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Agricultural trade policy changes pending in Ethiopia

09 December 2012

According to press reports, the Ethiopian government has decided to stop imposing ‘export quotas on commercial farm outputs and processed goods’. This commitment has been made in the context of the New Alliance for Food Security and Nutrition established by G8 countries to promote private-sector investment in African agriculture.

In 2009, faced by high levels of food price inflation, the Ethiopian government ‘banned the export of maize and sorghum’. The ban was subsequently lifted in 2010. More recently, in a move consistent with the new commitment, the Ethiopian government ‘lifted the ban on raw cotton exports’. 

The Ethiopian Ministry of Agriculture announced that it would ‘tentatively implement’ the new policy commitments before the end of September 2012. More formally, legislation is also to be amended to ‘allow the private sector to engage in seed supply and distribution’.

In the context of the new initiative, eight multinational companies – Diageo, DuPont, Yara International, United Phosphorus, Natafim, Swiss Re, Syngenta and AGCO – have ‘signed a letter of intent to invest in agriculture in Ethiopia’. Diageo, for example, is investing in barley production to supply the local Meta Abo Brewery which it acquired in 2011. According to Addis Fortune, a weekly business newspaper, Diageo ‘has pledged 100,000 dollars for the supply of fertilizer and seeds’ to farmers to promote production, and ‘has offered to pay the farmers 15 pc more than the market price’ as a means of encouraging early farmer participation. This is seen by Diageo as the first stage of a programme that will later be expanded to include other crops used in the brewing industry. 

Editorial comment

According to a 2007 report prepared by Imani Development, non-tariff measures on exports from Ethiopia mainly affect agriculture and livestock-related products. These can range from ‘technical requirements and tests to protect human health (coffee for example) and technical requirements to protect animal health (meat of sheep or goat) or non-automatic licenses and labelling requirements’, to the imposition of export taxes (e.g. on coffee) and the periodic use of export bans.

A USDA report in May 2012 suggested that regulatory changes by the Ethiopian government in the coffee sector had resulted in lower than normal exports (see Agritrade article ‘ High prices encourage coffee production in East Africa, but challenges r...’, 16 July 2012).

However, it should be borne in mind that while the 2009 ban on maize exports was lifted in 2010, it was reimposed just 7 months later, in March 2011, in the face of rising domestic food prices, despite FAO recommendations on the undesirability of such measures. The government moves highlight the central role of food security concerns in decision-making around export arrangements for basic food crops.

Taken together, the two developments (government attempts to regulate coffee exports and the periodic use of maize export bans) suggest that formal commitments made in the G8 will need to overcome substantial domestic pressures which may hold back their full implementation.

The Ethiopian case highlights the need for policy reform in other countries in Eastern Africa. A recent review by USAID of Kenyan government policies that might have an impact on the USAID ‘Feed the Future’ strategy (which is linked to the G8 initiative), called for policy reforms in several areas, including:

  • improving access to agricultural inputs;
  • enhancing product standards and food safety compliance systems;
  • improving agricultural marketing, including with regard to facilitating intra-regional trade and enhancing government-private sector dialogue to ensure that private sector concerns are better reflected in government policies.

The Ethiopian government’s response to the G8 initiative thus also raises wider issues at the regional level.


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