Effects of Agriculture on Economic Growth

As it was clearly mentioned by Melaku et al. (2016) Ethiopia is distinguished by shortage of food commonly called food insecurity emanated by conservational challenges, structural & other factors. Smallholder farming production remains low, particularly cereal crops, which is ascribed to inconsistent, untrustworthy rain &weakness in current agricultural techniques to mitigate circumstances, inefficient use of resources such as soil amendments; & rainwater that contributes to degradation of soil. Other contributory factors comprise inadequate use of improved seed, fertilizers and imperfectly resourced extension systems.

Moreover, dry lowlands practice erratic rainfall at times with very harsh droughts, in collaboration with land depletion, human & climatic features has greatly impaired Ethiopia’s development & its position of food security (Melaku et al., 2016). Another study conducted by Schmidhuber and Tubiello (2007) and cited by Abebayehu (2014) showed that global as well as household level food accessibility can be affected by weather disparity for it directly affects production through variations in agro-ecological conditions.

Compared to other parts of globe, food insecurity is extreme in developing economies specifically sub-Saharan African economies (Haile, 2005).

Specifically, there could be adverse consequence of weather variability on productions of crops which in turn results in shortage of food. Those problems might be severe in economies like Ethiopia, due to existence of majority of household reliance on agriculture, whose livelihoods can be vulnerable to climatic settings (Taye et al., 2010). Hence, most rural households are susceptible to prevailing shocks, like drought. So that Ethiopia suffered from worst food deficiencies during periods of two drought; 1968-1973 & 1979-1984 (Mattsson and Rapp, 1991).

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As reported by Taye et al. (2010) this famine caused death of 200 thousand citizens &millions of cattle. Among these, the 1973 famine was seriously affected over 300,000 lives (Taye et al., 2010). In 1985, roughly 10 million persons were reported for serious starvation, with around 300,000 were dead. (Taye et al., 2010). In the recent few decades’ droughts led to shortage of food in various part of Ethiopia. Unpredictable circumstances of weather and climatic shocks still have a direct effect on Ethiopian households.

Impact of adverse climatic situations may be exacerbated by many other factors such as; underdeveloped farming technology, telecom, transport, & ecological disturbances. Rapidly growing mass of people is another factor aggravating the situations due to its consequent burden on land (Taye et al., 2010). According to Taye et al. (2010), population burden triggered disintegration of farm holdings as a consequence degradation of environment & loss of land fertility. Population is still growing at an accelerating rate.

If we compare total population of 2012 with that of 2002, it was increased by over 20 million persons the last 10 years. As per estimation of World-Bank (2017), Ethiopia became among utmost populous economies of Africa with projected 102 million in 2018, by average rate of 2.6% annual growth. On top of the aforementioned problems, studies in some specific areas confirmed persistent drought has depleting the already scarce resources. There is evidence that manifestation of drought & its harshness shows growing tendency past decades. Due to this, Ethiopia became less resilient & more vulnerable in occurrence of some slight shocks (Canali and Slaviero, 2010).

As to FAO/WFP (2012) explanation, given dependency on farming which frequently affected by extremely variable climatic conditions, insecurity of food problem are still frequent. This might not because of restricted capacity of households to adapt event of climatic shocks, it may also be because of lack of evidence on how to cope with event of the shocks. The situations may be worsening because households do not have information on the basic causes of food insecurity. Bogale and Shimelis (2009) cited by Abebayehu (2014) denoted that food deficiency circumstances may be subject to agro-climatic situations that force peasants to base their subsistence on profoundly depleted, unproductive land in humidity stress areas.

Applying a fixed effects instrumental variable technique, Demeke et al. (2011) remarked that weather inconsistency is a vital determinant of food insecurity. Mean rainfall at main rainy season is found to be positively linked with food security over time. Hence, Demeke et al. (2011) suggest that, unless rainfall is favorable, improving Ethiopian household’s food security may be difficult. Holden and Shiferaw (2004) cited by Abebayehu (2014), using entirely different approach (bio-economic model), found that, drought has both direct & indirect influence on Ethiopia’s household welfare. The direct influence they mentioned is drought via production effect; whereas, indirect effects are effect of drought through livestock & crop prices.

Abebayehu (2014) based on descriptive statistic outcomes confirmed a negative link among food security & drought. This means, occurrence of extreme drought reduces per capita consumption, over entire panel. It was also found that there is statistically significant difference in mean per capita consumption food among sample of households faced drought at least once in a given year and those who did not (Abebayehu, 2014). As reported by Kinde and Jemal (2016) weather & agriculture are highly interlinked by which one affects others in various ways. Agriculture contributes to weather alteration on a global scale through emission of greenhouse gases (GHGs) while weather variation affects agriculture through changes in average temperatures, rainfall, and weather extremes; changes in pests and diseases conditions; changes in nutritional quality of foods.

As a consequence, frequent drought & unpredictable weather shocks affect rural households and force them to become food insecure. Though effect of weather shocks depend on capacity of a household respond to impacts of the shocks, appropriate long-run policy interferences and formulations require estimating yesterday’s impact of these shocks to improve at least tomorrow’s food security situations. Recently, to advance food security of chronic & transitory food insecure households, government launched a number of food safety programs, which aimed to put it on a trajectory of asset stabilization and accumulation to let them gradually food secured.

According to FAO/WFP (2012), the programs have four components: Productive Safety Net Program (PSNP); Household Asset Building Program (HABP); Complementary Community-based Infrastructure Program (CCI); and Resettlement Program. Broadly, the objectives PSNP’s are reduction of household susceptibility, improvement of household & community resilience to shocks & breaking the cycle of reliance on food aid (FAO/WFP, 2012). As reported by FAO/WFP (2012), the PSN program currently targets 7.57 million recurrently food-insecure people 7 it is expected to reach 8.3 million in320 woredas by 2015 in eight regional states.

Sensitivity of Ethiopia’s agriculture to climate primarily arises from rain fed & practiced by smallholder farmers with inadequate capabilities of respond to weather variability. Ethiopia’s GDP is heavily reliant on agriculture with a high rainfall variability correlation (World Bank, 2006). Therefore, rainfall variability & related harvest reductions are projected to cost the economy about 38% of growth rate and increase poverty by 25% (World Bank, 2006). AS reported by Evan (2012) it was confirmed & predicted that change in climate could reduce GDP by 3-10% by 2025. As indicted in figure 7, that is contribution of Kindie and Jemal (2016) is clearly revealed that GDP growth & and agriculture has a very robust correlation with rain fall variability in Ethiopia. Our recent observation also implies that agricultural growth & GDP of Ethiopia has a resilient negative correlation with the variability of rain fall (Figure 8).