ETHIOPIAFERTILIZERASSESSMENT

Ethiopia Fertilizer Assessment

P.O. Box 2040 Muscle Shoals, Alabama 35662, USA

www.ifdc.org

In Support of:

The African Fertilizer and Agribusiness Partnership

December 2012

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Acknowledgements

This study was commissioned and funded by the United States Agency for International

Development (USAID) under the Feed the Future initiative. This is part of a set of studies

covering 12 countries in Sub-Saharan Africa (SSA) in support of the African Fertilizer and

Agribusiness Partnership (AFAP), a collaboration among the International Fertilizer

Development Center (IFDC), Alliance for a Green Revolution in Africa (AGRA), African

Development Bank (AfDB), Agricultural Market Development Trust (AGMARK) and with the

support of the African Union Commission specialized agency, the New Partnership for Africa’s

Development (NEPAD).

Peter Heffernan, director of IFDC’s Research and Development Division, Porfirio

Fuentes, senior scientist – economics and trade, and Joshua Ariga, scientist – economics,

produced this report.

The staff of the Ministry of Agriculture and Rural Development, Agricultural

Transformation Authority (ATA), fertilizer dealers and staff from IFDC’s East and Southern

Africa Division office in Ethiopia provided useful information and insights to the research team.

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Table of Contents

Executive Summary .................................................................................................................. vi 1.0 Introduction ..........................................................................................................................1

1.1 A Conceptual Framework for Linking Inputs to Outputs ................................................2

2.0 The Ethiopia Agricultural Policy Context .............................................................................5

2.1 The Ethiopia Growth and Transformation Plan (2010/11-2014/15) ................................6

2.2 The CAADP Implementation.........................................................................................7

2.3 The Policy and Investment Framework (PIF) 2010-2020 ...............................................8

2.4 The Agricultural Growth Program (AGP) 2010-2015 ....................................................9

3.0 The Ethiopia Agriculture Sector ...........................................................................................9

3.1 Ethiopian Farm Subsector: Crop Area, Yield and Production ....................................... 13

3.2 Trends in Grain and Cereal Crops Production .............................................................. 14

4.0 The Ethiopia Fertilizer Sector ............................................................................................. 16

4.1 Evolution of Fertilizer Markets .................................................................................... 16

4.2 Fertilizer Imports, Sales and Consumption................................................................... 18

4.3 The Fertilizer Supply Chain ......................................................................................... 20

4.4 Fertilizer Supply Cost Structure ................................................................................... 23

5.0 Results: Estimating Fertilizer Requirements ....................................................................... 25

5.1 Estimating Fertilizer Use on Key Crops Using Nutrient Removal Approach ................ 26

6.0 Conclusions and Recommendations .................................................................................... 28

6.1 Expanding the Fertilizer Product Set and Capacity Training ........................................ 29

6.2 Estimation of Import Quantities and Potential Effect on Prices and Quality ................. 29

6.3 Price Determination and Effect on Access to Fertilizer in Remote Areas ..................... 30

6.4 Access to Finance ........................................................................................................ 30

6.5 Investment in Storage, Logistics and Transport Infrastructure ...................................... 31

6.6 Creation of an Enabling Business Environment ........................................................... 31

7.0 References .......................................................................................................................... 33

Appendix .................................................................................................................................. 35

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List of Tables

Table 1. Total Agricultural Land Use in Ethiopia .............................................................. 11

Table 2. Smallholders’ Area by Farm Size ........................................................................ 13

Table 4. Averages and Growth Rates of Grains Planted Area, Yield and Production (2007/08-2010/11) ............................................................................................... 15

Table 5. Yield and Production Differences Between Current and GTP Targets .................. 26

Table 6. Required Fertilizer Nutrients Using Nutrient Removal Factors for a Set of Crops ................................................................................................................... 27

Table 7. Nutrient and Corresponding Product Requirements for Crop Categories .............. 27

Table A.1. Total Planted Area per Crop Group and Regions, 2008/09-2010/11 ..................... 35

Table A.2. Total Crop Production per Crop Group and Regions, 2008/09-2010/11 ................ 35

Table A.3. DAP Sales/Consumption by Region, 2003-2011 .................................................. 36

Table A.4. Urea Sales/Consumption by Region, 2003-2011................................................... 36

List of Figures

Figure 1. The Double Value Chain ...........................................................................................3

Figure 2. Main Crop Zones of Ethiopia................................................................................... 12

Figure 3. Share of Fertilizer Imports by Type of Market Player, 1995-2009 ............................ 17

Figure 4. The Process of Estimating Quantities of Fertilizer Imports ...................................... 18

Figure 5. DAP and Urea Fertilizer Imports and Consumption, 2002-2011 .............................. 19

Figure 6. Average Fertilizer Use on Main Grains, 2008/09-2010/11 ....................................... 20

Figure 8. Proportion of Inland Costs to AISE Warehouse ....................................................... 23

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Acronyms

A-GDP Agriculture Gross Domestic Product ADLI Agricultural Development Led Industrialization AFAP African Fertilizer and Agribusiness Partnership AfDB African Development Bank AGMARK Agricultural Market Development Trust AGP Agricultural Growth Program AGRA Alliance for a Green Revolution in Africa AISCO Agricultural Inputs Supply Corporation AISE Agricultural Input Supply Enterprise ATA Agricultural Transformation Authority AU-NEPAD African Union-New Partnership for African Development BoARD Bureaus of Agriculture and Rural Development CAADP Comprehensive African Agriculture Development Program CBE Commercial Bank of Ethiopia CIA Central Intelligence Agency CFR Cost and Freight CSA [Ethiopia] Central Statistical Agency DAP Diammonium Phosphate DSSAT Decision Support System for Agrotechnology Transfer EDRI Ethiopia Development Research Institute. EEA/EEPRI Ethiopian Economics Association - Ethiopian Economic Policy Research

Institute ESSP Ethiopia Strategy Support Program FEWS NET Famine Early Warning System Network (USAID/WFP program) GDP Gross Domestic Product GoE Government of Ethiopia GTP Growth Transformation Plan IFDC International Fertilizer Development Center IFPRI International Food and Policy Research Institute ISFM Integrated Soil Fertility Management K Potash LoC Letters of Credit MDG Millennium Development Goals mt metric tons MoARD Ministry of Agriculture and Rural Development

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MOP Muriate of Potash N Nitrogen P Phosphorus PADEP Peasant Agricultural Development Program PADETES Participatory Demonstration and Training Extension System PASDEP Plan for Accelerated and Sustained Development to End Poverty PIF Policy and Investment Framework RDPS Rural Development Policy and Strategy RED&FS Rural Economic Development and Food Security platform SDPRP Sustainable Development and Poverty Reduction Program SNNP Southern Nations, Nationalities and Peoples’ region SO Strategic Objective SSA Sub-Saharan Africa

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Ethiopia Fertilizer Assessment

Executive Summary

To address the challenges of poverty, food insecurity and malnutrition, Ethiopia is

implementing the strategies in the Growth Transformation Plan (GTP) in line with the pillars of

the Comprehensive Africa Agriculture Development Program (CAADP) framework. The

government has committed to raising agricultural growth by more than 6 percent and keeping the

national budget allocated to agriculture to at least 10 percent.

Ethiopian agriculture is characterized by smallholder production with decreasing arable

land and therefore the need to raise productivity. A key tenet to achieving the agricultural growth

targets in the GTP is the adoption of improved technologies together with management practices

that will augment yields and therefore increase household incomes for smallholder farmers above

the current levels. This report provides information on the estimates of the level of fertilizer

consumption needed to meet the crop growth targets in the GTP by 2015. In addition to

providing these estimates, this study also analyzes the challenges in the fertilizer value chains

and offers policy options that will support the achievement of these consumption levels to meet

the growth targets.

The study estimates that Ethiopia must essentially double its consumption to 1.2 million

metric tons (mt) of fertilizer products to meet the GTP targets. To achieve this level of fertilizer

use requires dealing with existing constraints and improving the value chains so that these larger

volumes of product can be handled without significant problems. This will include tackling

bottlenecks in the procurement arrangements, macro- and micro-economic environment,

infrastructure and logistics, research and extension services, agro-dealer capacity and training of

farmers and financing issues.

The current consumption of mostly diammonium phosphate (DAP) and urea fertilizers

provides a limited set of products to smallholders who face heterogeneous agro-ecological

conditions and cultivate a variety of crops that need a more varied set of technologies. Though

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not all products may be imported at attractive prices, establishing domestic blending facilities

may offer options that target farmers’ local conditions. The introduction of new products will

require capacity building for agro-dealers and farmers to understand the agronomic practices and

benefits of use. An integrated soil fertility management (ISFM) approach and provision of right

fertilizer pack sizes that farmers can afford to purchase coupled with availability of credit

facilities will contribute to increased access to improved technologies.

Estimation of annual national fertilizer import requirements can be a challenging exercise

that can lead to over- or under-estimation of the actual demand that will prevail during planting

of crops. This is further complicated when moving large quantities of cargo over poor

infrastructure networks, which requires starting the procurement process fairly early before the

planting season. Carryover stocks can contribute to availing fertilizer at the right time for

planting for next season and possibly cushion users from international upward price risks.

However, depending on the design and operations of storage facilities and related storage costs,

prices may be affected and quality of fertilizer deteriorated, which will influence access to

fertilizer and lower yields at the farm level. Therefore, it is important to make estimates that are

based on realistic expectations of the performance of the agricultural sector while accounting for

possible weather patterns.

Although offloading capacity at the Djibouti Port is limited, cargo clearance is relatively

adequate compared to other Sub-Saharan Africa (SSA) countries. Poor road infrastructure and

low investments in trucking services are constraints that add costs to fertilizers. Improved roads,

investments in trucks and more efficient logistics arrangements can reduce the costs of moving

fertilizer from port to farmers. Good roads can also encourage investments in other support

industries like clinics and rural food processing plants that provide markets for farmers’ outputs.

Fertilizer prices in Ethiopia are set by the Ministry of Agriculture and Rural Development

(MoARD) in consultation with stakeholders, a process that may not capture all the relevant

elements that go into price formation. A consequence of this is that the margins set for players

can constrain their actions in a way that is deleterious to beneficiaries. For instance, setting

narrow margins for cooperatives limits their ability to extend value addition and other services to

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farmers. A possible alternative is to let retailers set their own farm-gate prices and the

government can provide smart subsidies to vulnerable groups that have no access to fertilizers.

Though state intervention in fertilizer markets has made significant contributions in

raising consumption over the last decade, success has depended on support from development

partners, and Ethiopia still has some way to go to achieve the relevant Millennium Development

Goal (MDG) of food security. It remains crucial to raise productivity as land becomes scarce, but

it may involve a re-assessment of previous approaches and the adaptation of relevant options

(including private sector participation involving building the capacity of unions) to ensure

smallholders have access to the right technologies appropriate to local conditions and

accompanied with the right information. A judicious mix of private and public investments with

legal and regulatory guidelines will be necessary toward encouraging increased investments. The

Ethiopian government has begun working with international investors in developing

manufacturing opportunities.

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Ethiopia Fertilizer Assessment

1.0 Introduction

Ethiopia is one of the fastest growing non-oil economies in Africa. During the 2000-2010

decade, the Ethiopian economy registered strong development with an average gross domestic

product (GDP) growth of 8.8 percent per year (from US $8.2 billion to US $29.7 billion),

compared with 3.8 percent for the previous decade (World Bank, 2012). The country is among

the most populous in Sub-Saharan Africa (SSA), with an estimated 93.8 million citizens and

3.2 percent growth rate per year (CIA, 2012). Despite its rapid economic growth, Ethiopia ranks

sixth among the poorest countries in the world; with a US $400 per capita income, it is one of the

poorest in SSA. An estimated 39 percent of the population (about 36 million people) survives

with an income below the poverty line.

Although the Ethiopian economy is diversified, it is heavily reliant on agriculture1

as the

main source of employment, income and food security for a vast majority of its population. In

2012, agriculture accounted for 85 percent of total employment, 90 percent of exports and a high

percentage of GDP (PIF, 2010). Over the last decade, the economic contribution of various

sectors to GDP has shifted. Agriculture’s share of GDP at 41 percent represents a decline from

about 50 percent since the early 2000s; this structural shift from agriculture to non-agriculture

sectors is attributed to the success of the Government of Ethiopia (GoE) Agricultural

Development-Led Industrialization (ADLI) strategy, which was intended to shift economic

activities from agriculture to other economic sectors. Still, during the 2000-2010 decade,

agriculture registered an average growth rate of 7.1 percent per year, just below the overall

economy growth rate. Within the agricultural sector, the crop subsector is the most important in

terms of contribution to GDP. In 2006/07 the crop sub-sector contribution to GDP was

30 percent while its share to the agriculture GDP (A-GDP) was 65 percent.

Given the economic importance of the agricultural sector, the GoE has been revamping

its efforts to improve the sector performance. To address this challenge, the GoE has engaged in

1Agriculture includes crop, livestock and hunting, forestry and fishing. Industry includes mining, manufacturing, electricity, gas and water. Services include trade, hotels and restaurants, transport and communication, public administration and defense, education, health and social works.

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a series of countrywide discussions and consultations with various public entities, economists,

higher education institutions, private sector partners and civil society. These discussions led to

the development of the Growth Transformation Plan (GTP 2010/11-2014/15) and to the adoption

of the Comprehensive Africa Agriculture Development Program (CAADP) Compact.

The purpose of this assessment is to estimate the quantities and types of fertilizer required

to meet the production targets laid out in Ethiopia’s GTP and other GoE policy documents and

identify the primary challenges in the fertilizer sector that might thwart this growth. The report

addresses two fundamental questions:

• How much fertilizer is needed for smallholders to produce the quantities of food and cash

crops targeted in the national GTP strategy?

• What investments and policy changes will be necessary to ensure the flow of these new and

significantly increased quantities of fertilizer through the chain to more than 12 million

dispersed smallholder farm households.

Information and data for this study were collected through interviews of individuals from

key stakeholder institutions and also from secondary data and other published reports. The

Ministry of Agriculture and Rural Development (MoARD) and organizations conducting

research in Ethiopia provided significant input for this report.

The data collected covered several areas: agricultural targets from country development

plans and CAADP documents; agricultural production data; fertilizer imports and consumption;

and percentage of farmers applying fertilizer.

1.1 A Conceptual Framework for Linking Inputs to Outputs To address the question of procuring and distributing enough fertilizer to meet the GTP

2010-2014 targets for the agricultural sector, this assessment adopts a value chain framework as

the core methodology.

The premise of this framework is the link that exists between input and output markets,

where input and output prices influence farmers’ decisions to use fertilizers and other

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productivity enhancing factors of production. An analysis of fertilizer needs and the capacity of

the existing fertilizer distribution system to supply those needs require an assessment of the

distribution systems, stakeholders and commodity flows along two inextricably linked and

complementary value chains:

• The fertilizer value chain, spanning fertilizer production, trade and consumption by farmers.2

• The agricultural outputs value chain, spanning crop production by farmers, transformation

and marketing and consumption by the ultimate consumers (domestic or export).

Figure 1 provides a simplified illustration of what are, in reality, very complex

interactions among a vast array of actors along this set of dual, integrated value chains.

Figure 1. The Double Value Chain For the purposes of this analysis, we start by discussing output consumers (Node 5) and

work left toward the smallholder farmer (Node 3) and other traders along the input-output chain

(Node 2) and fertilizer producers (Node 1). To analyze how much input is needed in order to

reach the GTP output targets and what measures are needed to ensure that the right quantity of

fertilizer flows through the existing distribution system, we make the following assumptions:

1. That the GTP crop production targets accurately reflect the quantities needed to achieve the

domestic contribution to national food security, agricultural growth targets, national storage

and transformation capacity, people’s food preferences, etc.

2 Although we present the value chain for mineral fertilizers, we acknowledge that their effectiveness is determined by interactions with: (a) organic fertilizers, which make up a parallel soil nutrient value chain, and (b) other inputs such as improved seed varieties, water and mechanization.

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2. That output markets are well-developed in order to absorb the increased levels of crop

production. This output will either be domestically consumed or exported. The analysis also

assumes that agents involved in Node 4 have the capacity to transport, store, process and

market the increased commodity output.

3. Since prices vary depending on the levels of supply and demand, it is assumed that the use

of fertilizer will remain profitable and that farmers will have an incentive to continuously

use fertilizer in the production process. Specifically, it is assumed that even if crop prices

fall (e.g., due to an increased supply), either a reduction on fertilizer price, the returns to

fertilizer or both will more than compensate for the output reduced price.

4. Given that Ethiopia’s consumption of fertilizers is a small fraction of the world trade, it also

assumed that Ethiopia is a price-taker and thus does not influence international prices.

These assumptions allow for simplification of the analysis of the outputs value chain and

an increased focus on the input value chain to address the following question: How much

fertilizer is required to produce, in an economically viable manner (Node 3), the level of crop

output to reach the targets in the GTP strategy?

This study applies a crop nutrient removal approach to provide estimates of the levels of

nitrogen (N), phosphorus (P) and potash (K) that is required to reach the GTP crop production

targets. Details on the specifics of this approach, data and analysis are presented in Section 5.

Having determined these estimates, we then assess the capacity of the current fertilizer system

(Node 2) to procure, import, store, transport and distribute that quantity to farmers (Node 3) in

time for the growing season. We ask the question: What investments and policy changes will be

necessary to ensure the flow of increased quantities of fertilizer through the chain to a dispersed

smallholder farmer population?

Node 2 (fertilizer traders) in Figure 1 consists of the following steps and players:

• Importation – Importers, bankers, shipping companies, port service providers (stevedores and

equipment), revenue authorities, quality inspectors, transporters, blending and bagging

agents.

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• Wholesale Distribution – Agricultural input supply enterprise (AISE) marketing centers and

regional cooperatives.

• Retail Distribution – Primary cooperatives, woredas3

and kebeles local governments.

Furthermore, the study examines the physical, human, institutional and financial capacity

and discusses possible actions by value chain participants in light of increased fertilizer use. It

also identifies investments in support structure along the supply chain and policy changes needed

to ensure the right quantities of the nutrients flow to the end user. Tabular, graphic and

descriptive analyses are used throughout the text to explain the assessment results.

2.0 The Ethiopia Agricultural Policy Context

Achieving broad-based sustainable economic growth and poverty reduction has been a

key objective of the GoE. A key goal is raising productivity and encouraging commercialization

to reduce poverty and food insecurity while contributing to meeting other key development

challenges like unemployment and export growth. Recognizing its importance, the GoE has put

in place a comprehensive and consistent set of policies and strategies for an integrated approach

to address the current and emerging challenges of the agricultural sector.

At the core of these policy sets is ADLI, an economy-wide strategy launched in 1991 as

the GoE’s central economic policy for fulfilling the development vision of achieving the

Millennium Development Goals (MDG) and becoming a middle income country4

by 2020.

ADLI sees agriculture as the main engine of growth and is therefore the lead strategy for

Ethiopia’s agricultural sector vision and goals.

Under ADLI, various programs and strategies have been implemented such as: (a) the

Sustainable Development and Poverty Reduction Program (SDPRP) 2002/03-2004/05,

Ethiopia’s first poverty reduction strategy; (b) the Rural Development Policy and Strategy

3 A kebele is the smallest administrative unit of Ethiopia, similar to a ward or municipality, and a woreda is the third-level administrative division in Ethiopia composed of a number of kebeles; in turn, the woredas form the zones and regions. 4 Middle income country is defined here as per capita income of $1,000.

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(RDPS); (c) the successor of SDPRP and recently completed Plan for Accelerated and Sustained

Development to End Poverty (PASDEP) 2005/06-2009/10; and (d) the latest and recently

launched Growth and Transformation Plan (GTP) 2010/11-2014/15. For the purpose of this

report, the GTP is the most relevant.

2.1 The Ethiopia Growth and Transformation Plan (2010/11-2014/15) Before the GTP, Ethiopia enjoyed strong economic growth, led initially by the

agricultural sector with a rising contribution from services and manufacturing sectors (World

Bank, 2011). Building on the gains of the SDPRP and PASDEP, the GTP allows the GoE to

continue its focus on smallholder farming while promoting a stronger private sector involvement

to achieve the MDG by 2015 and the country’s middle income status by 2020.

Recognizing the pivotal role of agriculture and rural development, in congruence with

ADLI, the GTP’s main strategy is to scale up the best practices of model farmers that registered

high levels of productivity and growth during the PASDEP implementation for a continuous

overall agricultural productivity and production increase. Commercial farmers will continue to

be the major source of agricultural growth; therefore, the strategy entails the shift in production

from subsistence to commercial/high-value agricultural production for domestic as well as export

markets, integrating smallholder farmers. The strategy also incentivizes private investment in

large commercial farming of high-value commodities.

Therefore, the success of the GTP depends greatly on macro-economic reforms for an

enabling environment that will allow the private sector to thrive, including transparency, access

to financial services and land tenure security to strengthen the ability to collateralize land use

rights. Supporting the private sector should also include strengthening agricultural input and

output markets, including information services, marketing, processing and trade. The

strengthening of agribusiness linkages must focus on agricultural commodity value chains.

In addition, the GTP strategy focuses on strengthening government structures to provide

effective services in support of the private sector. This will increase agricultural productivity and

promote industry investment, including the government regulatory system, research and

extension, soil fertility services, development of a more transparent and efficient agricultural

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marketing system and increase investment in irrigation and other rural infrastructures. However,

this strategy is based on an ambitious spending plan that may not be supported by the productive

capacity of the economy. The financing needs by the public sector could crowd out private sector

investment and strain external debt sustainability (World Bank, 2011).

Furthermore, the GTP will intensify the use of the country’s natural resources, mainly

water, to promote multiple cropping and help farmers to better cope with climate variability and

increase their living standards, productivity and ensure a high level of food security. This means

the expansion of small and large irrigation systems, with a high priority to small systems. The

expansion of irrigation will require close attention to conservation of natural resources and

watershed management.

2.2 The CAADP5

CAADP is an Africa-led initiative initiated in 2003 by the African Union’s New

Partnership for African Development (AU-NEPAD). It is intended as a framework to raise the

amount and quality of food produced in African countries for a secure food supply and to make

exports more profitable. Ethiopia signed the country-level CAADP Compact in September 2009,

symbolizing the country’s collective commitment to a shared vision for agricultural

development. The focus of the CAADP in Ethiopia is to strengthen and add value to the ADLI

strategy, the GTP and other related programs supportive of Ethiopia’s Rural Economic

Development and Food Security (RED&FS)

Implementation

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platform objectives.

In line with the GTP, the CAADP embraces the principle of agriculture-led growth as a

main strategy to achieve the first of the MDGs of halving poverty and hunger by 2015. On this

basis it sets principles and targets to guide national sector strategies for: (a) the pursuit of a

6 percent national average annual growth rate for the agricultural sector; and (b) the allocation of

10 percent of the national budget to the agricultural sector. In recent years, the growth rate of the

5 The authors assume that the general objectives of the CAADP are well-known to the readers. For further information, visit http://www.nepad.org/foodsecurity/agriculture/about. For additional country-specific CAADP information, visit http://www.nepad-caadp.net/text-version/library-mapping-caadp.php. 6 RED&FS platform is a group that brings together donor and government agencies under the chairmanship of the Ministry of Agriculture for agriculture policy debate and coordination. CAADP has helped focus discussions and donor support around common policies, thereby creating the conditions for improved aid management by government.

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agriculture sector in terms of A-GDP has been about 13 percent and the budget allocated for

agriculture both at the federal and regional government levels has been about 15 percent,

indicating that Ethiopia has surpassed both of CAADP targets for successive years, even before

the signing of the CAADP Compact. This does not mean that poverty and hunger have been

addressed to the level of expectations of the GoE. Indeed, the GoE is still committed to allocate

more resources to address these problems.

The Ethiopian CAADP, to some extent, has come to reinforce the RED&FS platform as a

forum for agriculture policy debate and coordination. Under the GTP and CAADP, the following

policy and program have been developed and adopted by the RED&FS platform: the Policy and

Investment Framework (PIF) and the Agricultural Growth Program (AGP).

2.3 The Policy and Investment Framework (PIF) 2010-2020 PIF is a policy initiative of the MoARD that provides a strategic framework for

estimating financing needs and the prioritization and planning of investments that will drive

Ethiopia’s agricultural growth and rural development over a 10-year period. It is designed to

operationalize the GTP and the CAADP Compact strategic plans by aligning the policies and the

financing commitments of the country’s development partners with GoE.

The Goal of the PIF is “to contribute to Ethiopia’s achievement of middle income status

by 2020.” The Development Objective aims “to sustainably increase rural incomes and national

food security” (Ethiopia PIF 2010-2020, 2010). This objective embodies the four pillars of

CAADP, expressed in terms of four strategic objectives (SO): SO1 – to increase agricultural

productivity and production; SO2 – accelerate agricultural commercialization and agro-industrial

development; SO3 – reduce degradation and improve productivity of natural resources; and

SO4 – achieve food security and protect vulnerable households from natural disasters.

Under the most relevant agricultural sector SOs (SO1 and SO2), the priority investment

areas are: (a) irrigation development; (b) seed and fertilizer supply and soil fertility management;

(c) research; (d) market system and infrastructure investment; (e) agricultural credit; and

(f) private sector support.

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2.4 The Agricultural Growth Program (AGP) 2010-2015 The AGP is a five-year government-led program, designed under the GTP, with financial

and technical support from various development partners, targeted to approximately 9.8 million

smallholder and medium-size famers in 83 woredas of the four major agriculture production

regions of Ethiopia. The development objective of the program is to increase agricultural

productivity and market access for key crop and livestock products (World Bank, 2010).

Therefore, the AGP seeks to scale up existing best practices and innovations in both agricultural

production and post-harvest value added – with emphasis on natural resource conservation and

rehabilitation.

To achieve the stated objectives, the program has two technical components: C1 focuses

on agriculture production and commercialization with the objective to strengthen public and

private advisory services (agricultural extension) to respond to smallholders’ demand for new

and proven effective technologies and to develop institutional capacity of farmer organizations

and other private stakeholders. It also supports strengthening farmer-market linkages (value

chains) and promoting agribusiness enterprises. C2 focuses on productive agricultural

infrastructure development (construction, rehabilitation/improvement of small-scale irrigation,

water harvesting and watershed management) to address key constraints in the agricultural

production system and improve productivity; and invest in rural and market infrastructure (rural

roads, market information) to increase the efficiency of identified value chains supported under

C1.

Major challenges of the AGP are the overall capacity limitation for implementation and

the high turnover of public employees, hurdles that may require civil service reform (AGP Aide-

Mémoire, 2012).

3.0 The Ethiopia Agriculture Sector

As previously stated, the agriculture sector is of great economic importance to Ethiopia.

However, the sector is characterized by low productivity and the prevalence of a fragmented

smallholder/subsistence farmer population that is relegated to highly degraded/marginal lands

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(World Bank, 2010). Nearly 55 percent of all smallholders farm on 1 hectare (ha) of land or less.

Low productivity can be attributed to limited access by small farmers to agricultural inputs,

financial services, improved production technologies, irrigation and agricultural output markets

and, more importantly, to poor land management practices that have led to severe land

degradation in some areas (PIF, 2010). Therefore, the sector is also characterized by low input-

low output and labor-intensive rainfed farming systems reliant on the use of animal power.

With approximately 51.3 million ha of arable land, Ethiopia has tremendous potential for

agricultural development; however, not all of this land is suited for cultivation (Taffesse et al.,

2011). The country has the potential to irrigate about 4.3 million ha, out of which only an

estimated 6 percent is currently being utilized (PIF, 2010). In the pastoral areas of the lowlands

and the densely populated food-insecure districts of the highlands, droughts periodically reverse

agricultural sector performance gains with devastating effects on household food security and

exacerbating poverty (FEWS NET, 2010).

In terms of soil nutrients and fertility, Ethiopia has one of the highest rates of nutrient

depletion in SSA. The estimated annual nationwide loss of phosphorus and nitrogen resulting

from the use of dung and crop residues for fuel is equivalent to the total amount of commercial

fertilizer use (PIF, 2010). However, the use of fertilizer and improved seeds are limited despite

government efforts to encourage the adoption of modern agricultural practices. Land degradation

and nutrient depletion are further exacerbated by overgrazing, deforestation, population pressure

and the poor land use planning and tenure system (PIF, 2010).

Transport infrastructure is generally lacking and, where it exists, tends to be in poor

condition, constraining the distribution of inputs like fertilizer and market access for producers’

output (World Bank, 2012). These constraints undermine the attainment of food security and the

effectiveness of the government poverty reduction strategy, presenting challenges to the

transformation of the sector from subsistence farming to commercial agriculture.

The total used land area in 2010/11 was 16.95 million ha (or 33 percent of total arable

land), with about 13.3 million currently being cultivated with temporary and permanent crops.

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Temporary crops cover 12.2 million or 92 percent of cultivated land. Cultivated area has seen a

6 percent increase for temporary crops and 1 percent for permanent crops between 2008/09 and

2010/11 (Table 1).

Table 1. Total Agricultural Land Use in Ethiopia

Land Use Types Hectares

2008/09 2009/10 2010/11 Temporary crop area 11,587,470 11,917,078 12,241,268 Permanent crop area 906,518 1,036,558 1,117,613 Fallow land 635,433 635,212 615,139 Grazing land 1,383,839 1,396,048 1,708,624 Wood land 169,675 186,243 231,965 Other land use 651,802 684,766 1,041,087 All land use 15,334,737 15,855,904 16,955,697 Source: Adapted from CSA (2011).

Ethiopia’s agriculture involves a variety of crops grown according to the country’s

regions and ecologies (Figure 2). Grains are commonly produced crops representing 89 percent

of the total cultivated area and 78 percent of total agriculture production (Table 2). Among

grains, cereal production is at the core of the agriculture and food economy. Other important

grain crops include pulses (horse beans, chickpeas, haricot beans, field peas, lentils, soybean and

vetch) and oilseeds (linseed, neug, fenugreek, noug, rapeseed, sesame, sunflower, castor bean,

groundnuts, etc.).

12

Source: http://www.fas.usda.gov.

Figure 2. Main Crop Zones of Ethiopia Almost three-quarters of total cultivated area is dominated by cereal crops, grown by

12.7 million farmers, most of whom are smallholders (Table 3). These farmers and land area

produced about 17.8 million mt of cereals, representing 68 percent of total crop production and

32 percent of A-GDP (or 14 percent of total GDP) (PIF, 2010). Among cereal crops, teff, corn,

wheat, barley and sorghum represent 95 percent of total cereal planted area and 96 percent of

total cereal production. Other cereals grown at a minor scale include millet, oats and rice.

Although the cereal cultivated area has been increasing since the early 2000s, yields are

still low and production is susceptible to weather shocks, especially droughts (Taffesse et al.,

2011). Cereal production has more than doubled as a result of expansion of the cropped area,

mainly toward marginal lands and, to a minor degree, to yield increases.

The balance of the total cultivated area, 1.4 million ha (or 11 percent of total cultivated

land), is used by more than 6 million smallholders to produce 5.6 million mt of non-grain

products, representing 22 percent of the total crop production in Ethiopia. These include

vegetables (onion, tomato, carrot, cabbage, etc.), root and tuber (potato, enset, sweet potatoes,

beets, yams, etc.), fruits (banana, orange, grape, papaya, lemon, mandarin, apple, pineapple,

13

mango, avocado, etc.), cash crops (coffee, tea, tobacco, etc.) and commercial/industrial crops

(sugarcane, cotton, sisal).

3.1 Ethiopian Farm Subsector: Crop Area, Yield and Production The Ethiopia Central Statistical Agency (CSA) classifies Ethiopian farms into two major

groups: smallholder ‘peasant’ farms and large commercial farms. The majority of farmers in Ethiopia

are smallholder,7

characterized as being fragmented, producing mostly for their own consumption

and generating only a small market surplus. Large farms are mostly commercial operations that

produce for domestic and/or export markets. They frequently make use of modern production

technologies, including better farm management practices and inputs (e.g., irrigation, fertilizers,

improved seeds, pesticides and farm equipment as opposed to labor), relative to small farms.

Table 2 shows smallholders’ cultivated area by farm size category for the 2010/11

seasons. Based on these figures, 80 percent of smallholders with farms of less than 1.52 ha,

account for almost 50 percent of the cultivated farm land, while the other 50 percent is in the

hands of small-medium holders with farm sizes between 1.52 and 25 ha. Seventy-one percent of

all farms, including small-medium holders, are located in the moisture-reliable cereal-based

highlands, therefore the predominance of cereal production in Ethiopian agriculture. The rest of

the smallholder farms are located in drought-prone and pastoral lands.

Table 2. Smallholders’ Area by Farm Size

Farm Size (ha)

Hectares (x103) Moist and

Humid Land %

Drought-Prone Land %

Pastoral Land % Total %

0 - 0.25 251.4 2.0% 76.9 0.6% 6.8 0.1% 335.1 2.7% 0.25 - 0.52 680.1 5.5% 271.2 2.2% 22.1 0.2% 973.4 7.9% 0.52 - 0.90 1,270.7 10.3% 474.3 3.8% 39.4 0.3% 1784.4 14.4% 0.90 - 1.52 2,116.5 17.1% 824.8 6.7% 70.5 0.6% 3011.8 24.3% 1.52 - 25 4,520.0 36.5% 1,617.8 13.1% 140.3 1.1% 6,278.1 50.7%

Total 8,838.7 71.4% 3,265.0 26.4% 279.1 2.3% 12,382.8 100% Source: Adapted from Taffesse et al. (2011). Note: Each farm size interval in the table contains 20 percent of Ethiopia’s smallholder farms.

7 Smallholders and larger farms are defined as those that cultivate less and more than 25.2 ha, respectively.

14

During the 2010/11 season, smallholder farms planted 97 percent of total cultivated land

and generated about 84 percent of total production; in contrast, large farms cultivated just over

3 percent of total cultivated land and contributed 16 percent to total production (Table 4).

Smallholders’ crop productivity is still below potential in Ethiopia and food security remains a

critical issue for many households and for the country as a whole.

Large farms account for a much larger share of commercial and industrial crop

production (sugarcane, cotton) in addition to cash crop production (coffee, fruit and vegetable).

As yields are usually higher on large farms, their share of production is often proportionally

higher than of acreage. For example, in cereals as shown in Table 3, yield on an average was

2.56 mt/ha when cultivated by large farms but averaged only 1.7 mt/ha for smallholders. This

yield differential is well-marked in the case of maize, where large farmers, on average, produce

78 percent higher yields (3.88 mt/ha) than smallholders (2.18 mt/ha).

Table 3. Crop Cultivated Areas and Production by Small and Large-Holders Production in tons (x 1000) Cultivated area in ha (x 1000) Smallholder Large-Holder Total Smallholder Large-Holder Total Cereals 15,099 385 15,483 9,122 150 9,273

Teff 3,330 8 3,338 2,504 5 2,509 Barley 1,614 1 1,615 1,072 1 1,073 Wheat 2,620 67 2,687 1,417 31 1,448 Maize 4,580 193 4,773 2,167 51 2,218 Sorghum 2,955 116 3,071 1,516 63 1,579

Pulses 2,058 26 2,084 1,622 19 1,641 Oilseeds 679 143 822 684 116 800 Other crops 3,200 3,548 6,748 935 152 1,087

Total 21,035 4,102 25,137 12,363 437 12,800 Source: CSA (2011); adjusted for small and large-holders’ proportions for production and area,

as estimated from Tables 2.3 and 2.4 in Taffesse et al. (2011). 3.2 Trends in Grain and Cereal Crops Production

Among cereal crops, teff, wheat, maize, barley and sorghum represent 95 percent of total

cereal planted area and 96 percent of total cereal production (Table 2). Since the 1960s, teff has

accounted for the largest share of cereal cultivated area. However, the teff share has been

declining gradually over the last four decades to make room for other cereals, mainly maize,

15

whose share increased by almost 8 percent over the same time period (Taffesse et al., 2011).

Wheat also experienced a slight increase, while barley decreased about 3 percent and sorghum

and other cereals experienced slight changes within the same time period.

Table 4 presents recent statistics on grains planted area, production and yields. Planted

area has been increasing steadily since the 2007/08 crop season with a 13.7 percent increase by

2010/11 season, driven by oil crops and, to a minor scale, by pulses and by cereals. Between the

2008/09 and 2010/11 seasons, the regions of Aromia, Amhara, the Southern Nations,

Nationalities and Peoples’ region (SNNP) and Tigray comprised about 97 percent of the total

planted area (Table A.1 in appendix).

Table 4. Averages and Growth Rates of Grains Planted Area, Yield and Production (2007/08-2010/11)

Crop Seasons % Change 2007/08 2008/09 2009/10 2010/11 2007/08-2010/11

Tota

l Are

a in

ha

(x10

3 ) Cereals 9,690.7 9,951.8 10,457.8 10,807.5 11.5% Pulses 1,357.5 1,803.9 1,727.4 1,582.0 16.5% Oil Crops 774.5 1,006.5 978.0 1,058.6 36.7% Total Grains 11,822.8 12,762.2 13,163.2 13,448.1 13.7%

Tota

l Pr

oduc

tion

in

mt (

x103 ) Cereals 17,761.3 15,606.8 17,320.8 19,180.7 8.0%

Pulses 1,953.2 2,060.5 2,065.0 2,065.7 5.8% Oil Crops 634.0 777.7 860.3 935.7 47.6% Total Grains 20,348.5 18,444.9 20,246.1 22,182.1 9.0%

Ave

rage

Y

ield

(m

t/ha)

Cereals 1.8 1.6 1.7 1.8 -3.2% Pulses 1.4 1.1 1.2 1.3 -9.2% Oil Crops 0.8 0.8 0.9 0.9 8.0% Total Grains 1.7 1.4 1.5 1.6 -4.2%

Source: CSA (2011).

In terms of grains production, the upward trend between 2007/08 and 2010/11 was again

driven by cereals along with a substantial percentage increase in oil crop production from a low

base. The increase in production between 2007/08 and 2010/11 is clearly attributable to the

increase in cultivated area. Yield performance between 2007/08 and 20010/11 was stagnant to

negative except for oil crops, which increased slightly.

16

4.0 The Ethiopia Fertilizer Sector

The GoE has taken a series of measures aimed at boosting agricultural productivity to

achieve GTP and other objectives. For fertilizer specifically, the plan is to increase the adoption

of improved technologies and ensure an adequate supply of fertilizer through domestic

production and a competitive and efficient fertilizer importation and marketing system.

Ethiopia’s fertilizer market deals with high transaction costs in marketing and distribution

to a geographically dispersed small farmer population who have limited financial resources and

access to credit (Harrigan, 2008; Jayne et al., 2003). In addition to relatively high fertilizer

prices, rainfall variability results in increased production risk and variability in fertilizer

consumption. This in turn exposes cooperatives to financial risk as they decide on the optimal

stock levels and avoid costs associated with stock carryovers from season to season. On the

supply-side, importers have to accumulate sufficient financial liquidity to take advantage of

economies of size in procurement and international shipping.

4.1 Evolution of Fertilizer Markets Following the introduction of fertilizer in Ethiopia in the late 1960s, fertilizer application

levels remained low until the mid-1980s, when consumption increased slightly with the

introduction of the Peasant Agricultural Development Program (PADEP). Since then, a series of

policies continues to reshape fertilizer supply in Ethiopia.

Prior to 1992, the government-run Agricultural Inputs Supply Corporation (AISCO) was

the sole player in a subsidized fertilizer market network. Inefficiency and cost concerns led to

partial liberalization in 1992, which allowed a few private companies and regional state-run

agencies to enter the market. However, competing against a state-run enterprise for a limited

market demand became difficult, which led these private firms to exit the market. By 2007 the

regional state-run agencies were replaced by farmers’ cooperatives, and in 2008 AISCO was

renamed AISE, reverting to its prior status as the sole fertilizer importer.

Figure 3 illustrates the share of imports attributable to various players following partial

market liberalization of the subsector. The share of the market for private firms decreased from

17

30 percent in 1996 to less than 10 percent by 2001 and then to zero in 2002. As the share of

private companies diminished, regional state-run agencies took over, but these were also

replaced with cooperatives as AISE became the sole importer.

Source: Adapted from Rashid et al. (2012).

Figure 3. Share of Fertilizer Imports by Type of Market Player, 1995-2009

18

4.2 Fertilizer Imports, Sales and Consumption As indicated above, AISE is currently the sole importer of fertilizer in Ethiopia. An

important decision that AISE must make every year is how much fertilizer to import in order to

meet the anticipated demand from farmers. These estimates begin at the kebele level by MoARD

agents, then aggregated to woreda, zonal, regional and national levels in order for AISE to

initiate procurement in line with national GTP targets. The following diagram illustrates this

process (Figure 4).

Source: Authors, based on information collected from MoARD.

Figure 4. The Process of Estimating Quantities of Fertilizer Imports Over the last 10 years, total fertilizer imports have increased by more than 50 percent,

from less than 370,000 mt in 2002 to almost 570,000 mt in 2011, with a spike of 627,000 mt in

2009. Fertilizer carryover stocks averaged 33 percent of imports between 2002 and 2011, with a

high of 61 percent in 2002 and a low of 12 percent in 2007. These stocks, resulting from the

mismatch between actual fertilizer demand and imports, accentuate the year-to-year variability in

fertilizer import levels (Figure 5).

Kebele

Woreda

Zonal demand

Regional demand

Imports: national demand for the coming agricultural year less

carryover stocks from previous year

Cooperatives demand assessment

Production targets set by GTP

19

Source: Authors, from MoARD data, 2012.

Figure 5. DAP and Urea Fertilizer Imports and Consumption, 2002-2011

Fertilizer sales and consumption have increased by more than 100 percent between 2002

and 2011, with an average rate of 6 percent per year, more so for urea than for DAP (Figure 5).

Consumption levels vary across the country with Oromia, Amhara, SNNP and Tigray regions,

using an average of 92 percent of total fertilizer sales between 2003 and 2011 (Tables A.3 and

A.4 in Appendix).

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Tota

l Im

ports

in M

T

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Tota

l Sale

s in M

T

DAP Urea

20

Source: CSA (2011).

Figure 6. Average Fertilizer Use on Main Grains, 2008/09-2010/11

Ninety percent of fertilizer consumed in Ethiopia is used on cereals, 4.7 percent on pulses

and 1.8 percent on oil seeds (CSA, 2011). Non-grain crops account for only 3 percent of

fertilizer use (Figure 6). From total fertilizer use in cereals, teff receives the highest share with

almost 40 percent of fertilizer use, followed by wheat (26 percent), maize (17 percent), barley

(9 percent) and sorghum (3 percent).

The amount of fertilizer applied to crops in 2010/11 is estimated at 550,500 mt, an

increase of 30 percent compared with about 426,700 mt in 2009/10. For 2010/11, 4.8 million ha

of cultivated land were fertilized, compared with 3.2 million ha in 2009/10, a 53 percent

increase. These figures suggest that the average fertilizer application rate per hectare of

cultivated land decreased from 133 to 115 kg/ha. Among major cereal crops, maize has a higher

average application rate of 175 kg/ha by 2011, while the lowest application rate was for sorghum

with 97 kg/ha (CSA, 2011).

4.3 The Fertilizer Supply Chain Once the fertilizer estimates have been determined by MoARD as described above

(Figure 4) and tenders approved by local financial institutions, the AISE places tenders on the

international market for the supply of fertilizer for the two main planting seasons. These

purchases are backed by World Bank funding, which sets the requirements for competitive

tenders and the tender process guidelines.

21

Requests by potential importers to be allowed to participate have been denied in favor of

a sole importer, AISE, with the expectation of bulk purchases that take advantage of economies

of scale in procurement and shipping to lower farm-gate prices. Contract arrangements with

international suppliers allow for the transfer of ownership of the product as it is unloaded from

the vessel and transferred to trucks at Djibouti Port. The contract is flexible and allows the

importer to transfer risk and responsibility that may arise from additional port costs resulting

from inefficiencies in handling and bagging at the port and demurrage.

As a landlocked country, Ethiopia makes use of Djibouti Port, 950 km from Addis

Ababa, as the main entry point for most of its imports. The port has four berths capable of taking

vessels exceeding 50,000 mt. Often there is berth competition for loading and unloading between

fertilizer and grain and other cargo. There are no storage facilities at the port except for a silo

that can be used in emergencies to avoid demurrage costs. Product is discharged, bagged and

loaded directly onto trucks, ready for distribution.

Once the cargo has been discharged at the port, AISE’s preference is to deliver the

product directly to the cooperative union warehouses. AISE has about 33 warehouses

strategically located around the country with capacities of 8,000-10,000 mt each, used almost

entirely for the storage of their imported products. If cooperatives are not ready to receive the

product, it is delivered to AISE’s main warehouses (Mekele, Addis, Nazaret, Shashemene,

Komblocha) to be transferred later to the cooperatives. Typically, about 70 percent of the product

is delivered to AISE’s warehouses.

After fertilizer has been transferred to the cooperative unions’ warehouses, it is in turn

distributed to the primary cooperatives, where farmers have direct access to the fertilizer for cash

purchase or, in some cases, obtained on a credit basis. In areas of the country where there are no

cooperative unions, AISE takes the role and responsibility of delivering directly to the primary

cooperatives. AISE can also supply fertilizer to farmers directly without intermediaries. About

10 percent of imports are sold directly to large commercial farmers and other regional

government agencies. Figure 7 illustrates the import and distribution process considering the

flow of product and of cash/financing.

22

Flow of product Flow of cash or finance/credit

Djibouti Port

International Fertilizer Suppliers

Agriculture Input Supply Enterprise (AISE)

Cooperative Unions AISE marketing centers to supply regional, zones,

kebele level farmers, including commercial

farmers. Primary Cooperatives

Farmers affiliated to cooperatives

Commercial Bank of Ethiopia

MoARD/Regional BoARDs

LoC

Credit

LoC $

Credit $

$

$

$

Credit

$ Credit Guarantee

$

woreda and

Source: Authors, based on MoARD and information from field interviews.

Figure 7. Fertilizer Distribution in Ethiopia and Cash/Financing Flow

The Commercial Bank of Ethiopia (CBE) issues letters of credit (LoC) on behalf of AISE

to procure the fertilizer and makes payments to the international supplier. The bank provides

credit to the cooperative unions backed by the credit guarantee of the regional Bureaus of

Agriculture and Rural Development (BoARDs). The regional BoARDs set fertilizer prices and

margins for the unions and the primary cooperatives and also provide credit guarantees for the

unions to obtain and transport fertilizer from the AISE warehouses. In turn, the primary

cooperatives receive credit from the cooperative unions and sell the fertilizer to farmers mostly

on a cash basis. In remote and food-insecure areas, fertilizer is provided to farmers on a

combination of cash and credit basis (50/50), with the credit portion to be paid at harvest.

23

4.4 Fertilizer Supply Cost Structure In this section we analyze the relative contribution of various cost components to the

price for DAP. Since world prices cannot be influenced by an individual importer, we focus on

inland costs where there is a possibility of saving by implementing appropriate policies. The

average 2012 AISE contract cost and freight (CFR) Djibouti price for DAP is US $725.50. The

prevailing DAP international price in the previous six months before the import season was

US $640. The cost of DAP delivered at AISE Nazret warehouse was US $787 compared with

US $878 at cooperative warehouses. These costs are estimated based on CFR Djibouti plus

inland transportation cost from port and unloading at the central warehouse, insurance, financing

costs (bank interest rates and LoC bank commissions), warehouse cost, overhead and

operational/administrative costs. The proportions of costs from Djibouti to the AISE warehouse

at Nazret are illustrated in Figure 8 for DAP.

Source: Authors, using data from country interviews.

Figure 8. Proportion of Inland Costs to AISE Warehouse

19%

7%

74%

Insurance, bankcommission, &

administration costs

Port Clearing,Inspection, Bagging,

Spillage

Transport (Djibouti-Central Warehouse)

24

Inland transportation is a major operational consideration in the importation of fertilizer.

The additional cost from Djibouti Port to a cooperative warehouse is $152.3 for DAP or 21 percent

of AISE CFR-Lo/Djibouti reported import price. Figure 8 illustrates the inland cost buildup after

importation to AISE warehouses. Inland transportation takes up to 74 percent, followed by

insurance, bank commissions and administration costs at 19 percent and clearing cost, inspections,

re-bagging and spillage losses at 7 percent of total inland cost up to the AISE warehouse.

AISE contractual arrangements with suppliers require a discharge rate of 2,000 mt/day to

avoid demurrage costs, which require 50-65 trucks/day/vessel that are contracted by AISE from

four major trucking companies. Inland transportation cost is mainly determined by the distance

between Djibouti Port and the AISE warehouse location, averaging about 860 kilometers (538

miles). To make sure of adequate transport for periods of peak cargo at the port, AISE signs

transport contracts on an annual basis to ensure that trucks are available when needed.

Typically, long-haul freight (from port to warehouses) does not include backhaul cargo,

which would help defray costs. Usually trucks offload their cargo at the nearest AISE warehouse

at Nazret in order to make more trips and avoid demurrage charges resulting from ship port

delays. Once the ships are emptied, trucks are then used to move fertilizer from Nazret to other

warehouses further up-country, such as Bahir Dar and Mekele. This practice adds extra costs due

to unloading/reloading, product losses and warehouse management. In addition, this practice

contributes to fertilizer delivery delays to the main production regions.

Although there are few backhaul cargo opportunities that will help cut costs, inland

freight rates of $0.06 mt per kilometer (km) as reported by the MoARD are competitive with

most African countries. Trucks can carry a load of up to 40 mt with costs between $42.89/mt and

$73.22/mt, depending on the port-to-warehouse distances. Short-haul freight (AISE warehouses

to unions and cooperatives) ranges between $0.10 mg/km to $0.13 mt/km. The average distance

is between 100 and 160 km. These rates are competitive and similar to other truck freight rates in

other SSA countries.

25

As explained earlier, prices received by farmers are determined by the regional BoARD.

The BoARD, in consultation with cooperatives, sets prices for cooperatives based on costs at the

AISE main warehouses. Farmer prices can range above ex-warehouse prices by US $74.4/mt for

DAP. The total average cost/price increase from port to farmer for DAP is US $152.

Fertilizer stocks carried from one season to the next have some impact on farm-gate

prices. For some regions (mainly Tigray and SNNP), prices are determined by weighting the

prices of current imports and the cost of stock carry-overs that include storage and administrative

costs. The costs of carryover stocks also include costs from physical losses and implicit costs

from deteriorating quality and hence reduced yield response. In addition, these stocks carry the

risks associated with fluctuations in global prices.

5.0 Results: Estimating Fertilizer Requirements

In this section, we estimate quantities of fertilizer required to meet the agricultural

production targets as stated in the GTP (2010). This study focuses on the crop nutrient removal

and fertilizer efficiency approach to estimate fertilizer requirements. This approach relies on a

number of assumptions to provide an indication of the level of nutrients required for targeted

production levels as explained below. In previous country analyses, we demonstrated the

capabilities of the Decision Support System for Agrotechnology Transfer (DSSAT) model with

an analysis of maize, but due to unavailability of crucial agronomic information necessary for the

application of the model, such analysis was not undertaken for Ethiopia.

To provide relevant estimates for the quantities of fertilizer required to achieve the GTP

crop targets (GTP, 2010), we determine the gap between current and target production levels

(Table 5) and then apply the nutrient removal factors to estimate fertilizer required to meet this

gap. These estimates provide the basis for the discussions on nutrient requirements to meet the

increased production. Assuming no significant change in cultivated area over the five-year

planning period, crop production will increase by approximately 50 percent based on an annual

growth rate of 8 percent.

26

Table 5. Yield and Production Differences Between Current and GTP Targets

Major Crops

Estimated Cultivated

Area

Yield Production

Current GTP Target: 8% Annual Growth Current Target Incremental

(ha [x103]) (mt/ha) (mt [x103]) Teff 2,770 1.3 1.9 3,496 5,137 1,641 Maize 2,022 2.6 3.8 5,271 7,744 2,473 Sorghum 1,960 2.1 3.1 4,109 6,037 1,928 Wheat 1,599 1.9 2.8 3,006 4,417 1,411 Barley 1,048 1.6 2.4 1,707 2,509 802 Finger millet 409 1.6 2.3 636 934 298 Rice 34 2.9 4.3 100 148 48 Soya beans 15 1.4 2.1 21 31 10 Groundnuts 50 1.4 2.1 73 107 34 Tomatoes 9 18.0 26.5 158 232 74 Sweet potatoes 82 9.1 13.3 741 1,089 348 Potatoes 55 8.4 12.4 461 678 217 Bananas 33 8.5 12.5 285 419 134 Coffee 574 0.8 1.2 461 678 217 Totals 9,635 Source: Various, including MoARD and authors’ calculations. The maize gap is estimated at

approximately 2.5 million mt.

To meet the GTP targets by 2015 requires an increase of 9.6 million mt above current

production.

5.1 Estimating Fertilizer Use on Key Crops Using Nutrient Removal Approach This approach estimates the amount of nutrient removed by the harvested crop to

calculate fertilizer required to sustain soil fertility levels. Nutrients removed from the soil by the

harvested crop must be replaced for the next cropping cycle. The approach assumes good

management practices on the part of farmers and that fertilizer application is for maintaining

rather than building soil fertility levels.

Nutrient levels contained in the incremental harvested crops were estimated and then

adjusted using efficiency recovery factors for N, P2O5 and K2O. This provides an indication of

the amount of nutrients that must be applied to maintain soil fertility given a particular level of

production. This approach assumes that the full nutrient uptake needed beyond removal levels is

27

met by other sources including recycling of residues. Table 6 shows the results from this method

for a set of crops.

Table 6. Required Fertilizer Nutrients Using Nutrient Removal Factors for a Set of Crops

Key Crops Incremental

Crop Production Nutrient Removal Total

Nutrient Removal N P2O5 K2O (mt [x103]) (mt [x103]) (mt [x103])

Teff 1,641 36.1 11.9 8.5 56.4 Maize 2,473 38.6 16.9 9.8 65.3 Sorghum 1,928 37.1 6.8 8.0 51.9 Wheat 1,411 34.1 13.6 7.7 55.4 Barley 802 16.5 3.3 4.2 24.1 Finger millet 298 6.3 2.4 1.4 10.1 Rice 48 0.6 0.2 0.2 1.0 Soya beans 10 0.6 0.1 0.2 0.9 Groundnuts 34 1.5 0.3 0.2 2.0 Tomatoes 74 0.1 0.0 0.2 0.4 Sweet potatoes 348 1.0 0.2 1.3 2.4 Potatoes 217 0.8 0.4 1.3 2.5 Bananas 134 0.4 0.1 1.8 2.4 Coffee 217 9.5 1.2 12.4 23.1 Totals 9,635 183.2 57.4 57.2 297.9 Source: Data from ministry and authors’ calculations using estimated nutrient content of crops.

Table 6 shows that the incremental output of 9.6 million mt (difference between base and

target outputs) from these crops accounts for 297,900 mt of nutrient requirements (N, P2O5 and

K2O). Table 7 below is derived from Table 6 and converts the nutrients to fertilizer product

required (here we illustrate for urea, DAP and muriate of potash [MOP]).

Table 7. Nutrient and Corresponding Product Requirements for Crop Categories

Crop Categories Nutrient* Product (mt [x103])

a. Crops in Table 6 612 1,221 b. All Crops (Table 6 including others not shown on table) 746 1,484 Sources: Authors’ estimates. The nutrients are converted to urea, DAP and MOP fertilizer products. *Note that the total nutrients were adjusted for fertilizer efficiency factors.

28

The nutrients that corresponds to the GTP targets are 612,000 mt, which translates to an

equivalent fertilizer product weight of approximately 1.22 million mt (urea, DAP, MOP). The

corresponding respective numbers when all crops are included are 746,000 mt of nutrients and

1.48 mt of fertilizer products. Therefore, to increase production for key crops from current to

target levels requires 1.22 million mt of urea, DAP and MOP fertilizer product (and for all crops

this increases to 1.48 million mt). This is essentially double the current fertilizer consumption in

Ethiopia.

6.0 Conclusions and Recommendations

This section addresses policy issues that contribute to increased availability and use of

fertilizer to achieve the GTP targets. Though this study focuses on fertilizers, it is important to

note that increased agricultural production will require a holistic approach in an ISFM

framework that includes technology, local knowledge and development of output markets. The

results from this study indicate that for Ethiopia to achieve its agricultural crop targets, it needs

to double its consumption of fertilizers by 2015. This section will touch on a combination of

demand- and supply-side recommendations and policies aimed at alleviating the constraints

within the fertilizer value chain and thereby improve the capacity to handle the high volumes of

fertilizers.

Ethiopian agriculture is dominated by smallholder farmers (< 25 ha) with over 90 percent

of cultivated land under food crops (mostly grains). As available arable land is becoming

increasingly scarce, increases in production will be driven largely by intensification of inputs

rather than expansion of land area. This makes fertilizer consumption a key element of any

agricultural strategic plan as appropriately emphasized in the GTP.

In the following paragraphs, we provide some suggestions on the way forward on

different fronts involving both public and private sector involvement in a synergistic system that

leads to provision of the necessary inputs to aid smallholders to achieve their objectives of

improving food security and incomes.

29

6.1 Expanding the Fertilizer Product Set and Capacity Training The study shows that a large share of fertilizer imports into Ethiopia consists of DAP and

urea, which offers a constrained set of choices to farmers who are cultivating a wide range of

crops in various agro-conditions in the country. It is important that fertilizers available in the

market match with the climate, soil profiles and crop needs in the country. Though it is not

economical to import fertilizer products for every possible need, modification of basic materials

through blending and compacting can help to address this problem. Encouraging the

establishment of such facilities in areas with high agricultural potential will provide a wider

choice to smallholders while avoiding the costs of importing small quantities of various fertilizer

types. To restore soil fertility in areas with high nutrient depletion rates, fertilizer use should be

accompanied by a comprehensive ISFM approach that incorporates irrigation and soil erosion

prevention measures to maintain and restore fertility.

A consequence of introducing new fertilizer products into a market that has been

dependent on a narrow range of fertilizers is the lack of knowledge of the benefits and use of

these new fertilizers. New fertilizer products will require investments in extension services and

capacity building for agro-dealers and farmers to determine appropriate blends, encourage

adoption through understanding the benefits and profitability of using the products and how to

appropriately apply them.

Faced by financial constraints, some farmers cannot purchase the current fertilizer and

seed pack sizes, but repackaged units that suit their needs and investment plans could increase

accessibility. The rigid packaging system in place constrains farmers from choosing what is

appropriate for their farm size or crops. It is important that market players face a business

environment that allows for flexibility to launch an array of products targeting many market

segments. Building linkages with extension and research institutions and state players will

provide information and feedback to determine and meet varying demand.

6.2 Estimation of Import Quantities and Potential Effect on Prices and Quality Estimation of annual national fertilizer import requirements can be a challenging

exercise, which can lead to over or underestimation of the actual demand that will prevail during

planting of crops. This is further complicated when moving large quantities of cargo over poor

30

infrastructure networks, which requires starting the procurement process fairly early before the

planting season. Carryover stocks can contribute to availing fertilizer at the right time for

planting for next season and possibly cushion users from international upward price risks.

However, depending on the design and operations of storage facilities and related storage costs,

quality and prices may be affected, which will influence access to fertilizer and lower yields at

the farm level. A general trend witnessed in most countries when preparing development plans

for agriculture is a tendency to set very high production targets. Therefore, it is important to

make estimates that are based on realistic expectations of the performance of the agricultural

sector and the distribution channel while accounting for possible weather disruptions.

6.3 Price Determination and Effect on Access to Fertilizer in Remote Areas Fertilizer prices in Ethiopia are set by MoARD in consultation with stakeholders, a process

that may not capture all the relevant elements that go into price formation. Prices and margins from

the port to cooperative warehouses are determined by costs incurred by AISE, the sole importer,

while cooperatives and farmer prices are determined by regional MoARD in consultation with

cooperatives. If the cooperatives do not receive adequate margins, they have less incentive to add

value and provide other services to farmers. Though cooperatives are spread throughout the

countryside, narrow market margins can curtail distribution especially to remote areas if it is

difficult to recover transport and transaction costs, limiting access to fertilizers in such areas.

It is therefore necessary that improved price-signaling and flexibility enables cooperatives

or other players to seek opportunities to recover their costs and direct inputs to their best use. One

such option is to allow prices paid by farmers to be determined by the market rather than MoARD.

If the government is concerned with access to fertilizers by poor farmers who cannot afford market

prices, then a smart subsidy system can be designed that targets such vulnerable groups that

capitalizes on the strengths of public and private actors. Such subsidy programs need to be

carefully designed and clearly articulated to all players and with clear exit strategies.

6.4 Access to Finance AISE has a letter of credit arrangement with banks for importation while the wholesale

distributors (cooperative unions) have credit arrangements with local banks and MoARD that

allow them to access fertilizer on credit. The total procurement bill depends on the terms of

31

contract that AISE sets at the time of requesting for international bids for the supply of fertilizer.

This is important because world prices can change in either direction between the time of making

the order and several months later when the cargo arrives at the port. Therefore, the bid price

must consider ways for AISE to take advantage of the possibility of expected low prices while

minimizing risks from future price increases.

However, at the retail and farmer level, limited financing constrains access to fertilizers.

Therefore, enabling a business environment that encourages participation in rural areas by

financial institutions will be important to encourage saving and allow access to loans. Loan

guarantee programs accompanied by access to markets will encourage increased fertilizer use.

6.5 Investment in Storage, Logistics and Transport Infrastructure Although offloading capacity at the Djibouti Port is limited, cargo clearance is relatively

adequate compared to other SSA countries. Still, there are periods of congestion that can inhibit

the flow of goods through the port. Furthermore, the number of trucks required to move the

products inland is often not sufficient, and costs can be high due to lack of backhaul cargos. A

logistics assessment that takes into account all the cargo moving through the port, the existing

and potential modes of transport and the storage facilities available to the logistics chain should

be conducted to highlight areas that require improvements to reduce costs along the chain.

Lack of and poor roads are challenges that significantly increase transaction costs, raising

farm-gate prices. This reduces input demand and acts as a disincentive to supplying fertilizer to

remote areas where fertilizer is needed, at the right time and price. Better maintenance and

upgrading of existing roads as well as construction of new rural feeder roads are necessary to

improve logistics and extend the life of transportation equipment. New roads will also provide

access to output markets, improving farm income and creating incentives for entrepreneurs to

expand the reach of input retail businesses to more farmers.

6.6 Creation of an Enabling Business Environment To encourage farmers and other private businesses to invest in improved technologies

and related services, it is important to nurture an environment that maintains macro-economic

32

stability and minimizes costs to businesses while providing the necessary regulatory and

enforcement system.

The current fertilizer procurement and distribution system relies heavily on development

partner support (the World Bank in particular) in underwriting the letters of credit and providing

the guarantees that enable international suppliers to transact with AISE. For sustainability of the

system, it is necessary to take a long-term view and start building the foundation for a system

that includes the right mix of private-public players with minimal reliance on international

community support.

It is crucial that businesses have the benefits derived from a legal and regulatory framework

that is predictable and not subject to high transaction and indirect costs of navigating the regulatory

system or meeting other requirements that deter investments. The brief partial liberalization of the

fertilizer private sector in the 1990s witnessed the entry, but then quick exit, of private sector

players in the market. Private investments can be limited by competition from public-run systems

that do not play by the same rules. This is the case for the private sector withdrawal from regional

fertilizer distribution networks that were then replaced by cooperatives. A requirement that

potential importers obtain a license from GoE and have the capacity to import over 25,000 mt of

fertilizer clearly acts as a barrier to entry, limiting participation by the private sector. Greater

competition will contribute to more efficient operation.

There is a role for the government to assist those farmers with restricted access to credit,

information and markets. Though GoE efforts have increased fertilizer consumption over the last

decade, Ethiopia still faces food shortages and high food prices. Though intensification continues to

be necessary for increased agricultural productivity in the face of low yields and production, it is

important to address these problems by establishing an approach that ensures smallholders have

access to the right technologies in the form that is appropriate to their local conditions and is

accompanied with the right information. A judicious mix of private and public investments with

consistently applied legal and regulatory guidelines can contribute to the successful development of

input markets in Ethiopia. The Ethiopian government has begun working with international investors

in developing manufacturing opportunities that will enhance the availability of appropriate products.

33

7.0 References

Agricultural Growth Program (AGP). Joint Review and Implementation Support (JRIS) Mission

Aide-Mémoire, January 30 to February 17, 2012.

Central Statistics Agency (CSA). 2011. Agriculture in Figures: Key Findings of the 2008/09-

2010/11 Agricultural Sample Surveys for All Sectors and Seasons, Country Summary.

Comprehensive Africa Agriculture Development Program (CAADP) Ethiopia Study, Final

Report, Volume 1, 2009.

Crawford, E., V. Kelly, T.S. Jayne and J. Howard. 2003. “Input Use and Market Development in

Sub-Saharan Africa: An Overview,” Food Policy, 28:277-292.

Spielman D., D. Keelemwork and D. Alemu. 2011. Seed, Fertilizer and Agricultural Extension

in Ethiopia, IFPRI Development Strategy and Governance Division/EDRI, ESSP II

Working Paper 020.

Chanyalew D., B. Adenew and J. Mellor. 2010. Ethiopia’s Agriculture Sector Policy and

Investment Framework: Ten Year Road Map (2010-2020), Ministry of Agriculture and

Rural Development.

Getachew, D. Peasant Reflections on the Agricultural Development Led Industrialization (ADLI)

Program, Department of Sociology and Anthropology, Addis Ababa University.

EEA/EEPRI. 2006. Evaluation of the Ethiopian Agricultural Extension With Particular

Emphasis on the Participatory Demonstration and Training Extension System

(PADETES).

Ethiopia Comprehensive Africa Agriculture Development Program (CAADP) Compact,

August 28, 2009.

Ethiopia Comprehensive Africa Agriculture Development Program (CAADP) Technical Review:

Summary of Key Findings for Ethiopia, 2010.

Harrigan, J. 2008. “Food Insecurity, Poverty and the Malawian Starter Pack: Fresh Start or False

Start?” Food Policy, 33:237-249.

IFPRI/Ethiopian Institute of Agricultural Research. 2010. Fertilizer and Soil Fertility Potential

in Ethiopia: Constraints and Opportunities for Enhancing the System.

Jayne, T.S., J. Govereh, M. Wanzala and M. Demeke. 2003. “Fertilizer Market Development: A

Comparative Analysis of Ethiopia, Kenya and Zambia,” Food Policy, 28:293-316.

34

Ministry of Finance and Economic Development. 2010. Growth and Transformation Plan (GTP)

2010/11-2014/15, Volume 1: Main Text.

Ministry of Agriculture and Rural Development. 2011. Key Interventions in Soil Fertility

Research and Management: A Roadmap 2011-2015.

Ministry of Agriculture and Rural Development. 2010. Ethiopia’s Agriculture Sector Policy and

Investment Framework (PIF) 2010-2020, Final Draft Report.

Mellor, J., and D. Paul. 2010. Agriculture and the Economic Transformation of Ethiopia, IFPRI

Development Strategy and Governance Division, ESSP2 Discussion Paper No. 010.

Morris, M., V. Kelly, R. Kopicki and D. Byerlee. 2007. Fertilizer Use in African Agriculture:

Lessons Learned and Good Practice Guidelines, World Bank, Washington, D.C.

NEPAD Planning and Coordinating Agency. 2010. Comprehensive Africa Agriculture

Development Program (CAADP) in Practice: Highlighting the Successes.

NEPAD Planning and Coordinating Agency. 2011. Success Story 1: Ethiopia.

Rashid S., N. Tefera, G. Ayele and G. Abate. 2012. Fertilizer in Ethiopia: The Policies, Value

Chain and Profitability. PowerPoint presentation at IFPRI/USAID-CIAFS Analytical

Support to ATA.

Taffesse A., P. Dorosh and S. Asrat. 2011. Crop Production in Ethiopia: Regional Patterns and

Trends, IFPRI Development Strategy and Governance Division/EDRI, ESSP II Working

Paper 0016.

The World Bank Economic and Sector Work. 2012. Agribusiness Indicators: Ethiopia, Report

Number 68237-ET.

The World Bank. 2010. Ethiopia – Agricultural Growth Program (AGP) Appraisal Stage,

Project Information Document (PID), Report No: AB5416.

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Plan (GTP) (2010/11-2014/15), Report No. 63592-ET.

The World Bank. 2012. Ethiopia at a Glance.

USAID/WFP FEWS NET. 2010. Ethiopia Food Security Update.

World Fact Book. 2012.

Woodhill, J., W. Heemskerk, B. Emana and E. Elias. 2011. Market Linked Innovation Systems:

Opportunities for Strengthening Agricultural Development in Ethiopia, Report for the

Netherlands Embassy of Ethiopia, Wageningen UR Centre for Development Innovation.

35

Appendix

Table A.1. Total Planted Area per Crop Group and Regions, 2008/09-2010/11

Country Regions

Crop Types OROMIA AMHARA S.N.N.P.R. TIGRAY

Other Regions

Country Total

Cro

p A

rea

in h

a

2008/ 2009

Cereals 4,697,806 3,110,206 1,103,658 768,734 271,410 9,951,814 Pulses 710,043 753,951 255,252 72,895 11,727 1,803,868 Oil Crops 405,509 365,216 13,126 169,685 52,963 1,006,499

Grains Total 5,813,359 4,229,373 1,372,036 1,011,314 336,100 12,762,181 Non-grain Total 671,869 112,784 484,316 17,432 47,727 1,334,127

Total area 6,485,227 4,342,157 1,856,352 1,028,746 383,826 14,096,308

2009/ 2010

Cereals 5,121,199 3,129,907 1,173,129 735,215 298,335 10,457,783 Pulses 670,382 739,627 240,122 65,261 12,014 1,727,406 Oil Crops 335,114 374,250 20,413 202,760 45,434 977,972

Grains Total 6,126,694 4,243,783 1,433,664 1,003,236 355,783 13,163,160 Non-grain Total 699,749 107,121 628,579 15,781 50,340 1,501,570

Total area 6,826,443 4,350,904 2,062,243 1,019,017 406,123 14,664,730

2010/ 2011

Cereals 5,155,243 3,405,417 1,177,892 744,192 324,709 10,807,453 Pulses 637,667 587,962 298,369 37,438 20,594 1,582,030 Oil Crops 333,103 401,312 17,588 195,956 110,636 1,058,595

Grains Total 6,126,012 4,394,691 1,493,850 977,586 455,938 13,448,078 Non-grain Total 819,602 111,737 607,072 8,623 60,299 1,607,334

Total area 6,945,614 4,506,428 2,100,922 986,210 516,238 15,055,411 Source: CSA Report on Area and Production of Major Crops, 2011. Table A.2. Total Crop Production per Crop Group and Regions, 2008/09-2010/11

Country Regions

Crop Types OROMIA AMHARA S.N.N.P.R. TIGRAY

Other Regions

Country Total

Cro

p Pr

oduc

tion

in m

t

2008/ 2009

Cereals 7,787,676 4,711,784 1,463,600 1,129,073 514,652 15,606,784 Pulses 821,470 924,477 217,697 83,797 13,014 2,060,454 Oil Crops 292,687 259,349 6,461 173,704 45,488 777,687

Grains Total 8,901,832 5,895,609 1,687,757 1,386,574 573,153 18,444,925 Non-grain Total 5,586,826 433,871 1,588,920 54,818 343,781 8,008,215

Total area 14,488,658 6,329,480 3,276,677 1,441,391 916,934 26,453,141

2009/ 2010

Cereals 9,090,993 4,848,593 1,782,262 1,020,668 578,320 17,320,836 Pulses 838,715 878,080 252,371 79,833 15,973 2,064,972 Oil Crops 279,701 298,131 14,257 223,442 44,736 860,267

Grains Total 10,209,410 6,024,804 2,048,889 1,323,942 639,030 20,246,075 Non-grain Total 3,418,828 489,810 2,274,043 88,558 223,458 6,494,697

Total area 13,628,238 6,514,614 4,322,932 1,412,500 862,488 26,740,772

2010/ 2011

Cereals 9,612,596 5,842,898 1,791,251 1,366,683 567,280 19,180,708 Pulses 902,252 768,607 319,494 51,930 23,441 2,065,724 Oil Crops 246,354 334,148 6,854 237,951 110,355 935,662

Grains Total 10,761,202 6,945,652 2,117,599 1,656,564 701,076 22,182,093 Non-grain Total 5,081,879 531,559 2,966,457 79,960 449,889 9,109,744

Total area 15,843,080 7,477,210 5,084,056 1,736,524 1,150,965 31,291,837 Source: CSA Report on Area and Production of Major Crops, 2011.

36

Table A.3. DAP Sales/Consumption by Region, 2003-2011

Total DAP Sales/Consumption in mt

Region 2003 2004 2005 2006 2007 2008 2009 2010 2011 Average Oromia 74,655 101,571 118,454 117,548 132,390 117,066 109,143 146,523 129,503 116,317 Amhara 48,481 61,263 61,828 70,998 74,392 93,536 86,270 118,320 116,316 81,267 SNNP 17,088 27,270 25,814 37,523 25,125 35,405 42,285 63,734 71,292 38,393 Tigray 5,250 5,395 7,670 5,125 9,612 8,907 10,692 17,169 21,083 10,100 A.A. 1,100 - 1,904 - 782 - - - - 1,262 Hareri 39 40 70 106 150 115 9 - - 76 Beni.shan 243 332 155

547 411 800 209 - 385

Gambela - - - - - 100 252 - - 176 Djredawa - - - - 39 44 10 - - 31 Somali - - - - 154 59 134 279 - 156 Others 11,099 14,966 8,924 19,856 15,829 10,125 28,644 6,075 12,015 14,170

Total 157,955 210,837 224,819 251,156 259,020 265,768 278,239 352,309 350,209 261,146 Source: IFDC data collect from MoARD, 2012.

Table A.4. Urea Sales/Consumption by Region, 2003-2011

Total Urea Sales/Consumption in mt

Region 2003 2004 2005 2006 2007 2008 2009 2010 2011 Average Oromia 45,806 45,252 54,397 53,027 48,843 54,735 48,946 59,351 59,163 52,169 Amhara 29,882 41,027 43,255 45,972 52,855 56,619 56,706 80,215 85,254 54,643 SNNP 4,035 6,111 4,257 5,431 3,534 4,828 7,375 17,642 24,785 8,666 Tigray 4,422 3,438 5,889 3,880 5,119 5,606 7,220 12,101 14,143 6,869 A.A. 657 - 1,086 - 3,282 - - - - 1,675 Hareri 37 20 60 220 220 50 57 - - 95 Beni.shan - 239 108 - 226 156 200 184 - 186 Gambela - - - - - 94 126 400 - 207 Djredawa - - - - - 32 10 - - 21 Somali - - - - 126 69 87 164 - 111 Others 21,555 16,018 12,683 16,031 14,916 16,799 27,710 31,519 16,976 19,356

Total 106,394 112,105 121,735 124,561 129,121 138,988 148,437 201,576 200,321 142,582 Source: IFDC data collected from MoARD, 2012. Note: S.N.N.P. = Southern Nations, Nationalities and Peoples’ region; A.A. = Addis Ababa.