Summary: Ethiopia Agriculture Sector Review (1987)

Executive Summary

The World Bank report analyzes Ethiopia's agricultural sector, highlighting stagnation in production despite rich potential. Key issues include soil degradation, poor incentives for farmers, and inefficient government services.

Key Findings:

• Agriculture accounts for 45% of GDP, 80% of employment, and 85% of exports
• Agricultural GDP grew only 1.1% annually in past decade while population grew 2.9%
• Per capita food production has declined significantly
• Soil erosion is destroying farmland at alarming rates
• Forest cover has declined from 40% to 4% in last century
• Government policies have eroded farmer incentives

Major Issues

Production Challenges

• Virtual stagnation in major crop production since 1970s
• Cereal yields remain low (1.2 tons/ha average)
• Only 3% of cultivated area uses fertilizer
• Small land holdings (0.14 ha per capita average)

Policy Issues

• Low official grain prices discourage production
• Restrictive marketing policies limit farmer incentives
• Overemphasis on state farms and cooperatives
• Land tenure uncertainties discourage investment

Environmental Degradation

• Severe soil erosion affecting 50% of highlands
• Deforestation rate of 200,000 ha annually
• Fuelwood shortages leading to dung burning

Key Recommendations

Immediate Priorities

• Improve producer incentives through price and marketing reforms
• Deregulate grain trade and reduce AMC control
• Adjust coffee pricing and marketing policies
• Increase operating funds for agricultural services

Long-term Strategies

• Strengthen land tenure security
• Reform producer cooperatives to be voluntary and efficient
• Revise villagization program to be gradual and voluntary
• Focus state farms on areas where they have comparative advantage

Institutional Reforms

• Improve agricultural research and extension services
• Enhance Ministry of Agriculture efficiency
• Strengthen input supply and distribution systems
• Develop improved seed production capacity

Projected Outcomes

With recommended reforms, cereal production could grow 3-5% annually. Without changes, Ethiopia faces:

• Continued decline in per capita food production
• Increasing food imports (up to 4 million tons annually by 2000)
• Further environmental degradation
• Persistent rural poverty