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ETHIOPIAN DEVELOPMENT
                                                   RESEARCH INSTITUTE




Agriculture and the Rural-...
Production and Real Prices of Major Cereals in
         Ethiopia, 2000/01 to 2008/09




Source: Dorosh and Ahmed (2009). ...
Agenda – Day 1
          Thursday, October 22, 2009
 Session I: Enhancing Agricultural Productivity
     Trends and Dete...
Increasing Cereal Productivity (1)
– Sample means from the CSA Agric Sample Survey data
   • Only about half of farmers us...
Increasing Cereal Productivity (2)
– ERHS yield trends (rainfall sufficient highland cereal-
  based AEZ)
   • Wheat: yiel...
Increasing Cereal Productivity (3)
– Fertilizer use is important but does not appear to
  induce significant growth
   • N...
Increasing Cereal Productivity (4)
– Should we be optimistic or pessimistic about
  increasing cereal yields?

   • John H...
Efficiency of Public Sector Spending on
                 Agriculture


– The top priority: CAPACITY STRENGTHENING

  • to ...
Rural Public Service Delivery
• Access to safe drinking water sources is very low
   – 32% of study households—which is su...
Rural Public Service Delivery (2)
• Evaluating agricultural extension services
   – Challenges in measuring farmers’ satis...
Experimental Evidence on Potential Effects of
     Weather Index – Based Insurance

– Methodology: Structure game on weath...
Agenda – Day 2
             Friday, October 23, 2009
 Session 3: Household Food Security
     Food Consumption Patterns ...
Analysis of Food Consumption Behavior from
             HICES 2004/05 Data
– Large variation in consumption patterns by
  ...
Results: Food Security Index 2000 - 2005
Although considerable improvement                        Ethiopia Food Security I...
Ethiopia Regional Food Security Index

– There has been substantial improvement in the
  index across all regions between ...
CGE Analysis of Production Shocks

– For each commodity, a region’s share of national
  commodity production and the share...
Real Wholesale Prices of Cereals (Addis)
                                              2004-09
                           ...
Food Security and the ERHS Data
• Interventions to enhance food security
  – Examples of successful micro-level interventi...
ERHS: Self-Reported Perceptions of Poverty




                                             19
Agenda – Day 2
        Friday, October 23, 2009 (cont.)
 Session 4: Agriculture and Beyond: Macro- and
  Micro- Analysis
...
Increasing Productivity of
 the Rural Non-farm Sector (Hand-Looms)
– Greater infrastructure is associated with more
  comp...
Implications of Foreign Exchange Rationing

– Foreign exchange rationing results in an
  appreciation of the real exchange...
Spatial Aspects of

Development Strategy



                       23
The Rural / Urban Landscape in Ethiopia

• Ethiopia has placed a primary emphasis on rural and agricultural led
  developm...
Travel Time and Agglomeration Index (urbanization)
Euclidean Distance (straight line distance) or distance in
  kilometers...
Travel time 1984




INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
                    ...
Travel time 1994




INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
                    ...
Travel time 2007




INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
                    ...
Results
           Percent population connected to a city of at least 50,000 people in 1994
Region                        ...
Results
         Travel Time: Percent point change in access to a city from 1994 to 2007
Region                    Access ...
Agglomeration Index: measuring urban expansion


• In order to standardize urbanization measurements, we use
  methodology...
Urban Expansion
                                        Agglomeration Index 1984
In 1984, Addis Ababa and other larger
cit...
Urban Expansion
                                           Agglomeration Index 1994
By 1994, Ethiopia’s cities grew, and t...
Urban Expansion
                                         Agglomeration Index 2007
By 2007, urban linkages were clearly
vis...
Population Density and Urbanization: 1994



Limited urbanization
(2.2%) is present in
SNNP region in 1994




           ...
Population Density and Urbanization: 2007



City growth, as well
as more networked
infrastructure
increased
urbanization ...
Population Density follows road infrastructure




                                                 37
Average Cropped Area per Holder

• The national
average cropped area
is 0.8 hectares

• Average cropped
land holdings are ...
Percent Fertilized Area: EASE 2001/02
                                   Average % of cereal crop area with inorganic fert...
Topography within Ethiopia is varied and fragmented
within and among regions.




                                        ...
Annual rainfall varies across space

Rainfall is highest
and least variable in
the western part of
the country and the
wes...
Agro-ecological Zones (AEZ’s):
                “3 Ethiopias” split into 5 AEZs




Source: 2005/06 EDRI Social Accounting ...
Agricultural Value Added
                 by Agro-Ecological Zone
                              bn birr (2005/06)         ...
• Ethiopia has placed a primary emphasis on rural and agricultural led
  development; nonetheless, the country continues t...
PSNP and AGP Selected Woredas
Several AGP woredas act as
‘bridges’ between PSNP
AGP ‘Bridge’ Woredas
Amhara         Misrak...
Implications for

Development Strategy



                       46
CAADP CGE Analysis
      Baseline Scenario Assumptions
• Agriculture
   – Land cultivated for each crop follows medium-ter...
Ethiopia:
               Agricultural Growth Outcomes
                          Initial              Average annual GDP gr...
Ethiopia: Impacts on Prices:
                                                      “All Agriculture” Scenario
            ...
Ethiopia: Impacts on Poverty
                                 40
                                       40.0
National pove...
Conclusions: Agricultural Growth
• Agricultural growth is desirable, achievable
  and would reduce poverty in half by 2015...
Implications for Development Strategy
• Differentiated growth strategy by regions may be best
  strategy
   – AGP in highe...
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Agriculture and the Rural-Urban Transformation in Ethiopia:Summary Findings and Implications for Development Strategy

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Agriculture and the Rural-Urban Transformation in Ethiopia:Summary Findings and Implications for Development Strategy

  1. 1. ETHIOPIAN DEVELOPMENT RESEARCH INSTITUTE Agriculture and the Rural-Urban Transformation in Ethiopia: Summary Findings and Implications for Development Strategy Paul Dorosh and Emily Schmidt ESSP – II Conference October 22-24, 2009 1
  2. 2. Production and Real Prices of Major Cereals in Ethiopia, 2000/01 to 2008/09 Source: Dorosh and Ahmed (2009). 2
  3. 3. Agenda – Day 1 Thursday, October 22, 2009  Session I: Enhancing Agricultural Productivity  Trends and Determinants of Agricultural Productivity (Alemayehu Seyoum Taffesse and others)  Public Expenditures on Agriculture (Alemayehu Geda)  Session 2: Rural Service Delivery and Weather Insurance  Agricultural Extension and Rural Water Supply (Tewodaj Mogues and team)  Weather Insurance for Farmers (Ruth Vargas Hill) 3
  4. 4. Increasing Cereal Productivity (1) – Sample means from the CSA Agric Sample Survey data • Only about half of farmers use fertilizer (teff, wheat and maize) • Farmers using both seed and fertilizer have moderately higher yields (this does not correct for agro-ecology, other inputs and many other factors) – Regression analysis of CSA Agric Sample Survey data • Average and marginal productivities are positive but relatively low • Using the regression coefficients, recent growth in teff and maize yields is not explained by fertilizer increase or other factors included in the regressions 4
  5. 5. Increasing Cereal Productivity (2) – ERHS yield trends (rainfall sufficient highland cereal- based AEZ) • Wheat: yield levels and (positive) trend is similar to Ag Sample Survey in this ecology • Maize and teff: much lower yields and opposite trend as compared to Ag Sample Survey data in the ecology – Methodology and data • National CSA Agric Sample Survey data: yields have actually increased • Regression analysis: Taking into account fertilizer and other factors, the increase in yields in the CSA data is still not explained • Agronomists: Need to take into account other factors: fertilizer is highly productive under the right conditions 5
  6. 6. Increasing Cereal Productivity (3) – Fertilizer use is important but does not appear to induce significant growth • Need to explore how fertilizer works – Fertilizer combined with improved seed is needed to push yields higher • Improved seeds is binding constraint – Extension services and credit availability have positive and significant impact on yields • How these effects are generated need to be established 6
  7. 7. Increasing Cereal Productivity (4) – Should we be optimistic or pessimistic about increasing cereal yields? • John Hoddinott’s musical conclusion: It’s a package deal (seed, fertilizer, extension) • Please stay for the debate this afternoon! 7
  8. 8. Efficiency of Public Sector Spending on Agriculture – The top priority: CAPACITY STRENGTHENING • to assess returns on proposed projects and • to better link micro-level planning to the macro- economic and sectoral planning 8
  9. 9. Rural Public Service Delivery • Access to safe drinking water sources is very low – 32% of study households—which is substantially higher than nation- wide rural access of 11% (2004, WDI 2008) – Weak accountability links may be a hindrance in translating rural residents priority concerns into policy priorities • Water committees, the lowest level service providers, are still insufficiently inclusive Take measures to make committees inclusive – or consider alternatives (Making it a responsibility of councils?) • Water committees not able to counter-act top-down facility provision. Draw on local knowledge and local considerations in selecting sites – more discretion. • Water committees have high discretion in setting rules, fees, etc., but unable to effectively use this discretion due to nearly no training on “soft skills” Train water committees on community relations 9
  10. 10. Rural Public Service Delivery (2) • Evaluating agricultural extension services – Challenges in measuring farmers’ satisfaction • High satisfaction rates in spite of low adoption rates • Need for further methodology development, especially if satisfaction data are to be used for management purposes • Strategies to better target female farmers – Linking extension with women’s groups – Increasing female staff among extension agents 10
  11. 11. Experimental Evidence on Potential Effects of Weather Index – Based Insurance – Methodology: Structure game on weather-index based insurance with farmers in SNNPR – Results suggest that providing insurance would increase farmer investments in agricultural inputs (e.g. fertilizer) – Discussant: Credit is a major constraint on farmer use of fertilizer (and potential use of insurance) 11
  12. 12. Agenda – Day 2 Friday, October 23, 2009  Session 3: Household Food Security  Food Consumption Patterns and their Determinants (Zeleka Paulos and Kibrom Taferre)  Trends in Household Food Security in Ethiopia (Emily Schmidt)  Panel Discussion  Implications of Price Shocks on Household Food Security (S. Robinson, Dirk Willenbockel, Hashid Ahmed, Paul Dorosh) 12
  13. 13. Analysis of Food Consumption Behavior from HICES 2004/05 Data – Large variation in consumption patterns by urban/rural and ecology; also by per capita expenditure level – Own-price elasticities of food are generally high: households are price responsive: change quantities consumed in response to price changes – Analysis of impacts of the effects of price increases must include these quantity adjustments to be accurate 13
  14. 14. Results: Food Security Index 2000 - 2005 Although considerable improvement Ethiopia Food Security Index: 2000 and 2005 occurred across all regions, all regions remain within the serious or very serious category: • Addis Ababa and Harari remain the top performers in the ERHI ranking and have progressed out of the very serious category. • SNNPR dramatically improved its score from 2000 to 2005, and is currently 4th in the ERHI ranking. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM 14
  15. 15. Ethiopia Regional Food Security Index – There has been substantial improvement in the index across all regions between 2000 and 2005 – When new nationally representative data are available (2010?), analysts can determine the extent to which these positive trends have continued 15
  16. 16. CGE Analysis of Production Shocks – For each commodity, a region’s share of national commodity production and the share of value added from that commodity in household income largely determine the magnitude of effects on national prices, incomes and consumption – Regional production shocks have limited effects on national markets; thus, local level monitoring is crucial for identifying and responding to sub- national production shocks 16
  17. 17. Real Wholesale Prices of Cereals (Addis) 2004-09 600 500 Price (Birr (2006)/quintal) 400 300 200 100 0 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-04 May-05 May-06 May-07 May-08 May-09 May-04 Month/Year Maize Mixed Teff Wheat Sorghum Source: Dorosh and Ahmed (2009). 17
  18. 18. Food Security and the ERHS Data • Interventions to enhance food security – Examples of successful micro-level interventions in irrigation exist – PSNP interventions have succeeded in providing a consumption floor; when combined with OFSP, there are significant increases in incomes, as well • Initial findings from the 2009 ERHS data – Substantial improvements in households’ perceived welfare, various household assets, child education (both boys and girls) – Further analysis coming soon! 18
  19. 19. ERHS: Self-Reported Perceptions of Poverty 19
  20. 20. Agenda – Day 2 Friday, October 23, 2009 (cont.)  Session 4: Agriculture and Beyond: Macro- and Micro- Analysis  Household Income and Welfare Dynamics: Evidence from the ERHS Surveys (John Hoddinott)  Constraints on the Rural Non-farm Economy: An Analysis of the Hand Loom Sector (Gezahegn Ayele and Lisa Moorman)  Real Exchange Rates, Growth and Income Distribution (Paul Dorosh, Sherman Robinson and Hashim Ahmed) 20
  21. 21. Increasing Productivity of the Rural Non-farm Sector (Hand-Looms) – Greater infrastructure is associated with more complex marketing networks and greater marketing linkages between rural and urban markets – Electricity enables longer working hours – Controlling for other factors, access to electricity (and other associated infrastructure) raises productivity of rural hand-loom enterprises by 55 percent relative to those without electricity 21
  22. 22. Implications of Foreign Exchange Rationing – Foreign exchange rationing results in an appreciation of the real exchange rate (in comparison to a policy of no rationing) – The major beneficiaries of this policy are those who receive economic rents generated from rationing – Incomes of net producers of tradable goods (including many farmers) are reduced 22
  23. 23. Spatial Aspects of Development Strategy 23
  24. 24. The Rural / Urban Landscape in Ethiopia • Ethiopia has placed a primary emphasis on rural and agricultural led development; nonetheless, the country continues to urbanize. • Improved transport within Ethiopia has facilitated greater mobility of capital, goods, and people, and incentivized population clustering along major transportation routes • Larger cities have emerged over the 3 census years, especially in Oromia, Amhara and SNNP regions. These cities represent large potential markets for agricultural products. • Barriers to increased production and farm incomes include: – Small size of land holdings – Dependence on rainfed agriculture / limited irrigation – Remoteness: limited access to market centers INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM 24
  25. 25. Travel Time and Agglomeration Index (urbanization) Euclidean Distance (straight line distance) or distance in kilometers may not take into account specific localized biophysical factors – In order to measure travel time to a major city: Estimation of Travel Times – A series of GIS layers are merged into a ‘friction layer’ which represents the time required to cross each pixel – Road type and class » Paved – all weather » Paved – dry weather » Gravel – all weather » Gravel – dry weather » Earth – Waterbodies – Landcover – Slope INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM 25
  26. 26. Travel time 1984 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM 26
  27. 27. Travel time 1994 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM 27
  28. 28. Travel time 2007 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM 28
  29. 29. Results Percent population connected to a city of at least 50,000 people in 1994 Region Access < 1 Access 1-3 Access 3 - 5 Access 5 - 10 Access > 10 hour hours hours hours hours Tigray 3.7 3.4 16.2 47.7 29.0 Afar - - - 5.6 94.4 Amhara 2.8 8.0 18.1 44.5 26.6 Oromia 5.3 7.7 20.6 36.7 29.8 Somali 8.0 - - 11.0 81.1 Benishangul-Gumuz - - - 11.2 88.8 SNNP 3.4 7.3 26.9 39.6 22.9 Gambella - - - - 100 Harari 100 - - - - Addis Ababa 100 - - - - Dire Dawa 100 - - - - Ethiopia 8.4 6.4 18.2 36.0 31.0 • In 1994, all of the inhabitants in Gambella region were more than 10 hours travel time to a city of at least 50,000 people • Overall, 31% of the population in Ethiopia was more than 10 hours away from a major city • In the four main regions, more than 50% of the population was over 5 hours travel time from a city9 2
  30. 30. Results Travel Time: Percent point change in access to a city from 1994 to 2007 Region Access < 1 hour Access 1 - 3 Access 3 - 5 Access 5 -10 Access > 10 hours hours hours hours Tigray 7.13 12.01 (3.72) 5.98 (21.39) Afar - - - 4.11 (5.89) Amhara 2.23 14.68 18.94 (12.49) (23.35) Oromia 3.74 10.40 15.84 (8.88) (21.10) Somali - - - 2.62 (2.61) Benishangul-Gumuz - - - 17.91 (17.91) SNNP 9.17 45.37 (14.59) (21.56) (18.39) Gambella - - - - - Harari - - - - - Addis Ababa - - - - - Dire Dawa - - - - - Ethiopia 4.10 17.12 7.54 (9.93) (18.83) • Population over 10 hours in the main four regions improved by at least 18% • Only 2.6 percent of the population in Somali region decreased travel time to under 10 hours over the 13 year period. 30
  31. 31. Agglomeration Index: measuring urban expansion • In order to standardize urbanization measurements, we use methodology developed by Uchida and Nelson (2009): • Urban areas are identified spatially using specific thresholds: – A population density greater than 150 people per km2; – Populations located within 1 hour travel time to a city of at least 50,000 people. – City centers of at least 50,000 people INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM 31
  32. 32. Urban Expansion Agglomeration Index 1984 In 1984, Addis Ababa and other larger cities were primarily confined to its city administrative boundaries. There were only a few cities with greater than 50,000 people Limited road networks and more dispersed population characterized the demographic landscape. 32
  33. 33. Urban Expansion Agglomeration Index 1994 By 1994, Ethiopia’s cities grew, and the country’s transportation network expanded Urban corridors formed between Addis Ababa and Nazaret Shashamene and Awasa also formed an urban network between Oromia and SNNP regions. Jimma urbanization is also expanding along key road networks 33
  34. 34. Urban Expansion Agglomeration Index 2007 By 2007, urban linkages were clearly visible throughout Oromia, SNNP, and Amhara regions. Addis Ababa expanded to connect Sebeta and Bishoftu, and Asela in the South. Addis Ababa also connected to Ambo in the west, and Debre Berhan in the east Jimma had grown into a southwestern hub with opportunities to link with Nekemte to the north. 34
  35. 35. Population Density and Urbanization: 1994 Limited urbanization (2.2%) is present in SNNP region in 1994 35
  36. 36. Population Density and Urbanization: 2007 City growth, as well as more networked infrastructure increased urbanization rates in SNNP almost 20% 36
  37. 37. Population Density follows road infrastructure 37
  38. 38. Average Cropped Area per Holder • The national average cropped area is 0.8 hectares • Average cropped land holdings are low throughout the country • This is especially true throughout the southwest 38
  39. 39. Percent Fertilized Area: EASE 2001/02 Average % of cereal crop area with inorganic fertilizer • Fertilizer use on cereals is mostly limited to the highlands and clustered in specific areas • This may be related to the proximity of major urban centers and associated fertilizer costs or distribution systems. • Moving from the highlands, fertilizer use becomes notably less prevalent. 39
  40. 40. Topography within Ethiopia is varied and fragmented within and among regions. 40
  41. 41. Annual rainfall varies across space Rainfall is highest and least variable in the western part of the country and the western slopes of mountains 41
  42. 42. Agro-ecological Zones (AEZ’s): “3 Ethiopias” split into 5 AEZs Source: 2005/06 EDRI Social Accounting Matrix. 42
  43. 43. Agricultural Value Added by Agro-Ecological Zone bn birr (2005/06) Shares Zone 2 Zone 3 Zone 4 Zone 2 Zone 3 Zone 4 Teff 2.75 0.29 1.41 10.8% 3.7% 9.3% Wheat 2.31 0.26 0.88 9.1% 3.2% 5.8% Maize 2.71 0.75 1.09 10.7% 9.4% 7.2% Bar/Sor 2.47 0.20 1.61 9.7% 2.6% 10.6% Enset 0.25 0.66 0.44 1.0% 8.2% 2.9% Exp Crops 3.78 2.01 3.08 14.9% 25.1% 20.3% Oth Agric 3.64 2.09 2.35 14.3% 26.2% 15.5% Livestock 7.47 1.72 4.34 29.4% 21.6% 28.6% Total 25.38 7.97 15.19 100.0% 100.0% 100.0% Zone 2: Rainfall sufficient highlands (cereal – based) Zone 3: Rainfall sufficient highlands (enset – based) – most of SNNPR Zone 4: Drought prone Source: 2005/06 EDRI Social Accounting Matrix. 43
  44. 44. • Ethiopia has placed a primary emphasis on rural and agricultural led development; nonetheless, the country continues to urbanize and agglomeration economies are beginning to link and form corridors of economic growth. • Improved transport within Ethiopia has facilitated greater mobility of capital, goods, and people, and incentivized population clustering along major transportation routes • Improvements in road infrastructure between large cities, as well as increases in population density along these corridors, have increased urbanization rates (agglomeration indices) from 3.7 to 14 percent over the last 2 decades • This dramatic transformation in the economic landscape is likely to continue, with important implications for future economic growth and public investments in infrastructure. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM 44
  45. 45. PSNP and AGP Selected Woredas Several AGP woredas act as ‘bridges’ between PSNP AGP ‘Bridge’ Woredas Amhara Misrak Belesa Berehet Debretabor Farta Abergele Kobo Oromia Adaba Deksis Enkelo Wabe Sire Gololcha SNNP Southern Bench Tigray Tsegede PSNP and AGP Overlap Region AGP PSNP Amhara 20 5 Oromia 33 0 SNNP 19 2 Tigray 8 5 Total 80 12 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM 45
  46. 46. Implications for Development Strategy 46
  47. 47. CAADP CGE Analysis Baseline Scenario Assumptions • Agriculture – Land cultivated for each crop follows medium-term trends: total land cultivated increases 2.6% per year, 2009-2015 – Land growth varies across region (1.2% per year in rainfall sufficient areas, 3.2% per year in drought-prone areas, 3.7% per year in pastoralist areas) – Crop yield increases account for one-third of the crop production growth – Overall agricultural GDP growth: 4.0%/year – Note: population growth rate is 3.0 percent/year • Non-agricultural output growth based on historical medium-term trends: – Manufacturing: 6.5% per year – Services: 6.7% per year 47
  48. 48. Ethiopia: Agricultural Growth Outcomes Initial Average annual GDP growth rate, 2009-2015 (%) agric. Baseline Cereals Export- Livestock All Non- GDP crops agric. agric. share (%) (1) (2) (3) (4) (5) (6) National (all zones) Agriculture 100.00 3.95 4.90 5.36 5.96 5.98 6.06 Cereals 32.98 4.96 7.38 7.41 7.63 7.68 7.82 Pulses & oils 9.37 3.31 3.53 3.94 4.10 4.12 4.03 Horticulture 6.71 4.69 4.81 4.86 4.96 4.98 5.09 Export crops 10.92 3.77 3.77 7.36 7.36 7.36 7.37 Other staples 8.00 3.02 3.19 3.13 3.22 3.24 3.11 Livestock 32.02 3.18 3.27 3.31 4.97 4.99 5.10 48
  49. 49. Ethiopia: Impacts on Prices: “All Agriculture” Scenario 1.050 1.025 Pulses Relative price index (baseline scenario = 100) 1.000 Tobacco 0.975 0.950 Sorghum Teff 0.925 Coffee 0.900 0.875 Maize Wheat 0.850 Cattle 0.825 Poultry 0.800 2005 06 07 08 09 10 11 12 13 14 15 49
  50. 50. Ethiopia: Impacts on Poverty 40 40.0 National poverty headcount (%) 35 30 25 22.7 Baseline scenario 20 All agriculture scenario 17.6 15 With non-agriculture scenario 13.3 10 2005 06 07 08 09 10 11 12 13 14 15 50
  51. 51. Conclusions: Agricultural Growth • Agricultural growth is desirable, achievable and would reduce poverty in half by 2015 • It may not be that easy: There is no cause for complacency! • Currently, on average, productivity of fertilizer on cereals is low – Recent yield growth is still not well understood – Combination with improved seed and extension is likely required 51
  52. 52. Implications for Development Strategy • Differentiated growth strategy by regions may be best strategy – AGP in higher potential areas: focus on increasing agricultural productivity and improving marketing channels – PSNP and OFSP in drought-prone, food insecure areas: provide a safety net and help food insecure households build up assets and raise incomes • Anticipate increased urbanization and plan public investments to promote growth of market towns and urban hubs • Gain the benefits of competitive international trade by maintaining price incentives for production of agricultural and non-agricultural tradable goods by appropriate real exchange rate policy 52

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