CHAPTER 2 Ethiopian Cooperatives Agriculture, Commercialization, and Public Policy A
griculture is the backbone of Ethiopia’s economy, accounting for 40 percent of GDP, 85 percent of employment, and 90 percent of export earnings. Furthermore, agriculture in Ethiopia is largely a smallholder phenomenon: as of 2001/02, about 37 percent of the farming households in the country cultivate less than 0.5 hectares and about 87 percent cultivate less than 2 hectares; only 0.9 percent cultivate more than 5 hectares (CSA 2003). Consequently, the agriculture sector in Ethiopia is host to 90 percent of the country’s poor. Cereals (mainly teff, wheat, maize, barley, sorghum, and millet) constitute the most important crop for smallholder livelihoods in Ethiopia. Some 98 percent of all cereals produced in Ethiopia are produced by small-scale farmers. Cereals are cultivated on 75 percent of cropped land and represent 69 percent of total crop production (Gabre-Madhin 2001).1 Cereal production by smallholders is primarily for subsistence in Ethiopia. Only 28 percent of the country’s total agricultural output and 30 percent of smallholder grain production is marketed (Dessalegn, Jayne, and Shaffer 1998; CSA 2003). More recent estimates suggest that among all teff producers, only 38 percent sell part or all of their production; other estimates suggest even lower figures for other cereals (Alemu, Gabre-Madhin, and Dejene 2006). Accordingly, the Government of Ethiopia’s (GoE’s) economic growth strat- egy, Agriculture Development–Led Industrialization, has placed high priority since the early 1990s on accelerating agricultural growth through the com- mercialization of smallholder production (FDRE 2002, 2005). The strategy has driven the introduction of policies to promote (1) a more supportive macro- economic framework for growth and development; (2) liberalized markets for agricultural products; and (3) a strong extension- and credit-led push to
1 In terms of value, the share of permanent crops is greater, given their higher market prices. This is particularly true of coffee and khat. Figures in this paragraph are computed from data generated by the Ethiopian Sample Enumeration Survey 2001/02 (CSA 2003).
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