Blog Post

What Is Driving Agricultural Productivity in Ethiopia?

Over the past decade, Ethiopia’s agricultural productivity has exploded, particularly for cereal crops. This expansion in agriculture has led to impressive economic growth, but it’s unclear exactly what is behind the advance in productivity. Additionally, Ethiopian agriculture relies heavily on smallholder farmers, and some researchers are concerned that the recent growth may not be sustainable on the country’s increasingly small landholdings. Multiple studies now suggest that medium- and large-scale farms may be more productive than smallholder farmers, and policies in Ethiopia are beginning to pay more and more attention to commercial farming as a way to spur agricultural growth and reduce poverty.

In a new working paper, “Cereal Productivity and Its Drivers: The Case of Ethiopia” , the Ethiopia Strategy Support Program (ESSP) examined this link between farm size and agricultural productivity. Authors Fantu Nisrane Bachewe, Bethelhem Koru, and Alemayehu Seyoum Taffesse utilized baseline data from Ethiopia’s Agricultural Growth Program from 2010-2011, covering almost 7,000 households that produce five major cereal crops: black teff, barley, wheat, maize, and sorghum. Using two different analytical methods, the authors uncovered several important results regarding Ethiopia’s cereal yields and agricultural productivity and efficiency.

While many development efforts have focused on smallholder farmers in recent decades, this study suggests that larger landholders are actually more productive. In fact, the authors found that as large farmers’ cultivated area increases, their productivity increases hand-in-hand. Smallholders’ productivity does not increase in this linear manner; in fact, as smallholders’ cultivated area increases, their productivity first actually decreases before it begins to improve.

Farms that partially or fully specialize in a particular crop also tend to be more productive than those that plant several crops. Productivity also increases as people are exposed to modern farming practices and inputs; however, adoption of modern inputs and practices remains low. The availability of extension services and producers’ organizations also has an impact on overall productivity.

These results suggest that it may be more beneficial for smallholders to engage in share-cropping or renting land, practices that are currently very restricted. Establishing these more flexible land markets would reallocate land to more efficient, larger farms, leading to increased agricultural productivity and allowing smallholders to take advantage of expanded labor markets.  Improving farmers’ access to information and modern inputs will also likely increase overall production.