The purpose of this study was to assess the challenges and opportunities of horticulture indusllyrnfocusing on its investment environment; production and export process sand its contribution tornEthiopian export diversification as horizontal export diversification strategy in minimizing anrnover-reliance on few low value commodities export. /t is a case study of Sebeta area farms ofrnFuits, vegetables and flowers. Both qualitative and quantitative approaches were employed inrnthe study. Across-sectional survey though questionnaire, interview, focus group discussions andrnobservation methods were used to collect dataFom main industry's developmentfacilitators andrnfarms owners. Secondary data were also gathered ji'om different publications. The data obtainedrnwere analyzed though descriptive statistics using SPSS and SWOT analysis by narration. Thernresult of the study reveals that yet the Ethiopian export structure has not been diversified. /t isrnhighly dominated by few traditional agricultural commodities. Hence, its export earning wasrnfluctuating both in value and volume. As a result, the overall balance of payment of the countryrnis widening deficit. The currently horizontal export diversification strategy through horticulturernindustlY is minimizing an over reliance on few low-value commodities. Investors Fom foreignrnand domestic both in number and amount of capital they invest on horticulture are rapidlyrnincreasing. The generated income account Fom the sector reached for 10% of the nation'srnforeign currency earning, which was only 3% before four years ago. The industry is alsornbecoming the 3rd largest source of foreign currency next to coffee and oilseeds. The incrementalrnof export share of horticulture produces is mainly Fom the rapidly booming of floriculture whosernshare is 80.67% in average Fom the industlY 's produces export. The reasons for the sectorrnremarkably booming are incentive schemes given and natural comparative advantages therncountry has such as favorable climate, abundant land (long term leased), varieties soil types,rnsuitable topography, agro-ecology, cheap labour, loans in advantageous terms, location forrnexport (proximity), irrigable lands and rivers, increase demand of horticulture produces, marketrnoriented policy wilh attractive incentive packages and etc. Moreover, governmentalrnorganizations such as EIA, EHDA, MOn DBE and the industry's association EHPEA arernworking in coordination to enhance development of the industry. Despite these efforts to developrnthe industry, it is still at nascent stage and not pel/orming at its maximum potential as comparedrnto what would have been achieved. Factors hinder expansion of the industlY and the countryrncould hardly benefit ji'om the industry were emerged from failure in realizing the existingrnopportunities that help in development of the industry. The main bottle necks against furtherrnexpansion of the industry are categorized in to lack of public inji'astructures, weak instilutionalrnservice delivery, weak market chain and unfair relationship, and lack of skilled manpower inrnmanagerial and technical know-how on the industry activities and weak water management.rnThese constraints are serious especially in the rural areas of the country. Because of thesernproblems most horticulture farms in the counlly are limited to just adjacent to main asphaltrnroads nearby the capital city-Addis Ababa closeness to Bole airport. Hence, in order to expandrnthe industry and be benefited from the sector, working in coordination of Government, donorsrnand stakeholders and investors to fulfill the problem is very important. The currently work ofrngovernment by giving high attention for public inFastructure has a good prospect for the jilturerndevelopment of the industry.rnKey Words: Export diversification, high- value agricultural commodities, Horticulture industry