Focus on Ethopia

by Chris Lyddon
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Ethiopia has a small-scale farming industry, but one which is of great importance to its economy. Grain trading is subject to a high level of state control and the country has continuing problems feeding its population.

The International Grains Council (IGC) forecasts total grain production in Ethiopia at 15.6 million tonnes in 2015-16, compared with 15 million the year before. The country’s wheat crop is forecast at 2.8 million tonnes, up from 1.8 million the prior year. Maize production is put at an unchanged 6.5 million tonnes. The IGC sees Ethiopia’s barley crop coming down to 1.7 million tonnes from 2.1 million in 2014-15. Sorghum production is seen unchanged at 4 million tonnes.

Ethiopia also produces teff grain. The USDA attaché, in a report published in March, put the total production of teff at 4.33 million tonnes.

Total Ethiopian imports of grain in 2015-16 are forecast by the IGC at 2.4 million tonnes, up from its estimate for 2014-15 of 2.1 million. They include imports of wheat put at 800,000 tonnes, down from 900,000 the year before.

“Aside from wheat imports, there are no significant volumes of grain being traded outside the country due to continued export restrictions,” the USDA attaché said in a report published in March.

The report described Ethiopia’s small-scale farming economy.

“Subsistence agriculture is the mainstay of Ethiopia’s economy and is the key economic driver in the government of Ethiopia’s (GOE) five-year Growth & Transformation Plan (GTP) from 2010-15,” it said.

In its Crop Prospects and Food Situation Report, the United Nations Food and Agriculture Organization reported on Ethiopia’s problems feeding its population. “In Ethiopia, the estimated number of food insecure people increased from 2.9 million in January 2015 to 4.5 million in August and to 7.5 million in October, as severe rainfall deficits during the March-May and June-September rainy seasons led to the rapid deterioration of food security conditions in almost all belg-dependent areas, as well as in northern and northeastern pastoral areas,” it said.

“The outlook for the main ‘meher’ season harvest is mixed, as the June-to-September ‘kiremt’ rainy season was erratic in parts,” it said. “Crop growing conditions were favorable in main cropping areas in western Oromia and western Amhara, while a prolonged dry spell in July had a negative impact on crop establishment and development in eastern Amhara, eastern Oromia and Tigray. The June-to-September rainy season also has so far performed poorly in several pastoral areas in Ethiopia, especially in Afar and northern Somali regions, with worsening availability of pasture and water as well as poor livestock conditions and unusual livestock deaths.”

Behind livestock, grain production is the second most important sector in the country’s agriculture-based economy, the attaché said.

“Ethiopia is one of the largest grain producing countries in Africa with nearly all production done by smallholder farmers working on less than one hectare of land,” it said. “Grain yields are relatively low due to the country’s rugged topography, small-scale landholdings, limited mechanization, and insufficient supplies of fertilizer and improved seed.”

The attaché explains that grain production accounts for nearly 80% of cultivated land and employs 60% of the rural workforce.

“Ethiopia has two crop seasons, the meher and the belg,” the report said. “The meher season, which runs from October through February, accounts for roughly 90% of annual grain production. The overall performance of the 2014-15 meher season was generally quite good due to relatively good rains in the main growing regions. Going forward, the continuous farm-level interventions in the form of improved seed, fertilizer, and extension services are expected to help lift overall grain production in the future.”

Grain is an essential part of the Ethiopian diet, the attaché said.

“Over 50% of the calorific intake of an average household comes from wheat, sorghum and maize,” it said. “Grain consumption, especially wheat, continues to climb as incomes rise and more people move to urban centers.”

The attaché explained that the wheat imports are designed to meet this demand and that wheat and teff are the two most expensive grains with retail prices above $600 a tonne.

“In order to cope with these high prices, some households and businesses substitute other less expensive grains, such as sorghum and corn, when making the traditional bread which is called injera,” the report said. “While most grains are for human consumption, a small portion goes to the livestock sector. With grain production expected to grow in the future, some of the surplus will likely be channeled to the livestock sector. In particular, the use of more corn and soy in the livestock diet is expected to boost productivity among the country’s livestock population, the largest in Africa.”

The government limits grain trade, with exports restricted, although some informal border trade probably takes place, the report suggested.

Grain imports consist almost entirely of purchases of wheat on the international market by the government’s state trading arm, which are then distributed in the local market at a subsidized price.

“Private traders are cautious about importing grains given the uncertainty about the timing and nature of government interventions in the marketplace,” the attaché said.

Teff exports

The USDA attaché reported in August that the government is preparing to export limited amounts of teff flour to the U.S. and other countries to take advantage of demand for gluten-free grain.

“Exports are expected to begin in early 2016 with annual totals the first year expected to reach between 6,000-8,000 tonnes,” the report said. “To avoid potential inflationary pressure from the export of teff flour, the government of Ethiopia will tightly control the volumes produced for export.”

Milling sector

In 2014, the attaché described Ethiopia’s flour milling sector has having around 216 flour mills, with a total production capacity of about 4.2 million tonnes of wheat flour a year.

“Almost a third of these mills are located in Addis Ababa. Mills are able to obtain wheat through two channels, namely subsidized wheat from the EGTE and from domestic production on the open market, whose price is higher than imports.”

EGTE stands for Ethiopian Grain Trade Enterprise. “The state-owned EGTE controls all commercial wheat imports and makes wheat available to millers at a subsidized price. This accounts for roughly a quarter of the wheat market and the rest of the market is supplied from domestic production, whose price is not controlled and whose price is higher than imported wheat,” the attaché explained.

Rust concerns

The International Maize and Wheat Improvement Center, CIMMYT, has raised warning about severe stem rust epidemics in Ethiopia on the wheat cultivar Digalu. Regarding the 2014-15 season, it said, “Overall, at least 20 districts were considered to be affected to some extent by the Digalu epidemic. Complete crop loss has occurred in the worst affected areas.”

A broad spectrum of different agencies, both national and international, worked tirelessly to control and mitigate the rust outbreaks in Ethiopia in 2014-15, CIMMYT said.

“These efforts were successful in many areas and very good crop performance was observed. However, in some areas no, or limited, control was achieved and serious losses resulted,” it said.

“The 2014-15 situation in Ethiopia is a stark reminder of the extreme difficulties in trying to successfully control stem rust when large areas are planted to highly susceptible cultivars, a virulent pathogen is present and environmental conditions are suitable. Replacement of the highly susceptible cultivars is now the highest priority for Ethiopia.”

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