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ETHIOPIAN DEVELOPMENT RESEARCH INSTITUTE
Cities and agricultural transformation in Ethiopia Joachim Vandercasteelen, Seneshaw Tamru, Bart Minten and Johan SwinnenIFPRI ESSP
Transformation and vulnerability in Ethiopia: New evidence to inform policy and investmentsGetfam HotelMay 27, 2016Addis Ababa
1
2
Introduction Transformation of agriculture deemed
important but progress has been slow in Africa
Urbanization – a new factor for transformation in Africa
City dwelling in Sub-Saharan Africa increased by 160% between 1990-2014
Urban population in Africa expected to triple by 2050
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Why study this? Most research focused on changes in
crops or off-farm employment
Little evidence on impacts on staple crops, that most of the rural population makes a living from
Therefore, Does proximity to urban centers affect
farmers’ agricultural practices?
We study the case of Ethiopia and teff
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From 3.7% to 14% between 1984 and 2007
In 2012: 17% in cities
Projections World Bank (2015): 5.4% annual growth; In 2028: 30% of population in cities
1996/1997 2010/2011
Urbanization in Ethiopia
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Ethiopia’s super crop-teff
23.4% - grain area 17.1 % - grain production
Most important crop in value terms in the country: o 2.5 billion USD in 2013/14
More demanded by urban consumers Rapid growth of cities and income
growth leading to greater demand
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Methodology Stratified random sample in 2012 1,200 farmers in five major teff
production zones 38% of national teff area 42% of the commercial surplus
Urban proximity - main independent variable (ETB/quintal):
1. from the farm to the market center2. from the market center to the Addis wholesale market by truck
Non-parametric regressions Advantage: No functional form specified
What are the relationships between proximity and different outcomes of interest?
Three major outcome variables:1. Prices2. Input3. Intensification
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Prices
1020
3040
50W
age
/ day
0 50 100 150Transport cost (Birr /Qt)
Wage (Birr /day)40
060
080
010
0012
00P
rice
(Birr
/Qt)
0 50 100 150Transport cost (Birr /Qt)
Teff price (Birr /Qt)
-200
00
2000
4000
6000
8000
Birr
/ H
a/ Y
ear
0 50 100 150
Transport cost (Birr /Qt)
Land rent (Birr /Ha/year)
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Use of inputs
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Intensification
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Multi-variate regression Strong effect of urban proximity on:
Prices Use of inputs Measures of intensification (land and labor
productivity) Profits
No strong effects of population pressure
A strong direct effect (through better transaction costs, knowledge, information)
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Explaining the direct effect• Channel 1: Transaction costs
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Explaining the direct effect• Channel 2: Monetization of production factors
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Explaining the direct effect• Channel 3: Access to information and
knowledge
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What did we find? Strong positive effect of urban
proximity on: output prices, wages, land rental rates, input use, and profitability
Strong indirect effect - changing price ratios of factor and output prices
Strong direct effect -transaction costs, knowledge, information
No significant effect of rural population increases (population density increases)
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Implications1. Market access matters for rural populations
- ensuring appropriate infrastructure and low transportation costs
2. Cities - engine for agricultural transformation
- ensuring that cities can grow, e.g. stimulating rural-urban migration and improved tenure conditions.
3. Access to inputs and knowledge
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THANK YOU!