Agricultural growth in Ethiopia (2004-2014): Evidence and drivers

ETHIOPIAN DEVELOPMENT
RESEARCH INSTITUTE
Agricultural growth in Ethiopia (2004-2014):
Evidence and drivers
Fantu Bachewe, Guush Berhane, Bart Minten, and Alemayehu S. Taffesse
IFPRI ESSP
EDRI
Addis Ababa, Ethiopia
1

2
1. Introduction
• Ethiopia one of the fastest growing economies in the world
• Fast growth by agriculture as well
• Important lessons to be learnt
• Purpose of the analysis:
- Explore the rapid change in Ethiopia’s agriculture (2004-2014)
- Provide evidence on changes in adoption of improved technology
- Identify major drivers of this modernization process

3
2. Ethiopia’s agricultural sector
During the 2004/5-2013/14 period:
• Growth real GDP 10.7%; per capita GDP growth 7.9%
• Growth agriculture 7.6%; industry 16%; services 13%
Agriculture,
47%
Industry,
10%
Services,
44%
CONTRIBUTION TO REAL GDP
Agriculture,
3.6% (34%)
Industry,
1.6%
(15%)
Services,
5.5% (51%)
CONTRIBUTION TO GDP
GROWTH

4
2. Ethiopia’s agricultural sector
• Crop sector is the most important in agriculture: 70%
• Within crop sector, cereals 63% of real value of crop output
• Within crop sector, smallholders dominate (94% of cultivated land);
meher dominate (10% of land cultivated in belg); grains dominate
(96% of crop land)
Barley
7% Maize
13%
Sorghum
10%
Teff
19%
Wheat
12%
Pulses
11%Oilseeds
5%
Vegetables
4%
Root crops
5%
Chat
3%
Coffee
6%
Other crops
5%

5
3. Growth of agriculture
1. National data
• based on surveys conducted annually on 45,000 HHs
• output grew 9.4% annually; area cultivated grew by 27% during the
decade (2.7% annual growth); cereal yields increased by 7% per year
Growth in area cultivated and yield of grains
4.1 3.9 3.8
1.8
2.7 2.6 2.5
1.7
0.8
7.9 7.6
3.8 4.3
2.9
9.7
4.8
4.1
7.9
0
2
4
6
8
10
12
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
Percent
area yield

6
Contribution to crop
output growth (2004/05 –
2013/14), (%)
Labor
31%
Land
13%
Fertilizer
8%
Improved seeds
12%
Returns to scale
8%
Rural roads
3%
∆ TFP
22%
Others
3%
Annual contribution to crop
output growth, (2004/05 –
2013/14)
2. Growth decomposition
• Labor and TFP growth most important factors; however declining
• Modern inputs contributed 21%; becoming more important
Source of
change
2006/
2007
2009/
2010
2013/
2014
Average
Output (∆Q/Q) 11 8.7 6.6 8.8
Labor 2.2 3.2 1.5 2.6
Land 1.1 1.4 0.8 1.1
Fertilizer 0.2 0.03 1.0 0.7
Improved seed 0.4 2.5 0.4 1.0
Infrast. & RTS 0.5 0.5 1.1 1.2
Others 0.3 0.3 0.2 0.3
Inputs (total) 4.2 7.4 3.9 5.6
Changes in TFP 6.3 0.2 1.5 2.3

7
3. Complementary data
• Show similar picture but a bit slower growth
• Data however not nationally representative
Estimates of cereal yield growth from alternative datasets, %
Survey CSA Ad hoc surveys ERHS CSA
Period 2005-2014 2008-2013 2004 – 2009 1997-2012
Number of
surveys
Annual 8 surveys 2 surveys Annual
Teff 5.8 4.7 1.7 4.2
Maize 6.2 6.2 0.4 3.4
Barley 4.8 6.8 10.1 -
Wheat 5.4 6.3 3.6 4.0
Sorghum 5.4 -1.8 - 4.5

8
4. International perspective
• Ethiopia started from a low base
• Narrowed the gap but still catching up to do
Maize and wheat yield levels (mt/ha) and growth rates,
selected countries, 2004-2013
Period China Egypt Ethiopia Kenya USA
Maize
2004 5.1 7.9 1.6 1.9 10.1
2013 6.2 7.2 3.2 1.6 10.0
Annual average growth (%) 2.3 -1.0 11.1 -1.8 -0.1
Wheat
2004 4.3 6.6 1.5 2.5 2.9
2013 5.1 6.7 2.4 3.0 3.2
Annual average growth (%) 2.1 0.2 6.8 2.5 1.0

9
4. Land intensification
• Land and labor expansion important contributors to ag. growth
• Labor grew faster than area (39% vs. 27%)
• Average landholding size declined annually by 1.4 percent
• More intensive labor use per unit of land
• Young farmers cultivate less land than previous generations
• Family labor use per hectare increases with increasing land pressure

10
• Technological change driver of fast agricultural growth of Asian
countries in the 1960s and 1970s - the Green Revolution
• Significant effort to replicate revolution in Africa, particularly Ethiopia
• Ethiopia implemented several cereal intensification programs
promoting the adoption of modern technologies since mid 1990s
• At the center has been the push for adoption of chemical fertilizer
and improved seed packages by smallholders
• Look at situation of modern inputs further on

11
1. Chemical fertilizer
• Chemical fertilizer use doubled over the last decade
• Fertilizer imports & use 124% & 144% higher in 2013/14 than 2004/5
Figure 3—Total fertilizer use and imports, (‘000 mt)
200
300
400
500
600
700
800
900
1000
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
Thousandsofmt
Used Imported

12
1. Chemical fertilizer
• Most fertilizer use on cereals
• Proportion of area and farmers using fertilizer grew by 50% or higher
Proportions of cereal farmers using fertilizer and cereal area
applied with fertilizer
46.3 47.9
75.6
36.0
29.5
53.1
0
10
20
30
40
50
60
70
80
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
Proportionofholders/areaapplied
Holders (%) Area applied (%)

13
2. Improved seeds
• More improved seeds developed and released in last decade than in
30 years before
• In last decade, 54 of 87 improved wheat seeds released; 33 of 45
improved maize seeds
• Lower for other cereals
Improved cereals varieties released during 1970-2011
0
20
40
60
80
100
Wheat Maize Barley Sorghum Teff
Numberofimproved
varieties
2000-2011
1970-2000

14
2. Improved seeds
• Share of cereals farmers using improved seeds more than doubled
• Adoption rates of improved seeds highest for maize and wheat
Proportion of improved seed applying farmers (%)
Crop 2004/05 2009/10 2013/14
Barley 0.8 1.2 0.8
Maize 11.6 15.7 27.6
Sorghum 0.9 1.8 0.4
Teff 1.0 2.4 4.6
Wheat 4.5 4.1 7.7
Cereals 10.1 11.3 21.5

15
2. Improved seeds
• Ethiopian Seed Enterprise (ESE) has been key player. In the past,
consistent shortage of base seeds.
• In the last decade, increasing decentralization in seed distribution
(now more than 30 private, agricultural cooperatives, and parastatal
seed producers)
• Improvement significant but CSA data may underestimate adoption
• Issues of hybrid seeds versus open-pollinated ones
• DNA fingerprinting exercises suggest higher levels of adoption of
improved varieties (3 zones: 1/ wheat: 62% stated; 96 measured;
2/ maize: 56% reported; 64% measured)

16
2. Improved seeds
• The ‘quncho’ story in teff illustrates some of the fast changes
• Quncho combination of preferred white color and high yields
• Released in mid-2000s and adopted by 32% of teff farmers in 2012
• Especially adopted in those areas with better access
0
20406080
%offarmers
0 50 100 150
Transport costs to Addis (Birr/quintal)
Improved seed at survey Improved seed 10 years before

17
3. Other modern and improved practices
• CSA indicate irrigated area low and has not changed
• However, irrigation often used in belg and commercial/para-statal
farms
• Area under irrigation overall about 5% of cultivated area
• Fast growth in agro-chemical use
Area under irrigation and pesticide use
Variable and data source 2004/05 2009/10 2012/13
Irrigation
1. Irrigated area (‘000 ha, only meher) - CSA reports 154 152
Proportion of area irrigated (meher, %) 0.8 1.0 0.8
2. Irrigated area (‘000 ha) - MoA Annual GTP progress reports 853 1830
Proportion of pesticides applied crop area (percent)
All crops 13.0 12.4 21.5
Cereals 16.7 13.4 26.1
Pulses 0.8 9.6 6.5
Oilseeds 1.1 8.7 2.8

18
• Important changes in adoption of modern agricultural technologies
• See increasing modernization and intensification
• Especially changes in modern input adoption in the last 5 years
• First five years, agricultural growth more based on area expansion
and TFP growth

19
5. Drivers for change
1. Identifying drivers
Two criteria used to identify drivers:
i. Linked with significantly increased adoption of improved practices
ii. Major positive changes over the last decade
• Factors associated significantly with modern input adoption :
1. Agricultural extension
2. Connectivity
3. Education
4. Incentives

20
1. Identifying drivers
• A probit analysis using primary data (2008/9 CSA data)
- Associates of improved seeds and/or chemical fertilizer adoption
- Four crops: teff, maize, wheat, and barley
Variables Barley Maize Teff Wheat
Received extension visit 0.3276*** 0.5605*** 0.3589*** 0.3744***
Travel time to nearest city -0.0153*** -0.0035 -0.0134** -0.0201***
Education (highest grade) 0.0103*** 0.0049*** 0.0074*** 0.0073***
Access to credit 0.0310* 0.0465*** 0.1163*** 0.0884***
Others
Observations 18,913 38,390 31,247 19,619

21
2. Evidence on changes in drivers
- Agriculture has been at the centre of transformation in Ethiopia
(since ALDI strategy)
- Shown in expenditures on agriculture in last decade (compared to
other African countries)
1 1 1 2 2 2 2 2 3 3 3 3 3 3 3 3 3 3 3 3 3 4 4 4 4 4 5 5 5 6 6 6 6 6 6 6 7 7 7 7 8 8 8 9 101010
1516
18
0
5
10
15
20
25
GNQ
GNB
MAR
EGY
ZAF
SSD
LSO
SWZ
CAF
CPV
MUS
DJI
BWA
COD
NAM
SYC
GHA
NGA
KEN
CIV
SDN
UGA
MOZ
DZA
AGO
STP
MRT
BDI
TUN
TZA
ERI
CMR
GMB
TCD
BEN
SLE
GIN
RWA
TGO
LBR
SEN
NER
ZMB
MLI
ETH
COG
BFA
MDG
ZWE
MWI
2008-2013 10% target
1 1 2 4 2 1 3 4 2
3
3 2 4 1 5 4 2 5 4 3
6
3
6
4 2 5
6
4
7 6 5
4
7
6 6
2
9
4
5
2
7
18
9
12
14
2
10
6
18
10
0
5
10
15
20
25
GNQ
GNB
MAR
EGY
ZAF
SSD
LSO
SWZ
CAF
CPV
MUS
DJI
BWA
COD
NAM
SYC
GHA
NGA
KEN
CIV
SDN
UGA
MOZ
DZA
AGO
STP
MRT
BDI
TUN
TZA
ERI
CMR
GMB
TCD
BEN
SLE
GIN
RWA
TGO
LBR
SEN
NER
ZMB
MLI
ETH
COG
BFA
MDG
ZWE
MWI
2003-2008 10% target

22
(a) Changes in informational efficiency and the role of extension workers
• Considerable investment into public agricultural extension system
• By 2009, 60,000 DAs trained
• Ethiopia one of highest extension agent-to-farmer ratios in the world
Extension agent-to-farmer ratio
21
16
6
4 3 2
0
5
10
15
20
25
Ethiopia China Indonesia Tanzania Nigeria India

23
(a) Changes in informational efficiency and the role of extension
workers
• These investments show up in the CSA data
• 70% of famers stated to be covered by advisory services in 2013/14
32.7
50.8 56.2
63.3
73.6
0
10
20
30
40
50
60
70
80
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
%offarmerswithadvisory
services
Share of farmers covered through public extension

24
(b) Changes in input and output market efficiency
• Important investments in roads
• Leading to better connectivity in the country
1996/1997 2010/2011

25
• Population within 3 hours of city of more than 50,000 people
- In 1998 15%
- 47% in 2011
Population connected to a city of at least 50,000 people, (%)
0%
20%
40%
60%
80%
100%
1997/98 2006/07 2010/11
Percentpopulationconnected
Access > 10 hours
Access 5 - 10 hours
Access 3 - 5 hours
Access 1 - 3 hours
Access < 1 hour

26
• Strong link between connectivity and adoption of improved
technologies
Chemical fertilizer Herbicides
0
20406080
100
%offarmers
0 50 100 150
Herbicides at survey Herbicides 10 years before
0
.5
1
1.5
2
0 50 100 150
DAP+urea at survey DAP+urea 10 years before

27
Output/fertilizer price ratio (left) and export price indices (right)
-
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Teff
Wheat
Barley
Sorghum
Maize
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
Priceindex
Coffee
Oilseeds
Pulses
Chat
• Improved incentives:
- Output/fertilizer price of main cereals twice as high 2012 than 2004
- Real prices of oilseeds, pulses & coffee increased significantly over
the last decade

28
(c) Changes in human capital accumulation and labor
• Significant strides for universal primary education, esp. in rural areas
• Share of illiterate farmers declined annually at 1.8%
40
45
50
55
60
65
70
0
2
4
6
8
10
12
14
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
Proportionilliterate(%)
Proportioneducated(%)
Illiterate Literate (informal)
Grades 1-3 Grades 4-6

29
(c) Changes in human capital accumulation and labor
• Tightening of the labor markets leads to increasing push for adoption
of labor-saving technologies (such as herbicides)
Rural real wages (2003/04-2013/14)
1
1.1
1.2
1.3
1.4
1.5
1.6
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
USD/day

30
(d) Other factors
• Weather was favourable over the period 2004-2013
Patterns in total rainfall 2004 – 2013 (meher/belg/slack)
0
200
400
600
800
1000
1200
1400
1600
1800
Belg2004
Meher2004
Slack2004
Belg2005
Meher2005
Slack2005
Belg2006
Meher2006
Slack2006
Belg2007
Meher2007
Slack2007
Belg2008
Meher2008
Slack2008
Belg2009
Meher2009
Slack2009
Belg2010
Meher2010
Slack2010
Belg2011
Meher2011
Slack2011
Belg2012
Meher2012
Slack2012
Belg2013
Meher2013
Slack2013
Sumofrainfall(millimeters)
Tigray Amhara Oromiya SNNP

31
(d) Other factors
• Access to credit: 1/ MFI has been expanding quickly over the last 10
years; 2/ CSA data do not show changes in access to credit by farmers
(between 22% and 28%)
Number of active borrowers of micro-finance institutions
0.0
1.0
2.0
3.0
4.0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Millionborrowers

32
(d) Other factors
• Land certification: has contributed to more secure property rights
(happened mostly before the period under study); this leads to more
investments and more active land rental markets
• Risk situation might have improved:
1/ Returns to fertilizer better; investments therefore less risky
2/ functioning PSNP net
3/ farmers are richer and have more assets and better able to
self-insure

33
6. Conclusions
• Significant changes in Ethiopia’s agriculture in the last decade
• Total output increased more than doubled driven partly by:
- Area expansion and an increase in number of farmers
- Rapid uptake of improved technologies
- Growth in total factor productivity (TFP)
• Drivers of modern inputs adoption multiple, most importantly
agricultural extension, improved input and output markets, more
educated farmers and incentives
• Study inferred plausible pathways to growth and triangulated findings

34
6. Conclusions
• Issues that need further investigation:
i. Yield levels differ across data sources
• Survey methods differ
• Experiments needed
ii. Cereal output growth higher than consumption growth in last decade
• Further analysis on use issues needed
• Real prices of cereals have not fallen, which is expected if supply
exceeds demand growth
iii. Land use changes
• Fallow land in 2013/14 was half its size in 2003/4
• Although deforestation known to occur, data on recent rates
unavailable

35
6. Conclusions
• Further challenges:
1/ Sustainable intensification central, with further adoption of modern
inputs required. Soil maps enormous potential but distribution system
of fertilizers important as well. Further stimulation of the seed sector
enormously important.
2/ Adjustment to climate change
3/ Agriculture important improvements; however, its link with
nutritional outcomes should be improved; most growth happened in
cereal sector; other products will become increasingly demanded
4/ Gender issues; shown that increasing empowerment of women leads
to nutritional and agricultural pay-offs
5/ Mechanization might increasingly become important, especially with
tightening labor markets

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