Agro Processing: Vital in Ethiopian Economy By Samuel Tekleyesus Well-known that Ethiopia is gifted with good climate, sufficient arable land and labor, adequate rainfall and a range of agro-ecological zones that contributes to the wide diversity of commodities which can be produced. And agriculture plays a critical role in the Ethiopian economy; Ethiopia’s economy is predominantly agriculture-based. According to Growth and Transformation Plan Progress Report, Ethiopian agricultural sector is characterized by the presence of many smallholder farmers which are not integrated into commercial value chains with small land holdings and accounts more than 85 per cent of agricultural production in the country. Ethiopians’ demand for food and agricultural products is changing in unprecedented ways. Increases in per capita incomes, higher urbanization and the growing numbers of women in the workforce engender greater demand for high-value commodities, processed and ready-prepared foods.Even though the demand is there, medium- and large-scale food processing companies in Ethiopia often cite a lack of raw material inputs as a main constraint hindering their ability to work at full capacity.Poor quality inputs and farmers inefficiency are the major reasons for the supply and demand gap. The Government has identified increasing productivity of smallholder farms and expanding large-scale commercial farms as two of its priority areas. In addition, as part of the second Growth & Transformation Plan (GTP II), the government has been looking to the agro-processing sector as one engine to pushthe economic growth.There are clear indications that agro- industries are having a significant global impact on economic development and poverty reduction, in both urban and rural communities. However, the full potential of agro processing industries as an engine for economic development has not yet been realized. Developing competitive agro processing industries is crucial for generating employment and income opportunities. Agro processing industries have the potential to provide employment for the rural population not only in farming, but also in off-farm activities such as handling, packaging, processing, transporting and marketing of 18
Abyssinia Business Nework
መስከረም 2012 / September 2019
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food and agricultural products. Though there is a huge potential for growth of the agribusiness in the country, there are some critical constraint such as weak infrastructure linkage between the producers and processors, limited knowledge on the requirements of processors by the farmers in terms of quality or agronomic practices and fragmented agricultural system which pose a challenges for processors to procure the appropriate quantity and quality of raw materials. Ethiopia’s agro-exports are currently almost entirely limited to primary and unprocessed products. The share of processed products in total agriculture exports constitute only insignificant amount while import for such products remains strong. It is known that there is a favorable market
