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The changing face of agriculture and markets

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The changing face of agriculture and markets

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The changing face of agriculture and markets

  1. 1. The changing face of agriculture and markets 1 Bart Minten IFPRI-ESSP Conference on “The Future of Ethiopia’s Agriculture: Towards a Resilient System to End Hunger and Undernutrition” December 15, 2017 Addis Ababa
  2. 2. 1. Context drivers 2. Changes in markets 3. Changes in prices 4. Changes in farms and farmers 5. Future food systems Plan of presentation 2
  3. 3. 3 1. Context drivers Population growth 0 5 10 15 20 25 30 35 40 45 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 millionpeople rural urban
  4. 4. 4 1. Context drivers Population growth 0 5 10 15 20 25 30 35 40 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Millionpeople Age 0-14 Age 15-29 Age 30-64 Age 65+
  5. 5. 5 1. Context drivers Income growth and diet transformation Increasing diversification in the food basket • However, quantities of cereals consumed is increasing: - 1996: 127 kgs/capita - 2000: 141 kgs/capita - 2005: 150 kgs/capita - 2011: 155 kgs/capita • Share of cereals in expenditures on the decline 0 10 20 30 40 50 60 70 2000 2005 2011Shareinfoodexpenditures(%) cereals non-cereals
  6. 6. 6 1. Context drivers Income growth and diet transformation Important difference between urban and rural areas • Urban residents have different food basket: - More consumption of teff and meat - Lower consumption of maize, sorghum and enset/kocho 0 5 10 15 teff sorghum maize processed cereals animal products enset/kocho F&V % food expenditures Rural Urban
  7. 7. 7 1. Context drivers: Infrastructure development
  8. 8. 8 2. Agricultural markets Modern input adoption growing 0 100 200 300 400 500 600 700 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 MillionUSD Chemical fertilizers - imports 0 20 40 60 80 100 120 140 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 MillionUSD Agro-chemicals - imports
  9. 9. 9 2. Agricultural markets Rapid market growth - 2 4 6 8 10 12 14 16 18 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Realbillion2011Birr Real value commercial surplus
  10. 10. 10 2. Changes in markets Food imports/aid are large 0 500 1000 1500 2000 2500 3000 3500 4000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1000tons rice wheat
  11. 11. 11 2. Agricultural markets Number of people that need assistance not coming down 0 5 10 15 20 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Million Source: World Bank Number of HRD/PSNP beneficiairies
  12. 12. 12 2. Agricultural markets But Ethiopia in most years net agricultural exporter (2.0) (1.0) - 1.0 2.0 3.0 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 BillionUSD ag. imports ag. exports net exports
  13. 13. 13 3. Changes in prices Marketing margins are declining Maize markets price differences (compare with surplus area Nekemte) -200 -100 0 100 200 300 400 2001 2003 2005 2007 2009 2011 2013 2015 Real2011Birr/quintal Addis Mekelle
  14. 14. 14 3. Changes in prices Prices of nutritious foods on the rise 60 80 100 120 140 160 180 Grains, roots and tubers Legumes and nuts Dairy products Eggs Flesh foods Vitamin A dark green leafy veg. Other Vitamin A rich F&V Other fruits and vegetables Oils and fats Sugar and honey Prices in 2016 compared to 2007 (2007=100)
  15. 15. 15 4. Changes in farms and farmers Farm sizes are declining 0.7 0.8 0.9 1.0 1.1 1.2 1.3 20052006200720082009201020112012201320142015 hectares Crop area per holder Agricultural area per holder
  16. 16. 16 4. Changes in farms and farmers Farmers are getting older 16 18 20 22 24 26 28 30 32 % Under 30 30-39 40-54 55 and older Share of farmers in four age categories
  17. 17. 17 4. Changes in farms and farmers Youth farmers have less land 0.7 0.8 0.9 1.0 1.1 1.2 1.3 hectares Under 35 35 or older
  18. 18. 18 5. Future food systems • Significant changes over the last decade. • In near future, three trends will further drive major changes in food systems: 1. Population growth and increasing urbanization 2. Further improvements in infrastructure (roads, communication (mobile phones), electricity, etc.) 3. Higher incomes (middle-income target by 2025) and diet/shopping change
  19. 19. 19 5. Future food systems Expected changes: a. Calories consumed will increase but relatively slowly (200 calories per capita per day for doubling of income) b. Changes in types of foods demanded, especially increase of Animal Source Foods (ASF) c. Increasing demand for processed products and convenience and ready-to-eat products d. Changes in food distribution (modern retail, out-of-home food consumption, development of food service sector)
  20. 20. • Real food expenditures per capita in 2011 - urban: 1219 Birr/year and 97% market; rural areas: 863 Birr/year and 58% market. • Scenario 1: No changes in purchase behavior and income Commercial market doubling in size 20 5. Future food systems e. Commercial food markets will expand rapidly 0 20 40 60 80 100 2011 2030 RealBillion2011Birr rural urban +67% +209%
  21. 21. • Scenario 2: 1. Income growth 3% per year 2. Rural food market participation increasing from 58% to 75% Commercial market quadrupling in size 21 5. Future food systems 0 50 100 150 200 2011 2030 RealBillion2011Birr Rural Urban +400% +248%
  22. 22. 22 5. Future food systems f. Increasing reach of cities will stimulate agricultural transformation

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