
Radar | Jan 07,2023
Jun 26 , 2021
By Christian Tesfaye
The rainy season has begun. In Addis Abeba, it elicits mild disappointment as the season means more mud, colder weather (especially as air conditioning systems are virtually non-existent in households), and flooded streets though, of course, roasted corn by street vendors is a plus.
For subsistence farmers, it means the difference between feeding themselves or relying on safety nets because, like our ancestors centuries or millennia ago, we have to rely on the rain to provide for livelihoods. For the country as a whole, any hint of drought means massive levels of food insecurity. Fortunately, it will be an adequately rainy season this year, and all things equal, agricultural output is expected to hold up.
There is a certain irony when it comes to food security. The countries whose economies are most reliant on agriculture are the likes of Liberia, Somalia, Central African Republic, and Ethiopia. All poor sub-Saharan African countries that nonetheless are highly food insecure, rely on food imports and aid. This is because although most of the labour force is engaged in agriculture, much of them are subsistence farmers. Their productive force is spent tilling the land or raising cattle for consumption by themselves.
On the other hand, most developed countries’ share of their agricultural sector is below five percent. And these few engaged in crop or livestock farming, fishing and poultry are doing it for commercial purposes—to sell to the domestic market or for export purposes— rather than for self-consumption.
No wonder then that Ethiopia wants to wean its reliance on the agriculture sector, which is highly unproductive. They have come up with sensible policies to ensure a structural economic transformation to productive areas of the economy, such as manufacturing. They have built roads, industrial parks, hydroelectric dams and invested heavily in education and public health to create the skilled workforce necessary for a healthy industry, construction and services sector. Indeed, now in Ethiopia, services contribute more to the economy than does agriculture.
But all of this can only go so far. Not enough rain in any given year, then investments in other sectors have to be held back to import food. Otherwise, people will go hungry. Agriculture is a stubborn sector that can not be neglected. It is possible to survive without major industry or services, as has been the case for humanity for millennia, but too low of an agricultural output is a drain on the economy, not to mention a cause of food insecurity.
There are institutions such as the Ministry of Agriculture and the Agricultural Transformation Agency set up to change this reality. Emphasis has been put on the provision of fertilisers and improved seeds; building irrigation systems; and better integrating farmers with domestic markets. One piece of the puzzle remains sadly unaddressed: access to finance for farmers and agri-business.
Farmers are unable to get credit in order to scale up their production through means such as adopting modern farming techniques. This is because they lack collateral—the land they till is not their land per se but belongs to the “public.” It is a scenario that will not change anytime soon.
Coupled with general underdevelopment of the financial sector, this means that less than a fifth of smallholder farmers have access to banking services and only about five percent of loans have gone to the agriculture sector in Ethiopia in 2018.
But there is hope for this gloomy set of circumstances. Instruments such as inventory financing, where a lender holds a farmers post-harvest inventory as collateral, could help scale up, according to the Brookings Institution. The service sector can also help make up for the financial gaps businesses and smallholders are faced with, such as ‘Uber for farming.’
Recently featured by the World Economic Forum, the app Hello Tractor connects farmers with tractor owners, the former renting out the equipment for a fee. It is a service that helps make each farmer that could not afford a tractor be more productive through mechanised farming techniques while helping create a business opportunity for those that happen to have idle tractors sitting around.
PUBLISHED ON
Jun 26,2021 [ VOL
22 , NO
1104]
Radar | Jan 07,2023
Obituary | Jan 23,2021
Radar | Feb 20,2021
Radar | Dec 05,2020
Viewpoints | Dec 29,2018
Agenda | Nov 06,2021
Fortune News | Jul 01,2023
Commentaries | May 06,2023
Fortune News | Sep 19,2020
Agenda | Sep 19,2020
Photo Gallery | 82327 Views | May 06,2019
Photo Gallery | 74464 Views | Apr 26,2019
Fineline | 58295 Views | Oct 03,2020
Fortune News | 58163 Views | Jul 18,2020
Dec 24 , 2022
Biniam Mikru heads the department of cabinet affairs under Mayor Adanech Abiebie. But...
Jul 2 , 2022 . By RUTH TAYE
On a rainy afternoon last week, a coffee processing facility in the capital's Akaki-Qality District was abuzz with activ...
Nov 27 , 2021
Against my will, I have witnessed the most terrible defeat of reason and the most sa...
Nov 13 , 2021
Plans and reality do not always gel. They rarely do in a fast-moving world. Every act...
Nov 25 , 2023
Ethiopia's quest to develop a functioning capital market is a demanding yet not unach...
Nov 18 , 2023
Prime Minister Abiy Ahmed (PhD) has made a fervent call for landlocked Ethiopia to ga...
Nov 11 , 2023
In November last year, a ray of hope pierced the gloomy skies of Ethiopia as the Pret...
Nov 4 , 2023
In the corridors of economic policy-making, a quote often attributed to Albert Einste...
Nov 25 , 2023
Awash International Bank (AIB) posted a striking surge in net profits, reaching 6.9 b...
Nov 25 , 2023 . By BERSABEH GEBRE
A new regulatory measure Djibouti's customs officials enforced led to importers being...
Nov 25 , 2023 . By MUNIR SHEMSU
Minister of Health Lia Tadesse (MD) has displayed her ambition of rolling out a three...
Nov 25 , 2023 . By DAWIT LIDETA
A year after the cessation of hostilities agreement was signed between the Tigray People's Liberation Front(TPLF) and the Federal government...