A Review of Ethiopian
Agriculture: Roles, Policy and
Small-scale Farming Systems
BACKGROUND
Agriculture is the backbone of the Ethiopian economy. This particular sector
determines the growth of all other sectors and consequently, the whole national
economy. On average, crop production makes up 60 percent of the sector’s outputs,
whereas livestock accounts for 27 percent, and other areas contribute 13 percent of
the total agricultural value added. The sector is dominated by small-scale farmers
who practice rain-fed mixed farming by employing traditional technology, adopting
a low input and low output production system. The land tilled by the Ethiopian
small-scale farmer accounts for 95 percent of the total area under agricultural use
and these farmers are responsible for more than 90 percent of the total agricultural
output.
Small-scale farmers produce 94 percent of the food crops and 98 percent of the
coffee, the latter being Ethiopia’s leading export good. Private and state commercial
farms produce just 6 percent of food crops and 2 percent of the coffee grown. These
commercial farms use about 5 percent of the total cultivated land. Coffee, cotton, tea,
fruits, and vegetables are the major crops grown by the few commercialized state
farms, although with very minimal return despite huge investments in them (MEDIC
1999). With these statistics, one can easily infer to what extent the small-scale
farmers (who are all rural dwellers) are the key element in strengthening the effort
towards agricultural growth and consequently to the overall economic growth.
The country has varied agro-climatic zones. The Government extension programme
lists these as: areas of adequate rainfall; areas of moisture stress; and pastoral areas.
Farmers traditionally classify them as dega (cool), woina dega
37 GLOBAL GROWING CASEBOOK
(temperate) and qolla (low land; warm climate). This diversity makes it a favourable
region for growing a variety of crops (Desalegn Rahmato 2008).
The country is endowed with one of the most biodiverse ecosystems in the
world. It has earned the name “the Water Tower of Eastern Africa” for having more
than ten rivers, each of which has irrigation potential. It also has the largest livestock
population in Africa (est. 114 million), i.e. 2.5 per capita (MEDIC 1999). As regards
to the agricultural suitability of the country’s territory, some estimates indicate that
more than 65 percent (78.9 million hectares) of the land is fertile for agricultural
purposes (Haile Kibret 1998).
Demographically, the country is the second most populous country in Africa after
Nigeria. In 2007, Ethiopia had a total population of 79.22 million. The total fertility
rate of the country is 5.9 children per woman; 3.3 for urban and 6.4 for rural women
(estimates for the years 1995–2000). 83 percent of the population lives in rural areas,
whereas only 17 percent reside in urban areas. However, a report by UN-Habitat
(Economist 2010) foresees an increase of 62 percent in the number of urban dwellers
by the year 2025 for Addis Ababa. The same source also states that the age structure
of the population is youth dominated, similar to National other developing
countries. 43 percent of the total population is under the age of 15. With such a
predominantly young population the country has undoubtedly the potential for fast
growth (theoretically known as “population hidden momentum”). The UN report
also indicated that the dependency ratio (the proportion of the population younger
than 15 and older than 64 to the total population) is high; 55.45 percent of the
population is the productive segment and the remaining 44.55 percent is the
dependent segment. From this data, it is possible to infer that such a high
dependency ratio can easily hamper the country’s efforts to develop.
Being aware of the above mentioned factor endowments – a huge labour force in the
rural areas, relatively abundant agricultural lands, diversified agro-climatic zones
and sufficient water resources – the Government of Ethiopia has devised the current
national development strategy called Agricultural Development Led-
Industrialization (ADLI). ADLI takes agriculture as the engine of national economic
growth. Through ADLI, the country plans to end up with rapid and sustainable
economic growth and independence from foreign food aid, ensuring maximum
benefit for the local population in the context of a free, open market. As the
Government has taken the small-scale farmer and the local leadership (lower strata
of the administration) as active and fundamental players in the implementation
process, building the capacities of the peasant farmers and the local leadership are
the two most important goals.
This paper tries to asses and to identify the role of the agricultural sector in the
Ethiopian economy at macro- and micro-levels. Eventually, it identifies possible
areas within which the voluntary sector could intervene in supporting the sector at
both national and local levels.
THE PLACE OF AGRICULTURE IN THE ETHIOPIAN ECONOMY:
THE MACRO-LEVEL
THE ROLE OF AGRICULTURE
In 1999, The Federal Ministry of Economic Development and Cooperation
(MEDIC), (now called the Ministry of Finance and Economic Development
MoFED), revealed that agriculture contributes greatly in terms of export,
employment, and subsistence to the Ethiopian economy. It contributes 50 percent of
GDP, 85 percent of employment (the rural population of Ethiopia), 90 percent of
39 GLOBAL GROWING CASEBOOK
earnings from export, and 70 percent of raw material requirements for large and
medium industries that are agro-processing (MEDIC 1999).
Haile Kibret revealed that the agricultural sector, due to its major contribution to
the GDP, highly influences the performances of the other sectors of the economy
(Haile Kibret 1998). It, for example, accounts for more than 80 percent of
employment and 90 percent of exports. Ethiopian export commodities are
agricultural outputs: coffee; hides and skins; and seeds and nuts used for edible oil
production. As these are the main sources of foreign earnings, they also
automatically define the country’s capacity to import other materials used in
manufacturing. Kibret also stresses that macro aggregates, like employment and
inflation rates, are also influenced by the sector (Haile Kibret 1998).
In the history of Ethiopia’s export markets, coffee has been the number one export
good, dominating all other export products. It not only supports the entire economic
growth of the nation but it is also the source of income for millions of coffee
growers, thousands of coffee traders, primary cooperatives and unions, financial
institutions and transportation enterprises. Some of the Ethiopian coffee importers
include Germany, Japan, Saudi-Arabia, Belgium, USA, Italy, France, the Sudan,
England and Switzerland.
Oil crops take second place in terms of Ethiopian agricultural exports. Niger
(nueg), sesame seeds, sunflower and ground nuts are also exported to Asia,
Europe, America and Africa. Countries like China, Turkey, Israel, USA, Jordan,
Greece, Switzerland, Yemen, Saudi Arabia, Canada and Britain are the main export
partners.
SHARE OF AGRICULTURE SHARE OF AGRICULTURE
YEAR
TO NOMINAL GDP TO REAL GDP
1995/96 56.7 53.6
1996/97 55.4 53.4
1997/98 50.6 49.8
1998/99 47.4 48.6
1999/2000 47.4 47.4
2000/01 45.7 48.8
2001/02 41.9 47.3
2002/03 41.2 43.3
2003/04 43.4 45.4
COUNTRY ANALYSES: ETHIOPIA AND D. R. CONGO 41
2004/05 46.9 46.6
2005/06 48.1 47.3
Source: MoFED, Department of National Economic Accounting
TABLE 1: Share of Agriculture to Nominal and Real GDP
Cattle from Ethiopia is exported to various countries.
Pulses like white pea beans, chickpeas, peas, mung peas, lentils, and beans have
also been exported to Sudan, UAE, Pakistan, Yemen, India, South Africa, Germany
and Singapore, in addition to other regions.
Horticulture items (vegetables and fruits) like beans (Phaseolus vulgaris), lemon,
tomatoes, potatoes, banana, oranges, onion, mango, avocado, cabbages, papaya, and
garlic are also exported to different countries.
In terms of livestock numbers, the country stands atop the list in Africa and ranks
tenth in the world. However, animal husbandry has not managed to establish itself as
a main contributor to the national economy as once hoped for due to the use of
backward technologies. Ethiopia has been exporting different livestock like cattle,
camels, sheep and goats, together with their meat, to different countries. The same
report also shows that notwithstanding various constraints, external trade has
increased relative to past years. Table 2 depicts the difference over 23 years
(between 1984/5 and 2006/7).
41 GLOBAL GROWING CASEBOOK
There is, however, a structural shift in the overall macro-economy and, hence, in
the relative position of agriculture. The Hand Book of the Ethiopian Macro-
Economy (Access Capital 2010) describes the projected composition of the
Ethiopian GDP by analysing three broad divisions of the economic sector:
agriculture, industry and services. Table 3 indicates that the services sector,
VOLUME (IN VALUE
TONNES) (IN ETB)
1984/85 2006/07 DIFF. % 1984/85 2006/07 DIFF. %
COFFEE 73.8 176.4 239 446.3 m 3.8 bn 851
OIL SEEDS 12.4 235.2 1,887 15.6 m 1.7 bn 10,897
PULSES 20.0 158.7 795 16.9 m 624.2 m 3,695
VEGETABLES & FRUITS 9.9 41.0 415 6.0 m 145.5 m 2,416
Source: MoRAD
TABLE 2: Changes in major export agricultural commodities of Ethiopia
involving real estate, wholesale and retail trade, accommodation, catering, financial
services, education, etc. has taken the lead position in the economy. It also shows
structural shifts in the Ethiopian economy over three consecutive years and a
forecast for the 2011/12 fiscal year in terms of the trends for the three sectors
relative to GDP contribution.
MAJOR CONSTRAINTS FACED BY THE ETHIOPIAN AGRICULTURE
Ethiopian agriculture has been suffering from various external and internal problems.
It has been stagnant due to poor performance as a result of factors such as:
¯ Low resource utilisation (e.g. the proportion of cultivated land compared to the
total amount of land suitable for agriculture and the amount of water available for
irrigation is far below the capacity and thus compels the sector to be rain fed);
¯ Low-tech farming techniques (e.g. wooden plough by oxen and sickles);
¯ Over-reliance on fertilisers and underutilised techniques for soil and water
conservation;
¯ Inappropriate agrarian policy;
¯ Inappropriate land tenure policy;
¯ Ecological degradation of potential arable lands;
¯ Increases in the unemployment rate due to increases in the population (Haile
Kibret 1998).
The main structural constraints for Ethiopian agriculture (Yonas Ketsela, 2006).
These, among others, include the following:
¯ Archaic mode of production and low uptake of technological innovations, which
in turn yield low levels of productivity;
¯ Degradation of land and other natural resources due to intense cultivation and
overgrazing;
¯ Recurrent drought, civil strife and political unrest;
¯ Effective policies governing such issues as land ownership, land titles, land
fragmentation, credit systems and land and crop insurance mechanisms are not
available or are very limited; and
¯ Neglect and lack of agricultural investment.
These constraints, coupled with the rapid population growth, have significantly
contributed to the problem of food insecurity since the 1960s. For Ketsela, the total
population under the national poverty line facing dramatic food insecurity is
estimated to be 50 to 60 percent (Yonas Ketsela 2006).
The external market is a binding constraint on the positive development of the
country’s macro aggregates due to deterioration of trade (especially coffee) and the
rising level of imports combined with the volume of exportable goods (MoFED
2004).
