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Abstract
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Agricultural transformation in Africa? Assessing the evidence in Ethiopia
1. ETHIOPIAN DEVELOPMENT
RESEARCH INSTITUTE
Agricultural transformation in Africa?
Assessing the evidence in Ethiopia
Fantu Bachewe, Guush Berhane, Bart Minten, and Alemayehu S. Taffesse
IFPRI ESSP
Ethiopian Economic Association
May 13, 2017
Addis Ababa, Ethiopia
1
2. 1. Motivation
• Africa recorded a rapid economic growth in the last two decades,
• Agriculture productivity/yield still low (NEPAD, 2013; Block, 2014)
• Improving agricultural performance vital to improve food/nutrition
security, poverty reduction, & overall growth (Bahiigwa et al., 2015)
• Needs to occur amidst rapid population growth and impacts of
climate change becoming more damaging
• Among broad set of recommendations proposed to meet the
challenge two deemed rather critical (NEPAD, 2013)
Agricultural intensification and
Commercialization through market development
• Study explores these and related issues in the context of Ethiopia.
3. 3
1. Introduction
• Ethiopia among fastest growing economies in the last decade
• Agricultural growth major contributor to overall growth and to
decline in rural poverty
Rural poverty fell from 45% in 1999/00 to 30% in 2010/11
Such linkages observed before in similar settings (Christiaensen,
Demery, & Kuhl, 2011; Datt & Ravallion, 1998)
• Study draws lessons from Ethiopia’s growth experience. Specifically:
I. Reviews evidence on agricultural growth & triangulate official data
(mostly CSA) using a large number of household survey datasets
II. Provides new (update existing) evidence on modern inputs adoption
III. Identifies major sources of modernization process
4. 4
2. Methods
• Study uses modified Solow output growth decomposition model
• Disaggregate output growth into inputs used, total factor productivity
(TFP), and exogenous factors
• Aggregate crop production in Ethiopia:
𝑄𝑡 = 𝐴(𝑡)𝑓(𝐿 𝑡, 𝐾𝑡, 𝑇𝑡, 𝐹𝑡, 𝑀𝑡, 𝑃𝑡, 𝐼𝑡, 𝐸𝑡, 𝑆𝑡, 𝑍𝑡) (1)
Where
𝑄 – real value of crop output, L – labor, T – land,
𝐴(𝑡) - cumulative technical change, K – capital, F – fertilizer,
M – improved seeds P – pesticides, I – irrigation
S – intermediate service inputs, E – extension, & Z – exogenous factors
Differentiating (1) WRT to time and dividing by Q
∆𝑇𝐹𝑃 =
∆ 𝐴(𝑡)
𝐴
=
∆𝑄
𝑄
− 𝐽 𝑤𝐽
∆ 𝐽
𝐽
− 𝛼∆𝑅𝑇𝑆 − 𝛽∆𝑅𝑅 (2)
5. 2. Methods
• Multinomial probit model employed to study associates of fertilizer
and improved seeds adoption
• Let the unobserved latent variable, 𝑦𝑖𝑡
∗
, represent the net benefit of
adopting a technology/set of technologies and let:
𝑦𝑖𝑡
∗
= 𝛽′
𝑥𝑖𝑡 + 𝜀𝑖𝑡 where 𝑖 = [1, 2, … , 𝐼] and 𝑡 = [1, 2, … , 𝑇] (3)
where 𝑥𝑖𝑡 are explanatory variables, 𝛽 parameters to be estimated, 𝜀𝑖
stochastic term assumed jointly multivariate normal distributed
• Given 𝑦𝑖𝑡
∗
, the observable choice is given as:
𝑦𝑖𝑡 = 1 if 𝑦𝑖𝑡
∗
= max[ 𝑦𝑖𝑡𝑚
∗
, 𝑚 = 0, 1, … , 𝑀]; 𝑦𝑖𝑡 = 0, otherwise (4)
where 𝑚 = 0, 1, … , 𝑀 define unordered outcomes of adoption decision
6. 6
3.1 Agricultural growth: evidence
• Nationally representative crop production data from CSA,
Based on annual surveys of 40-50,000 HHs
• Output 127% higher in 2013/14 than 2003/04, growth averaged 9.4%
Cultivated area increased by 27% during the decade
• Yield in cereals increased by 7% per year
Figure 1—Growth in area cultivated and yield of grains
4.1 3.9 3.8
1.8
2.7 2.6 2.5
1.7
0.8
7.9 7.6
3.8 4.3
2.9
9.7
4.8
4.1
7.9
0
2
4
6
8
10
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
Percent
area yield
7. 7
3.1 Agricultural growth: evidence…Contd.
• Alternative data show similar picture but a bit slower growth,
• Caution needed in interpreting results
Data not nationally representative, and purposes & methods data
collected as well as woredas focused & periods covered vary
Table 1—Estimates of cereal yield growth from alternative datasets, %
Survey CSA
Ad hoc
surveys
ERHS CSA CSA CSA
Period 2005-2014 2008-2013 2004-2009 1997-2012 2001-2012 2014/15-15/16
# of surveys Annual 8 surveys 2 surveys Annual Annual Annual
Teff 5.8 4.7 1.7 4.2 4.6 -1.0
Maize 6.2 6.2 0.4 3.4 4.2 -1.2
Barley 4.8 6.8 10.1 - - 0.1
Wheat 5.4 6.3 3.6 4.0 3.6 -0.3
Sorghum 5.4 -1.8 - 4.5 4.8 -1.6
8. 8
3.2 Agricultural growth: sources
Figure 2—Average contribution
as % of crop output growth
(2004/05 – 2013/14)
Table 2—Contribution to crop output
growth (2004/05 – 2013/14)
Labor
29%
Land
13%
Fertilizer
8%
Improved
seeds
10%
Extension
9%
RTS
2%
Rural
roads
3%
Others
3%
TFP
23%
Source of
change
2004/05-
2008/09
2009/10-
2013/14 Average
Output (∆Q/Q) 10.1 8.6 8.8
Labor 29.1 26.3 2.5
Land 11.1 13.8 1.0
Fertilizer 4.9 12.6 0.7
Improved seed 6.9 9.7 0.9
Extension 2.2 18.4 0.7
Infrast. & RTS 4.8 4.9 0.4
Others 3.3 2.6 0.3
Changes in TFP 37.7 11.8 2.3
• Labor and TFP growth most important contributors to output growth
• Modern inputs on average contributed 29.6% of the growth
9. 9
3.2 Agricultural growth: sources…Contd.
• Labor, land, & TFP is declining in importance. Together accounted for
78% of output growth during 2004/05-2008/09 and
51.9% during 2009/10-2013/14
• Modern inputs are becoming more important. Fertilizer, improved
seeds, extension, pesticides, and irrigation together accounted for:
16.5% crop output growth during 2004/05-2008/09 and
42.7% during 2009/10-2013/14
10. 10
4. Intensification and adoption of modern inputs
• Technological changes drove the dramatic agricultural growth of
Asian countries in the 1960s and 1970s
• Significant effort to replicate growth in Africa, particularly Ethiopia
• Ethiopia implemented several cereal intensification programs
promoting the adoption of modern technologies since mid 1990s,
Adoption of chemical fertilizer & improved seed packages at the
center,
11. 11
4.1 Intensification…Contd.
Chemical fertilizer use doubled
Fertilizer imports & use 124% & 144% higher in 2013/14 than 2004/5
Most fertilizer used on cereals due to attention to food security
Figure 3—Total fertilizer use and imports, (‘000 mt)
200
300
400
500
600
700
800
900
1000
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
Thousandsofmt
Used Imported
12. 12
4.1 Intensification…Contd.
Application on fertilized area grew by 28% from 95kg/ha to 122kg/ha
Proportion of area and farmers using fertilizer grew by 50% or higher
Figure 4—Proportions of cereals farmers using fertilizer and cereal area
applied with fertilizer
46.3 47.9
75.6
36
29.5
53.1
0
10
20
30
40
50
60
70
80
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
Proportionofholders/area
applied
Holders (%)
Area applied (%)
13. 13
4.1 Intensification…Contd.
Improved seeds
• Share of cereals farmers using improved seeds more than doubled
• Improvement significant but CSA data may underestimate adoption
Improved maize seeds 35% of all seeds in 2013 (Benson et al. 2014)
39% maize area in 2010 planted with hybrid varieties (Zeng et al. 2013)
Table 3—Proportion of improved seed applying farmers (%)
Crop 2004/05 2009/10 2013/14
Barley 0.8 1.2 0.8
Maize 11.6 15.7 27.6
Sorghum 0.9 1.8 0.4
Teff 1.0 2.4 4.6
Wheat 4.5 4.1 7.7
Cereals 10.1 11.3 21.5
14. 14
4.1 Intensification…Contd.
Other modern inputs and improved practices
• Proportion of irrigated area low and has not changed
Includes only smallholders & meher season, irrigation often used in belg
• Area under irrigation indicated by other data sources much larger,
Table 4—Area under irrigation and pesticide use
Variable and data source 2004/05 2009/10 2012/13
Irrigation
1. Irrigated area (‘000 ha, only meher) - CSA reports 121 154 152
Proportion of area irrigated (meher, %) 1.2 1.3 1.3
2. Irrigated area (‘000 ha) - MoA Annual GTP
progress reports 853 1830
Pesticides (proportion of area applied, %)
All crops 13.0 12.4 21.5
Cereals 16.7 13.4 26.1
Pulses 0.8 9.6 6.5
Oilseeds 1.1 8.7 2.8
15. 15
4.2 Factors associated with sources of growth
• Evidence indicate rapid adoption of improved technologies
• Uptake particularly faster during 2009/2010–2013/14, when output
growth was linked more with increased use of modern inputs
Leads to the question: Which factors are associated with the
increased modernization and intensification in agriculture?
Drivers identified using two criterion:
i. Linked with significantly increased adoption of improved practices.
ii. With major positive changes over the last decade.
16. 16
4.2 Factors associated with sources of growth…Contd.
• Multinomial probit analysis using primary data form CSA
Analyses covers 2004/05-2013/14 period
Adoption of improved seeds, chemical fertilizer, or both contrasted
against adoption of none
Four crops: teff, maize, wheat, and barley
• Analyses identify three important drivers of modern input adoption:
1. Agricultural extension,
2. Connectivity (travel time to larger towns/cities)
3. Education
• Reviewed literature corroborate results of analyses
• Study identifies additional factor: input and output market efficiency
17. 17
5. Evidence on potential pathways to rapid agricultural growth
(a) Changes in informational efficiency and role of agricultural extension
• Considerable investment into public agricultural extension system
• 21 extension agents per 10,000 farmers in Ethiopia in 2010 (1:500)
16 China, 6 Indonesia, 4 Tanzania, and 3 Nigeria
32.7
50.8 56.2
63.3
73.6
0
10
20
30
40
50
60
70
80
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
%offarmerswith
advisoryservices
Figure 5—Percent of farmers covered through the public
extension system, 2004/05-2013/14
18. 18
5. Evidence on potential pathways…Contd.
• Number of farmers using extension advisory service tripled and those
using extension package in one or more crop more than doubled
Figure 6—Number of farmers covered through the public extension
system, 2004/05-2013/14
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2012/13
2013/14
advisory (number of holders)
Holders (under ext-pkg)
Hectares (under ext-pkg)
19. 19
5. Evidence on potential pathways…Contd.
Figure 7-Output/fertilizer price ratio (left) and export price indices (right)
-
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Teff
Wheat
Barley
Sorghum
Maize
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
Priceindex
Coffee
Oilseeds
Pulses
Chat
(b) Changes in input and output market efficiency
• Price changes favour intensification: tradable and non-tradable goods
Output/fertilizer price of five main cereals twice higher in 2012 than 2004
Oilseeds, pulses, & coffee price at least twice in 2012/13 than in 2003/04
20. 20
5. Evidence on potential pathways…Contd.
• Connectivity: In 1998 only 15% within 3 hours of city ≥50,000 people,
47% in 2011
• Urbanization: 3.7 million more urban residents in 2013/4 than 2004/5
Urban people less likely to grow food → commercial surplus increased
Figure 8-Population connected to a city of at least 50,000 people, (%)
0%
20%
40%
60%
80%
100%
1997/98 2006/07 2010/11
Percentpopulationconnected
Access > 10 hours
Access 5 - 10 hours
Access 3 - 5 hours
Access 1 - 3 hours
Access < 1 hour
21. 21
5. Evidence on potential pathways…Contd.
(c) Changes in human capital accumulation
• Significant strides for universal primary education, esp. in rural areas,
Efforts made to make adult education accessible,
• Share of illiterate farmers declined annually at 1.8%
Share of farmers in grades 1-6, 7-8, and ≥9 grew at 3%, 5%, and 15%
50
55
60
65
70
0
2
4
6
8
10
12
14
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
Proportionilliterate(%)
Proportioneducated(%)
Illiterate Literate (informal)
Grades 1-3 Grades 4-6
Figure 9—
Proportion
of farmers
with
different
levels of
education
22. 22
5. Evidence on potential pathways…Contd.
Other factors
1. Favourable weather
No major incidences of large-scale droughts that plagued Ethiopia before
Better early warning system
2. Access to credit
Number of microfinance institutions increased to 32 (from 1 in 1994)
Active borrowers increased from 0.5 million in 2003 to 3.5 million in 2014
3. Land certification
Large-scale land certification program set up to ensure land property rights
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6. Conclusions
• This study examines the incidence, sources, and proximate causes of
agricultural growth in Ethiopia during 2004/05-2013/14
• Total output more than doubled during the period.
• Growth driven partly by:
Area expansion and increase in number of farmers,
Rapid uptake of improved technologies,
Growth in total factor productivity,
• Drivers of modern inputs adoption multiple,
Linked with higher expenditure in agriculture/rural areas
• Study triangulated findings implied by official statistics
Alternative data & literature show dynamic agricultural environment,
There still exist data related caveats,
Data with similar coverage and frequency lack,
Analyses also point to a number of issues requiring further investigation
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6. Conclusions
Issues that need further investigation include
i. Yield levels differ across datasets, despite similarity in growth rates
• Survey methods: CSA uses crop-cut Vs. remaining rely on recall data,
• Experiments to explain differences in yield data collection methods needed
ii. Cereal output growth higher than consumption growth in last decade
• Research on changes in food balance, wastage & losses, feed & seed
demand, formal & informal export/imports are possible issues to consider.
iii. Analysis needed on land use changes to understand where additional
agricultural land derived from and its implications for future land use,