giews country brief ethiopia layout

Ethiopia December 1, 2008 1

GIEWS Food Security Country Brief

Ethiopia

Food security highlights

Reference Date: 02-October-2008

The poor secondary season “belg” rains led to delayed plantings and partial failure of the crop that was recently harvested, particularly

in lowlands of Oromiya, Somali and SNNP regions. Although this crop accounts for only a small portion of the total national cereal

production, in Amhara and Tigray regions, where output is severely reduced, large number of people depend on this crop for about half

of their annual food consumption.

After a late start to the current main “meher” season rains, precipitation began to increase in July improving crops and pasture

conditions. However, notwithstanding the continued rains in August and early September, deficits remain in localized areas in Tigray

and Afar. To the south, in the northern areas of Oromiya and Somali regions, unusual early September rains have benefited pastures

and drinking water supplies.

Poor secondary season "belg" rains and a late start to the current main "meher" season rains have created a rather alarming food

situation. More than 10 million people have been affected by the drought which, between January and May, has hit large sections of

southern, central, western and north-eastern Ethiopia. The drought led to the failure of a harvest that has left 4.6 million people needing

emergency food aid and 5.7 million in drought-affected areas requiring other handouts such as additional cash or food transfers. On 22

September 2008 the UN World Food Programme launched an appeal to the international donor communities for USD 460 million to feed

9.6 million people affected by drought, rising food prices and conflict. About one-fourth of the people in need live in the arid and troubled

Somali regions in the east where has not rained for three years.

Large numbers of livestock have died and unusual migrations in search of water and pasture are reported in several parts of the

country, particularly in the Somali region. By contrast, western Ethiopia has experienced abundant and well distributed rains since the

season started in late March. WFP reports some improvement in the nutritional situation in parts of southern Oromiya and SNNPR due

to a combination of food aid interventions and the start of green harvest of maize, potato and haricot beans. Livestock conditions have

also reportedly improved in most areas. However, the supply situation remains critical in most areas. Gode, Zafder, Korahe, Warder and

Liben zones in Somali region continue to report critical water and food shortages. Increased level of migration, reduced daily food

intake, poor livestock conditions and subsequent mortalities are also reported. A recent report released by the Central Statistical Agency

(CSA) indicates that the food inflation rate in August was 46.9 percent, an increase of 28.3 percent compared to the food inflation rate in

August 2007, but lower than the previous three months of this year. By contrast, the country’s overall level of inflation rate has been

steadily increasing over the past six months to reach in August 33.6 percent – more than double the rate in August 2007- from 29.6

percent in July. In an effort to reduce the impact of the high food inflation rate on poor people, the Government decided to cancel the

value-added and turnover taxes on food grains and flour - which constitute more than half of the country’s consumption. The

Government has also set up measures which include provision of direct and indirect subsidies, and has spent ETB 372 million (USD 38

million) to subsidize wheat and ETB 3.52 billion (USD 366 million) to subsidize fuel.

Grain prices continued to increase in 2008 after weakening slightly at the end of 2007. Since food prices in Ethiopia have continued to

increase despite successive bumper harvests, it is unlikely that prices will decline after the “meher” harvest, which will start soon. Thus,

there are other factors, in addition to supply and demand forces, that contribute to the price rises in Ethiopia. Some of the reasons

include: high liquidity in the economy, high fuel prices, an inadequate grain market system and price speculation. The price of wheat in

Addis Ababa in July increased to USD 643 per tonne from USD 623 per tonne in June. White maize in the same market was quoted in

July at USD 563 per tonne compared to USD 536 per tonne a month earlier



Selected macro-economic and financial indicators

2004/05 2005/06 2006/07

Real Sector & Prices (% change over previous year)

Real GDP 12.6 11.6 11.4

Agricultural Value Added 13.5 10.9 9.4

Non-Agricultural Value Added 11.8 12.2 13.2

All Services 12.8 13.4 13.5

Consumer Price Index 6.8 12.3 17.8

Government Finance (% change over previous year)

Domestic Revenue (including grants) 12.4 15.5 26.3

Tax Revenue 13.7 14.2 22.6

External Grants 14.1 -18.1 103.2

Total expenditure 20.9 18.3 21.3

Overall Balance (including grants) (as % of GDP) -4.4 -4.6 -3.6

External Sector (% change over previous year)

Exports 41.2 18.1 18.5

Imports 40.4 26.4 11.6

Average Exchange Rate Birr/US$ 8.65 8.68 8.79

Reserve in months of imports 3.5 2.5 2.2

Total Merchandise Exports (Mio. US$) 847 1000 1185

Total Merchandise Imports (Mio. US$) 3633 4593 5126

Total Trade Balance (Mio. US$) -2786 -3593 -3941

Overall Balance of Payments (Mio. US$) -97 -350 85 Source: Ministry of Finance and Economic Development; National Bank of Ethiopia

Cropping zones



Estimated rainfall in selected provinces

Estimated rainfall difference with average



Vegetation



Cereal production (last 5 yrs)

2004 2005 2006 2007 2008*

Wheat 1 618 2 177 2 307 2 470 2 786

Maize 2 744 2 906 3 912 4 098 4 352

Sorghum 1 784 1 718 2 200 2 339 2 336

Millet 305 333 397 484 500

Cereals NES 1 678 2 047 2 247 2 451 2 570

* FAO latest forecast

Price monitoring

Currently unavailable

Policy monitoring

�� May 2008: Government imported 150 000 tonnes of wheat for subsidized distribution scheme

�� June 2008: Government decided to cancel the value-added and turnover taxes on food grains and flour

�� July 2008: Government set up measures which include provision of direct and indirect subsidies, and has spent ETB 372 million

(USD 38 million) to subsidize wheat and ETB 3.52 billion (USD 366 million) to subsidize fuel.

giews country brief ethiopia layout

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