In Ethiopia: Agricultural growth a multifaceted challenge

In Ethiopia: Agricultural growth a multifaceted
challenge

08 February, 2012 | By Laura Lance
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With nearly 50 per cent of

Ethiopia's GDP rooted in

agriculture, it goes without

saying that growing the

industry is its best short-

term hope of boosting the

economy.

After all, between 80 and

90 per cent of Ethiopians

farm for a living. It has the

highest per capita density of cattle in Africa and is among the top 10
in the world. Agricultural commodities such as coffee, flowers and
livestock products make up 80 per cent of the country's exports.

Yet the country suffers from a chronic dependence on foreign aid,
much of which comes in the form of humanitarian food responses.

A multi-agency assessment released last month concluded
approximately 3.2 million Ethiopians will require relief food
assistance amounting to US$168.7 million in 2012. The report also
called for an additional US$46.4 million for non-food needs such as
health and nutrition, water and sanitation, agriculture and education
support.

Last year's drought affecting the Horn of Africa affected 4.5 million
people in Ethiopia alone.

The Ethiopian government has embarked on an ambitious plan to
increase its agricultural productivity and reduce or eliminate the
reliance on humanitarian aid. And it is making progress. According
to published reports, growth in the agricultural sector neared eight
per cent in recent years.

Industrial scale farms are seen not only as an important economic
driver, but a source of employment. For example, a huge Dutch-
owned flower operation near Zeway in the Rift Valley about three
hours south of Addis Ababa employs 11,000 people.

Some of these efforts, however, are controversial, such as the
decision to allocate up to three million hectares of crop land to
foreign investors under attractive leases conditions and tax
incentives when the majority of the country's domestic farmers farm
plots too small to be economic.

Government statistics suggest there is no shortage of land. Nearly
65 per cent of the country's land is arable and only 13 per cent of it
is currently being cultivated. In addition, there have been some
modest efforts in recent years to offer farmers in densely populated
farming kebeles (similar to a township) the opportunity to apply for
voluntary relocation. Successful applicants receive assistance with
moving, resettlement and are given two years in which to change
their mind and return to their former communities.

A recent paper jointly produced by the International Food Policy
Research Institute and the Ethiopian Development Research
Institute concludes says an agricultural growth rate of six per cent is
achievable provided reforms are in place to accelerate the
availability of improved seed and fertilizer.

In fact, the 2011 paper called called Agriculture and Ethiopia's
Economic Transformation says agricultural development holds the
key to increasing employment and accelerating poverty reduction.

And it says middle class farmers should play an important role.

The so-called middle class farmers are considered a disappearing
breed in North American agriculture, squeezed by their inability to
compete with large farmers' economies of scale and and too capital
intensive to fit into small farming niches.

But this paper suggests that for Ethiopia, focusing on this scale of
farm activity strikes a balance between increasing productivity and
job creation without provoking a mass exodus of people to major
urban areas that are ill-equipped to accommodate them.

"Linkages"

"Raising farm incomes is essential to drive employment increases,
poverty reduction, and diffused urbanization," the paper says. "That
impact will be greatest by concentrating on geographic areas that
respond best to improved technology and more intensive cropping
patterns.

A diffused pattern of urbanization is the development of several
spatially dispersed, medium-size cities by creating jobs in the rural
non-farm sector, the paper says.

"In order to achieve this rapid agricultural growth with positive
economy-wide linkages it is necessary to engage middle farmers,
who are those with large enough farming to adopt new technologies
and to produce significant marketed surpluses, but small and
numerous enough to have spending patterns that drive a vibrant
rural non-farm sector," the paper says.

While the needs of households with small landholdings, which
makes up more than 80 per cent of the population, cannot be
ignored, they are unlikely to be drivers of growth -- because they
aren't selling much off the farm.

"Similarly, very large landowners are generally less efficient drivers
of economic growth because they have consumption patterns that
are import and capital intensive. As a result, their spending
generates few growth multipliers and does little to reduce poverty."

By concentrating on developing the middle class, more jobs will be
created in towns and villages that serve as service centres, which
creates off-farm employment opportunities for the people living in
poor resource areas, where it is not feasible to significantly improve
farm incomes.

Government and foreign donors are well aware of the potential for
agricultural growth to strengthen the country's economy.

While most of the support from Canada, through the Canadian
International Development Agency and non-government
organizations, supports projects that provide humanitarian
assistance and promote food security, some of Canada's
contribution to Ethiopia is also focused on initiatives that support
farmers who are farming commercially, a CIDA official told a
briefing.

"The more productive areas need help getting to the next stage in
terms of productivity," the official said. CIDA's allocation for
partnered projects in Ethiopia is between $170 and $180 million
annually, divided between $120 million in bilateral assistance
delivered through NGO partners, $55 million through multilateral
programs and between $1 to $3 million in debt relief.

-- Laura Rance is the editor of the Manitoba Co-operator,
reporting this week from Ethiopia on a media food study tour
with the Canadian Foodgrains Bank. Watch this site this week
for updates on her travels.

Courtesy