Blog Post

The Economics of Teff

Teff plays a leading role in both the diets and the economy of Ethiopia. While the crop’s potential to expand into lucrative domestic and global export markets is large, however, little investment has been made to expand the crop’s productivity to take advantage of these opportunities. A new book from IFPRI, The Economics of Teff: Exploring Ethiopia’s Biggest Cash Crop , takes a look at the challenges faced by teff producers and how governments and private sector actors can work together to expand the crop’s role in global food markets.

For producers in Ethiopia, teff represents an important cash crop. Twenty-two percent of the country’s cultivated land is dedicated to teff production, and 43 percent of the country’s farmers were involved in teff production in 2013-2014. During that same period, the total share of Ethiopia’s teff production sold (commercial surplus) reached US$ 750 million, as much as the commercial surplus of all other cereals combined.

The crop is important for consumers in Ethiopia as well. Teff makes up 12 percent of total food expenditures in the country, and the crop is high in nutrients and comparable in calories to other cereal crops.

In addition, teff is gluten-free, giving it the potential to appeal to broader international markets in which gluten-free products are in strong demand.

Despite teff’s potential and importance to the Ethiopian diet and economy, the crop faces several major production challenges. First, it is generally a low-productivity crop, with low yields per hectare compared to other cereals. Expanding production has also proven difficult because while teff can withstand adverse weather conditions, it is best suited to a certain agroecological zone (mid-altitude highlands); land in this particular zone is becoming increasingly scarce in Ethiopia. Its low productivity means that many smallholder farmers cannot afford to farm the crop because overall prices/ha are not high enough.

The Economics of Teff provides an in-depth look at these challenges and provides recommendations for action to address them.

Improving productivity and resilience

In order to increase teff’s productivity and resilience to climate shocks, investment needs to be made in agricultural research and development of improved seed varieties. In addition, increasing adoption of these improved varieties will require better information and education campaigns, as well as better marketing and supply systems. While government investment in these areas continues to be needed, the private sector will also need to take a leading role.

Selecting and Scaling Up New Technologies

While it is important to develop improved agricultural technologies and teff varieties, it is also important to determine which of those technologies and varieties work in specific locations and under specific conditions. The book’s authors recommend setting up on-farm trials and rigorous impact evaluations in order to ensure that technologies, extension packages, and educational messages are truly effective. National-level monitoring and evaluation of the teff sector is also needed, particularly to understand how policy instruments such as credit, extension and distribution services, and incentives for teff producers can support the adoption of improved technologies and varieties.

Establishing targeted distribution systems

To increase teff productivity will require increased use of inputs such as chemical fertilizers. Ethiopia’s government has invested heavily in soil mapping to determine which fertilizers are needed in specific regions; however, many smallholder farmers still cannot access or afford the appropriate inputs. Improving distribution systems to meet the needs of specific areas and populations will help to increase adoption of these important inputs.

Managing labor demand and post-harvest activities

Rural wages have been rising in Ethiopia, driving up demand for labor-saving technologies such as mechanized agricultural tools. Making such tools more affordable and accessible will be crucial in increasing teff productivity. In addition, the book’s authors highlight the need for improved storage and processing technologies to meet growing demand from urban consumers. Both public and private sector actors will need to invest in this mechanization and technological innovation in order to make it accessible and sustainable over the long term.

Extending markets

Finally, as Ethiopia’s economy continues to develop, consumers will likely be willing to pay more for higher quality and more convenient teff products. The book’s authors forecast an increase in demand for teff flour and injera (a flatbread made from teff) and a decline in the purchase of unprocessed teff grains. In addition, as international demand for teff also grows, Ethiopia’s supply chains will need to be strengthened in order to produce for the export market. To address this need, the government of Ethiopia has begun to allow large-scale commercial farming in areas of the country that face lower land constraints.

The book’s authors also emphasize that policies to improve access to insurance, credit, and labor markets need to accompany policies to increase teff productivity. Finally, the government should work to ensure an effective enabling environment to allow for the expansion of the private sector in teff production and for strong public-private partnerships.

The Economics of Teff: Exploring Ethiopia’s Biggest Cash Crop was recently launched at an event held in Addis Ababa.

By: Sara Gustafson, IFPRI