The Ethiopian agricultural landscape: A case for professionalism
SCOPEinsight has been working in Ethiopia since 2011. In this time, we have assessed nearly 500 agribusinesses of all sizes (i.e., cooperatives, producer organizations, professional organizations, AFIOs). Through our partners and work, we have noticed some trends which require an urgent focus on strengthening these organizations’ professional acumen to solve. It is necessary to professionalize agribusinesses to help grow thriving agribusinesses. This will lift farmers out of poverty and make them more resilient to climate change, while also helping rural economies thrive. While not all of Ethiopia’s sectoral challenges will be solved by professionalizing agribusinesses (the conflict in Tigray, for example, destabilizes national security and the economy), many of the challenges could be alleviated through a systematic strengthening of the country’s agribusinesses.
Current agricultural state of affairs in Ethiopia
Agriculture is a very important part of the Ethiopian economy. Approximately 40% of the country’s GDP and 80% of its exports come from agriculture, and the sector employs approximately 75% of the workforce, according to USAID. The biggest crops in Ethiopia are cereals, specifically teff, maize, wheat, sorghum, and barley. Other crops include sesame, legumes, and coffee, which is one of the biggest export crops.
Despite agriculture’s importance, the Ethiopian agricultural sector faces many challenges. Some of these challenges include low yields among farmers’ crops, impacts of climate change, and an inability to access required finance. Many Ethiopian agribusinesses face these issues. When looking at the data collected from the approximately 500 agribusinesses we have assessed within the country, we find that most of the organizations:
- ● Only have rudimentary policies & processes
- ● Have weak business & financial planning
- ● Have weak or no strategic & operational planning
- ● Have weak or no human resources
- ● Lack support systems/technologies
- ● Are vulnerable to external shocks/low resilience
- ● Engage in environmentally unsustainable practices
These challenges are important to focus on and solve, as Ethiopia also has high levels of food insecurity. Rates of hunger in Ethiopia have been going down in recent years, but the Global Hunger Index still describes the situation as serious. If Ethiopian farmers and agribusinesses grow stronger, then levels of food insecurity are likely to go down.
Solving these challenges is possible through professionalism
Change must occur in the Ethiopian agricultural sector if it is to support a growing population. To help the sector become successful, it is important to address issues such as insufficient yields, the changing climate, and a lack of finance. There are various lessons on how to help agricultural sectors reach their full potential, but at the base of these improvements is a singular concept that can lead to agricultural success: agribusiness professionalism.
SCOPEinsight defines a professional agribusiness as one that “can manage its resources and processes using its human capital (leaders, management, staff, and members) efficiently and effectively… thereby achieving the organization’s goals.” This aligns with the definition of professionalism in the IWA29. To measure an agribusiness’s professionalism, we score it on a scale of 1 to 5 along eight different dimensions, each composed of multiple subdimensions (see below). The resulting SCOPE score indicates an overall level of professionalism as well as specific strengths and weaknesses of the agribusiness. This data can be used in many ways; for example, to tailor capacity building or to create a pipeline for lenders. As agribusinesses grow more professional, they also grow stronger and more capable. Agribusiness professionalism can help to solve many problems currently facing the Ethiopian agricultural sector.
Professionalism can improve yield sizes
Many Ethiopians rely on their own crops to eat, but they are unable to grow enough to support themselves and their families. And as arable land in the country is limited, simply farming on more land is not possible. Instead, yields must increase.
An important way to help farmers increase their yields is by helping them to use improved seeds. A study from Cameroon showed that the use of improved seeds could increase yields by 20-40%. However, if farmers are to consistently use improved seed, they must be able to access it. Evidence has found that some Ethiopian farmers stop using improved seed because of, among other things, poor extension services by local agro-input retailers.
However, this issue can be solved if efforts are made to professionalize input retailers. The SCOPE Input Retailer assessment tool is an essential first step in the professionalization process. After assessing and understanding an input retailer’s status, it is possible to make a plan for improvements. Cultivating New Frontiers in Agriculture (CNFA) has done this with great success in Rwanda. Similar efforts can have similar success in Ethiopia. This will ensure that Ethiopian farmers have a place to buy the improved seeds that will improve their yields. These improved yields should help reduce food insecurity in the country.
Climate change issues can be mitigated
Ethiopian agriculture is very dependent on the climate and weather, which means changes in the climate will have negative effects on farmers. Changes in rainfall will be especially devastating, as Ethiopian farms are predominantly reliant on rainfall for watering. While Ethiopia has many lakes and rivers that could be used to water crops, many farmers do not irrigate their fields. This means the available water is underutilized.
To mitigate the effects of climate change, the approach must be twofold: First, Ethiopian farmers must adopt environmental best practices, and second, they must have the ability weather the risks and challenges climate change causes. Increased professionalism has a proven correlation with improved environmental practices. If Ethiopian agribusinesses become more professional, they will also be gentler towards the environment, which may lessen the future impact of climate change.
To deal with the current impact, again we can turn to professionalism. More professional agribusinesses are more able to weather external risks. They are also more likely to use modern farming techniques. If Ethiopian farmers irrigate their fields, for example, they will no longer be as dependent on rainfall for their yields. Irrigated crop yields tend to be 2.3 times greater than yields from rain-fed fields. Ethiopia is capable of more irrigation than is currently available; estimates indicate that the water in Ethiopia could irrigate approximately 5.7 million ha, but less than half of that (2.7 million ha) is used. If Ethiopian farmers irrigate their crops, using the abundance of water available within the country, then they will also see massive increases in their yields.
More professional farmers have greater access to finance
Like many other smallholder farmers and agri-SMEs, Ethiopian farmers often struggle to access the loans they need to invest in their business. Across all of sub-Saharan Africa, there is an estimated annual $65 billion financing gap between lenders and agri-SMEs. This is often a stumbling block as agribusinesses try to improve themselves in any way. Without capital, farmers and agribusinesses are unable to grow.
Agribusiness professionalism can also solve this problem. As farmers become more professional, their ability to access loans increases. They can then use these loans to invest in their agribusiness and improve it. For example, agribusinesses can use the money to purchase important supplies, such as improved seeds. They can also implement other modern agricultural techniques, such as modern fertilizers or irrigation.
Our commitment to Ethiopian agriculture
At SCOPEinsight, we have been working in Ethiopia for ten years and have conducted nearly 500 assessments within the country. We have worked with many partners on projects in Ethiopia, and we have seen a great deal of success in their projects.
We worked with the IFC and Heineken to professionalize malt barley farmers and link them to finance. The project was a massive success, with SCOPE reassessment scores showing an 11% increase in professionalism. Yields more than doubled, going from 2.4 MT/ha to 5.2MT/ha. This added an estimated $60 million in food security. The project also helped farmers to access $1.8 million in short-term financing with virtually zero defaults.
We have also worked with Nuru International to help organize Ethiopian smallholder farmers into thriving, professional cooperatives. These cooperatives are then able to grow and sustain themselves and their communities. The communities involved see major benefits: yields improve by 65% and incomes increase by 97%.
We intend to continue our work in Ethiopia in the future. Currently, we are working with the charity A Glimmer of Hope to create a tool to more effectively assess Savings and Credit Cooperatives (SACCOs) in Ethiopia, as a continuation of a previous project. We also have an upcoming project with Agriterra and SNV to assess dairy cooperatives in Ethiopia and help them to professionalize.
A systemic approach will make systemic change
While projects like these can help the specific farmers and agribusinesses reached, creating real change will require a larger, more systemic solution. Researchers in Ethiopia suggests “the support [of international governments and organizations]… be made in such a way that observable impacts could be seen in the defined period of time in contrast to the usual piecemeal regular support from year to year and decade to decade.” If we are to make a systemic, sector-wide change, then we must work together in a systemic, sector-wide manner. Only then will we be able to make a significant impact.
Are you interested in helping us create systemic change in Ethiopia? Contact us today to see how we can work together.Back to news