Political and economic reforms have been implemented for a number of years to alter the institutional, infrastructural and financial/economic environment in which Ethiopian agriculture operates. Changing the environment in which agriculture operates may be an intermediate goal; at the end, the question remains; have the new reforms and policies had the capacity to improve the performance of the sector and its roles in the development process of the economy? And have they contributed to the generation of positive environmental externalities? In comparison to the two decades (1970s and 1980s) that precedes the reform of the 1990s. Ethiopian agriculture has been doing better since the reform. Total production of food crops has improved and the rate at which per-capita production has been declining is narrowed. Moreover, the volume of agricultural commodities exported has slightly improved; while new non-traditional commodities like flower have joined the list of exported commodities. But all those improvement have not been sufficient to lift up agriculture�s role in the development process of the Ethiopian economy nor have they brought a full and sustainable recovery to the sector. Ethiopian agriculture should still demonstrate the following desirable characteristics if it is able to serve as the engine of Ethiopian economic growth: it should grow at sufficiently higher rates over a number of years; any development in the sector should be able to improve rural labour productivity which is an important precondition to stimulate the non-agricultural sectors and transformation of the sector; the source of growth should principally originate from increased investment and efficient use of resources rather than from the use of additional scarce natural resources especially land, and; agriculture should be supported to establish strong and dynamic linkages with other sectors especially with the industry.