In Ethiopia, economic development policy has historically been dominated by subsistence agriculture, leading to unrealized agricultural potential characterized by low productivity and a focus on subsistence farming practices. This would necessitate giving agricultural policies top priority and launching an improved initiative to speed up the transition from traditional farming. To this end, this review was to summarize the strengths and drawbacks of Ethiopia's agricultural policies and strategies, as well as make recommendations for improved interventions and the potential for scaling them up. This may be very helpful in directing policymakers to introduce the valuable interventions and handle related issues. Since 1991, the government of Ethiopia has implemented various agricultural policies in order to boost agricultural productivity and production, which in turn reduces poverty and food insecurity. However, the results have been found to be unsatisfactory. This is mainly due to the poor performance of the agricultural extension system in terms of its coverage and quality of implementation. Thus, the review argues, addressing such challenges and commercializing the sector could lead Ethiopia to further exploit its agricultural potential. In this regard, the recently implemented cluster farming is the right way to overcome these problems and support subsistence farming by increasing smallholder farmers bargaining power, increasing the faster diffusion of research recommendations and extension packages, knowledge transfer, and market linkage. Therefore, the review recommends that policymakers and development organizations should consider cluster farming as a main farming strategy to increase smallholder farmer’s productivity and support initiatives to attain the intended goals.