Ethiopia has registered remarkable economic growth in the last decade, largely attributable to growth in its agriculture sector (Bachewe et al., 2017; Hill & Tsehaye, 2014). Measured in constant market prices, Ethiopia has seen significantly faster and more stable GDP growth rate since 2004. The country’s growth has been spearheaded by sustained public investment in agriculture and associated infrastructure speared by a “developmental” model of government with the highest commitment of the top leadership to achieve it.
A recent study by Bachewe et al. (2017) indicates three major drivers explain Ethiopia’s rapid growth: first, a rapid physical capital accumulation led by substantial expansion of public investment. Second, sustained growth in agricultural productivity and modernization supported by continued investment in a large public extension structure that extends from the federal to regions to kebeles—the smallest administrative structures in the rural areas. Third, a substantial surge in the service sector motivated by urbanization and an emerging urban middle class that in turn fueled growing demand for agricultural produce that further boosted productivity, although the service sector’s contribution to GDP exceeded that of the agriculture sector in the same period. A relatively stable political and macroeconomic environment in the same decade enabled the country to exploit the benefits from these drivers.
An important aspect of the changes that occurred in Ethiopia in the last decade has been the prime focus given to agriculture. The Government of Ethiopia placed agriculture at the center of its development policy agenda ever since the EPRDF government assumed power in 1991. This brought an important element of political commitment at the highest echelons of government to the sector. The Agriculture Development Led Industrialization (ADLI) strategy was developed in the mid-1990s to serve as a roadmap to transform smallholder agriculture. Rural education, health, infrastructure, agricultural research, and agricultural extension services were among its top priorities (Berhane et al., 2018). Ethiopia is one of the only four African countries to have implemented the CAADP agreement of a 10% target of annual government expenditures earmarked for agriculture over the 2003–2013 period (Benin, 2014). In fact, Ethiopia had started implementing the agenda in CAADP way before CAADP was initiated. More recently, the country’s transformation agenda elaborates its ambitious five-year Growth and Transformation Plan (GTP), emphasizing the agriculture sector, in general, and the agricultural extension system, in particular. Investments made in the early years were continued, or even strengthened as public funding remains critical to keep the extension system in place in the face of international funding cuts to the sector.
Extension services and farmer training centers
One of the critical investments made by the government to transform agriculture has been on its publicly funded extension system. This system is hailed as one of the largest and most extensive public extension systems in Africa, at least, in terms of extension agent–farmer ratio. In 2010, the extension agent–farmer ratio was estimated at 1 agent per 476 farmers—equivalent to 21 extension agents per 10,000 farmers (Davis et al., 2010). Comparable figures for Tanzania stood at 2,500 farmers per agent—in other words, 4 agents per 10,000 farmers, and 16 agents per 10,000 farmers in 15 AFRICA AGRICULTURE STATUS REPORT 2018
China. By 2016/2017, the Ethiopia estimate went up to 46 agents per 10,000 farmers. In sum, by 2017 around 72,000 extension agents were deployed around the country. This means, there were 3–4 extension agents per kebele specializing in crop production, livestock, natural resource management, irrigation agriculture, and veterinary services. Moreover, the country has instituted about 15,000 farmer training centers throughout the rural areas, one in each kebele, although, according to some studies, about 30% of these centers are fully functional (Davis et al., 2010). Ethiopia has also spent significant resources on agricultural research (Beintema et al., 2016). Research has helped generate improved local varieties, including on crop seeds like Teff that are unique to Ethiopia and receive limited international funding resources (Minten et al., 2013; Minten et al., 2018).
A recent study found that access to an extension system has significantly increased adoption of modern inputs such as chemical fertilizers and improved seeds (Berhane et al., 2018). However, the impact on productivity has not been as high as expected mainly because the extension system has largely focused on facilitating distribution of modern inputs and is yet to become knowledge-based (Berhane et al., 2018).
Ethiopia’s soils are among the most nutrient depleted in Africa and fertilizer application has been one of the lowest, despite the introduction of chemical fertilizers as early as the 1960s. However, this picture has changed dramatically in the last decade. Fertilizer imports and their use have dramatically increased, nearly doubling from 2.7 million hectares in 2004/2005 to 5.2 million hectares in 2013/2014. Fertilizer use on other crops has also shown significant increases over the same period (Bachewe et al., 2017). The proportion of cereal-growing smallholders using fertilizers has dramatically increased from 46% in 2004/2005 to 76% in 2013/2014; and the proportion of cereal area where fertilizer has been applied has increased from 36% in 2004/2005 to 53% in 2013/2014 .
Improved seed, irrigation and pesticides
Access to improved seed varieties remains a key challenge of agricultural transformation in Africa, largely due to the complexities involved to develop the sector. Despite the challenges, Ethiopia has shown some progress in this sector as well. Over the decade discussed here, the number of improved seed varieties released to farmers has increased rapidly, mostly with local capabilities of research and seed multiplication structures. However, this increase has been from a rather low base and needs to be taken cautiously. Bachewe et al. (2017) indicate that improved seed release rate has been particularly dynamic for wheat and lower for other crops. An estimated 54 of the 87 improved wheat varieties available in Ethiopia were developed and released in the period 2001–2011. While adoption rates of improved seed varieties by farmers are low overall, the proportion of farmers using improved seed, however, has seen significant improvements, more than doubling over the last decade, from 10% of cereal producers using improved seed in 2004/2005 to 21% in 2013/2014. Large increases in the proportion of farmers adopting improved seed are noted for maize producers, in particular. Studies suggest an important synergistic complementarity exists between improved seed varieties, use of chemical fertilizers and irrigation (Abay et al., 2018). However, access to irrigation is low in Ethiopia and has not changed significantly in the last decade for any crop categories during the major meher season (Bachewe et al., 2017). Perhaps future increases in the use of irrigation are likely to increase use of chemical fertilizers and improved seeds. Pesticide use is also emerging in Ethiopia. Specifically, pesticides use has increased from 13% of the crop area in 2004/2005 to 21% in 2013/2014.
In the early years of the decade, the government focused on crop production and productivity as the priority was to mitigate the pressing food insecurity situation. Thus, all agricultural investments and intervention efforts were geared towards improving the productivity of the main cereal crops in the country. As a result, productivity gains were much higher in this sector than in others, for example, the cash crops or horticulture sub-sectors. Ensuing to the massive efforts, crop production has doubled from 119 million quintals in 2004/2005 to 266 million quintals in 2015/2016).
These figures are similar to those of Bachewe et al. (2017) updated for an additional year (2015/2016) for which data are available. The doubling of production is explained by, among others, increases in yield, cultivated area expansion, and increases in total factor productivity (TFP)— productivity gains achieved over and above the productivity contributions of each input applied. In the period considered, cultivated area has expanded by 28% while yield has increased by 76%. Note that cultivated area expansion has declined in recent years as available land dwindles in the highlands of Ethiopia.
Bachewe et al. (2017) decompose the sources of agriculture output growth in 2004–2014. Appendix Figure 1.4 presents the results from the decomposition (see Bachewe et al. (2017) for details of the decomposition model). They find that agricultural labor (31%) contributes the largest to agricultural growth in the decade followed by TFP (22%), land (13%), and improved seeds (12%). Use of chemical fertilizers and investments in rural roads connecting villages with feeder roads also contribute significantly (8% each).
Consistent with these findings, Benin et al. (2011) document that Ethiopia has the largest share of total agricultural value-added percentage (2003–2010) among countries in the East Africa region followed by Sudan and Tanzania. In sum, these findings depict Ethiopia’s favorable progress in agricultural growth in the last decade, following its concerted and coordinated development efforts that involved critical commitments from higher national policy making circles and its development partners.
Ethiopia has achieved substantial progress in triggering and generating sustained agricultural growth for more than a decade. At the center of these favorable changes is an important political commitment that early on recognized the need to put agriculture at the center of its development agenda. This fundamentally shaped Ethiopia’s approach to addressing its age-old problems of structural bottlenecks for development. As such, the government envisioned overall development around an agriculture-first and then industrialize approach with a series of strategies put in place to execute this grand vision. As a result, Ethiopia and its development partners have invested heavily in putting in place not only development programs and projects but also the critical institutional and governance structures to implement them. This required instituting government structures, at times at the cost being too bureaucratic, and building new government and semi-government organizations tasked to achieve agricultural transformation.
The result has been remarkable. Agricultural productivity increase has been sustained for over a decade, owing to increased use of chemical fertilizer, improved seeds, and pesticides over the period 2004/2005 to 2013/2014. Adoption of these practices has doubled over the decade considered, suggesting that at least the first steps of modernization and intensification of agriculture in Ethiopia has started to take off (although from a low base). Uptake of these improved agricultural technologies occurred especially in the second half of the last decade, that is, between 2009/2010 and 2013/2014, with the observed agricultural growth being linked more with greater use of modern inputs in this period. In contrast, land expansion and TFP growth were the major contributing factors to agricultural growth in the period between 2004/2005 and 2009/2010.
Many have hailed Ethiopia’s public sector investment driven growth given that the country is a non-oil exporting country and its mineral resources are limited. The challenge is, however, whether Ethiopia would be able to sustain this progress in the coming decade and be able to fully transform its agriculture sector in the face of dwindling sources of growth that used to be low-hanging such as additional land for expansion. Additional productivity gains are likely to come with changes in approach including linking extension with research and making agricultural production increasingly knowledge driven, and focusing on the now relatively more important horticultural and livestock sectors.
Another important question is whether other African countries can replicate Ethiopia’s model of agriculture development. As noted elsewhere in the development literature, replication is unlikely to occur as country specificities limit such an exercise. However, lessons can be taken from the Ethiopian experience, one of which is the critical role governments can play in achieving progress in agriculture growth, and thus overall development.
Authors: Guush Berhane, Research Fellow; Fantu Bachewe, Research Coordinator; and Bart Minten, Senior Research Fellow and Programme Leader. International Food Policy Research Institute (IFPRI).