Crop Value Chain

Ethiopia’s crop agriculture is complex, involving substantial variation in crops grown across the country’s different regions and ecologies. Five major cereals (teff, wheat, maize, sorghum, and barley) are the core of Ethiopia’s agriculture and food economy, accounting for about three-fourths of the total area cultivated, 29 percent of agricultural gross domestic product (GDP) in 2005/06 (14 percent of total GDP), and 64 percent of calories consumed (FAO various years). There has been substantial growth in cereals in terms of area cultivated, yields, and production since 2000, but yields are low by international standards, and overall production is highly susceptible to weather shocks, particularly droughts. Thus, raising production levels and reducing their variability are essential aspects of improving food security in Ethiopia, both to help ensure adequate food availability and to increase rural household incomes.

Ethiopia’s crop agriculture continues to be dominated by the country’s numerous small farms, which cultivate mainly cereals for both their own consumption and sales: smallholders account for 96 percent of the total area cultivated. The five major cereals (teff, wheat, maize, sorghum, and barley) occupy almost three-fourths of the total area cultivated and represent almost 70 percent of the total value-added in recent years.

The main challenge in the current trading system is a lack of transparency. The value chain is long, with too many actors participating and adding prices
at each step without adding much value. Market information is scarce and open to manipulation. Sellers are exposed to opportunistic traders who collude and drive prices down at source while gaining significant margins at the endpoint. We believe some of this can be solved by setting up a computer-aided marketing mechanism that can help the farmers and end users.