Agricultural Transformation Agenda Annual Report 2015-2016
Over the past decade, Ethiopia has made tremendous economic progress to become one of the fastest growing countries in the world. Between 2005 and 2015, the country’s GDP more than quadrupled from 12.4 billion USD to 55.6 billion USD, compared to the more moderate increase of 63% from 7.6 billion USD to 12.4 billion USD in the previous ten years (1995 to 2005). This growth was fueled by widespread institutional and policy reforms carried out by the Government of Ethiopia (GoE) across all major sectors (education, health, water, transport and telecommunications), but particularly in agriculture, which forms the backbone of the national economy. These reforms have gone a long way toward reducing the number of Ethiopians living in poverty: in 1995 nearly 79% of the population was living in poverty, a figure that has been slashed by more than half to 34% 20 years later.
This remarkable progress notwithstanding, Ethiopia’s agriculture sector remains paradoxically underdeveloped. As the largest component of the economy, agriculture employs a majority of the Ethiopian population. The majority of these are smallholder farmers practicing subsistence farming on less than one hectare of land. Furthermore, the country is not exploiting effectively its vast natural resources, as less than half of all arable land is currently under cultivation (15% versus 36% of total land area). Additionally, a majority of the agricultural activity is environmentally unsustainable and relies on annual rainfall despite the availability of abundant water sources.
Nonetheless, considerable and continued investments by the Government have succeeded in helping farmers increase their crop production and productivity, adopt yield-enhancing inputs, and leverage community organizations like cooperatives to aggregate produce so that farmers can benefit from economies of scale. Recent economic gains have also made Ethiopia an attractive destination for foreign direct investment. Coupled with the wide range of crops (over 100) that can be cultivated across the country’s varied agro-ecological zones and climates, there are plenty of reasons to be optimistic about future agricultural developments.
The GoE’s primary development target is to reach middle income country status by 2025, an aspiration that requires serious attention to be paid to the existing systemic bottlenecks hindering further agricultural growth. In addition, agriculture must serve as the basis for industrialization in order to reap maximum rewards from the country’s comparative advantages in producing raw materials. For example, coffee, sesame and vegetables – the country’s top agricultural exports – account for a combined 1.4 billion USD in annual earnings, but could fetch far more after agro-processing for value addition than they do as raw materials. Capitalizing on these agro-processing opportunities, however, requires addressing challenges along the entire value chain, including: limited transportation and processing infrastructure; insufficient aggregation and storage capacity; outdated farming techniques yielding lower quality outputs; low input use; and high vulnerability to climate change and extreme weather events, such as the 2015 El Niño phenomenon.
In light of these circumstances, the Government has set out clear objectives to transform the agriculture sector, and the economy as a whole, in successive Growth and Transformation Plans (GTPs).
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ATA Report 2015-16