Ethiopia’s Farmers and Urban Growth

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Urbanization rates have exploded across Africa over the past 20 years. According to the African Development Bank, between 1982 and 2012, African cities grew at a rate of 3.5 percent per year, and experts only forecast this trend to continue. The World Bank expects the share of Africans living in urban areas to reach 50 percent by 2030.

This trend clearly has implications for the people living in cities themselves, but it also impacts rural populations through a variety of channels. Many studies have examined how urbanization will effect Africa’s rural growth, agricultural sector, off-farm jobs options, and food security prospects. While urbanization rates in Ethiopia have been among the lowest in the world, the World Bank recently projected that annual urban growth in the country will reach 5.4 percent per year and that Ethiopia’s urban population will triple by 2034. A recent working paper and related research note from the Ethiopia Strategy Support Program examines how living in close proximity to these growing cities, and thus to a growing urban population in need of food, impacts rural teff farmers’ agricultural production decisions.

Teff is a major staple crop in the Ethiopian diet and is the most important cereal nationally in terms of value. Thus, many producers rely on the crop for their livelihoods. In addition, demand for teff among urban consumers is increasing, leading teff production to double over the last decade, according to the paper’s authors.

In addition to growing urban populations and increasing teff production, Ethiopia is also seeing an explosion in access to cities. The paper reports that in the late 1990s, only 15 percent of Ethiopia’s population was located within three hours of a major city (defined as a city with a population of at least 50,000); however, in 2010-2011, that number had jumped to 47 percent. This growth was due to enormous investments in road construction as part of government infrastructure improvement strategies.

The paper utilizes a survey of 1,200 teff farmers randomly selected from both the smallest and the largest teff-producing woredas in five major teff production zones. The authors also collected data on agricultural prices and land rental rates through additional community-level surveys. The measure used in the paper is the cost of transporting one quintal (0.1 metric ton) of teff from the farm to the capital city of Addis Ababa via local market centers. The paper estimates the effects of urban proximity on teff prices, the use of agricultural inputs, and agricultural intensification outcomes to assess the effects of urban proximity on teff farmers’ productivity and profitability.

The study finds that, overall, farmers located closer to Addis Ababa pay more for both hired labor and land rental; however, they also receive higher output prices for the teff they produce. The authors suggest that all of these results can be attributed to the reduction in transport costs that comes with closer proximity to the city. For example, they find that the teff output price is 1,150 ETB per quintal in villages located closer to Addis Ababa, compared to 950 ETB per quintal in the most remote villages examined in the study. Similarly, wages for hired laborers drop by more than 50 percent in more remote villages. According to the authors, these decreases track closely with the cost of transporting one quintal of teff to Addis.

Proximity to the city also appears to play an important role in farmers’ overall productivity. The paper finds that farmers close to Addis Ababa produce more than 12 kg of teff per person-day of labor, while farmers in the most remote village produce only 6 kg per person-day. This result can be explained by another of the paper’s findings - a clear reduction in how much farmers spend on teff production in households located farther away from the city.  Farmers further from Addis Ababa use fewer agricultural inputs like fertilizers and improved seeds. For example, the paper finds that the intensify of use of DAP and urea fertilizers drops by more than 50 percent for the most remote households, while there are almost no improved seeds used by these households.  Interestingly, the price and distribution of chemical fertilizers are fixed by the government, meaning they do not cost more in remote areas. Thus, the reduced use of fertilizers farther away from the city appears to have more to do with market access than with cost – since remote households are found to receive lower prices for their teff, they have less incentive to spend money on intensifying their production.

Overall, the paper concludes that proximity to an urban market can be a major driver of agricultural intensification and transformation in Ethiopia. From a policy standpoint, this finding highlights the importance of continued improvements in roads and other physical infrastructure to reduce transportation costs and increase farmers’ access to markets. Better connecting farmers to urban markets will increase their profitability and thus their incentives to intensify their agricultural production, leading to agricultural commercialization that can lift rural populations out of poverty and ensure the food security of a growing urban population.

By: Sara Gustafson, IFPRI

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