Identifying Priority Value-chains in Ethiopia
A major challenge when designing a National Agricultural Investment Plan (NAIP) is deciding how to prioritize between different opportunities, e.g., which value-chains should be promoted over others?
Government analysts and policymakers are increasingly asked to adopt a systems approach to planning. This means having to consider sector-wide trade-offs between investment and policy options, e.g., the promotion of one value-chain may come at the expense of another and, so, it is the overall effect that is relevant for policy design. At the same time, policymakers, especially in agrarian economies like Ethiopia’s, are asked to quantify how a NAIP not only benefits the agricultural sector, but also contributes to economywide development objectives. This paper uses an economy-wide model to identify agricultural activities and value-chains in Ethiopia whose expansion would be most effective at generating economic growth, reducing national and rural poverty, creating jobs, and diversifying diets. Results indicate that expanding cereals production would continue to contribute positively to national pro-poor growth.
However, the analysis suggests that there is no single value-chain that can achieve all policy objectives. Instead, a more balanced portfolio of valuechains would not only enhance agriculture’s future contribution to poverty reduction and economic growth, but also promote faster rural transformation and dietary diversification, both of which are needed to create job opportunities and improve nutrition outcomes over the longer-term. After considering alternative weighting schemes for competing policy goals, the final analysis suggests that vegetables and fruits/tree crops should be considered priority value-chains, because these are among the most effective at achieving multiple policy objectives. Other highly-ranked value-chains include oilseeds, tobacco/cotton/tea, and milk/dairy.