ETHIOPIAN DEVELOPMENT
RESEARCH INSTITUTE
Agricultural transformation in Ethiopia:
Evidence from the teff sector
Bart Minten
Addis Ababa
December 12th
1
Major changes in agriculture
1. More improved technologies: e.g. 4 fold increase in
use of fertilizer over 15 years
2. Av. Annual increased in agricultural productivity:
7.4% over the period 2005-2011
3. Improved market performance; e.g. significantly
smaller margins between markets
4. Growth of agricultural exports; e.g. 50% increase in
volume of coffee export, take-off flower exports,
ten-fold increase in sesame exports in ten years.
2
Major challenges
1. Yields still low; adoption of improved practices has
increased but overall rates are still low (e.g. half of
the farms use fertilizer)
2. Not self-sufficient in staples; e.g. still major
imports of wheat
3. Increasing land pressure leads to smaller farms,
making livelihoods from agriculture problematic
4. little diversification, sector largely focused on
cereal crops, with major implications on nutrition
3
Teff as an illustration of the dynamics
• 20% of all cultivated area, covering 2.7 million hectares
and grown by 6.3 million farmers (maize is second with
15% of cultivated area)
• Value of production in 2011/12 was 1.6 billion USD, the
most important crop in the country.
• Value of commercial surplus (CS) 2011/12: 464 million
USD, as important as sorghum, maize, and wheat
combined; one-quarter less than coffee (600 million USD)
4
Data and methodology
• Purpose of the study: to understand major value
chains from rural producers in major production
zones to Addis, the major city in the country.
• Organization of surveys: 1/ Interviews with key
informants September – October 2012; 2/ Fielding
of surveys in November – December 2012.
• Surveys with producers and communities
upstream;
rural and urban wholesalers and
truckers midstream; cereal shops, mills, and
cooperative retail downstream
Teff upstream in the value chain
Increasing adoption of modern inputs in ten years
Technology
Unit
Ten years
ago
Now
Improved seed share (%)
7
36
Use of DAP
kgs/ha
50
91
Use of urea
kgs/ha
34
64
Herbicides
share (%)
32
65
Pesticides
share (%)
4
13
Teff upstream in the value chain
Type of teff: rapid decline of red; increase of white/magna
Technology
Unit
Ten years
ago
Now
Red teff
share (%)
36
20
Mixed teff
share (%)
18
12
White teff
share (%)
41
54
Magna teff
share (%)
5
14
Teff upstream in the value chain
Reasons for the decline of red teff:
1. Lower prices of red teff. Higher prices of white
teff driven by:
a. lower conversion ratios of red teff to enjeras;
b. longer shelf life for white enjeras;
c. preference of consumers
1. Higher productivity of white teff now because of
availability of improved varieties; traditionally red
teff would do better compared to white teff
Teff upstream in the value chain
• 93% of teff farmers use chemical fertilizer; 34%
uses improved seeds
• Stated reasons for not using or for not using
enough modern inputs:
1. Chemical fertilizer: Lack of money at the time
of need
2. Improved teff seeds: Unable to find them or
unable to find more
0
.5
1
1.5
Heterogeneity in adoption: Fertilizer
0
50
100
Transport costs to Addis (Birr/quintal)
DAP now
urea now
DAP 10 years ago
urea 10 years ago
150
0
20
40
60
80
100
Heterogeneity in adoption: Herbicides
0
50
100
Transport costs to Addis (Birr/quintal)
herbicides now
herbicides 10 years ago
150
0
20
40
60
80
Heterogeneity in adoption: Improved seeds
0
50
100
Transport costs to Addis (Birr/quintal)
Improved seeds now
150
Improved seed 10 years ago
Midstream - Changes in margins: Share of producer
in retail price
• Trend line: share of producers has increased from 74%78% in 2001 to 76-86% in 2011
0.9
0.8
0.7
0.6
0.5
white producer
red producer
Linear (mix producer)
mix producer
Linear (white producer)
Linear (red producer)
200201
200207
200301
200307
200401
200407
200501
200507
200601
200607
200701
200707
200801
200807
200901
200907
201001
201007
201101
201107
Share in retail price
1
Midstream – Changes in margins: Milling costs
- Declining milling costs (ratio milling/teff price); other
marketing costs stayed stable
0.06
0.05
0.04
0.03
0.02
0.01
200107
200202
200209
200305
200312
200407
200502
200509
200604
200611
200706
200801
200808
200903
200910
201005
201012
201107
201202
0
Teff downstream in the value chain
• Teff retailing in Addis: 61% mills; 29% cereal shops; and
8% consumer cooperatives
• Traditionally (as seen in other towns or rural areas), mills
only did milling and household typically would:
a. buy teff on market/cereal shop;
b. clean teff at home;
c. take teff to mill;
d. prepare enjera at home
Teff downstream in the value chain
• Mills are increasingly becoming “one-stop shops”
10 years ago
Unit
No. of
Now
Value
obs.
Share of customers that get
home delivery
%
Share of customers that clean at
home
%
Share of customers that only
come for milling
%
No. of
Value
obs.
102
59
271
61
96
30
254
21
93
30
250
24
Teff downstream in the value chain
- More competition and better service delivery
10 years ago
Unit
Number of mills in the
kebele
number
Number of cereal shops
in the kebele
number
Often queuing of
consumers
%
#
Value
Now
#
Value
92
6.1
250
9.3
75
2.9
202
4.1
102
30
276
12
- Food service industry sizable (20% of teff sold as prepared
enjera)
Drivers for change
1. Public sector: Large investments in agricultural extension system
Unit
Contact extension agents:
Received a visit of an agricultural extension agent in the last 2
years
In last 12 months:
Farmer visited a demonstration plot of teff
Farmer visited a government office of agriculture and discussed
teff issues
Farmer awareness of technologies:
Farmer knows the recommended fertilizer use on teff plots
Mean/
Percent
share
74
share
37
share
27
share
51
Drivers for change
2. Important improvements in road and communication
infrastructure
Unit
Owners of a phone
share
(%)
Year since they own a phone
Used mobile phone in the last marketing
transaction
If yes, agreed on a price with the trader
by phone in the last transaction
year
share
(%)
share
(%)
Farmers Rural Urban Urban
traders traders retailers
28
100
100
98
-
2006
2007
2008
12
-
97
56
74
-
52
32
Drivers for change
3. Urbanization (1.2 million more people in Addis),
income growth and economic superior characteristics
of teff (doubling of income, 110% increase in teff
consumption expenditure); these factors combined
might have led to doubling of commercial surplus into
Addis in last 10 years
4. Higher opportunity costs of time, especially of
women; further impetus for foodservice industry as
well as for development of a different retail sector
Conclusions
Important changes in the teff value chain:
1. Modern inputs increasingly adopted, especially by
those farmers living close to urban areas
2. Quality demands are rising, important shifts from
cheap red varieties to more expensive white ones
3. Increasing willingness to pay for convenience in
urban areas, as illustrated by the emergence of onestop shops as well as by a sizable foodservice sector
4. The share of rural-urban marketing, urban
distribution, and milling margins is declining,
indicating improved marketing efficiency
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Conclusions
Despite changes, still in early stage of agricultural
transformation:
1. Upstream: a/ Adoption of improved varieties still low;
b/ Fertilizer used is below recommended level; c/
Mechanization absent; d/ Vertical integration and
coordination absent
2. Downstream: a/ Little evidence of up-scaling; b/ Small
share of modern retail; c/ Almost no branding
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Implications
1.Major room for improved seed development;
better knowledge on other technologies to improve
productivity needed, i.e. row planting, transplanting,
response to fertilizers that contain zinc and copper,
minimal tillage
2. Further investments in roads and communication
(still one of the lowest in Africa)
3. Urbanization motor for rural transformation
(urbanization also one of lowest in Africa)
23