Cereal production and marketing is the single largest sub-sector within Ethiopia’s agriculture.
It dominates in terms of its share in rural employment, agricultural land use, and calorie
intake, as well as its contribution to national income. The sub-sector accounts for roughly 60
percent of rural employments, about 73 percent of total cultivated land, more than 40 percent
of a typical household’s food expenditure, and more than 60 percent of total caloric intake of
a typical household in the country.1
The contribution of cereals to national income is also
large: according to available estimates, cereals’ contribution to agricultural value added is 65
percent (Diao et al. 2007), which translates to about 30 percent of GDP.2

Thus, it is no surprise that, despite differing political ideologies, all agricultural production
and marketing policies since the 1960s have had a focus on the cereals sub-sector. Since
1991, strategies for both growth and poverty reduction have placed a heavy emphasis on
cereal production and marketing. The Agricultural Development Led Industrialization (ADLI)
strategy, the Sustainable Development and Poverty Reduction Plan (SDPRP), and the Plan
for Accelerated and Sustained Development to End Poverty (PASDEP) all highlight the
importance of cereals in Ethiopia’s overall economic development. The Government of
Ethiopia (GoE) instituted the Participatory Demonstration and Extension Training System
(PADETS), in the mid-1990s with the specific purpose of increasing cereal production
through demonstration of seed-fertilizer technology. As part of these strategies, the
Government of Ethiopia (GoE) has undertaken substantial market reforms, accelerated
investments in road and communication networks, and initiated programs to increase cereal
production through large-scale demonstrations of the benefits of modern seeds and greater
fertilizer use. The structure of Ethiopian cereal markets has undergone massive changes
since the 1960s due to dramatic shifts in government agricultural production and market
policies, vast improvements in marketing infrastructure, and major increases in domestic
production. This paper documents these experiences. It begins by giving a historical
overview of policies that have directly or indirectly affected cereal production and marketing.
Section 3 discusses public investments in infrastructure and information. This is followed by
the sections that present analysis on market structure and performances, respectively. The
paper concludes with a summary of key points and policy implications.