Identifying Priority Value-chains in Ethiopia

Center (ownership): 
Authors: 
Rui Benfica and James Thurlow
Tool typology: 
Assessing the business environment
Long name: 

Identifying Priority Value-chains in Ethiopia

Description: 

A major challenge when designing a National Agricultural Investment Plan (NAIP) is deciding how to prioritize between different opportunities, e.g., which value-chains should be promoted over others?

Government analysts and policymakers are increasingly asked to adopt a systems approach to planning. This means having to consider sector-wide trade-offs between investment and policy options, e.g., the promotion of one value-chain may come at the expense of another and, so, it is the overall effect that is relevant for policy design. At the same time, policymakers, especially in agrarian economies like Ethiopia’s, are asked to quantify how a NAIP not only benefits the agricultural sector, but also contributes to economywide development objectives. This paper uses an economy-wide model to identify agricultural activities and value-chains in Ethiopia whose expansion would be most effective at generating economic growth, reducing national and rural poverty, creating jobs, and diversifying diets. Results indicate that expanding cereals production would continue to contribute positively to national pro-poor growth.

However, the analysis suggests that there is no single value-chain that can achieve all policy objectives. Instead, a more balanced portfolio of valuechains would not only enhance agriculture’s future contribution to poverty reduction and economic growth, but also promote faster rural transformation and dietary diversification, both of which are needed to create job opportunities and improve nutrition outcomes over the longer-term. After considering alternative weighting schemes for competing policy goals, the final analysis suggests that vegetables and fruits/tree crops should be considered priority value-chains, because these are among the most effective at achieving multiple policy objectives. Other highly-ranked value-chains include oilseeds, tobacco/cotton/tea, and milk/dairy.

You can read this full paper here:http://ebrary.ifpri.org/cdm/ref/collection/p15738coll2/id/131413

Objective: 
This paper aimed to use an economy-wide model to identify agricultural activities and value-chains in Ethiopia whose expansion would be most effective at generating economic growth, reducing national and rural poverty, creating jobs, and diversifying diets.
Type of tool: 
Quantitative
Methodology: 

The Rural Investment and Policy Analysis (RIAPA) model is used to estimate how increasing production in Ethiopia’s different agricultural sectors leads to changes in national and household outcomes.1 The RIAPA model and the analytical approach presented in this paper were developed by the International Fund for Agricultural Development (IFAD) and the International Food Policy Research Institute (IFPRI). One of RIAPA’s main features is that it captures economic linkages between sectors and rural-urban economies, as well as changes throughout the agriculture-food system (AFS).

Main variables (add a few variables which are important for data analaysis): 
Economic growth
Employment
Poverty
Dietary diversity score
Poverty-growth elasticity (PGE)
Dietary-diversity-growth elasticity (DDGE)
Economywide growth (employment) elasticity
Spatial coverage: 
Commodity: 
Domain: 
Version: 
1
First released on: 
Monday, September 18, 2017
Last version on: 
Monday, September 18, 2017
Format: 
pdf
Target audience: 
Development practitioner