Supply response of smallholder households in Ethiopia

A large proportion of the poor in Africa south of the Sahara (SSA) reside in rural areas where smallholder agriculture is the dominant activity. Smallholder farms account for more than 90 percent of the cultivated area and output in Ethiopia, with about 80 percent of the total population living in rural areas (Bachewe et al. 2015). Smallholder farmer–focused policies, which derive from the Agricultural Development Led Industrialization (ADLI) framework, were predominant in Ethiopia over the past two decades. This includes the current Growth and Transformation Plan (GTP). Furthermore, considerable resources are used through a number of national and multilateral supported programs aimed at increasing smallholders’ productivity and marketed supply (Ethiopia, MoA 2015). The success of such efforts crucially depends, among other factors, on how smallholders respond to changes in prices and policy interventions. This chapter examines supply responses of smallholder farmers to recent price changes.