The Role of Agriculture in Ethiopian Development

Agricultural production accounts for 42% of GDP, employs 80% of Ethiopia's labor force, and supplies 90% by value of all exports. A predominant portion of agricultural production takes place at the subsistence level. In all, 99% of coffee production, and 94% of other agricultural output come from peasant farms. In contrast, industrial production accounts for about 16% of GDP, contributes to less than 10% of exports and employs under 5% of the labor force (Pickett, 1991).

In spite of the importance of agriculture, it has been treated primarily as a source of surplus rather than as a sector for investment. When investments have been made they have by in large circumvented the peasant producer in favor of highly inefficient state farms, where improved seeds, and chemical fertilizers were preferentially distributed. This despite the fact that it cost state farms 150-250% more to produce a given crop as compared to the peasant farmer (Pickett, 1991).

A further detriment to appropriate investments has resulted from a failure to understand agriculture production when either labor or land is the limited resource. A look at pre- industrial western agriculture shows that, where land but not labor was scarce - a condition of most pre-industrial societies, there was little incentive to adopt labor-saving machinery, but every incentive to increase yield per hectare. Conversely, where land was abundant and labor scarce, mechanization was adopted at a greater pace to substitute for labor Grigg (1982). Even today, the productivity of industrialized agriculture can be viewed in terms of either land or labor productivity. For example, countries such as Canada, the US and Australia have the highest output per unit labor but some of the lowest per unit of land, while countries such as Taiwan, Japan and the Netherlands show the inverse (Grigg, 1982).

In this light, appropriate investments to increase Ethiopian agricultural productivity should focus on appropriate land-saving techniques and technologies, i.e. increasing crop yields per unit of land. It should be noted here that crop yields on peasant farms are low not because of farmer incompetence but because of lack of suitable inputs. The main land-saving techniques appropriate to subsistence agriculture are:

- improved crop varieties

- use of chemical fertilizers

- seedbed preparation and the elimination of weeds

- reduction of plant and animal diseases

Of these, the first two would provide the earliest and most cost effective return on investments. This has been attested by farmers themselves; there was significantly greater demand than could be met for improved seeds, and specially chemical fertilizers in rural service cooperatives.

The needs of peasant farmers for labor saving can more appropriately be addressed by improved implements for land preparation, harvesting, etc. than by any mechanized implements. Again, technological change in pre- industrial agriculture first took the form not of mechanization but of a switch from lower into higher working capacity hand tools (Collins, 1969).

A further requirement for improving agricultural productivity entails the reduction of growing season and post harvest losses, consisting of control of pests and diseases in standing crops and stored produce. Furthermore, it is important to introduce technology and techniques that minimize crop damage during handling. Typically 40% of crops are lost during post harvest storage and handling in subsistence agricultural production systems.

The government can provide an appropriate engine to foster increased productivity by providing credit and infrastructure support to rural communities. To a limited extent, the Ministry of Agriculture and the Agricultural and Industrial Development Bank have successfully done so in the past.

Where then does industrialization fit in such a context? As indicated by Pickett (1991), since a large part of Ethiopia's available resources are tied up in food production, releasing these for the purpose of industrialization requires increasing agricultural productivity. Furthermore, Pickett asserts that industry cannot grow beyond the pace of the domestic market, which in turn is limited because much of the purchasing power is in poor and relatively stagnant peasant households. To draw briefly again from history, there were significant linkages between agriculture and industry in the latter's early stages. In fact, the industrial revolution created great demand for agricultural products (Grigg, 1982). Thus, industrialization, if it is to be promoted, should focus on providing goods to the one major sector of the economy, agriculture. Although it currently constitutes a small internal market, it is the one sector that has the potential to be the engine of economic growth in Ethiopia.

This is not to say that we need not face major challenges. In the first instance, chemical fertilizers are an imported commodity and thus pose problems related to foreign exchange earnings. Similarly, there is the daunting task of expanding road and communication infrastructure, considering that only 12% of Ethiopia's population has access to roads (Brietzke, 1982).

Appropriate strategies need to be adopted and adapted to address the challenges of increasing agricultural productivity and linking industrialization to agricultural development. As an example, Habtu (1994) proposes a small-scale industrialization strategy within an industrial district model that partly addresses the lack of suitable infrastructure by locating small-scale firms within their appropriate markets, i.e. within rural communities.

While this brief communication is far from exhaustive, it attempts to raise issues that are relevant to Ethiopian economic development. Agriculture, and particularly the peasant producer, has been too long neglected, except for purposes of exploitation. To continue to do so relegates Ethiopia to stagnation and deterioration. To recognize its importance and devise means of fostering its growth would provide the opportunity to significantly redress arrested development.


Brietzke, P.H. 1982. Law, Development and the Ethiopian Revolution. Lewisburg. Bucknell University Press.

Collins, E.J.T. 1969. Labor supply and demand in European agriculture 1800-1880. Pages 61-94 in Jones, E.L. and Woolf, S.J. (eds.) Agrarian Change and Economic Development. London. Methuen & Co.

Grigg, D. 1982. The Dynamics of Agricultural Change. New York. St. Martin's Press.

Habtu, R. 1994. Small-scale industry in Ethiopia. Pages 227-253 in Abegaz, B. (ed.) Essays on Ethiopian Economic Development. Aldershot. Avebury.

Pickett, J. 1991. Economic Development in Ethiopia: Agriculture, the Market and the State. Paris, OECD.