PROGRESS REPORT

10 PROGRESS REPORT TRANSFORMING AGRICULTURE IN ETHIOPIA 11
Agriculture-Driven Socio-Economic
Development
As detailed in all of Ethiopia’s major strategies
and policies over the past 20 years, agriculture is
expected to play a pivotal role in achieving middle
income status by 2025.
A number of countries in Asia during the second
half of the 20th century utilized a developmental
state approach to address the market failures
that exist in the early stages of agricultural
transformation. Specifically, public sector-led
interventions supported smallholder farmers
(who accounted for a significant percentage of
total agricultural production) to catalyze increases
in agricultural production and productivity. These
increases, coupled with increasing domestic and
international demand, resulted in higher incomes
for the largely rural agricultural population, thus
enhancing demand for industrial goods and
services. This demand, along with supportive
government policies and incentives, catalyzed
capital investment and growth of manufacturing
and service industries. This in turn increased
demand for value-added and processed
agricultural outputs for use by industry and drove
development of productivity-increasing and valueadding
industrial products.
Agricultural and industrial growth were thus
mutually reinforcing, with each sector supplying
inputs and at the same time generating demand
for value-added outputs from the other. This
eventually drove commercialization, diversification
and specialization across the economy.
While some parallels and critical lessons are
available from the experience of these Asian
countries, today’s more globalized food system
creates additional challenges for smallholders
in all developing countries, including Ethiopia.
Nevertheless, Ethiopia aims to adapt key lessons
from the Asian experience to transform its
agriculture sector, creating market based linkages
between agriculture and the country’s broader
industrialization and socio-economic development
strategy.
Increased
availability of
new agricultural
technologies
Stronger
demand for
value added
agricultural
products
Increased
agricultural
production and
productivity
Growth of
industry
Improve
linkage to
demand
sinks
Ethiopia also expects that agricultural
transformation will strengthen rural-urban
linkages and growth of rural non-farm industry
and employment, which would allow rural
households to diversify their income sources.
With increased incomes, these rural families can
invest in more nutritious food, education, health,
and other basic necessities. With diverse sources
of income, rural populations can better manage
risks and improve their resiliency to shocks. This
is especially critical in the face of climate change
and a population growth rate of ~2.5% annually. 4
The Current Status of Ethiopia’s Agricultural
Transformation
By nearly all measures, agricultural transformation
in Ethiopia can be considered to be well
underway. This has been characterized by major
public sector investments in order to stimulate
agricultural production and productivity increases,
as well as to develop (and better manage) the
country’s natural resource base and reduce the
vulnerability of farming households.
Ethiopia is one of the few countries in Africa
that has consistently surpassed the CAADP
targets of 6% annual agricultural growth and
10% national public expenditure towards the
agriculture sector. Over the past decade, Ethiopia
committed an average of 14% of its national
budget to agriculture. 5 This investment has been
used to lay strong foundations for the sector
by building effective institutions and structures,
strengthening policies and regulations, and
expanding agricultural services to smallholders.
Average Yield of Major Cereals
In MT per hectare
2.26
Ethiopia’s Progress Since CAADP (2004-2014)
All of these investments have had a significant
impact in accelerating progress towards
enhanced food security – the starting point
for overall agricultural transformation in
Ethiopia – through production and productivity
increases and targeted support to food insecure
households.
However, more work still needs to be done. In
the coming years, Ethiopia aims to solidify the
progress made to date, by continuing to build on
the considerable investments made over the past
decade. In particular, a more concerted effort is
being placed on supporting smallholder farmers
moving from subsistence to commercial, marketfocused
farming. In this regard, interventions
related to aggregation, processing and marketing
are being prioritized. In addition, increased efforts
are necessary to more systematically leverage
and scale-up innovations that are developed by
smallholder farmers themselves and expand
the role of the private sector across the entire
agricultural value chain.
Cereal Production
In Million MT
21.6
95% 109%
1.16
10.3
G.C 2004 2014 G.C 2004
2014
Source: World Bank Data and Central Statistical Agency (CSA) Agricultural Sample Survey, 2004-2014