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.
"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.