Cereal price variability in Ethiopia has worsened in recent years, and some of the earlier liberalizations are being reversed due to the unacceptable economic and political costs of increased price variability. The challenge now is to achieve price stability in a cost-effective way. This paper examines intercommodity price relationships to assess the relative importance of each of the three major cereals in generating price volatility. Based on the estimates from a dynamic econometric model, the paper concludes that maize is the most significant in exacerbating price variability with respect to the persistence of shocks to itself and the two other cereals. This implies that focusing on maize, instead of wheat, will not only help better stabilize prices but also reduce costs of stabilization. The results are also discussed in the context of ongoing policy discussions. ; Non-PR ; IFPRI1; GRP27 ; MTID
Cereal price variability in Ethiopia has worsened in recent years, and some of the earlier liberalizations are being reversed due to the unacceptable economic and political costs of increased price variability. The challenge now is to achieve price stability in a cost-effective way. This paper examines intercommodity price relationships to assess the relative importance of each of the three major cereals in generating price volatility. Based on the estimates from a dynamic econometric model, the paper concludes that maize is the most significant in exacerbating price variability with respect to the persistence of shocks to itself and the two other cereals. This implies that focusing on maize, instead of wheat, will not only help better stabilize prices but also reduce costs of stabilization. The results are also discussed in the context of ongoing policy discussions. ; Non-PR ; IFPRI1; GRP32; ESSP II ; DSGD
Holding strategic grain reserves to address food price hikes has received renewed attentions in recent years. This paper examines such a program in Ethiopia that has been successful in addressing several emergencies since the 1990s. The analysis suggests that the key ingredients behind the success are a unique institutional design, coordination during emergencies with food-based safety net programs, and keeping the grain stocks to a minimum. Institutional design is unique because, unlike similar agencies in other countries, Ethiopia's Emergency Food Security Reserve Administration (EFSRA) is independent of price stabilization and hence is not engaged in buying and selling of grain. The paper also demonstrates that scaling up school feeding programs will generate additional food demand and an effective outlet for stock rotation; and that increasing the stock level for price stabilization will adversely affect both grain markets and the performance of the EFSRA. ; Non-PR ; IFPRI1 ; MTID
The case for enhancing agricultural productivity through promotion of modern inputs is fairly easy to make. Promoting input use and intensifying agriculture, however, have proved difficult for most African countries under a wide range of policy initiatives since 1970s, ranging from universal subsidy, market liberalization, to smart subsidies in recent years. The central objective of this paper is to highlight the evolving policy options and, to do so, we analyze the trends in fertilizer and seed use and synthesize the evidence on the impacts of modern input promotion policies. ; Non-PR ; IFPRI1; ReSAKSS; C.4 Land and Input Markets; E.3 Resilience management tools and knowledge products; F.2 Political Economy of Development Policy and Investment Processes; CRP2 ; MTID; PIM ; CGIAR Research Program on Policies, Institutions, and Markets (PIM)
"Governments in most Asian countries used grain price stabilization as a major policy instrument when they embarked on promoting the Green Revolution. The art of public policy-making is to know when to introduce government interventions and when to withdraw. The common mistake is to forget the withdrawal part, leading to unsustainably high costs – a dilemma that most Asian countries are confronted with today. Analyzing case studies of six Asian countries, which have tried to tackle the task in different ways with varying degrees of success, eight key lessons can be learned from the more than three decades of food price stabilization in Asia. Times have changed: policies and public agencies that may have been appropriate 30 years ago are not optimal today. Private institutions have strengthened significantly – or could be strengthened significantly – and should be entrusted for many of the functions that parastatals, or other government agencies, have traditionally performed. Holding on to old practices delays reaping the benefits that changing current policies have to offer." -- Authors' Abstract ; IFPRI3; ISI; Theme 2; Globalization, retail food industries, and trade ; NDO; MTID ; PR
Using case studies from six Asian countries, this paper (a) assesses the relevance of underlying rationales for public intervention in foodgrain markets, (b) documents the existing policies and regulations that support operation of grain parastatals, (c) provides estimates of benefits and costs of parastatals, and (d) compares experiences of countries that liberalized (or reduced intervention) with the ones that continue to have significant presence of parastatals. Our results suggest that conditions in the region have improved significantly over the past thirty years; and none of the four commonly agreed rationales—that is, poorly integrated domestic markets, thin and volatile world market, promoting modern technology and the scarcity of foreign exchange reserves—for public intervention in foodgrain markets are now persuasive. Domestic foodgrain markets are integrated, international markets for both wheat and rice are significantly more robust than they were thirty years ago, High-Yielding Varieties (HYV) now cover practically all of the high potential area sown to wheat and rice; and foreign currency reserves have increased dramatically in all countries in recent years. However, although rationales have lost their significance, many countries continue to practice old policies and provide regulatory supports to parastatals, including monopoly control over international trade, preferential access to transportation, restrictions on movement of foodgrains, and cheap or interest-free credit. Relative to the private sector, the costs of the grain parastatals have been high and are increasing, as special interests and rent- seeking are increasingly dictating their operation. This is being manifested in various forms, such as excessive public stocks in India, vacillating import policies in Indonesia and Pakistan, questionable government foodgrain import decisions in the Philippines, and politically-determined ceiling and floor prices in India. On the other hand, the experiences of Bangladesh and Vietnam, both of which have implemented extensive reforms over the last fifteen years, suggest that reduced government intervention can promote competition in the domestic markets, reduce subsidies, and release funds for development and anti-poverty programs without jeopardizing price stability. The paper concludes that reforms are overdue and the delay in changing the old ways of doing price stabilization will be increasingly wasteful. ; Non-PR ; IFPRI1; GRP2; Theme 2 ; MTID
Cereal production and marketing is the single largest sub-sector within Ethiopia's agriculture. It dominates in terms of its share in rural employment, agricultural land use, and calorie intake, as well as its contribution to national income. The sub-sector accounts for roughly 60 percent of rural employments, about 73 percent of total cultivated land, more than 40 percent of a typical household's food expenditure, and more than 60 percent of total caloric intake of a typical household in the country.1 The contribution of cereals to national income is also large: according to available estimates, cereals' contribution to agricultural value added is 65 percent (Diao et al. 2007), which translates to about 30 percent of GDP.2. Thus, it is no surprise that, despite differing political ideologies, all agricultural production and marketing policies since the 1960s have had a focus on the cereals sub-sector. Since 1991, strategies for both growth and poverty reduction have placed a heavy emphasis on cereal production and marketing. The Agricultural Development Led Industrialization (ADLI) strategy, the Sustainable Development and Poverty Reduction Plan (SDPRP), and the Plan for Accelerated and Sustained Development to End Poverty (PASDEP) all highlight the importance of cereals in Ethiopia's overall economic development. The Government of Ethiopia (GoE) instituted the Participatory Demonstration and Extension Training System (PADETS), in the mid-1990s with the specific purpose of increasing cereal production through demonstration of seed-fertilizer technology. As part of these strategies, the Government of Ethiopia (GoE) has undertaken substantial market reforms, accelerated investments in road and communication networks, and initiated programs to increase cereal production through large-scale demonstrations of the benefits of modern seeds and greater fertilizer use. The structure of Ethiopian cereal markets has undergone massive changes since the 1960s due to dramatic shifts in government agricultural production and market policies, vast improvements in marketing infrastructure, and major increases in domestic production. This paper documents these experiences. It begins by giving a historical overview of policies that have directly or indirectly affected cereal production and marketing. ; Non-PR ; IFPRI1; GRP32; ESSP II ; DSGD
The study involved interviewing a large number of stakeholders in fertilizer value chain, collection of data on costs and margins from the key actors in the value chain, as well as household survey data. In this paper, we present the key findings from that study. In particular, the paper presents estimates of detail costs and margins in the value chain, econometrically derived profitability and yield responses, and the costs of government's fertilizer promotion policies. Based the estimates of the costs and margins in the fertilizer value chain, the study argues that the current value chain will not be sustainable unless the scale of operation, as well institutional capacity, of the primary cooperatives goes up. ; Non-PR ; IFPRI1; Theme 2; Subtheme 2.2; GRP27; Theme 3; Subtheme 3.2 ; MTID
The perception of Ethiopia projected in the media is often one of chronic poverty and hunger, but this bleak assessment does not accurately reflect most of the country today. Ethiopia encompasses a wide variety of agroecologies and peoples. Its agriculture sector, economy, and food security status are equally complex. In fact, since 2001 the per capita income in certain rural areas has risen by more than 50 percent, and crop yields and availability have also increased. Higher investments in roads and mobile phone technology have led to improved infrastructure and thereby greater access to markets, commodities, services, and information. In Food and Agriculture in Ethiopia: Progress and Policy Challenges, Paul Dorosh and Shahidur Rashid, along with other experts, tell the story of Ethiopia's political, economic, and agricultural transformation. The book is designed to provide empirical evidence to shed light on the complexities of agricultural and food policy in today's Ethiopia, highlight major policies and interventions of the past decade, and provide insights into building resilience to natural disasters and food crises. It examines the key issues, constraints, and opportunities that are likely to shape a food-secure future in Ethiopia, focusing on land quality, crop production, adoption of high-quality seed and fertilizer, and household income. ; PR ; IFPRI2; GRP27; Theme 3; Subtheme 3.2; ESSP ; DSGD; MTID
"The International Food Policy Research Institute (IFPRI) conducted a comprehensive study of the efficiency of food distribution in food aid-supported programs in Bangladesh. The capacity and efficiency of the food distribution system was assessed from entry ports to targeted beneficiaries. The study identified problems in the whole food distribution system, determined the level of losses, leakages, and other lapses at various stages, and recommended solutions. The study has three components: (1) food discharge at harbors, (2) the public food distribution system, and (3) food distribution to program beneficiaries. This brief summarizes the main findings and a few of the many key recommendations of the third component of the study." -- from Text ; Non-PR ; IFPRI1; GRP28; Theme 8 ; FCND
The livestock is an important sub-sector within Ethiopia's economy in terms of its contributions to both agricultural value-added and national GDP. Between 1995/96 and 2005/06, the livestock sub-sector's share averaged 24 percent of agricultural GDP and 11 percent of national GDP, with the highest shares recorded at 27 percent and 13 percent, respectively, at its peak (NBE 2005/06). The contribution of livestock and livestock product exports to foreign exchange earnings is also large. The annual average revenue from livestock and livestock product exports was estimated to be 13 percent of the annual national foreign exchange earnings during the period 2000/01 to 2007/08 (NBE 2007/08). Given the large porous border, a large amount of cross-border exports also go un-recorded. Therefore, the official estimates of foreign exchange earnings do not necessarily reflect the actual volume of exports.At the household level, livestock plays a critical economic and social role in the lives of pastoralists, agro-pastoralists, and smallholder farm households. Livestock fulfills an important function in coping with shocks, accumulating wealth, and serving as a store of value in the absence of formal financial institutions and other missing markets. In the case of smallholder mixed farming systems, livestock provides nutritious food, additional emergency and cash income, transportation, farm outputs and inputs, and fuels for cooking food. In the case of pastoralists, livestock represents a sole means to support and sustain their livelihoods. Furthermore, available research suggests that with economic growth, consumption patterns tend to change towards high value and high protein foods, such as those derived from livestock (Delgado et al. 1999). This implies that, given the economic growth in Ethiopia and the region, the market demand for livestock and livestock products is likely to continue growing in the future. The government recognizes the importance of livestock in poverty alleviation and has increased its emphasis on modernizing and commercializing the livestock sub-sector in recent years (SPS-LMM 2008).Focusing on four key livestock classes—cattle, sheep, goats, and chicken—this chapter undertakes three tasks: (1) it provides a characterization of the livestock subsector, (2) it assesses livestock and livestock product value chains based on primary data, and (3) analyzes the trends in marketing and trade of live animals and animal products. Carrying out these tasks relies on the critical review of existing literature and policy documents, as well as extensive use of both secondary and primary data, including household and traders' surveys. The paper is organized following the sequence of these major tasks and concludes with a summary and policy implications. ; Non-PR ; IFPRI2; GRP32; ESSP II ; DSGD
In developing countries across Asia, food marketing parastatals have played an important role in agricultural policy, especially with regard to government efforts to stabilize food prices. Three broad market failures constitute the primary arguments for this form of government intervention: a lack of market integration stemming from inadequate infrastructure, the absence or inadequacy of risk-mitigating institutions and markets, and the need to protect the world's poorest communities from a volatile global market. Opponents of such public intervention schemes claim that the old rationales are no longer convincing, that the programs are not cost-effective and do not allocate resources optimally, and that private institutions are strong enough to take over many of the functions traditionally performed by parastatals. In From Parastatals to Private Trade, the editors—clearly from the latter camp—pose three general questions: Why must parastatal-centered policies in Asia change, when should policy changes occur, and how should such change happen: gradually or abruptly? Experts in agricultural policy use case studies from South Asia (Bangladesh, India, and Pakistan) and East Asia (Indonesia, the Philippines, and Vietnam) to answer these questions; and a concluding chapter synthesizes these countries' experiences with price stabilization programs. In light of the evidence—which indicates that parastatals played important roles in the past but have become overly expensive, and that reduced intervention can promote competition, help develop alternative institutions, and release funds for development and antipoverty programs without jeopardizing price stability—the editors highlight the challenges ahead and propose suggestions for reforming the existing paradigm for price-related policies. This volume provides valuable analyses for anyone concerned with balancing government intervention with market-friendly policies. ; PR ; IFPRI2 ; NDO; MTID
