The Ethiopian government and the European Union (EU) have signed a 30-million-euro (about 39 million US dollars) grant agreement, the Ministry of Finance said Friday.

Getachew Admassu, public relations officer with the ministry, told journalists that the agreement was signed in Brussels by Ethiopian Ambassador to Belgium, Berhane Gebre Kirstos, and Director of EU Development Aid Coordination Office, Francisco de Angelinas.

Much of the grant would be directed to the procurement of food aid and crop mainly from the local market.

Ethiopia is an extremely poor and overwhelmingly agricultural country, with farm products accounting for over half of the country's gross domestic product (GDP) and 90 percent of its exports.

Because of its degraded lands, poor cultivation practices, and frequent droughts, Ethiopia suffers chronic hunger and has to rely on massive foreign aid.