Press release number: IFAD 02/05

Rome, 20 January 2005 – A new IFAD-supported programme will help reduce the effects of fluctuating commodity prices on the incomes of smallholder farmers in Ethiopia and thereby contribute to improved incomes and food security.

The US$ 35.1 million programme will be largely financed by a US$ 27.2 million loan to the Federal Democratic Republic of Ethiopia from the International Fund for Agricultural Development (IFAD). The loan agreement was signed today at IFAD headquarters in Rome by Dr. Mengistu Hulluka, Ambassador Extraordinary and plenipotentiary of Ethiopia to Italy and IFAD’s President, Lennart Båge.

Agriculture dominates Ethiopia’s economy. In addition to coffee, the country is a large producer of grains: mostly teff (a grain native to Ethiopia), wheat, barley, sorghum, millet, and maize. However, famine still remains as a frequent threat for Ethiopians. Adverse climatic effects, particularly drought, reduce agricultural production and increase prices. And this fluctuation in agricultural output and commodity prices has dramatic consequences for smallholder farmers during and between years.

The Agricultural Marketing Improvement Programme will strengthen national capacity for market research, intelligence, policy analysis and formulation. Specifically, it will strengthen capacity to develop and implement appropriate strategies and policies to stabilize commodity prices as well as improve linkages between smallholder producers, rural traders, artisans and the marketing chains. The programme will also support the development of improved post-harvest technologies for processing, storage and transportation of agricultural outputs in a manner consistent with a liberalised market economy.

With this loan, IFAD will have provided funds for 12 development projects in Ethiopia, totalling US$ 190 million.

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IFAD is a specialized agency of the United Nations dedicated to eradicating rural poverty in developing countries. Seventy-five per cent of the world’s poorest people – 900 million women, children and men – live in rural areas and depend on agriculture and related activities for their livelihoods. Through low-interest loans and grants, IFAD works with governments to develop and finance programmes and projects that enable rural poor people to overcome poverty themselves.

There are more than 200 ongoing IFAD-supported rural poverty eradication programmes and projects, totaling US$ 6.5 billion. IFAD has invested about US$ 3 billion in these initiatives. Co-financing has been provided by governments, beneficiaries, multilateral and bilateral donors and other partners. At full development, these programmes will help more than 100 million rural poor women and men to achieve better lives for themselves and their families. Since starting operations in 1978, IFAD has invested US$ 8.5 billion in 677 projects and programmes that have helped more than 250 million poor rural men and women achieve better lives for themselves and their families.