Green Revolution: A Multi-pronged Approach

August 3, 2010

Reacting to Tsegaye’s original article, Yemane T. raised important issues such as pollution, declining soil quality, and human health costs and risks associated with excessive use of fertilizer, pesticides and other chemicals. And lately, Getachew Mequanent, one of the intellectual godfathers who provide consistent conceptual smoke screen for the ruling party, tried to remind us that, though not explicitly or officially declared, the government’s agricultural-led industrialization development strategy (ADLI) “has as a core objective the promotion of green revolution technologies.”


It is not so much Tsegaye and Yemane that spurred me to put my computer ink and paper together; I share most of their legitimate ideas and insights, which, I believe, emanate from their genuine concern about the inexplicably pervasive economic hardships and social deprivations in our country.


Though there are also some truths in Getachew’s assertions, they are, however, candy-coated with conceptual convulsions (or an excess of statistical legerdemain, if you choose) that are the hallmarks of both write-ups. For instance, based on his 1998 agricultural input application data in North Gondar, the farmers used a total of 49,000 quintals of fertilizers between 1994/95 and 1996/97, an adoption rate which he trumpets as “very high.” Yet, as you say, the devil is in the details, and if we disaggregate the total figure into three agricultural production periods, the farmers actually consumed on average 16 333 quintals of fertilizers per annum (or less than 6kg/household), which is an extremely low level of adoption, especially if we take into account the fact that more than 300,000 agricultural households inhabit the North Gondar administrative zone.


Moreover, even if we assumed that 6kg/household (still much less than the national average of 16kg/hectare in 1999) is a “high rate” of adoption, we still run the risk of making irrelevant generalization for the whole country based on the findings of an empirical investigation conducted in one specific zone. In fact, according to FAO, the high adoption rates were observed in the three provinces of central Ethiopia, namely, Shoa, Arsi and Gojjam, whose peasants together consumed 75 percent of the total fertilizer input in 1994/95.


Now there could be several explanations as to why the level of fertilizer consumption in Ethiopia is not only very low but it is also concentrated in small pockets in the central part of the country. One possible reason is the existence of fast and affordable transportation facilities in these areas. Central Ethiopia has better road transportation networks linked to the capital, with an average road density of over 40 kilometres per 1000 square kilometre area (which is higher than the national average of 30 km/1000 sq km area). So, conceivably, farmers in remote and mountainous regions like North Gondar Administrative Zone (with an average road density of 21 kms/1000sq km area and several hundred kilometres away from Addis compared with Arsi or Shoa) are very likely to be discouraged by the punitive costs of fertilizers and other farm inputs as traders would charge higher prices to redress the high costs associated with transportation. So green revolution is not only about production-boosting inputs but also about the availability of fast, convenient and modern transportation networks to facilitate the supply of these inputs to farmers timely and affordably.


Fertilizer for Fertility


Another important factor that determines the rate of adoption and the success of new agricultural technologies in Ethiopia is household income. Without the financial capacity to purchase and apply new technologies, farmers in Ethiopia will remain impoverished for the foreseeable future. Even extending farm credits, as evidenced by the outcome of the government’s rural-farm-input-credit scheme implemented over the past two decades, will not make the slightest dent in Ethiopia’s dreadful rural poverty. As I tried to argue in my previous article–what shall we do with the tools?—we must devise ways and means of subsidizing agricultural production in our country by building the capacity of the farmer at household level. So far the fertilizer market in Ethiopia has only enriched those rapacious fertilizer importing-and-distributing individuals, private firms, if any, and party parastatals that have been literally sucking the blood of the poor farmer, perpetuating his hardships as he remains bogged down in an escapable trap of taking farm credit and paying the debt thereof without any prospect of achieving economic independence and self-reliance.


Many questions spring to mind when we raise the issue of providing subsidies to our farmers till they accumulate enough assets and become economically and financially independent. Considering our limited resources, can we give subsidies to all Ethiopian farmers who currently number more than 68 million encompassing 12 million rural households? If we can’t include the entire farming community into our support programme due to resource constraints, how many should be included? From which regions? What should be the criteria on which we identify and pick eligible recipients? And most importantly for how long do we need to sustain such support to our farmers, that is, when is the right time to press the exit button?


These are crucial questions of practical significance whose answers require the joint contributions and participation of statisticians, economists, high ranking government officials, agricultural experts and other stakeholders including local residents, administrators and kebele sheriffs. It is a veritable rigmarole which involves a lot of money, time and man power. It requires diligence, a sense of commitment, and greater transparency. It takes the effort, big and small, of each and every patriotic Ethiopian who has the vision to break the long standing bond between famine and Ethiopianity.


Regions or provinces may be selected based on their agricultural potential such as soil fertility, availability of suitable land that supports the efficient utilization of agricultural technologies, the amount of annual precipitation or availability of rivers that can be developed for irrigation use etc. Our criteria for the selection of target areas/districts need to give greater weight to economic efficiency than to egalitarian considerations, which are impossible to attain. Thus, (resentful) residents in less productive regions which do not participate in the support scheme would benefit from higher quality food produced in more productive regions and supplied at lower prices. Moreover, the government can also support less fortunate regions—those that do not have comparative advantage in food production—by creating off-farm employment opportunities such as through the expansion of labour intensive, small and medium sized manufacturing firms that specialize in the production and distribution of low-technology household consumption goods like soap and footwear (what Tsegaye and Getachew call industrial decentralization).


Once we agree on how to select our regions, the next task will be selecting eligible households, which certainly will be the most complex and controversial work to do. It is also in here which I hope I will make my “groundbreaking” contribution towards solving the age-old food insecurity puzzle in our country. I call my criteria “fertilizer for fertility,” and target the youngest, most productive rural couples or households, with as few children as possible (say, three and below). The choice of young couples with lower number of children has several advantages:

  • To begin with, it serves as a powerful instrument in managing Ethiopia’s population explosion problem, which has been growing much faster than the country’s ability to produce enough food. Combating such Malthusian crisis (higher population growth with slow agricultural expansion) requires targeting the younger generation which is more likely to be open and easy to edify about the long-term risks of having more children.

  • People naturally respond to incentives, and more enthusiastically to financial incentives. Therefore, by providing fertilizer subsidies to such young rural couples, the government literally achieves two objectives simultaneously: increase food production through its green revolution and sell its family planning programmes. Whether the couple will stick to abstinence, prophylactic or any other family planning stratagem depends on many factors including the level of their edification, the community they live in, the availability of effective health system, the role of religious and traditional leaders in promoting such programmes etc.

  • Knowing that the fertilizer subsidies they receive is conditional on controlling the number of children they would like to have, the target rural couples develop a sense of self-restraint which they willingly want to impose on themselves in exchange for free fertilizer which would increase their farm output, with a room for surplus produce that could be cashed and saved for any eventuality. There is no doubt that the existence of such incentives would encourage competition among peer groups for greater prudence in managing their family sizes.

Efficient Agricultural Financial System


It is more than a surprise that a government that boasts to be promoting the vital interests of the farming and pastoral communities in Ethiopia has not established a specialized agricultural bank that effectively addresses the special needs and circumstances of the country’s troubled agricultural sector.


Even though the Development Bank of Ethiopia (DBE) has been assigned with the responsibility to support the country’s development efforts by providing loans to agricultural and industrial investors, its impact on modernizing Ethiopia’s agriculture has been hardly noticeable. For instance, as of June 2007, the latest report available online, the DBE extended a total loan portfolio of about 5.9 billion Birr of which only 30 percent, close to 1.8 billion Birr, was channelled to cooperatives, individuals and public enterprises investing in agriculture; the remaining 70 percent went to finance industrial and other non-agricultural business activities. Moreover, apart from its meagre capital base, for a country with a huge rural population of some 65 million, the DBE cannot be expected to discharge its duties and functions effectively with only 33 branches, most of which are concentrated in major towns and cities. For an overwhelmingly agrarian economy like ours, having one agricultural bank branch for every constituency/district is not a banking extravaganza.


Several studies have shown that there is strong positive relationship between an efficient financial/banking system and strong economic growth, including agricultural growth, even though the direction of causation is often disputed. Despite such theoretical and empirical foundations for a modern financial sector, Ethiopia’s financial system remains among the least developed in the world. One important measure of the degree of maturity of a country’s financial system is the total credit advanced by commercial banks and other financial institutions to the private sector as a percentage of its gross domestic product (private sector credit/GDP). According to the World Bank, as of 2008, this ratio is 18% for Ethiopia, which, for instance, compares with Sudan (10.9%), Eritrea (18.4%), Djibouti (27.3%), Kenya (30%), Egypt (42.9%), China 108.3%), South Africa (145.2%), United States (193.7%), Cyprus (257.3%).


We may be in a better position than the Sudan in “financial sector innovation” but we should not feel complacent about that and we need to improve the availability of credit to individuals and businesses, and particularly to the hitherto forgotten vast agrarian regions of the country. One important area of intervention is for the government to sell up to half of its stake in the Commercial Bank of Ethiopia to Ethiopians at home or abroad (no to foreigners!) and use the proceeds thereof to support poor rural households by extending credit services at lower interest rates. Because where there is profit the power of greed works miraculously and it is for this reason that private banks in Ethiopia, non-existent during the socialist Dreg regime, flourished rapidly since 1995 controlling 53% of the banking market in terms of branch network and 33% in terms of capital as of 2008.


The government would help the economy if it withdraws its interfering hands from profit-making areas and focus on risky and so far unsuccessful ventures like Micro Finance Institutions (MFIs). These institutions, which claim to be working for those in the social periphery but some of them charging as high as 30% interest rates from the poorest of the poor, cannot be in the service of the needy. The government would practically prove its populist agenda if it relaxes its grip on profit-oriented financial enterprises such as the CBE and concentrate on sectors for socially disadvantaged citizens. Of course there are government sponsored regional MFIs operating in Tigray, Amhara, Oromia, etc. but as of July 2010 these regional MFIs have been able to reach out only 1.7 million poor Ethiopians, which is insufficient given the fact that some 40% of Ethiopians, most of them rural, live in absolute poverty.


Rural Electrification


Still another significant factor that should complement our green revolution campaign is a comprehensive rural electrification programme. As we all know Ethiopia loses some 150,000-200,000 hectares of its forest cover through deforestation on annual basis. Without any doubt much of this deforestation occurs due to increased population pressure which in turn translates to increased demand for cultivable land and fuel. So programmes that aim at electrifying rural Ethiopia not only help reduce the dramatic rate of deforestation and desertification threatening the country but also help contain its rapid population growth. It is also possible that households with electrified houses tend to have smaller number of children, access to radio and community TV services (increased awareness on issues that matter to them), and their children will have better education, among others. Moreover, availability of electricity contributes to economic growth and development by providing carbon-clean energy for irrigation and other projects in rural neighbourhoods.


While little or no access to rural electricity facilities should present a sense of national urgency, we have been hearing about Ethiopia’s plans to sell electric energy abroad. But, why would Ethiopia plan to export electricity to the Sudan and other neighbouring countries, when such services are badly needed at home? Is that economically, environmentally and politically sensible? Do not get me wrong, am one of those proud Ethiopians to encourage the government to push on its Gilgel Gibe III and other similar mega projects. But I do not see any economic, social or political rationale for exporting electricity at the moment when more than 85% Ethiopians are groping their way in complete darkness, and increasing deforestation and desertification are endangering the ecological balance of the nation.


To put things in perspective: as of 2008 the total population of Ethiopia having access to electricity is 15% (rural 2%) while the corresponding figure for the Sudan is 30% (rural 19%). On per capita basis an Ethiopian consumes 3.8 watts per person, Somalia (3.48), Eritrea (5.91), Sudan (10.4), Kenya (14.9). So given the low level of electrification in (rural) Ethiopia giving priority for domestic concerns would appear more sensible than providing light to a neighbouring country with (relatively) higher rate of electrification. But the government insists on selling electricity to the Sudan and other neighbouring countries, and in doing so, I fear, it would add another item on a pool of long-standing accusations that the regime does not have Ethiopia’s national interests at heart.

‘Green Politics’


Peace, democracy, and freedom are vital ingredients for any society not only for their own sake but also to effectively attain its social and development goals. Paul Collier, the renowned maestro on development matters in Africa and other struggling nations, has forwarded useful insights on this subject in his celebrated book ‘The Bottom Billion’ (a euphemism for much of the destitute Sub Saharan Africa). Analyzing the causes of poverty in these countries, Collier identifies four principal traps: the conflict trap, the resource trap (e.g. ‘blood diamond’), the bad governance trap and the trap of being landlocked, all of which have significant implications for Ethiopia.


For instance, because of the myopic decisions of our leaders in Asmara and Addis Ababa to separate and antagonize the sisterly peoples of Ethiopia and Eritrea, the citizens of both countries are suffering a lot economically, psychologically and politically. While these countries should have been working together to improve the lives and livelihoods of the poor under their jurisdictions through increased economic integration and cooperation by allowing greater mobility of people, goods, ideas and capital across their borders, both governments have chosen to keep their people under worsening poverty by wasting millions of dollars on military operations and hate campaign. If our leaders were far-sighted and worked to promote peace (domestically and externally) the nearly one billion dollar money Ethiopia spends on port service annually could be used to develop joint irrigation schemes to ensure food-self sufficiency in both countries. But, confusingly, they have preferred soldiers to goods to send across their borders.


Without both internal and external peace Ethiopia will never be able to solve its chronic food insecurity problem, let alone join the club of middle income countries in the coming two decades. Either we democratize, improve our governance institutions, make peace with our people and our neighbours, or keep this country in eternal poverty and political instability. Worse yet, judicious Ethiopians who recognize the critical importance and necessity of better governance, democracy, freedom and peace for development are labled by the government as “terrorist.” At this crucial juncture, by ruling out any chance for peaceful democratic transition in Ethiopia and for restoring peace with its neighbours, none other than Meles and company are responsible for plunging this nation to looming violence and conflict, which will further deepen our poverty and misery.


Stimulating Demand


So far we have been focusing on the supply side to increase production through green revolution. Yet subsidized production is not an end in itself; there must be enough demand to absorb the surplus produce obtained through the application of technologically intensive methods so that farmers can enjoy the fruition of their labour. With sufficient demand for their produce farmers will be shielded from the disastrous consequences of price collapse in the wake of bumper harvests as happened in southern Ethiopia in 2001 following a record maize harvest when farmers had to dump their maize like garbage. Thus sufficient demand presupposes the existence of quality roads; strong and expanding urban markets and an efficient agricultural banking sector adapted to the unique needs and circumstances of Ethiopia’s backward agricultural sector. It also presupposes the existence of an economically capable urban class with access to decent job opportunities that guarantee adequate remunerations.


And creating enough demand requires tackling the country’s rampant unemployment problem, especially in urban and agriculturally unsustainable areas. Though correct data on unemployment in Ethiopia is hard to come by, it does not take an economic guru to recognize the severity of the problem. So tackling an Ethiopian social hydra such as unemployment requires strong government intervention through the expansion of credit and public sector investment in the short-run and tackling the country’s population explosion (which translates to unsustainable increase in labour force) in the long-run.


Of course deficit hawks and free market aficionados (e.g. the IMF) do not want the government to assume active roles by spending on public projects to fight joblessness and other serious social ills. But Ethiopia is a poor country and cannot afford to indulge in the luxury of ‘low’ inflation and support an expensive welfare state policy on the model of rich Europe, United States and Canada. The European Union, for example, demands its member countries that they arrest annual inflation below 3 percent per annum. So such policies—while good at maintaining low and stable price levels–discourage national governments from undertaking important public investments that create jobs to their desperate citizens, and the result would be huge unemployment (as high as 20 percent in Spain, for instance). But since most EU member states are wealthy enough to provide acceptable unemployment benefits and other social security payments to the unemployed, they are to some extent successful in ensuring social cohesion and political stability, and their leaders do not leave in permanent paranoia unlike our leaders who are constantly scared of the unemployed youth.


Thus public policies designed to reduce unemployment, besides to their role in creating sufficient demand for our green revolution, will also relieve our leaders of painful paranoia if such policies focus on long-term economic gains than short-term political advantages such as the pork barrel expenditures undertaken between 2005 and 2010, whose only tangible effects were shattering inflation and massive macroeconomic dislocations. The trade-off between tackling unemployment and running the risk of sliding into uncontrollable and socially destabilizing price hike should not escape the attention of our policy makers.


To sum up, green revolution in Ethiopia needs a comprehensive strategic intervention led by the government, and in addition to the traditional approach based on intensification of farm inputs like fertilizer and pesticides, it requires the expansion of fast and durable road and other transportation networks; the establishment of an efficient agricultural banking sector; launching an innovative population control policy; designing and implementing a comprehensive rural electrification programme; the existence of a peaceful and healthy society; making peace at home and with our neighbours and most importantly a strong (and democratic) government with a goal of maintaining social cohesion and economic security by acting as the guardian of those in the social periphery where the market has little or no interest to meet their special needs and circumstances.


For comments bishangary@yahoo.com