Factors Contributing for the Underdeveloped Agri-Value Chain of Ethiopia

Matiwos Jaleta


About 85% of all Ethiopians are employed in agriculture. However, Ethiopia stands in the extreme end of the continuum of value chain. Structurally, it means Ethiopian economy is mostly dependent on agricultural product of export commodity like coffee with little to no value addition on the extreme left side of the continuum of value chain, and finished goods import like vehicles on the extreme right side. As a result Ethiopia is characterized by underdeveloped agriculture for subsistence with little to no surplus as the country is continuously engaging in import of wheat commodity from abroad. Based on the survey from 322 respondents of East Wollega Zone, Gudeya Bila Woreda, Gute Canco Kebele farmers, located in the West of Addis Ababa, Ethiopia, factors attributed to the underdevelopment of Ethiopian agriculture are mainly explained by value chain governance dominance in the downstream supply chain, lack of subsidy and hedging to farmers, high logistics cost to market, and low level of mechanization and innovation. Based on the identified factors, the study recommends for provision of subsidy and hedging for farmers, and the need to govern the agri value chain of Ethiopia by setting maximum retail price and equitable sharing of the benefits according to the value addition made by each player in the agri value chain.
Key words: Agri value chain, subsidy, hedging, mechanization, value chain governance.

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ISSN : 2251-1571