Overview
Agriculture is an essential driver of economic growth in the Ethiopian economy. Crop and livestock production account for roughly 65% and 25% of agricultural GDP. Improved inputs, enhanced management techniques, and expansion of irrigation farming help to boost agricultural output. However, significant constraints, such as limited access to finance and technology, slow potential gains. Further, inefficient market systems and underdeveloped research and extension services provide additional challenges.
Ethiopia is still a net importer of agricultural goods despite this enormous potential. Ethiopia imports one million metric tons of wheat every year. The government of Ethiopia set a plan to replace wheat imports with local production by introducing irrigated farming techniques to harvest wheat twice a year. This will create great opportunities for U.S. irrigation equipment manufacturers to supply their technology to the Ethiopian agricultural sector. There are also three integrated agro-industrial processing parks and more planned for the years to come. U.S. companies that can supply equipment and technology for food processing plants have great opportunity in the Ethiopian market.
Agri-investment licenses can be obtained from the EIC and land can be leased for up to 99 years from regional and city administration bureaus. Recently, land allocation, compensation, and relocation have posed significant issues for the GOE in terms of equity and transparency. In addition, significant regional autonomy in Ethiopia means that respect for land rights varies across the country. U.S. companies should do their due diligence in advance of making investments requiring land use.
Ethiopia’s total agricultural exports in 2022 were valued at $3.3 billion. Major exports include:
- Coffee ($1.5 billion)
- Fresh-cut flowers ($591 million)
- Fresh vegetables ($248 million)
- Sesame seeds ($184 million)
- Pulses ($137 million).
Ethiopia, a net importer of agricultural and food commodities, imported $3.6 billion in agricultural and food products in 2022, an increase of five percent from the previous year. The top commodities imported were:
- Palm oil ($888 million)
- Wheat ($511 million)
- Cane sugar ($474 million)
- Rice ($447 million)
- Sunflower seed oil ($442 million).
In 2022, the United States exported $375 million in agricultural products to Ethiopia, up 157% from 2021. Principal U.S. exports to Ethiopia are wheat, pulses, sorghum, vegetable oils, and food preparations. Top U.S. imports of Ethiopian agricultural products are coffee, oilseed meal and cake, Niger seeds, nursery products, cut flowers, and spices.
Agriculture Development Priorities and Targets
Agriculture is a priority sector for the GOE, which sees enhancing agricultural production and productivity as a way to increase export revenue and strengthen global competitiveness. To achieve these targets, the GOE seeks to leverage unutilized arable land, modernize production systems, and enhance the uptake of modern technology. Please see the following table for agricultural priorities in the Ten Years Development Plan: A Pathway to Prosperity 2021-2030. Under the ten-year plan, the Ministry of Agriculture (MOA) has prioritized commodities for investment and production expansion, including wheat, soybeans, sesame seed, onion, tomato, avocado, banana, poultry, milk, and red meat. In addition, the MOA plans to boost domestic production of rice.
| Agriculture Focus Areas | Objectives |
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Opportunities
Potential investment opportunities in commercial production and agro-processing include coffee, oilseeds, pulses, fruits and vegetables, honey, cut flowers, tea, and spices. Additional options in the agro-processing sectors include cooking oil, sugar, wheat milling, pasta and biscuits, fruits, vegetables, juice, dairy, and meat. Integrated Agro-Industrial Parks in Amhara, Oromia, Sidama, and Tigray regions target increased value-added agro-product production for domestic consumption and export.
In May 2019, the Ministry of Finance released a new proclamation that allows duty free import of feed production machinery. This new directive will boost both production of feed as well as dairy and poultry production. In June 2022, the GOE removed import duties and value added tax levied on animal feed products. The exemption would help lower the cost of animal feed by a third and the prices of dairy products by an average of 17%.
Top Commodity Prospects
Coffee
Ethiopia is Africa’s largest coffee producer and the world’s fifth largest exporter of Arabica coffee. Coffee is Ethiopia’s number one source of export revenue, generating about 30-35 percent of the country’s total export earnings and directly or indirectly contributing to the livelihood of a quarter of the country’s population. Ethiopia’s coffee production for 2022/23 (Oct-Sep) is estimated at 496,200 metric tons. Total production for 2023/24 is forecasted to be 501,000 metric tons. Please see table below and USDA/FAS Coffee Annual Report 2023/24 for further details.
| Table: Coffee Total Market Size (1000 MT) | ||||
|---|---|---|---|---|
| 2021 | 2022 | 2023 (Estimate) | 2024 (Estimate) | |
| Total Local Production | 456,000 | 489,000 | 496,200 | 501,000 |
| Total Exports | 280,500 | 289,860 | 289,200 | 289,200 |
| Total Imports | 0 | 0 | 0 | 0 |
| Imports from the U.S. | 0 | 0 | 0 | 0 |
| Total Market Size * | 175,500 | 199,140 | 207,000 | 211,800 |
*Total Market Size = (Total Local Production + Imports) – Exports
Wheat
Ethiopia is the largest wheat producer in Sub-Saharan Africa but still fails to meet domestic demands. Domestic annual production of approximately 7.5 million metric tons accounts for about 75% of domestic wheat consumption. The GOE is increasing investments to expand irrigated wheat production to meet domestic demands and generate exports. The U.S. is a leading wheat exporter to Ethiopia, with a market share of 67% in 2022 (see table below).
| Table: Wheat Total Market Size (1000 MT) | ||||
|---|---|---|---|---|
| 2021 | 2022 | 2023 (Estimate) | 2024 (Estimate) | |
| Total Local Production | 5,479 | 5,520 | 7,000 | 7,500 |
| Total Exports | 0 | 1 | 0 | 10 |
| Total Imports | 1,400 | 1,700 | 900 | 600 |
| Imports from the U.S. | 345 | 504 | 605 | 0 |
| Total Market Size * | 6,879 | 7,219 | 7,900 | 8,090 |
*Total Market Size = (Total Local Production + Imports) – Exports
Rice
Rice is a strategic crop and the GOE is targeting an increase in local production to offset imports. Ethiopia imported 900,000 MT of rice in 2022, up 13% from the previous year, with annual import volume growing more rapidly than domestic production (see table below).
| Table: Rice Total Market Size (1000 MT) | ||||
|---|---|---|---|---|
| 2021 | 2022 | 2023 (Estimate) | 2024 (Estimate) | |
| Total Local Production | 124 | 130 | 135 | 140 |
| Total Exports | 0 | 0 | 0 | 0 |
| Total Imports | 800 | 900 | 671 | 600 |
| Imports from the U.S. | 2 | 1 | 0 | 0 |
| Total Market Size * | 922 | 1,029 | 806 | 740 |
*Total Market Size = (Total Local Production + Imports) – Exports
Sugar
| Table: Sugar Total Market Size (1000 MT) | ||||
|---|---|---|---|---|
| 2021 | 2022 | 2023 (Estimate) | 2024 (Estimate) | |
| Total Local Production | 350 | 400 | 440 | 440 |
| Total Exports | 0 | 0 | 0 | 0 |
| Total Imports | 376 | 163 | 190 | 200 |
| Imports from the U.S. | 0 | 0 | 0 | 0 |
| Total Market Size * | 726 | 563 | 630 | 640 |
Ethiopia depends on imports to supplement domestic production to meet growing domestic demand. Ethiopia imports around 230,000 MT of sugar annually. Ethiopia has 13 sugar manufacturing factories with all plants owned by the state. The GOE has recently issued an international tender to privatize eight state-owned sugar enterprises to promote private sector investment (see table below).
*Total Market Size = (Total Local Production + Imports) – Exports
Leading Sub-Sectors
Best prospects in agriculture and related industries include:
- Produce, including wheat, rice, sugar, edible oils, and prepared foods for wholesale and retail outlets
- Inputs, including improved seeds, livestock genetics, and fertilizer
- Equipment, including tractors and harvesters, farm trucks, grain handling systems, irrigation and drainage systems, agro-processing equipment, and cold chain facilities.