VZCZCXRO8746
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO
DE RUEHDS #2346/01 2740632
ZNR UUUUU ZZH
R 010632Z OCT 09
FM AMEMBASSY ADDIS ABABA
TO RUEHC/SECSTATE WASHDC 6339
INFO RUEHZO/AFRICAN UNION COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEHLMC/MILLENNIUM CHALLENGE CORP
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 04 ADDIS ABABA 002346 
 
SIPDIS 
 
STATE FOR EB, AF, SP, F 
USAID FOR AFR, AFR/EA 
AFR/SD JHILL, THOBGOOD, STHOMPSON 
EGAT/AG 
DCHA JBRAUSE, JBORNS, SBRADLEY 
NAROIBI PEWELL, CBUZZARD, KSUNDSMO 
PASS TO USTR FOR EBRYAN AND PATRICK COLEMAN 
TREASURY FOR DPETERS 
MCC FOR KRPENN 
USDA FAS 
USDA ARS 
 
E.O. 12958: N/A 
TAGS: EAGR EAID PREL AF ET
SUBJECT:  Ethiopia Becomes Fourth African Country 
         to Sign a Comprehensive Africa Agriculture 
         Development Program Compact 
 
REF: (A) ADDIS ABABA 1665 
     (B) ADDIS ABABA 1861 
 
ADDIS ABAB 00002346  001.2 OF 004 
 
 
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Summary 
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¶1. (U) As part of the USG's food security initiative implementation 
plan development, USAID Ethiopia continues to produce information 
sharing cables to highlight progress and plans in key areas.  This 
Comprehensive Africa Agriculture Development Program (CAADP) cable 
is a continuation of this series.  Also refer to cables on food 
security and livestock programs (Refs A and B).  In the coming 
weeks, USAID Ethiopia will send an additional cable summarizing the 
details of the food security initiative implementation plan. The 
cable will also give an overview of agriculture development 
coordination between government and development partners. 
 
¶2. (U) With the August 27 signing of Ethiopia's CAADP Compact, the 
Government of Ethiopia (GOE) has reconfirmed strong commitment to 
agriculture development.  During the CAADP Ethiopia process, 
existing agriculture development policies were evaluated and 
recommendations were provided to further accelerate Ethiopia's 
agriculture growth.  All recommendations were accepted by the GOE 
and included harmonizing Ethiopia's seed policy with regional 
countries, accelerating the land registration process and placing 
more focus on the livestock sector.  To support the CAADP Ethiopia 
compact, the GOE and development partners are collaborating through 
the Rural Economic Development and Food Security (REDFS) Working 
Group.  Under REDFS, the three focus programs are Food Security, 
Agriculture Growth and Sustainable Land Management.  These programs, 
which are aligned with the CAADP Ethiopia framework, are currently 
being designed jointly by the donor community and the GOE.  In the 
coming months, a Policy Investment Framework (PIF) will be developed 
using the CAADP Ethiopia compact as a basis of investment for both 
development partners and the GOE.  END SUMMARY. 
 
---------------- 
CAADP Background 
---------------- 
 
¶3. (U) In 2002, the Comprehensive African Agriculture Development 
Program (CAADP) was initiated. This program aims to fundamentally 
shift the way African leadership looks at agriculture and its 
potential contribution to end poverty and hunger.  To achieve these 
goals, African governments have pledged to devote 10% of public 
expenditures to the agriculture sector, while striving for at least 
6% annual agriculture growth.  Under CAADP, four key pillars have 
been agreed upon: Extending the area under sustainable land 
management, Improving rural infrastructure and trade related 
capacities for market access, Increasing food supply and reducing 
hunger, and Agriculture research, technology dissemination and 
adaption. 
 
¶4. (U) CAADP is managed by the African Union's New Economic 
Partnership for Africa's Development (NEPAD). Currently, Prime 
Minister Meles Zenawi of Ethiopia is the Chair of NEPAD. After some 
hesitation to embrace CAADP, Ethiopia has enthusiastically adopted 
the CAADP process. 
 
---------------------- 
CAADP Ethiopia Process 
---------------------- 
 
¶5. (U) Unlike many other African countries, Ethiopia has surpassed 
the CAADP targets of  6% agriculture sector growth and devoted more 
than 10% of public expenditures to agriculture for successive years 
before starting the CAADP process.  In recent years, the official 
growth rate in the agriculture sector has been around 13%, while 
budget allocations have been at 15%.  This level of investment is 
crucial for Ethiopia's development, as roughly 85% of the population 
is engaged in agriculture and 46% of Gross Domestic Product (GDP) is 
derived from the agriculture sector.  With the main CAADP benchmarks 
already achieved, the Ethiopia process and compact design has been 
slightly different compared to other countries. 
 
ADDIS ABAB 00002346  002.2 OF 004 
 
 
 
¶6. (U) In Ethiopia, the CAADP planning process started in September 
2008 with a launching ceremony. After the launching ceremony, a 
national consultant team was formed to complete the CAADP 
stocktaking document.  This group included a team leader with an 
agriculture economics background, a livestock/pastoral expert and an 
agronomist.  Following discussions with the GOE and stakeholders, 
the consultant team identified a gap in knowledge regarding natural 
resource issues.  With support from the Common Market for Eastern 
and Southern Africa(COMESA), a fourth national consultant was hired 
who had strong expertise in natural resource management. 
 
¶7. (U) Through the CAADP Ethiopia process, technical assistance was 
provided to further define the GOE's agriculture development 
strategy and accelerate recent development progress.  Also, the 
CAADP study allowed for development challenges to be further 
examined. To support the CAADP Ethiopia process, USAID provided 
funding to COMESA to fund workshops and hire national consultants, 
through the Regional Enhanced Livelihood Program in Pastoral Areas 
(RELPA). 
 
¶8. (U) The CAADP team quickly agreed that agriculture is the prime 
sector for Ethiopia's long-term development.  The consultancy 
started with a review of existing national development strategies, 
which included Rural Development Policies (RDPS), Plan for 
Accelerated and Sustained Development (PASDEP) and the Agriculture 
Led Industrialization Strategy. Afterwards, consultations were held 
with key stakeholders, including donors, federal and regional 
government representatives, civil society and the private sector. 
Also, the team assessed the current capacity of government 
institutions. 
 
¶9. (U) Following this review, the CAADP team was able to undertake a 
gap analysis of existing programs.  The group determined that 
further work is needed regarding the harmonization of seed policy 
with East and Central African countries.  Also, more focus is needed 
for livestock and pastoralist programs in the coming years. Another 
major gap identified was the capacity level at the Ministry of 
Agriculture and Rural Development (MOARD).  Low capacity and 
frequent changes in staff was observed at both the Federal and 
Regional level, which constrained long-term development 
initiatives. 
 
¶10. (U) During the study, the CAADP pillars were "indigenized" to 
the Ethiopian context to include the following four pillars: Improve 
Natural Resource Management and Utilization, Improve Rural 
Infrastructure, market access and trade capabilities, Enhance food 
security and improve disaster risk management and Improve the 
agriculture research and extension system.  Through the CAADP 
stocktaking phase, 46 national agriculture policy positions were 
organized into the four CAADP Ethiopia pillars. With the Plan for 
Accelerated and Sustained Development to End Poverty (PASDEP) soon 
to expire, the CAADP study has informed and influenced the 
preparation of the next phase of PASDEP. 
 
¶11. (U) The CAADP stocktaking document also included the Ethiopian 
General Equilibrium Model, which was completed by the International 
Food Policy Research Institute (IFPRI).  Major findings of the model 
concluded that Ethiopia can sustain 6% agriculture growth in the 
medium term.  In addition, most rural households will directly 
benefit from this agriculture growth. Some households located in 
high rainfall areas and situated near urban centers stand to achieve 
higher economic benefits. The study also concluded that growth 
driven by cereal crop production generally will have larger impacts 
on poverty reduction. 
 
¶12. (U) In the final stocktaking document, the CAADP consultant team 
concluded that agriculture will remain crucial for Ethiopia's 
economic development.  The substantial investments of the GOE have 
contributed to the recent growth in the agriculture sector.  At the 
same time, much more work and resources are required to achieve 
Millennium Development Goal I of halving hunger and poverty by 2015. 
 The team also provided 25 specific recommendations to the GOE. 
Most importantly, the team recommended that all future proposed 
programs fall under the CAADP Ethiopia framework, as this framework 
 
ADDIS ABAB 00002346  003.2 OF 004 
 
 
uses past GOE strategies as a base and takes into account current 
program and policy gaps.  Other specific recommendations include 
improvement of coverage and focus in the livestock and pastoralist 
sector, review of the seed policy and strategy in line with the 
emerging regional interests, institutionalization and promotion of 
land administration, a review of the warehouse receipt and credit 
program of the Ethiopia's Commodity Exchange and enhanced capacity 
development interventions. 
 
¶13. (U) Throughout the CAADP stocktaking process, the national 
consultants communicated frequently with the State Minister for 
Agriculture Research and Extension and also with the GOE's CAADP 
Focal Point, the Director of the Extension Directorate. 
Additionally, the consultant team worked with the Rural Economic 
Development and Food Security (RED&FS) Donor Working Group.  In 
June, a joint planning workshop was held with the Agriculture Growth 
Program of the RED&FS group.  This meeting was attended by several 
USAID representatives. 
 
¶14. (U) In July, the CAADP stocktaking document was formally 
completed and presented to both MOARD and the Ministry of Finance 
and Economic Development (MOFED).  This document was subsequently 
endorsed by the GOE.  Afterwards, the GOE moved quickly to plan the 
CAADP roundtable and Compact Signing ceremony. 
 
------------------------------------ 
CAADP Roundtable and Compact Signing 
------------------------------------ 
 
¶15. (U) On August 25-26, the CAADP Roundtable discussion was 
organized, which was attended by several USAID technical officers. 
USAID Ethiopia's Mission Director participated in the CAADP Ethiopia 
Compact signing on August 27th.  At the ceremony, the Canadian 
International Development Agency (CIDA) signed the CAADP Compact, as 
the representative of the Development Assistance Group (DAG).  With 
the signing, Ethiopia becomes the fourth African nation to sign its 
CAADP Compact, after Rwanda, Togo and Burundi. 
 
¶16. (U) With the CAADP Compact signed, USAID Ethiopia has earmarked 
additional resources to provide technical assistance to the GOE for 
development of a CAADP implementation and investment plan, which 
will accelerate agriculture development and move Ethiopia toward 
long-term food security. 
 
---------------------------- 
Opportunities and Challenges 
---------------------------- 
 
¶17. (U) In the past, some observers have felt that government policy 
has constrained agriculture development.  Through the CAADP policy 
review, the national consultant team concluded that existing 
government polices provide adequate direction on key issues 
including support of commercial agriculture, development of a 
private sector input supply system and promotion of the land 
certification process. Unfortunately, the implementation of policies 
often lags behind official positions.  While constraints certainly 
exist, the policy environment is improving in some areas.  For 
example, much progress has occurred in land certification. 
Recently, the GOE has pledged to complete second level land 
certification throughout the country.  This will insure that all 
landholders will receive surveys.  Although land still cannot be 
used as collateral or be sold, research has shown that certified 
land plots have increased in value by 9%.  The GOE is strongly 
committed to the land certification process, which is illustrated by 
MOARD's recent establishment of a national land administration 
taskforce.  In the future, USAID Ethiopia will continue to advocate 
for policy improvements.  Focus areas include improving the enabling 
environment for the private sector, particularly in inputs such as 
seeds, reduction of transaction costs in market and transport and an 
overhaul of the agriculture and research systems. 
 
--------------- 
The Way Forward 
--------------- 
 
 
ADDIS ABAB 00002346  004.2 OF 004 
 
 
¶18. (U) Under the USG's new food security response, country led 
strategies have been emphasized as a critical requirement for future 
funding commitments, while also being crucial for the long-term 
sustainability of the initiative. During the development of the new 
USG food security initiative implementation plan, USAID Ethiopia has 
employed the lead national consultant for the CAADP Stocktaking 
document. This has ensured that USAID Ethiopia's food security plans 
are closely aligned with the CAADP Ethiopia framework.  In addition, 
the Mission has collaborated closely with both Federal and Regional 
officials regarding the USG's new food security response framework 
and potential focus areas. 
 
¶19. (U) Complementing the CAADP process, the GOE and donors have 
worked closely to prioritize future investments through the Rural 
Economic Development and Food Security (RED FS) Donor Working Group. 
 This working group is part of the larger DAG, which includes all 
major donors to Ethiopia.  Within RED&FS, there are four sub 
programs: Agriculture Growth, Food Security, Sustainable Land 
Management and Private Sector Development.  Thus far, the Food 
Security Program (FSP) and Sustainable Land Management planning have 
progressed farther than the other programs. USAID's leadership in 
the design of the second phase of the FSP serves as a model for 
future multilateral food security response activities. 
 
¶20. (U) In the coming months, the Agriculture Growth Program's 
pre-appraisal Mission will start.  With agriculture productivity 
being a major focus of the new food security response, USAID 
Ethiopia believes that a portion of funding can be allocated with 
this multi-lateral mechanism. 
 
------- 
Comment 
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¶21. (U) In recent months, USAID Ethiopia has worked closely with 
MOARD to encourage movement toward completion of the CAADP process. 
USAID Ethiopia is pleased that the GOE has shown strong commitment 
to the CAADP process. The successful completion of the CAADP process 
has institutionalized CAADP as the country's agriculture development 
strategy and framework for future investments.  While the CAADP 
benchmarks of 6% annual agriculture growth and 10% of public 
investments devoted for the agriculture sector have been met for 
successive years, the GOE realizes that additional resources and 
attention are needed to tackle poverty and food security challenges. 
 Additionally, policy reforms are needed to encourage more 
agriculture led growth.  USAID Ethiopia believes that the recent 
work completed through the CAADP Ethiopia and RED&FS processes 
create a strong framework to effectively utilize increased food 
security funding in the coming years.  End Comment. 
 
Meece