Agricultural Economics, 6 (1991) 159-175 159 Elsevier Science Publishers B.V., Amsterdam Development of agriculture in Ethiopia since the 1975 land reform Abenet Belete a, John L. Dillon a and Frank M. Anderson b a Department of Agricultural Economics and Business Management, University of New England, Armidale, N.S. W. 2351, Australia b Department of Agricultural and Horticultural Systems Management, Massey University, Palmerston North, New Zealand (Accepted 8 August 1990) ABSTRACT Belete, A., Dillon, J.L. and Anderson, F.M., 1991. Development of agriculture in Ethiopia since the 1975 land reform. Agric. Econ., 6: 159-175. A stated objective of the Ethiopian Government since it came to power in 1975 has been to increase the production of crops for both domestic consumption and export. Conse­ quently, a number of plans and programs have been proposed and implemented to bring about such development in Ethiopian agriculture. This paper mainly focuses 011 a macro review of the general course of Ethiopian agricultural development since the land reform of 1975. The food production in Ethiopia has lagged behind the population growth as evidenced by the gap between the growth rates of population (3%) and food production (1.8%) over the period from 1970 to 1983. Recently, this situation has, perhaps, further deteriorated. Seventy-one percent of the total land mass is estimated to be suitable for agriculture, but only about 19% is cultivated. This suggests an underutilisation of land. Moreover, Ethiopia has a persistent subsistence production problem in agriculture. Agricul­ tural research and education which are essential to development have not been given due attention by the policy makers. As a result, the agricultural technologies used by farmers have changed little in this century. Moreover, small-scale farmers, although still the most potent economic force in the country, have not been given the incentives necessary to expand production, and currently receive less than adequate support from the central government. Some 85%, 50%, and 79% of total agricultural credit, fertiliser and improved seeds respectively go directly to socialist enterprises (state farms and producers' coopera­ tives) which, up to 1985, have jointly accounted for only 5% of the total cultivated land and 4% of the national crop production. The favouring of large-scale and capital-intensive state-owned farming enterprises with credit, subsidies, and fiscal incentives, while neglecting smallholders, has contributed to the stagnation of agricultural production in Ethiopia. Overall, the analysis indicates that there has been no significant development of agriculture in Ethiopia following the 1975 land reform. 0169-5150j91j$03.50 © 1991 -Elsevier Science Publishers B.V. All rights·reserved 160 A. BELETE ET AL. INTRODUCTION Ethiopia is primarily an agricultural country. It is believed to possess an immense potential for agricultural production, a potential which has not yet been realised. Out of the total land area of 1.22 million km2, some 71% is estimated to be suitable for agriculture. However, only 19% of the land is at some time used for crop production (NRDCjCPSC, 1983; MSFD, 1984). This apparently low rate of utilization is due in part to endemic problems of malaria, sleeping sickness, etc. in the lowland areas. But 40% of the country's total area is classified as highlands (above 1500 m a.s.l.) and about 88% of the national farming population lives in these highland areas. Prior to 1975, the agrarian economy in Ethiopia was principally feudal. During the feudal era an agricultural surplus was extracted by a relatively small group of landlords. It is generally believed that the system kept the peasantry impoverished and preserved outmoded primitive cultivation practices. Insecurity of individual tenure under the feudal system also reduced We incentives for tenants to increase yields through investment in the improvement of land. The overall effect of these tenure arrangements was reflected in the stagnation of agriculture. This perceived bottleneck was removed by the land reform proclamation of 4 March 1975 which made all rural lands public property and thereby fundamentally altered agrarian relationships in Ethiopia (PMAC, 1975). Since 1975, through a series of related proclamations, the government has sought to organize agriculture into production units of individual farms, each of at most 10 ha, state farms (mainly comprising former estates, plantations and large commercial farms) and producers' cooperatives. Under the land reform, private farm households were .organized into Peasant Associations (PAs) each encompassing a nominal 800 ha and typically made up of 300 to 400 farmers and their households. Members of each P A cultivated the land as individuals. The total number of PAs, as of 1985, was 20 158 with a total membership of some 5.6 million households (MOA, 1985b). In the same year there were 54 state farms operating on 250 000 ha of land. There were also 1856 producers' cooperatives, of which only 191 were registered and had legal status. These cooperatives ac­ counted for a total of 132 842 farm households (MOA, 1985a). In spite of these major changes to the structure of agriculture in the country, production has stagnated. Currently, Ethiopia is experiencing a wide food gap. Agricultural pro­ duction has been increasing annually by about 1.8% while population growth is approximately 3% (World Bank, 1984). Although recent data are not available, per-caput consumption of cereals and pulses fell steadily from an estimated 415 g per caput per day in 1975/76 to 367 gin 1981/82 ETHIOPIAN AGRICULTURAL DEVELOPMENT SINCE THE LAND REFORM OF 1975 161 (FAO, 1982). Ethiopia has become a regular importer of some 300 to 400 thousand metric tonnes of food grain each year. Imports of food increased from US$11.2 million in 1974 to US$62.3 million in 1982 (NBE, 1982). The total volume of food aid flowing into the country increased from 135 000 metric tonnes in 1978 to 243 000 metric tonnes in 1982 (FAO, 1982). The increase in food aid is even more striking if the drought years of 1984 and 1985 are taken into account. In each of these years, international food assistance reached 1.1 million metric tonnes of grain (RRC, 1985). The basic constraint on development in Ethiopia is that agriculture presently produces little economic surplus. Yet, it is the agricultural sector that can provide investable resources for national development. Agricul­ ture, according to NRDCjCPSC (1982a), should finance its own growth and also finance industrialisation of the country. The problem, therefore, is how to achieve development and growth in agriculture. An appreciation of the general course of agricultural development in Ethiopia since the 1975 land reform may provide some insights on this matter to decision makers in Ethiopia. ROLE OF AGRICULTURE IN ETHIOPIA'S ECONOMIC DEVELOPMENT STRATEGY Agriculture can directly contribute to Ethiopia's economic development in six important ways. These are (NRDCjCPSC, 1983): (1) by providing basic food supplies for the nation; (2) by generating foreign exchange earnings through agricultural exports; (3) by supplying labour needed by the industrial sector; (4) by providing the necessary capital for industrial development and social investment; (5) by raising the income of the rural population and thereby being an important source of effective demand; and (6) by providing employment for a significant part of the rural population. The size and sectoral origins of Ethiopia's GDP over the period 1970/71, to 1985/86 are shown in Table 1. From these data it can be seen that agriculture's share of GDP, at around 50% (made up of some 80% from crop and some 20% from livestock production) did not change significantly over the period. The industrial, domestic trade and other services sectors account for about 15%, 15% and 20% of GDP, respectively. The data also show that agriculture made an almost equal contribution to the GDP of the country during both the pre- and post-1975 period. The development of the non-agricultural sectors has not significantly reduced the overwhelming domination of the economy by the agricultural sector. The economic development of Ethiopia will continue to depend primarily on agriculture for many decades to come. 162 A. BELETE ET AL. TABLE1 Ethiopian GDP by sector and annual growth in agricultural production, 1970/71 to 1985 j86 Year GDP Sectoral share of GDP Growth in (mjbirr a) Agriculture Industry Trade Services agricultural (%) (%) (%) (%) production (%) 1970/71 2405 54.5 15.2 13.6 16.7 3.4 1971/72 2286 51.8 16.0 14.4 17.8 -4.9 1972/73 2345 50.3 16.4 15.1 18.2 2.6 1973/74 2605 49.3 16.1 15.6 19.0 11.1 1974/75 2423 48.3 15.8 15.6 20.3 -7.0 1975/76 2739 48.5 14.8 16.1 20.6 13.0 1976/77 3198 48.2 14.9 15.4 21.5 16.8 1977/78 3467 47.6 14.5 14.8 23.1 8.4 1978/79 3656 46.7 15.5 15.2 22.6 5.5 1979/80 3871 46.3 16.2 15.1 22.4 5.9 1980/81 4024 46.0 16.0 15.5 22.5 0.0 1981/82 4035 45.7 16.0 15.7 22.6 0.3 1982/83 4281 48.5 15.5 16.0 20.0 6.1 1983/84 3793 45.6 17.3 16.4 20.7 -11.4 1984j85b 3177 41.3 18.5 17.5 22.7 -16.3 1985/86 3860 44.7 17.3 16.5 21.5 21.5 Average 3260 47.7 16.0 15.5 20.8 3.69 a Birr 2.07 = US$1.00 b Drought year. Source: CSO (1971 to 1985).