A crisis looms over the fertile lands of Gambella and Benishangul Gumuz regional states, where the future of commercial farming was once in high hopes.

Faced with the spectre of foreclosure, burdensome tax demands, and a crippling lack of working capital, approximately 5,800 commercial farmers are seeking urgent intervention from regional and federal authorities. Last month, these farmers, represented by the Crop Producers & Exporters Multisectoral Association (CPEMA), conveyed their dire situation to senior officials of the Ministry of Agriculture, warning of an impending halt to their operations.

At the heart of their plea is a request to restructure loans provided by the Development Bank of Ethiopia (DBE), a state-owned policy bank that has provided 70pc of their financing. They are calling for tax relief from regional governments, citing the difficulties of operating amidst the unstable security situation. The political unrest of the past three years has led to widespread property losses due to robbery, deepening the financial crisis.

The absence of accessible loans from commercial banks for rain-fed agriculture exacerbated their plight, after they were unable to initiate new farming cycles under the current conditions.

Nonetheless, the Association leaders remain hopeful for a loan rescheduling agreement with the DBE. Melkamu Abraham, the head of the Association, spoke of the dilemma faced by many commercial farmers, who are puzzled over how to fulfil their tax obligations at a time of declining productivity.

"We need compensation for the damages," Melkamu asserts, emphasising the critical need for support.

In response to the political unrest, the Benishangul Gumuz Regional State has initiated tax penalty waivers for 950 businesses, acknowledging the hardships faced by the community. The regional tax bureau has designated commercial farmers based on their proximity to conflict zones, offering some reprieve through waived interest and tax penalties. Despite these measures, the farmers contest the legitimacy of the initial tax demands, especially since many farms have been abandoned due to the ongoing conflict.

Ethiopia's agricultural sector, predominantly comprised of smallholder farms, faces unprecedented pressure. With around 60pc of farm holdings measuring less than one hectare, and nearly 90pc of the cultivated area farmed by smallholders, the country struggles to meet its food demand. Traditional farming practices, climate change, and a growing population aggravate this struggle. Research conducted four years ago by Ibsa Dawud and Feyesi Mohammed advocated for a transition towards commercial agriculture, emphasising the need for improved incentives and infrastructure.

Alemu Bayisa, head of Tax Audit & Supervision in the Benishangul Revenues Bureau, revealed that 150 million Br was foregone through the waivers on interest and penalty.

"Few have reached out to settle their initial obligations," he said.

Acknowledging the array of obstacles confronting commercial farmers, Dereje Abebe, team leader of out-growers and contract farming at the Ministry of Agriculture, disclosed plans to convene farm owners, and representatives of the DBE and the two regional states in an effort to find a resolution to the cocktail of crises faced by the businesses.

"We can't go to every region and solve their problems," said Dereje.

Yohannes Ayalew (PhD), president of the DBE, conceded the necessity for prompt action in response to the loans granted to farmers in the Gambella Regional State.

"The DBE remains committed to supporting commercial agriculture through financing models that help rainfed and irrigation projects, aligning with national food self-sufficiency goals," said Yohannes.