Introduction: -

 This paper tires to provide some elaborations according to the required question.
The main points included below are: -
 Agriculture in Ethiopia and the current challenges that affect the agricultural
sector
 Enterprises that are involved in agricultural or food marketing also their
strength as well as their limitations with regard to LDC.
 Agricultural or food marketing system in Ethiopia and the relationship with
the world wide concept.
 Ethiopia gets export income or foreign currency by exporting meat and from
livestock too.
 What do we mean by commodity exchange and how it works? The end of
this assignment or paper will focus on it.
1. Elaborate the current bottle neck of agriculture sectors in Ethiopia.
Agriculture is the science and art of cultivating plants and livestock. Agriculture was the key
development in the rise of sedentary human civilization, whereby farming of domesticated
species created food surpluses that enabled people to live in cities. The history of agriculture
began thousands of years ago.
Agriculture is important not only for the supply of food but also for the provision of raw
materials for other industries such as textiles, sugar, jute, vegetable oil and tobacco. Agriculture
is not only an occupation for people but also a way of life. Most customs and cultures in the
world revolve around agriculture.
Ethiopia is basically an agricultural and pastoral country. Agriculture dominates the Ethiopian
life to the extent that little progress can be made unless agriculture is attacked directly. Ethiopia
is a country of peasants with primitive agriculture. The two dominant agricultural systems in
Ethiopia are mixed agriculture of the highlands, where both crops and livestock production are
integrated, and pastoralism in the lowlands. Over 85% of the population depends on agriculture
for its livelihood. The agricultural sector contributes slightly more than half of the country’s
Gross Domestic Product. Almost all of the foreign exchange earnings of the country come from
the export of agricultural products many of the raw materials used by the country’s factories
and industries come from agriculture. The dominant farming system in Ethiopia is peasant
farming where intensive multiple crop production is integrated with livestock production.
Formerly, the peasant typically had little or no control of the means of production, distribution
and services and thus was largely unable to remove drudgery from his farming and poverty
from his life, as his traditional farming methods had long reached the limits of their
productivity.
Lack of transportation and related infrastructure: - Lack of adequate communication and
transportation infrastructure combined with the rugged terrain, has kept rural Ethiopia
isolated. It has been difficult, and sometimes impossible to take out agricultural products from
agricultural areas and to take in industrial goods and government services. This situation has
traditionally depressed farm-gate prices and caused the prices of industrial agricultural areas.
The development of roads through important agricultural areas has amply demonstrated the
dramatic economic changes for the better than can follow. The development and maintenance
of rural roads in Ethiopia is, and will be, a considerable undertaking as more than 75% of the
rural farm families are still inaccessible.
Lack of trained manpower and institutional infrastructure to serve agriculture:-In the rural
areas of Ethiopia both development administration and administration in general have been
weak or non-existent. Programmed delivery points have not been well developed, making any
implementation or rural development programmes difficult. On the other hand, development
agencies, commodity boards and authorities, as well as ministries of the Government, have
been top-heavy, thus creating a formidable bureaucratic machinery, weak at the village level.
Development workers have been inadequate in the rural programmes or often lacked
supervision and support from the central authority. This shortage of trained manpower is in
turn the result of the slow development and expansion of training institutions in the country to
serve agriculture and those few that are in operation did not come into existence until after the
1960s. Agricultural research as a formal activity and a national programme is very recent but
the traditional agriculture has evolved over many centuries into diverse and viable farming
systems. The innate ability of the indigenous Ethiopian farmer to make the best use of available
resources is the rich heritage upon which agricultural research and development must be based
in real progress is to be attained.
Critical problems and issues in the agricultural research system: - Ethiopia lacked institutions
capable of fostering and supporting a modern agricultural economy where the agricultural
research system and services remained poorly developed. The establishment of the Ethiopian
Science and Technology Commission in 1975 finally brought government commitment to
agricultural research and development as part of the national development plan and policy.
Historically, both the internal and external problems or inadequacies of the agricultural
research system were immense and ranged from lack of a national commitment to rural and
agricultural development, defective structure of the land tenure system and lack of institutional
infrastructures to a poorly organized and operated embryonic research system and
programmes which were not mission oriented and not in tune with the national development
plans in agriculture.
Poor markets, marketing, and on-farm storage facilities: - For centuries, the Ethiopian peasant
knew only a barter system of trade and, with the introduction of legal money into the
marketing system, all the trade and business of the peasant was handled by non-nationals. At
later stages in the development of markets and marketing, non-farmer Moslem Ethiopians
started to enter into the picture but the farmer was still excluded. Thus, the farmer did not
benefit from the marketing system and even lost some of the benefits and bargaining positions
he had enjoyed from the barter system of the open-air weekly markets which were
characteristically located at 15-20 km intervals and named after the days of the week. Because
of the strong control of merchants and dealers over agricultural commodities, prices were fixed
by them and the farmer had to take what was offered him. The grain merchants and dealers
came only during harvest time and not throughout the year, resulting in large supplies of farm
products at depressed prices. These purchased products were removed from the market and
stored, causing an escalated price at the planting season, and the farmer was forced to
repurchase for seed and home consumption at exorbitant prices. The tradition of selling farm
products at harvest time and not throughout the year has tended to make the distribution and
supply of industrial goods and services to rural areas too seasonal and caused transportation
costs to be high because freight tends to be only one way. It is often difficult to get production
inputs to farmers during the main growing season, at which time road traffic is at its minimum
because of the rains and the fact that the markets have long cooled off. The strong tradition of
disposal of farm produce during harvest has meant that storage needs on the farm have been
minimal and storage structures and facilities either poor or non-existent. Losses are therefore
very high, reaching 25-50 ~ for most cereals. Thus, despite the fact that the rural peasant family
consumes more than 80 ~ of its produce, its annual food supply alternates between feasts and
famine because of initially low production, the tradition of selling much of the saleable portion
during harvest, lack of proper and adequate storage facilities and lack of appropriate food
processing and preservation technology and industry.
2. What types of enterprises are involved in the marketing of agricultural products in LDCs and
what are their strengths and limitations?
Agricultural Marketing is a process which starts with a decision to produce a saleable farm
commodity, and it involves all the aspects of market structure or system, both functional and
institutional, based on technical and economic considerations, and include pre- and post-
harvest operations viz., assembling, grading, storage, transportation and distribution.
Enterprise is another word for a for-profit business or company, but it is most often associated
with entrepreneurial ventures. People who have entrepreneurial success are often referred to
as “enterprising.” There are many forms of legal enterprises, with the most common in the U.S.
An enterprise is a project, a willingness to take on a new project, an undertaking or business
venture. An example of an enterprise is a new start-up business. An example of enterprise is
someone taking initiative to start a business.
Agricultural and food marketing enterprises
1.Private enterprise: - The Private Sector participants in the Agriculture sector include, to name
a few, the following entities: agribusiness houses, agro-processing firms involved in contract
farming, farmer organizations and producer cooperatives, non-government agencies, media
and web based agro-service providers, financial agencies, agriconsultants and informal
extension agents. Private enterprise strength including:
•Low operating costs: - Nothing so concentrates the mind on cost control than ownership. The
private entrepreneur has every motivation to contain costs since to do otherwise erodes
his/her profit margin.
•Adaptability: - Decision making within private enterprise tends to be quicker, because of the
absence of a weighty bureaucracy, than in public enterprise equivalents.
•Personal initiative: - The entrepreneurial spirit is in evidence when an individual shows a
willingness to accept calculated risks.
•Rapid decision making:-Decision making within private enterprise tends to be quicker, because
of the absence of a weighty bureaucracy, than in public enterprise equivalents.
•An understanding of agriculture: -This of course, relates to agribusinesses and is essential to
those seeking to do business with farmers (or fisherman). Knowing how crops are grown and
mature and understanding the priorities of producers and the daily/seasonal pressures they
face is invaluable in agribusiness. company, with its ability to make quick decisions, in response
to an ever changing environment and set of market conditions, is in a better position to prosper
in the perishable produce market.
•Livestock and meat: - Abbott claims that the marketing of livestock and meat is dominated by
private enterprise. He says that this is explained by the fact that direct decision making gives
private enterprise the edge because of the need for skilled judgement in appraising quality and
value when the product is so variable.
2.Agricultural marketing boards in developing countries: - Marketing boards which are set up
by government action, with broad responsibilities and powers of compulsion over producers
and handlers of defined commodities, play an increasingly important role in the developing
countries. Six broad types are distinguished: advisory and promotional boards, regulatory
boards, boards stabilizing prices without engaging in trade, boards stabilizing prices by trading
alongside other enterprises, export monopoly marketing boards, and domestic monopoly
marketing boards. Better techniques are needed for analyzing and improving the efficiency of
these boards. Criteria for appraisal include ability to raise producer bargaining power, to
stabilize supplies and prices, to improve marketing services, and to reduce marketing margins,
within the administrative constraints and marketing conditions prevalent in the developing
countries. Tax implications, staffing arrangements, and varying standards of political and
personal integrity are issues commonly raised. Effective appraisal calls for a greater willingness
on the part of the boards to allow access to information about their operations than is to be
found generally at present.

3.Co-operatives in the agriculture and food sectors

The co-operative enterprise has its origins in the 19th century and has become one of the most
ubiquitous examples forms of business/economic enterprise. Co-operatives exist in all countries
of the world and operate under diverse political systems: from communism to capitalism. The
majority of these co-operatives are, through their national apex organizations, ultimately in
membership of the International Co-operative Alliance (ICA), the representative world body of
co-operatives of all types.
The weakness of co-operatives
Unfortunately, the potential of co-operatives, and the extent of their development, has, in
many
cases, fallen for short of expectations. Low standards of performance, bad management,
financial failure, corruption and misuse of funds, use of co-operatives for political ends, have
been common features of co-operative enterprise in many countries. As a consequence, a great
deal of understandable criticism has been levelled at the co-operative system, and many,
including some members, have become cynical as to its ability to play an effective role in the
development process. There are a number of problems which inhibit co-operative development
and adversely affect performance, the more important of which are discussed below.
Realism of objectives: Commitment and purpose are two important ingredients in motivation.
Achievement of purpose is equally important. Objectives are expressions of purpose and
expectation. To serve as motivators and guides to action they have to be attainable. The
resources available have to be adequate to achievement of the objectives, and aspirations must
be matched to ability. Neither members nor others should expect too much of co-operatives,
including expecting them to expand too quickly. Most agricultural co-operatives in developing
countries operate in commercial circumstances which any form of business enterprise would
find
difficult. Like their farmer-members, co-operatives have to operate in very marginal conditions.
Their members are usually poor, often subsistence, farmers. High operating costs, low margins,
relatively low turnovers, narrow stock inventories, seasonal trading patterns, exposure to the
consequences of crop failure, high credit risk, fluctuating demand, are all familiar aspects of
trading in such circumstances. Indeed, were it not so, it could be expected that private
enterprise
would have moved in to exploit a profitable market. It is not uncommon for co-operatives to be
introduced to provide essential services because other agencies have either failed, or refused,
to
do so.
Expecting too much of co-operatives is one fault, expecting too much too quickly is another.
The
mistake is frequently made that once a co-operative appears to be reasonably well established,
injection of loan capital from some external source will permit it to rapidly expand its services.
Such hasty injection of loan capital can strain management resources, encourage unwise
risk-taking, weaken financial judgement, lead to overstocked inventories and promote
loss-making enterprise.
3.Evaluate the relationship between agriculture and the food marketing system in Ethiopia as
well as in the worldwide?
The key component of Ethiopia’s Agriculture Policy is expanding the primary and processed
agricultural products. As a result, the government of Ethiopia has identified two of its crucial
areas, which are increasing the productivity of small hold farms and expanding the large scale
commercial farms. To spur the economic growth of Ethiopia in the future, the government has
initiated the Second Growth and Transformation Plan (GTP II), in order to make the agro-
processing sector a single entity by encouraging private sectors’ investments within the
country. The government of Ethiopia has started working with international partners to
enhance agriculture productivity by collaborating with different private sectors in many
possible ways. According to export.gov, the government of Ethiopia has established the
Agricultural Transformation Agency (ATA) in order to address the problems of the agriculture
sector in Ethiopia. The establishment of the society is meant to enhance the capability of the
Ministry of Agriculture and Livestock Resources (Molar), as well as it is public, private, and non-
governmental implementing partners.
The perception of Ethiopia projected in the media is often one of chronic poverty and hunger,
but this bleak assessment does not accurately reflect most of the country today. Ethiopia
encompasses a wide variety of agroecologist and peoples. Its agriculture sector, economy, and
food security status are equally complex. In fact, since 2001 the per capita income in certain
rural areas has risen by more than 50 percent, and crop yields and availability have also
increased. Higher investments in roads and mobile phone technology have led to improved
infrastructure and thereby greater access to markets, commodities, services, and information.

In Food and Agriculture in Ethiopia: Progress and Policy Challenges, Paul Doors and Shahidur
Rashid, along with other experts, tell the story of Ethiopia's political, economic, and agricultural
transformation. The book is designed to provide empirical evidence to shed light on the
complexities of agricultural and food policy in today's Ethiopia, highlight major policies and
interventions of the past decade, and provide insights into building resilience to natural
disasters and food crises. It examines the key issues, constraints, and opportunities that are
likely to shape a food-secure future in Ethiopia, focusing on land quality, crop production,
adoption of high-quality seed and fertilizer, and household income.
For over a decade, Techno Serve in Ethiopia has partnered with farmers, cooperatives,
suppliers, agro-processor buyers, and other market actors--as well as the government--in order
to develop competitive, inclusive agricultural market systems. We help farmers to increase
productivity through training on improved agricultural practices; cooperatives and businesses
to strengthen operations, governance, and sustainability; and multinational companies to
sustainably source from smallholders. This work is grounded in advancing the country's green
economy and environmental well-being, as well as gender equality, for which we maintain a
strong commitment to internal and project gender equality targets.

4. How do you see Livestock and meat marketing in Ethiopia?

Livestock is commonly defined as domesticated animals raised in an agricultural setting to
produce labor and commodities such as meat, eggs, milk, fur, leather, and wool. The animals
you find on a farm are collectively called livestock. Your herd of dairy goats are livestock, but
your toy poodle is just a pet.
Livestock are distinguished from other animals by the fact that they're domesticated and raised
for food or money — if you get wool, milk, meat, or eggs from animals, they're livestock. The
word comes from the sense of stock that means "supply for future use" or "sum of money;
from the 1500s, this word was also used to mean "movable property of a farm." From the
household point of view, the most important livestock species are chickens and pigs.
A meat market is, traditionally, a marketplace where meat is sold, often by a butcher. It is a
specialized wet market. The term is sometimes used to refer to a meat retail store or butcher's
shop, in particular in North America.
Livestock perform multiple functions in the Ethiopian economy by providing food, input for crop
production and soil fertility management, raw material for industry, cash income as well as in
promoting saving, fuel, social functions, and employment. Various estimates show that the
livestock sub-sector contributes 12–16% of the total and 30–35% of agricultural GDP,
respectively. The sector’s contribution to national output is underestimated because traction
power and manure for fertilizer are not valued. Contributing 12–15% of total export earnings,
the sub-sector is the second major source of foreign currency through export of live animals,
hides and skins. The sector also employs about one-third of the country’s rural population.
Therefore, livestock can serve as a vehicle for improving food security and better livelihood, and
contribute significantly to agricultural and rural development. Ethiopia has the largest livestock
population and the highest draft animal population in the continent. There are approximately
35 million cattle, 39 million sheep and goats, 8.6 million equines, 1 million camels, and 55.4
million chickens in the country. Generally, sheep are the predominant livestock in areas over
3000 meter above sea level and at altitude over 3500 farmers keep only sheep. Cattle are
common below 3500. Livestock are most common in the 1500 to 2800 range. Cattle, camels
and goats are prominent domestic animals in the lowlands below 1500. Chickens are ubiquitous
in all production systems. Ethiopia has got more advantage to market livestock and livestock
products to wider parts of the world than most African countries.1,6 But out of all live animal
export in the country (85%) is illegal1,11 to Djibouti, Somalia, Kenya and Sudan.
Meat and other slaughter by-products being exportable food items have been contributing to
the foreign export earnings and GDP growth of Ethiopia since the beginning of meat processing.
Even though the country is blessed with huge livestock resources, the share of meat and other
slaughter by-products exported from the overall export commodities is not more than 2% and
the per capita meat consumption is below the average of Sub-Sahara African countries. The
major and formal meat export destination from Ethiopian export abattoirs for chilled small
ruminant meat is limited to United Arab Emirates and Kingdom of Saudi Arabia with the order
of 60% and 38% share. The meat by-products for export include, intestine, testis, liver, brain,
lung, kidney and abomasum which are mostly exported to Vietnam, Saudi Arabia, Egypt etc.
The rest of meat is exported to some North African countries and other Arabic countries. The
contribution of meat and meat by-products export to GDP is growing but not to its potential as
it is observed in a number of reports. On the other hand, there are more than 300 local
abattoirs which produce meat for local consumption at different locations with different
capacity and facilities but with no standards. However, the export of meat on both shoat and
beef origin were not without challenges in Ethiopia. Therefore, this review study is initiated to
identify the major challenges and potentials of meat production, trade and consumption from
Ethiopia compared to some African countries and to propose possible intervention areas to
leverage its potential.
Even with this abundance of livestock and meat resources, the only countries which Ethiopia
better off are Burundi and Eritrea. According to report, there are several reasons for this low
meat consumption, including low per capita income, high domestic meat prices and the fasting
days by the Orthodox Christian which lasts for at least 200 days in a year that reduces the
aggregate demand by 20-35%. However, the domestic meat demand is believed to increase
with increasing literacy and family income. But the global figure for some selected countries
indicated that, the correlation between high income and increase per capita meat consumption
is not strong enough for some countries to justify the effect of income on meat consumption
and sometimes even the opposite is observed.
5.What is a commodity exchange and how does an Exchange Work?
A commodities exchange is a legal entity that determines and enforces rules and procedures for
trading standardized commodity contracts and related investment products. A commodities
exchange also refers to the physical center where trading takes place. A commodity exchange is
an organized, regulated market that facilitates the purchase and sale of standardized contracts
whose values are tied to the price of commodities – example, corn, crude oil, or gold.
Commodity exchanges depend on a diverse group of participants, each of whom plays an
important role in maintaining a fully functioning marketplace. The role of exchanges is to
ensure that the rules are fair to all of these market participants: Producers, Industrial End-
Users, Traders, Speculators.
Advantages of commodity exchange
•Reduce cost of farming operations and improve quality of agro-produce through adoption of
best practice procedures. Reduce or eliminate price differentials in adjacent markets. Improve
aggregation (bulking) of commodity volumes. Effectively mobilize agricultural produce from
surplus to deficit areas.
•It gives an option to the investors and traders to transfer their risk to professional risk bearers.
•Exchanges offer a continuous and fair market for the price discovery wherein the producer of
the commodity is free from middlemen.
•Since the commodity exchanges ensure the continuity of trade, financiers and bankers have
no issues to extend a loan against the commodities.
•Commodity exchanges offer hedging opportunities. This helps to reduce the effect of
fluctuation in the price.
Disadvantages
•Leverage – margin requisites by the exchanges are kept low, thereby, causing poor money
management. This sometimes leads to unnecessary risk-taking.
•Physical Delivery – traders don’t prefer the physical delivery of the commodities because they
cannot afford to take deliveries of huge quantities of commodities.
•A Risky Business – matching the speed of the bots and Algol trading is always a risky business
with many traders burning their hands due to either greed or fear.
How commodities exchange work?
Traders rarely deliver any physical commodities through a commodities exchange. Instead, they
trade futures contracts, where the parties agree to buy or sell a specific amount of the
commodity at an agreed upon price, regardless of what it currently trades at in the market at a
predetermined expiration date. Commodities exchanges conduct business via two methods: pit
trading and electronic trading.
Pit Trading: - Not long ago, most commodity exchanges conducted trading via a means called
open outcry in locations called trading pits.
Pit Trading Process: - This process works as follows
1.The buyer or seller of a futures contract(s) calls a commodities broker and places an order.
2.The commodities broker relays the order to a desk clerk on the floor of a commodities
exchange.
3. The desk clerk relays the order to a floor broker standing in the pit where the particular
commodity trades.
4.The floor broker executes the trade on behalf of the customer with another floor broker or
with a market maker (a trader that provides liquidity for brokers).
5.The floor broker informs the desk clerk when the trade is executed.
6.The desk clerk informs the commodities broker.
7.The commodities broker informs the customer.
Electronic Trading: - With electronic trading, traders simply enter their orders onto an
electronic trading platform where exchanges match buyers and sellers.
Advantages Over Pit Trading Electronic trading has several advantages over pit trading:
Simplicity – Electronic trades take seconds to execute and involve far fewer people and steps.
Cost – Electronic trades cost far less to execute.
Transparency – With electronic trading, the trader can see the market quote, size, and last
trades on a screen.