Commercial & Contract Farming
Why is transformation needed in this program area?
Medium and large scale private farms offer enormous potential to contribute to overall agricultural and economic growth. Although Ethiopia’s commercial farms have existed for many decades, great limitations remain in terms of their use of enhanced inputs, application of modern technologies (such as mechanization), and their effective management. For example, average use of urea and DAP fertilizer is only 22%, pesticides 35%, fungicide 17% and herbicides 47%. As a result, productivity and production remains low.
In addition, planning and management systems are not yet sufficiently responsive to important social and environmental considerations, and agribusiness development and market infrastructure are not at the required standard. Institutions to support commercial farms are also experiencing capacity limitations to provide adequate, high quality services.
The transformation of private medium- and large-scale commercial farms (PMLCFs) is critical, as it will play a great role in food and nutrition security, as well as contributing to the transfer of skills and technologies to smallholder agriculture. It also plays an essential role in the development of the agro-processing sector, reduces rural unemployment, and generates important foreign exchange, both in terms of exports and import substitution.
What are the objectives and focus areas of this program during GTP II?
The Commercial & Contract Farming program aims to drive and transform Ethiopian agriculture by creating an enabling environment for increased investment in agriculture, agribusinesses and food processing. Key elements of the agenda include fostering entrepreneurship, improving markets and competitiveness, creating effective commercial-smallholder linkages, and promoting socially and environmentally responsible PMLCFs. This modernization of the sector supports the Government of Ethiopia’s goal of becoming a middle-income country by 2025, with growth rates of at least 11.2 percent per annum during the GTP II period.
More specifically, the objectives of this program during GTP II are: 1) to strengthen the enabling environment required to develop commercial farming, 2) to build the capacity of the federal and regional institutions mandated to support medium and large commercial farms, and 3) to enable commercial farms to be sustainable market outlets and sources of technology for both male and female smallholder farmers.