The impact of COVID-19 on household income and participation in the agri-food value chain: Evidence from Ethiopia

The COVID-19 pandemic is having disruptive consequences on many people's livelihoods around the world, projecting 150 million people into extreme poverty. In many developing countries, where economies still rely on agriculture, domestic food supply chains have been severely affected due to internal mobility restrictions, resulting in income reduction and job loss. In this context, the ability to adapt to the “new normal†is crucial in ensuring market inclusion, but it is often limited by many constraints that participants at different levels of the chain face. Understanding the main constraints and the possible ways in which the agri-food system participants can adapt is then key for targeting appropriate responses. Using Ethiopia as a case study, this paper aims to identify different impacts at various stages along the agri-food value chain, assessing the impact of COVID-19 on household employment and income and identifying the main determinants that mediate those impacts. Using both longitudinal and cross-sectional econometric models over a panel sample composed of a pre-COVID face-to-face interview and 6 follow-up phone-based surveys, the paper shows that the crisis has reduced both employment and income, with worsening trends over time. The study shows that farming, which had initially been relatively less affected, reported highly negative impacts in subsequent rounds, making it the most affected stage in the agri-food value chain. Access to formal institutions, such as formal insurance, credit, formal contract, and land ownership title, played a key role in reducing the likelihood of income loss.