Cash crop production can effectively increase households' agricultural income, and specialization in cash crop production often brings a higher economic return per unit of land they have devoted, including land, water, technologies, and, to some extent, labor input.
Of late, The Ethiopian Herald conducted an exclusive interview with Tariku Debella, an agricultural economist who graduated from Dilla University and is working as a private economic consultant.
He said, "Cash crops provide cash in the market. These crops are most useful and are grown for nutrients and edible oil production in a country and the world. These crops are used in industries in high demand resulting in an increase in the rate of the crops. They include cereal grains, vegetables, and fruits, legumes and oil seeds. They help in the improvement of the economy of the country. Ethiopia often uses cash crops to augment its economy. Yes, these crops are used in industries and have a vast range of benefits."
As to him, commercial crops in some parts of Ethiopia have a significant economic impact. Agriculture contributes about 40% of the national GDP and sustains the livelihood of two-thirds of the population, making it the backbone of the agro-based industries.
It is well known that agriculture is the mainstay of Ethiopia's economy, encompassing crop production, animal husbandry, apiculture, sericulture, and dairy farming, among others. The agriculture sector also has an attractive portfolio of specialty oilseeds, including sesame, safflower, linseed, Niger seed, and castor beans, which are now given due emphasis for export markets.
He further stated that Ethiopia has not yet benefited out of its cash crop resources as deserved as the cash crop production in the country has not followed a well organized fashion and situations have become difficult to add value to it. Hence, the government has to work on organizing activities to aptly and legally produce all sorts of cash crops. Producers are also expected to properly identify to whom and to where the products are referred. In so doing, it is possible in the country to bolster import substitution.
According to Tariku, opportunities for export are not fully exploited because little is known about the characteristics of the Ethiopian oilseeds in relation to high demanding export markets. Blending, inefficient marketing, improper cleaning and sometimes poor contract discipline complicates further exploiting the market prospect. Oilseeds are the second export earner of Ethiopia. Smallholders in remote areas mostly grow oilseeds. Growth and improvement of the oilseed sector can substantially contribute to the economic development at national, regional and family level. The oilseeds chain is fragmented and many smallholders and middlemen are involved, decreasing efficiency and chain responsiveness.
He said, "Lacking inputs can be exploited for high value export markets. To be able to realize sales of vegetable oils to highly developed consumer markets major investment in quality, hygiene and food safety measures are needed. Work on more advanced production methods at farm level."
Since it will be very difficult for Ethiopia to compete on the world market due to its relatively low volumes and high handling and transport costs, the country has to well embark on bolstering the subsector, oilseeds production. These crops, however, can be of high importance for the domestic market, as food crop. Most potential for the Ethiopian oilseeds sector concerns the following specialty.
Ethiopia's oilseeds export performance will be determined primarily by its domestic policies. The engagement of nations in the international trade depends upon a nation's specialization in the production of goods in which they have comparative advantages constructs room for improvement of the welfare of the society as a whole.
"Agriculture is the mainstay of the Ethiopian economy. Its share accounts for more than 40% of the total GDP, 50% of foreign currency earnings, and above 80% of employment creation. Both industry and services are dependent on the performance of agriculture, which provides raw materials and generates foreign currency for the import of essential inputs and food for the fast-growing population. In spite of its importance in the national economy, agriculture is based on subsistence farm households, whose modes of life and operation have remained unchanged for centuries. The objective of this study is to scrutinize oilseed export performance in Ethiopia," he opined.
The government should take measures to achieve greater levels of independence in vegetable oils only by boosting production in various oilseeds, oil palm, and mainly in tree-borne oilseeds.
As to Tariku, there is a need to promote efficiency in water use through protective irrigation and increase its area under irrigation of oilseeds grown in rain-fed areas. Effective market interventions through price support, price signaling, etc. have to be complemented and strengthened through the selective use of innovative market approaches like future markets.
The growing demand in the world market for these specialty products and the available capacity to expand production could make oilseeds turn into one of the engines of economic growth in Ethiopia.
He further elucidated that the Ethiopian government always puts agriculture at the forefront of the national economy, and assists in improving the conditions of agricultural production continuously by stabilizing the basic policies in rural areas. The government thus protected and mobilized the enthusiasm of the farmers in their production efforts, and brought about the sustained and stable growth in the production of major crops.
"Increasing cropping intensities in farming systems across the nation using the concept of horizontal diversification brought about economic emancipation to millions of farmers. However, because of the increase of consumption level of the increasing population, the proportion of output value of crops in the gross product of agricultural production and domestic commodity trade shows a declining trend," he added.
The Ethiopian government always attaches due importance to grain production and takes grain production as the basis of national food security and social stability. Along with the development of the economy, the urban and rural residents became more sophisticated in their demands based on specific varieties, quality and nutritive value of foods, he stated.
He said, "To solve these problems, the government is trying hard to improve the conditions of agricultural production, quicken the economic development in poverty-stricken areas and guarantee grain security for the poor people in rural areas on the basis of the policy of stabilizing the rural areas and increasing agricultural inputs. Meanwhile, attention is also stressed on the protection and development of crop resources, guiding and encouraging farmers to adopt a market-oriented cropping structure, enlarging the scope of employment for farmers and enhancing their income."
As to him, protecting arable land, saving water and developing and using natural resources of the environment rationally is the base for ensuring national grain security, and achieving sustainable development of agriculture as well as preserving the national wealth of crops and safeguarding the ecological balance. The government always provides special protection to arable land.
Meantime, water-saving irrigation farming is actively developing and the technologies of drip irrigation, spray irrigation, infiltration-protecting irrigation, pipe-borne water delivery systems etc., are being extended widely. Besides, the government has also strengthened the work of construction of ecologically friendly agricultural systems and environment protection programs.
Cash crop economy is widespread in the semi-highland area and climatic zones with most farmers having adopted a mixed farming system, using a progressively increasing part of their arable land for the production of one or several cash crops, he added.
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He further elucidated that the main channel by which cash crops affect food security is through income: farmers or workers earn an income by growing cash crops with which they may purchase a wide variety of food. Cash crops thus improve the food access dimension of food security. Income growth also has implications for the other dimensions of food security like food availability, utilization, and stability, but these effects are indirect.
"We find that on a national level, food availability in terms of average energy supply is currently not compromised by cash crop farming. Cash crops cultivated as monocultures may be more susceptible to pests and diseases. Cash crop sectors are often concentrated with a few firms buying from a large number of smallholders, and prices often fluctuate heavily under the influence of policy change and the global commodities market. Adequate infrastructure and strong institutions like market information systems are key in reducing transaction costs and improving market integration," he said.
Generally, cash crops have helped the nation very well if they are legally shipped to all over the globe, excluding brokers and those who are meddling along the legitimate channel. Cash crops can also be food and non-food. Grains, oilseeds, tea, sugar cane, fruits, vegetables, peanuts, wool, and tobacco are examples of the type's food and non-food commercial crops.
Coffee, rice, tea, oilseeds, soybeans, and maize are cash crops, and all these crops are cultivated in large quantities and exported to other countries that have relatively fewer yields in that regard. They may help in accelerating these yields and help Ethiopia on a path of sustainable intensification if legally produced and channeled well. By contributing to increased agriculture production and income of rural households, cash crops also contribute to sustainable intensification. These crops have a catalytic effect on agricultural innovations because they add value and increase productivity in rural areas and help develop institutions to support further growth.
