This document summarizes the transformation of smallholder crop production in Ethiopia from 1994 to 2016. Some key points: - Crop production makes up 28% of Ethiopia's GDP and 67% of agricultural GDP, driven by growth in area cultivated, productivity, output, and market surplus. Productivity increases were the main factor. - Major drivers of growth included expanded agricultural extension providing information, improved input and output markets, increased human capital via education/health investments, and risk reduction programs. - While growth was rapid, productivity remains low overall. Heterogeneity is large, with the smallest farms (bottom third) having very small land sizes and output. - Continued investment in agriculture and a

1. Chapter 27
The Transformation of Smallholder Crop Production
in Ethiopia (1994-2016)
Alemayehu Seyoum Taffesse
International Food Policy Research Institute
Launch of the Oxford Handbook of the Ethiopian Economy
February 9-10
UNECA, EEA, and Skylight Hotel
Addis Ababa
1

2. The Chapter
 describes the evolution and state of Smallholder Crop Production in Ethiopia
 crop production is large - its share 28 per cent of overall GDP and 67 per cent of
agricultural GDP;
 Summary:
 captures the key features of smallholder grain production and producers (circa
2014)
 locates grain production in a broader context of Ethiopian geography, recent
history, institutional setting, and ongoing overall growth;
 describes the structure of grain production in terms of farm size, factors of
production, output and productivity, and commercialisation;
 highlights the considerable heterogeneity within smallholder grain production
using farm size as the denominator.
 summarises the known proximate drivers of change during the two decades
spanning 1994-2016 (the most significant period in terms of rapid growth and
signs of transition began in 2004/05).
 mentions some of the major challenges and opportunities facing smallholder crop
agriculture going forward.

3. Four major takeaways
1. Growth – area cultivated (<1%), productivity (yield=5.6%), output (9.5%), and
marketed surplus (2.1%);
Intensification the leading cause – average annual growth rate (2003-14)
2. Drivers Drivers - Policies mattered for the growth
 expansion of the agricultural extension system and the resultant considerable
increase in farmers’ access to information on new and improved farming
practices;
 deepening input and output markets, with the concomitant decline in
transaction costs, driven by large public investments in roads and
telecommunication;
 accelerated human capital accumulation with education levels and life
expectancy rising, strongly linked to public investments in education and
health systems;
 reduced exposure to shocks and their negative consequences through the
implementation of the large Productivity Safety Net Programme (PSNP) and a
widespread land certification programme;
Chemical Fertilizer Application - Share in Crop area (%) 8.5
Extension Incidence - Share in Crop area (%) 13.2
Improved seed application - Share in Crop area (%) 16
Irrigated area - Share in Crop area (%) 2.5

4. Four major takeaways (cont’d)
2014
Average Annual Growth
Rates
(2003-2014) (%)
All T-I T-II T-III All T-I T-II T-III
Grain area per holder 0.87 0.14 0.63 1.81 0.1 0.2 0.8 0.5
Grain output per
holder (kg)
1966 311 1385 4102 6.4 5.5 6.5 7.2
Grain output per
hectare or yield (kg)
2135 2072 2197 2138 5.6 4.9 5.7 6.3
3. Productivity is still low – growth rapid but from a very low base;
4. Heterogeneity considerable – small farms: really small; grew at about the same
rate as larger farms

5. Two implications for policy and practice
1. Policies mattered and will continue to matter
Too early to stop investing in agriculture - agriculture’s transformation into a
modern, highly productive, and commercialised sector closely integrated with the rest
of the economy is still work in progress;
2. Focus on small farms
 farms in the bottom-tercile are really small (see table) – a 10-fold increase in yield
leads to 30 quintals or 3 tonnes of output by these farms;
 need radical change in what and how production occurs on these farms;
Ideas
 switch into high value crops;
 consolidation in production (not in ownership) through relaxed land rental market
(organically happening in parts of Ethiopia to pool adjacent plots of different
farmers );
 switch out of agriculture;