector Policy and Investment
Framework (PIF), 2010/11 - 2019/20
The government’s views on agricultural
transformation are strongly in line with those of
prominent thought leaders, leading academicians,
and international forums.
“ Agricultural transformation is the process of
converting household-oriented, subsistence-type
structures (that is, decision-making units in rural
households that are concerned with production
primarily for home consumption and subsistence
needs and that have relatively few and highly
imperfect market connections to the urban
economy and to world markets) to commercial
units that have highly efficient linkages to the
urban and world economies.” - Dr. C. Peter Timmer,
Professor, Harvard University, and Faculty Fellow at the Harvard
Institute for International Development 1
A Snapshot of Ethiopia’s Agriculture Sector
Ethiopia is endowed with abundant natural
resources and some of the most diverse
ecological zones in the world. Ethiopia’s ~74.3
million hectares of arable land are spread out
over 18 major and 49 sub agro-ecological zones at
altitudes ranging from 148 to 4,620 meters above
sea level. This diversity, coupled with abundant
natural resources, makes it suitable to grow over
100 types of crops. 2
However, Ethiopia is not currently realizing its full
agricultural potential, as the sector is dominated
2.5
2.0
1.5
1.0
0.5
Share of Agriculture in Ethiopian GDP, Employment and Exports
by subsistence oriented, low input/low output,
rain-fed farming. Ethiopia’s agricultural produce
is also limited in production diversity. In addition,
over 90% of cultivated land has been dependent
on rains, making the sector highly susceptible
to climate change, including extreme events
such as droughts. Despite significant gains in
the past few years, issues beyond increases in
improved input usage (i.e., soil health, agronomic
practices, etc.) are constraining the ability of
farmers to reach target yield levels. Furthermore,
differentiated interventions are necessary for the
1.16
GDP
2014
15%
43%
42%
Employment
2014
5%
18%
77%
poorest farmers living in marginalized areas and/
or on very small plots of land.
There is also significant room for gains in the
value that Ethiopia can get from its agricultural
produce. For example, processed products, which
fetch more value than raw goods, comprised
61% of Ethiopia’s agricultural imports but only
14% of its agricultural exports in 2012. 3 Hence,
addressing these low-production and processing
issues could assist Ethiopia in reaping more
quantity and value from the same amount of
effort and resources.
Despite almost doubling yields of major cereals in the past decade, cereal yields in Ethiopia
still fare lower in comparison with those of other fast developing countries
Yield of major cereals - Over time in Ethiopia
Tons per hectare
Yield of major cereals - Comparison with others
Tons per hectare (2013)
0
G.C 2004
2007 2010 2013
Tanzania Ghana Ethiopia
2.22
+91%
Exports
2012
8%
1.42
1.69
2.22
Agriculuture
Services
Industry
Manufactured Goods
SOURCE: ATA analysis based on data from MOFED Ethiopia, National Economic Accounts Statistics of Ethiopia, 2013; Business landscape, Invest in Ethiopia, 2013; MIT Economic
Observatory; World Bank, 4th Ethiopia Economic Update, 2015; and IMF Economic Database
Note: Major cereals covered include wheat, rice, maize, barley oats, rye, millet, sorghum, buckwheat, and mixed grain
SOURCE: World Bank Data; FAO Data; ATA Analysis
8%
84%
Others
2.97
World
Average
3.72
South
Africa
4.83
Brazil