Agriculture is Ethiopia's most strategic economic sector and the main driver of growth. It employs 78% of the country's workforce, generates 45% of its total output and makes up 80% of its exports. It is also by far the main source of food for most of the population. At the same time, Ethiopian agriculture is largely rain-fed, based on smallholder and subsistence farming, not highly productive and not very market-oriented.
The Government of Ethiopia recognizes these challenges and invests significant resources to develop the agricultural sector. The European Union is one of Ethiopia's top donors in agricultural modernization and food security, investing approximately €252 million from 2015 to 2020. A large proportion of these funds are contributed to Ethiopia's three government-executed flagship programmes – the Agricultural Growth Programme, the Productive Safety Net Programme and the Sustainable Land Management Programme – all of which are expanding the stock of rural infrastructure to increase agricultural productivity in a sustained manner. Through these and other initiatives, the EU is helping smallholder farmers across Ethiopia access the following public goods: improved seeds and other inputs, water from new irrigation works, extension services linked to the latest agricultural research, space in newly built markets, feeder roads to take produce to those markets, and other undertakings aimed at expanding production and sales of agricultural products. The EU also promotes and funds nutrition-sensitive action in agriculture in order to reduce the high incidence of stunting and underweight among Ethiopian children.
The EU maintains a close and constructive relationship with the Ethiopian agricultural ministries in its capacity as co-chair of the Rural Economic Development and Food Security Working Group, the overarching donor coordination and harmonization structure in the Agricultural Sector.