1. Food and Agriculture in Ethiopia:
Progress and Policy Challenges
Paul Dorosh, Shahidur Rashid
and Alemayehu Seyoum Taffesse
Improved Evidence Towards Better Food and Agricultural Policies in Ethiopia
November 02, 2012
Hilton Hotel, Addis Ababa
1

3. Food and Agriculture in Ethiopia:
Progress and Policy Challenges
Thank you!
H.E. Ato Newai Gebre-ab, Chief Economic Adviser to the Prime Minister of Ethiopia
and Director of the Ethiopian Development Research Institute
Wzo. Samia Zekaria, Director General, Central Statistics Agency
Donors:
Canadian International Development Agency (CIDA)
Department for International Development (DfID)
United States Agency for International Development (USAID)
Development Cooperation of Ireland
Agricultural Transformation Agency (ATA)
Researchers: Bart Minten, Alemayehu Seyoum Taffesse, Mehrab Malek, Hashim
Ahmed, Eleni Gabre-Madhin
Numerous Others… (see the acknowledgements)
3

4. Food and Agriculture in Ethiopia:
Progress and Policy Challenges
1. Introduction Paul Dorosh and Shahidur Rashid
Part I: Overview and Analysis of Ethiopia’s Food Economy
2. Ethiopian Agriculture: A Dynamic Geographic Perspective
Jordan Chamberlin and Emily Schmidt
3. Crop Production in Ethiopia: Regional Patterns and Trends
Alemayehu Seyoum Taffesse, Paul Dorosh, and Sinafikeh Asrat
Gemessa
4. Seed, Fertilizer, and Agricultural Extension in Ethiopia
David J. Spielman, Dawit Kelemework Mekonnen,
and Dawit Alemu
4

5. Food and Agriculture in Ethiopia:
Progress and Policy Challenges
Part I: Overview and Analysis of Ethiopia’s Food Economy (cont.)
5. Policies and Performance of Ethiopian Cereal Markets
Shahidur Rashid and Asfaw Negassa
6. Livestock Production and Marketing
Asfaw Negassa, Shahidur Rashid, Berhanu Gebremedhin, and
Adam Kennedy
7. Patterns in Foodgrain Consumption and Calorie Intake
Guush Berhane, Linden McBride, Kirbrom Tafere Hirfrfot, and
Seneshaw Tamiru
5

6. Food and Agriculture in Ethiopia:
Progress and Policy Challenges
Part II: Major Agricultural and Food Policy Interventions in Ethiopia
8. Implications of Accelerated Agricultural Growth for Household
Incomes and Poverty in Ethiopia: A General Equilibrium Analysis
Paul Dorosh and James Thurlow
9. Disaster Response and Emergency Risk Management
John Graham, Shahidur Rashid, and Mehrab Malek
10. Targeting Food Security Interventions in Ethiopia: The Productive
Safety Net Programme
Sarah Coll-Black, Daniel O. Gilligan, John Hoddinott, Neha Kumar,
Alemayehu Seyoum Taffesse, and William Wiseman
11. The Evolving Role of Agriculture in Ethiopia’s Economic
Development Paul Dorosh
6

7. Ethiopian Agriculture:
A Dynamic Geographic Perspective
Figure 2.4. Map of woreda domain assignments, 2007
Source: Author’s calculation 7

8. Ethiopian Agriculture:
A Dynamic Geographic Perspective
8

9. Road Infrastructure and Urbanization
Travel Time 1984
9

10. Road Infrastructure and Urbanization
Travel Time 2007
11

11. Ethiopian Agriculture:
A Dynamic Geographic Perspective
12

12. Ethiopia: Alternative Urbanization Estimates
14
12
10
(millions)
8
6
4
2
0
1984 1994 2007
Agglomeration Index Official CSA
13

13. Crop Production in Ethiopia:
Regional Patterns and Trends
15

14. Crop Production in Ethiopia:
Regional Patterns and Trends
16

15. Crop Production in Ethiopia:
Regional Patterns and Trends
17

16. Seed, Fertilizer and
Agricultural Extension in Ethiopia
19

17. Seed, Fertilizer and
Agricultural Extension in Ethiopia
20

18. Seed, Fertilizer and
Agricultural Extension in Ethiopia
21

19. ‹#›

20. Policies and Performance of Ethiopian Cereal Markets
(Policies)
Policy Regimes Major Policy Key Observations
Objective(s)
Imperial Regime Support and promote the Limited interventions and were not
(1960-74) interests of few landlords effective
and urban consumers
Socialist Regime Complete socialization of Heavy government intervention
(1975-1990) production and which depressed the development
marketing of private grain trade
Liberalization and Price stabilization, Substantial progresses have been
rapid growth ( 1991- promote private sector made, but challenges remains with
2010) grain trade information, risk management, and
making policies transparent
24

21. Policies and Performance of Ethiopian Cereal Markets
(Policies)
1961–74 1975–80 1980–90 1991-2000 2001–08
Indicators Imperial Transition State Liberalization Rapid Growth
Regime period control
Production ('000 MT)[i] 4,641 4,527 5,601 7,056 10,672
Marketed as % of Production 25% [ii] 11%[iii] 19% [iv] 25%[v] 28.10%[vi]
Public Market Share (%) 10%[vii] 57% [viii] 40%[ix] 4% 1.87%
Marketed ('000 tons) 1,160 498 1,064 1,764 3,000
Public sector ('000 tons) 116 286 426 71 56.0 [x]
Population (mns) 28.3 35.6 42.9 57.6 77.4
Marketed (kgs/capita) 41 14.2 24.8 30.6 38.8
Farms to Compulsory Liberalized
Collapse of Liberalization;
landlords; quota for all market;
Source of Market Supplies markets after increasing
tribute; market private trade
land reform trade
private actors dominates
25

22. Policies and Performance of Ethiopian Cereal Markets
(Policies)
1961–74 1975–80 1980–90 1991-2000 2001–08
Indicators Imperial Transition State Liberalizatio Rapid
Regime period control n Growth
% of farms holding less
98.7 87 80
than two hectare of land[xi]
% of lands owned by
holders with less than two 94.7 65 56
hectares[xi]
Government intervention only during
Very limited -- Yes Yes
& price stabilization the food crisis
AMC AMC, EGTE, small
Private EGTE, traders,
declining limited traders;
Key market actors sector coops, ECX,
private private small farms,
limited EGB processors,
sector trade millers

23. ‹#›

24. Policies and Performance of Ethiopian Cereal Markets
(performance)
• Performance of cereal markets
– Price analyses (historical data)
• Market integration
• Seasonality
• Price variability
– Survey data analyses
• Transactions costs
• Trade margins
Performance of cereal markets has improved significantly
28

25. Policies and Performance of Ethiopian Cereal Markets
(performance)
• Consider the following facts:
– In 1985, price of kg of teff was 7.7 Birr in Gojjam BUT 15.7 Birr in
Wello
– In 1974, price of rice in the district of Rangpur in Bangladesh (a
deficit area) was almost three times the prices in surplus and well
developed districts
• What is common in these two cases?
– Both countries had famines: Ethiopia in 1984/5 and Bangladesh in
1974.
– Hard hit famine areas lacked integration with the surplus and well
developed regions.
– In both countries there were restrictions on grain movements
29

26. Policies and Performance of Ethiopian Cereal Markets
(performance)
Author (s) Commo Geographic Method of Findings
dities coverage & analysis
time period
Dadi, L., A. Negassa, Maize and Bako area of Price correlation Results indicate that private-sector marketing of maize
and S. Franzel. teff Western Shoa and analysis and teff is characterized by high risk and variable gross
1992.
Eastern Wollega margins. Interspatial arbitrage is serious flawed,
(1985 -1989) correlations in prices range from weak to strong
Dercon, S. Teff Ethiopia Modified Liberalization in early 1990s had important effects on
1995. (1987 – 1993) Ravallion’s method the long-run and short-run integration of markets. Teff
markets were co- integrated with Addis Ababa market
Getnet, K., W. Teff Ethiopia Autoregressive Found long-run and short-run relationship between
Verbeke, and J. (1996 – 2005) distributed lag producer prices and the wholesale price in major
Viaene.
model terminal market (Addis Ababa)
2005.
Negassa, A., and R. Maize and Ethiopia Extended parity Grain market reform in 1999 have improved spatial
Myers. 2007. wheat (1996 – 2002) bounds model market efficiency in a few markets, worsened it in a
few others, but generally to have had little effect on
the spatial efficiency.
Rashid, S. Maize, Ethiopia Common trend Most market locations, except Mekelle in the north
2011. wheat, and (1996 – 2007) and Multivariate and Dire Dawa in the eastern part of the country, are
teff co-integration integrated. Analyses further suggest that shocks to
analyses maize markets have the most persistent effects on all
major cereals.
30

27. Policies and Performance of Ethiopian Cereal Markets
(performance)
Absolute change since
2002 2008 2002
Costs and Margins
Mean Median Mean Median Mean Median
A. Transaction costs
Total transaction cost(Birr/ton) 176.4 52.91 65.7 21.90 110.7 31.01
Handling 54.7 10.58 17.7 5.91 36.9 4.67
Sacking 56.4 24.29 21.0 6.94 35.4 17.34
Transport 37.0 6.88 9.9 3.28 27.2 3.59
Storage 1.8 0.05 0.7 0.22 1.1 0.17
Road stop 0.0 0.53 0.0 0.07 0.0 0.46
Brokers 15.9 4.76 1.3 1.09 14.6 3.67
Travel 1.4 0.53 0.7 0.22 0.8 0.31
Others 9.2 5.29 14.5 4.16 5.3 1.13
B. Trade Margins
Price Difference(Birr/ton) 141 88.2 102.2 73.0 38.9 15.19
Gross margin rate (%) 7% 4% 4% 3% 3% 1%
Net margin (Birr/Ton) 132.3 52.9 37.0 43.8 95.3 9.11
31

28. ‹#›

29. Livestock Production and Marketing
• Importance of livestock in Ethiopian economy
• At the national level :
• Livestock subsector accounted for 11% of GDP and 24 % of agricultural
GDP during 1995/96 to 2005/06
• Annual export earning from livestock / livestock products averaged
13% of the national export earnings
• If unofficial export is included, livestock’s share in total export earning
would have been about 25%!!
• At the household level:
• Livestock subsector is important in the livelihood of all types of rural
households in all agro-ecological zones
• It plays an important role in coping with shocks, accumulating wealth,
and as store of value in the absence of missing markets and institutions.
• Potential future demand:
• With economic growth and regional integration, demand is likely to
grow 33

30. Livestock Production and Marketing
45
15%
40
35 10%
30
25 5%
20
0%
15
10 -5%
5
-10%
0
1970-79 1980-89 1990-99 2000-08 1970-1979 1980-1989 1990-1999 2000-2008
Cattle Sheep Goats Cattle Sheep Goats
• Livestock production stagnated or experienced negative growth from 1970-
1999
• But has shown a strong growth in the 2000-2008 period
34

31. Livestock Production and Marketing
Total production (in 000 tons) Productivity 2
Categories Growth Growth
2000 2004 2008 rate1 (%) 2000 2004 2008 rate1 (%)
Meat 393 488 572 4.57
Beef 294 336 380 2.90 108 108 109 0.02
Mutton 36 60 82 12.30 10 10 10 -0.02
Goat 26 44 65 13.31 9 8 9 0.06
Chicken 38 47 46 0.11 1 1 1 0.00
Milk 900 1,050 1,350 4.35 207 210 211 0.61
Notes: 1Growth rate calculated over 2000-2008
2
Productivity measures: meat (carcass weight): kg/head; and milk is kg/head/year
Source: FAO: http://faostat.fao.org; both production and productivity are measured by the FAO
• While total production has grown, productivity has been more or less
stagnant
35

32. Livestock Production and Marketing
45
40
35
30
25
20
15
10
5
0
Cattle Sheep Goats
1999-00 2004-05
36

33. Livestock Production and Marketing
Nominal prices (Birr /Ton) Real prices (2006 prices)*
Feed types 2004 2008 2008 as % of 2004 2008 2008 as %
2004 of 2004
Cottonseed 800 2200 275 1065 1334 125
Noug cake 800 2300 288 1065 1395 131
Wheat (grade-2) 600 1800 300 799 1092 137
Wheat chaff (grade-2) 300 1400 467 399 849 213
Bale hay (teff / grass) 300 1200 400 399 728 182
Source: Nominal numbers are from SPS-LMM surveys
Note: *Deflated by December CPIs of the respective year with Dec 2006=100.
37

34. Livestock Production and Marketing
• Preventing the death of
these three species
would have generated
estimated additional
value of:
• US$1.4 billion if
valued at 2008/9
export price
• Of the total, cattle
alone would have
accounted for US$1.0
billion
38

35. Disaster Response and Emergency Risk
Management Implications
Date Region Affected Attributed Causes and Severity
1888-1892 Ethiopia Rinderpest affected cattle population, estimated 90 percent
livestock lost. Estimated 2 million dead.
1957-1958 Tigray and Wollo Rain failure in 1957. Locusts and epidemic in 1958
1964-1966 Tigray and Wollo Undocumented; said to be worse than 1973-74
1971-1975 Ethiopia Sequence of rain failures. Estimated 1/4 million dead. Fifty percent
livestock lost in Tigray and Wollo.
1978-1979 Southern Ethiopia Failure of Belg rains
1982 Northern Ethiopia Late Meher rains
1984-1985 Ethiopia Sequence of rain failures. Eight million affected. Estimated 1
million dead. Much livestock loss.
1987-1988 Ethiopia Drought of undocumented severity in peripheral regions
1990-1992 Northern, eastern, and Rain failure and regional conflicts. Estimated 4 million people
southwestern Ethiopia suffering food shortage
1993-1994 Tigray, Wollo, Addis 4 million people requiring food assistance, including demobilized
army and Somali refugees. New droughts.
1997-2000 Eritrea, northern Tigray Localized food shortages due to conflict
1999-2000 Food Security Crisis in Somali Rain failures and decline in prices of livestock, the main source of
Region pastoralists’ income
2002-2003 Ethiopia Drought-induced crop shortages; 12.6 million people were affected
2008-9 Southern Ethiopia Localized drought; 6.4 million people were affected
Source: 1888-1892: Pankhurst 1964
1957-1994: Webb and von Braun 1994
1997-2009: Dorosh, Schmidt, and Taffesse 2010
39

36. Disaster Response and Emergency Risk
Management Implications
• Shocks / disasters still Number of deaths & affected people (in
‘000)
large in magnitude, but:
Drought Total number of Total number of
• While disasters continue to
affect millions of Ethiopians Year deaths people affected
occasionally, they lead to far 1983 300 7,750
fewer deaths;
• In 1973/74 famine, 300 thousand 1973 100 3,000
people out of 7.5 million affected
people died. 1965 2 8,000
• By contrast, although 12.6 1987 0.4 7,000
million people were affected in
2002/03, there were no reported 1989 N/A 6,500
deaths due to the crisis
1999 N/A 4,900
• These are significant
accomplishments; and the credit 2003 N/A 12,600
goes to having right kind of
policies and institutions in place. 2005 N/A 2,600
2008 N/A 6,400
40

37. Disaster Response and Emergency Risk
Management Implications
• Food aid flow to the 16
country is declining, but: 14
• Food aid flow to Ethiopia has 12
declined considerably in 10
recent years
8
• However, food aid has played
6
significant roles in the years
of droughts /other shocks. 4
• This was the case in 1999- 2
2000 and then again in 0
2002/03, when the country
1998
2005
1996
1997
1999
2000
2001
2002
2003
2004
2006
2007
2008
was hit by severe droughts. Food Aid as % of production
Aid as % of consumption
41

38. Patterns in Foodgrain Consumption
and Calorie Intake
• General
• Food consumption patterns are diverse in Ethiopia
• no dominant staple in the national diet;
• location, culture, and incomes matter;
• Some features
• Teff is consumed much more frequently in urban areas
• Enset, maize, and sorghum are predominantly rural
• Afar, Somale, Harari, and SNNPR consume the lowest amounts of cereals.

39. Patterns in Foodgrain Consumption
and Calorie Intake
• Calories
• Calorie consumption across Ethiopia is low;
• A high percentage of calorie consumption is coming from cereals;
• Per capita intake of calories varies:
• across rural and urban areas;
• across regions;
• across agro-ecological area;
• Across socioeconomic groups.

40. Patterns in Foodgrain Consumption
and Calorie Intake
Expenditure Shares
• Food expenditures’ share in total expenditures remains fairly high, but has been
declining over time;
• The proportion of income spent on (raw) cereals is high, and that of processed
cereals and non-cereal food is low;
Changes
• Calorie consumption is growing in Ethiopia – 1995/96 – 2004/05
• Case of Teff
Implications
• Inter-sectoral linkages

41. Patterns in Foodgrain Consumption
and Calorie Intake
45

42. Patterns in Foodgrain Consumption
and Calorie Intake
46

43. Patterns in Foodgrain Consumption and Calorie Intake
47

44. Targeting Food Security Interventions in
Ethiopia: The Productive Safety Net Programme
The PSNP is targeted towards households that are both food insecure
and poor, in terms of total household resources.
PSNP-PW:
• targeted the poor for participation, rather than food insecure
households per se;
• poverty is highly correlated with food insecurity - food insecure
households were targeted as a consequence;
Increasing community understanding of targeting criteria:
• households’ identification of poverty-related factors as a reason why
households are selected for public works improved;
• growing understanding that the elderly and disabled are the intended
recipients of direct support;
• family or friendship connections were not reported as major factors
affecting a household’s likelihood to receive PW or DS
48

45. Targeting Food Security Interventions in
Ethiopia: The Productive Safety Net Programme
• the PSNP is well-targeted:
• progressive;
• better targeted than the average global safety net program;
• better targeted than any of the African safety net programs
reported in Coady, Grosh and Hoddinott (2004).
• These findings suggest that:
• the PSNP has been able to target resources to the poorest
households in rural areas using a combination of geographic and
community-based targeting.
• the need for continuous capacity building and follow-up from
higher level implementers.
49

46. Implications of Accelerated Agricultural Growth
for Household Incomes and Poverty in Ethiopia:
A General Equilibrium Analysis
EDRI Social Accounting Matrix 2004/05
• Constructed as part of a project with the University of
Sussex (w/support of IFPRI-ESSP2)
• 69 production sectors (24 agricultural, 14 agricultural
processing, 20 other industry, 11 services)
• Regional SAM based on the “3 Ethiopias”
• Rainfall sufficient, drought prone, pastoralist
• Rainfall sufficient AEZ disaggregated to humid
lowlands, enset-based systems, and other (highland) rainfall
sufficient areas
• Poor and non-poor groups in rural and urban areas

47. Agro-ecological Zones
“Three” Ethiopias

48. Baseline Scenario Assumptions
• Agriculture
• Land cultivated for each crop follows medium-term trends:
total land cultivated increases 2.6% per year, 2009-2015
• Land growth varies across region (1.2% per year in rainfall
sufficient areas, 3.2% per year in drought-prone
areas, 3.7% per year in pastoralist areas)
• Crop yield increases account for one-third of the crop
production growth
• Overall agricultural GDP growth: 3.8%/year
• Note: population growth rate is 3.0 percent/year
• Non-agricultural output growth based on historical
medium-term trends:
• Manufacturing: 8.1% per year
• Services: 8.1% per year

49. Ethiopia:
Targeting yield/productivity increases
2.50
Accelerated yield growth target,
2015
2.00 Expected yields under baseline
scenario, 2015
Crop yield (mt/ha)
1.50 Current yields, 2005
1.00
0.50
0.00
Maize
Chat
Wheat
Tobacco
Sorghum
Flowers
Cotton
Teff
Oilseeds
Coffee
Barley

50. Simulated
Agricultural Growth Outcomes

51. Simulated Poverty Outcomes

52. Model Conclusions
• The simulations indicate that agricultural growth
does have significant poverty-reducing effects.
– This indicates that the overall Agriculture
Development-Led Industrialization (ADLI)
strategy, as well as the basic CAADP and AGP
programs, are sound approaches
• Complementary non-agricultural growth (in addition
to agricultural growth linkages) can have a marginal
impact on poverty equal in size to that of accelerated
agricultural growth

53. The Evolving Role of Agriculture
in Ethiopia’s Economic Development
• Ethiopia is changing at an accelerating pace
• Road networks, telecommunications, electricity
generation, urbanization
• Large-scale public investments in agriculture in 1990s and 2000s
• Strong evidence that agricultural production has increased
(independent ERHS surveys; stable real prices in context of
increased incomes, population)
• Substantial economic growth and reductions in malnutrition
• To a large extent, the evidence suggests that Agriculture
Development Led Industrialization (ADLI) adopted in the late
1990s succeeded
57

54. The Evolving Role of Agriculture
in Ethiopia’s Economic Development
• However, there are increasing concerns about reliance on
agriculture as a major source of growth in the future
• Land and water constraints in the highlands and drought-
prone areas
• Without continued growth in non-agricultural sectors, there
may be insufficient demand for any increased supply of
agricultural products
• Urbanization and the normal structural shift in production
from agriculture to industry and services will require public
and private investments in non-agricultural capital
58

55. Major Challenges
for Agricultural and Food Policy
• Sustaining Growth in Crop and Livestock Production
• Public and private Investments in productivity-increasing technologies are
needed
• Problems in seed multiplication and distribution must be overcome
• Chemical fertilizer use must increase
• Increasing Market Efficiency
• Large increase in domestic demand for marketed staple foods
• Promote competition in markets, especially for imported products (e.g.
fertilizer) and allow private sector to compete with cooperatives
• Providing Effective Safety Nets
• PSNP has proven successful in targeting the poor with cash and food
transfers; complementary programs to build household assets and
sustainable livelihoods are essential
• Strengthen a decentralized response system to emergencies to improve
timeliness of response to serious hunger threats
• Allow private sector imports to supplement domestic supplies in times of
shortage
59

56. Major Challenges
for Agricultural and Food Policy
• Maintaining Macroeconomic Incentives and Stability
• Rapid overall domestic inflation from 2007 to 2009 reduced food
security, especially for urban households with fixed or slowly adjusting
salaries
• Appreciation of the real exchange rate worsened incentives for
production of tradable goods (including export crops)
• Incentives were largely restored through sharp restrictions on domestic
credit in 2009 and other measures that reduced inflation, and the
September 2010 devaluation of the Birr
• Macroeconomic stability will be crucial for growth and poverty reduction
• Managing the Rural-Urban Transformation
• Urbanization rates remain low (less than 20 percent) in spite of recent
increases
• Measures that facilitate sale of land or avoid loss of land rights for those
who migrate could accelerate rural-urban migration
• Achieving an appropriate balance of rural and urban public investments
can facilitate both economic growth and overall poverty reduction 60

57. Conclusions
• Ethiopia has made enormous progress in food security and
poverty reduction since the famines of the 1970s and 1980s
• Significant variations in agro-ecology, population densities and
infrastructure make Ethiopia’s agricultural and food economy
complex and necessitate a regional approach to agricultural
development and food security
• Continued progress will require both public and private
investments and appropriate agricultural and economic policies
that provide incentives for adoption of technology, enhance
market efficiency and provide effective safety nets
61

58. Ethiopia Strategy Support Program
Capacity Building
GIS Training 2009
CGE Paper Authors
EEA Conference 2010
 CGE Course
Ceremony 2009