Productivity and efficiency in high-potential areas

A large majority of Ethiopians and those who are poor live in rural areas and derive their livelihood from agriculture. Moreover, the proportion residing in rural areas is predicted to stay high (still around 70 percent in 2040), when there is likely to be 40 percent more rural residents (UN 2014). Agriculture is dominated by smallholder households. During 2013/2014, 94 percent of the area nationwide was cultivated by smallholder farmers (Ethiopia, CSA 2005b–2014b). The average amount of land held by smallholders was about a hectare and has since declined. In addition, the number and size of households increased between 2004/2005 and 2013/2014 (Ethiopia, CSA 2005b–2014b). The facts that most Ethiopians are engaged in agriculture and the bulk of the poor reside in rural areas have provided the impetus for major policy initiatives from the government of Ethiopia that prioritize smallholder agriculture. Most notably, since the launch of the Agricultural Development Led Industrialization strategy in 1993 (Ethiopia, MoPED 1993), agriculture has become a focal point.