ETHIOPIAN DEVELOPMENT RESEARCH INSTITUTE

Fantu Nisrane Bachewe and Alemayehu Seyoum Taffesse

Ethiopia Strategy Support Program, ESSP-IIInternational Food Policy Research Institute (IFPRI)

Workshop on Increasing Agricultural Productivity and Enhancing Food Security in AfricaNovember 1-3, 2011

Addis Ababa

Agricultural Productivity in Ethiopia - Challenges for Future Growth

Outline

Motivation: Recent trends in output and yield, and sources of growth,

Trends in total factor productivity and efficiency,

Challenges of increasing TFP and efficiency

Data and Methods

Data Ethiopian Central Statistical Agency (CSA) - Annual Agricultural

Sample Survey (1997/98-2008/09)

Ethiopian Rural Household Survey (ERHS) - Seven rounds of panel survey (1993/94-2008/09)

Methods Growth decomposition;

Growth accounting

Stochastic frontier analysis

Recent Trends in Output and Yield: ERHS

• Spatial coverage: 15 Kebeles (villages), 1500 households

• Temporal coverage: 1993/94-2008/9 (7 rounds the last three roughly one every 5 years)

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Data and Method - TFP and Efficiency

Change in TFPChange in Output

less Change in Input Use

Change in Technical Efficiency

Change in Allocative Efficiency

Technological Progress

Change in Other Factors (Scale Effects, Price

Effects)

Recent Trends in Output and Yield: CSA data

Trend in total agricultural output, area, and yield, 2004/5-2008/9

Levels Growth rates (%)

Variable Crop 2004/5 2008/92004/05-2005/06

2007/08-2008/09 Average

Output All crops

14,217

20,245 9.7 2.6 9.3

Grains 11,907 17,117 12.4 6.7 9.5

AreaAll crops 10,108 12,136 3.9 1.7 4.7

Grains 9,811 11,211 3.7 2.3 3.4

Yield

All crops 14.07 16.68 5.5 0.9 4.4

Grains 12.14 15.27 8.4 4.3 5.9

Source: Authors’ computation using CSA data (CSA (2006, 2007, 2008, and 2009)).

Recent Trends - Sources of Growth : CSA data

Both national and zone-level data indicate that about one-half of the increase in output resulted from expansion in cultivated area.

The remaining increase in total output must have resulted from: Increased use of other inputs, and/or Increased total factor productivity (TFP).

Most of the remaining growth resulted from increases in ‘traditional’ inputs Growth in number of holders that averaged 3.6 percent, Growth in draught livestock, which constitute non-land

capital, at average annual rate of 5.8 percent.

Recent Trends - Sources of Growth: CSA Data

Growth in the application of modern inputs was slower: On average 44 percent of cultivated area was fertilized and

this share grew at average annual rate of 1 percent, Rate of chemical fertilizer application averaged 33 KG/ha

and grew annually at a rate of 6.8 percent, Application of improved seed averaged 1.7 KG/ha and grew

at 9 %; The area under improved seeds averaged 3.5 percent and it

grew at 5.7 %, On average, about 19 and 1 percent of cultivated area was

applied with pesticides and was irrigated while this share grew annually at 6 and 5.5 percent, respectively.

Recent Trends in Output and Yield: ERHS

During 2004-2009 ,• Household level real value of output grew annually at 7.7

percent, • Cultivated area grew on an average rate of 11.7 percent,.• Use of labor and draught oxen increased annually at respective

rates of 1.7 and 5.9 percent,• Per hectare application of fertilizer averaged 35 KG/ha and grew

annually at 25 percent,• Household level real value of output per hectare has been

growing until 2009 during which it declined.

Recent Trends - Sources of Growth: ERHS Data

Analyses that use household level ERHS data implied output growth during the same period largely driven by: Size and quality of cultivated land, Number of draught oxen and ploughs used for cultivation, Increase in quality and quantity of labor use, and The amount of rain received in the region,

Trends in total factor productivity

Trends in TFP during 2004-2009 in agriculture

• A growth accounting model applied on sector level CSA data implied annual growth in TFP of 3.7 percent during this period.

• Stochastic production frontier (SPF) applied on zone level CSA data implied average annual growth in TFP of 4.6 percent.

• SPF using household level ERHS data implied average annual decline in TFP of 2.6 percent,

Trends in total factor productivity and efficiency

Trends in efficiency-relative to best performing zones/households • Zone level CSA data implied that during the 2004-2009 period

o Average nationwide relative level of efficiency of 0.72, and o Annual growth in efficiency averaged 1.24 percent.o Regional differences considerable: Level (0.5-0.92), growth (0.24%-

1.9%)

• Household level ERHS data implied that during the same period o Average household level relative efficiency was 0.52,o Efficiency levels grew at average annual rates of 1.17 percent,o Regional differences narrower: Level (0.49-0.59), growth (0.7%-4.6%)o Average levels of efficiency in Tigray, Amhara, Oromia, and SNNP regions

Trends in total factor productivity and efficiency - Summary

Output growth was mainly driven by growth in cultivated area and traditional inputs such as labour and livestock;

Rainfall matters; Modern inputs have yet to contribute as much as expected to increases

in output, and Both ERHS and CSA data implied positive contributions of increased

advisory services by extension agents.

Future growth need to derive from increases in TFP.

Challenges of Increasing TFP

Is there potential to improve efficiency? Zonal analysis – limited room (0.72 but higher if the region with the

lowest TE is excluded); ERHS analysis – a lot of room (0.52);

Caveat: Data, Concept “… farm-level efficiency concept has been applied to zone-level data.”

Adoption - The returns question (VC ratios <2); Input subsidy - a sub-text Availability – the Seed question;

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