This policy paper will look at land issues in general and the argument that smallholder agriculture in Ethiopia is constrained by the existing land tenure system in particular, exploring the variety of options and scenarios proposed in current policy debate, and teasing out the assumptions, trade-offs and challenges based on the available evidence from existing secondary sources. It will also analyze existing informal land markets and their possibilities to grow and facilitate the consolidation of plots into larger, more commercial farms. The study will also try to analyse and evaluate government’s assumptions that led it to keep land under its ownership and the implication of this policy has on the agriculture sector.