Land Reform in Ethiopia - Government Rural Programs - Cooperatives and State Farms

Cooperatives and State Farms

Starting in 1976, the government encouraged farmers to form cooperatives. Between 1978 and 1981, the Derg issued a series of proclamations and directives outlining procedures for the formation of service cooperatives and producers' cooperatives. Service cooperatives provided basic services, such as the sale of farm inputs and consumer items that were often rationed, the provision of loans, the education of peasant association members in socialist philosophy, and the promotion of cottage industries.

The producers' cooperatives alleviated shortages of inputs (because farmers could pool resources) and problems associated with the fragmentation of landholdings. The government ordered the creation of these cooperatives because of its belief that small farmers were inefficient and were unable to take advantage of economies of scale.

The producers' cooperatives developed in three stages. The first stage was the melba, an elementary type of cooperative that required members to pool land (with the exception of plots of up to 2,000 square meters, which could be set aside for private use) and to share oxen and farm implements. The second stage, welba, required members to transfer their resources to the cooperative and reduce private plots to 1,000 square meters. The third stage, the weland, abolished private land use and established advanced forms of cooperatives, whose goal was to use mechanized farming with members organized into production brigades. Under this system, income would be distributed based on labor contributions.

The government provided a number of inducements to producers' cooperatives, including priority for credits, fertilizers, improved seed, and access to consumer items and building materials. According to the ten-year plan, more than half of the country's cultivated land would be organized into producers' cooperatives by 1994. Despite the incentives, farmers responded less than enthusiastically. They saw the move to form cooperatives as a prelude to the destruction of their "family farms." By 1985/86 there were only 2,323 producers' cooperatives, of which only 255 were registered. Some critics argued that the resistance of farmers caused the government to formulate its resettlement and villagization programs.

A major component of the Derg's agricultural policy was the development of large-scale state farms. Following the 1975 land reform, the Derg converted a majority of the estimated 75,000 hectares of large, commercial farms owned by individuals and cooperatives into state farms; not long afterwards, the government expanded their size. By 1987/88 there were about 216,000 hectares of state farmland, accounting for 3.3% of the total cultivated area. The ten-year plan indicated that state farms would be expanded to 468,000 hectares by 1994, accounting for 6.4% of the cultivated land.

The primary motive for the expansion of state farms was the desire to reverse the drop in food production that has continued since the revolution. After the 1975 land reform, peasants began withholding grain from the market to drive up prices because government price-control measures had created shortages of consumer items such as coffee, cooking oil, salt, and sugar. Additionally, increased peasant consumption caused shortages of food items such as teff, wheat, corn, and other grains in urban areas. The problem became so serious that Mengistu Haile Mariam, the chairman of the Derg, lashed out against the peasantry on the occasion of the fourth anniversary of military rule in September 1978, criticizing them for their capitalist mentality and their petit bourgeois tendencies. Mengistu and his advisers believed that state farms would produce grain for urban areas and raw materials for domestic industry and would also increase production of cash crops such as coffee to generate badly needed foreign exchange. Accordingly, state farms received a large share of the country's resources for agriculture; from 1982 to 1990, this totaled about 43% of the government's agricultural investment. In 1983 state farms received 76% of the total allocation of chemical fertilizers, 95% of the improved seeds, and 81% of agricultural credit. In terms of subsidies, between 1982/83 and 1985/86 the various state farm corporations received more than 90 million Birr in direct subsidies. Despite the emphasis on state farms, state farm production accounted for only 6% of total agricultural output in 1987 (although meeting 65% of urban needs), leaving peasant farmers responsible for over 90% of production.