Ethiopia Strategy Support Program II

New ESSP publication: ‘Structural transformation in Ethiopia: Evidence from cereal markets’

ilamoot — Thu, 17 May 2012 06:07:19 +0000

ESSP II Working Paper 39 "Structural transformation in Ethiopia: Evidence from cereal markets" by Bart Minten, David Stifel, and Seneshaw Tamiru.

Abstract: We study cereal wholesale markets in Ethiopia in the last decade (2001–2011), a period that has been characterized by important local changes affecting agricultural markets, including strong economic growth, urbanization, improved road and communication infrastructure, an increase in importance of cooperatives and commercial farms, and a doubling in commercial surplus. We find that these changes are associated with significant declines in real price differences between supplying and receiving markets, in cereal milling margins, as well as in retail margins. Important improvements have thus happened in the last decade in Ethiopia’s food marketing system, traditionally identified as a major cause of food security problems in the country.
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Find more ESSP Working Papers on the Publication page.

Invitation to National Workshop on Food Price Dynamics and Policy Implications in Ethiopia

mmekuria — Wed, 16 May 2012 12:07:00 +0000

The surge in food price continues to be a concern for both policy makers and the public at large. In relation to this, the Ethiopian Development Research Institute (EDRI), in collaboration with the Association for Strenghtening Agriculutral Research in Eastern and Central Africa (ASARECA), Ethiopia Strategy Support Program II (ESSPII) and International Food Policy Research Institute (IFPRI) is holding a half-day national workshop on “Food Price Dynamics and Policy Implications in Ethiopia”.

You are invited to participate in the event and share thoughts.
The workshop will be held at Ghion Hotel in Blue Salon on May 24^th 2012 from 9:00a.m. to 1:00p.m.

Topics:

Food Price Trends in Ethiopia--Tadesse Kuma (EDRI)

Cereal Price Stabilization in Ethiopia: Implications of International Experience--David Stifel (Lafayette College/IFPRI)

Urban Wage Behavior during Price Hikes: The Case of Ethiopia--Fantu Nisrane (ESSP II/IFPRI)

Structural Transformation in Ethiopia: Evidence from Cereal Markets--Bart Minten (ESSP II/IFPRI)

Spatial Integration of Cereal Markets in Ethiopia--Seneshaw Tamiru (EDRI, ESSP II/IFPRI)

The Impact of Intensity of Wheat Variety Technology Adoption on Farm households’ Welfare Effects of Price Changes in Ethiopia--Asfaw Negassa (CIMMYT)

To confirm your participation please contact Ms. Bedilish Gebremedhin via email: bedilishbl@gmail.com or Tel: 251-11-5525315

New ESSP publication: ‘Consumption Patterns of Livestock Products in Ethiopia: Elasticity Estimates Using HICES (2004/05) Data’

ilamoot — Tue, 15 May 2012 06:25:04 +0000

ESSP II Working Paper 38 "Consumption Patterns of Livestock Products in Ethiopia: Elasticity Estimates Using HICES (2004/05) Data" by Kibrom Tafere and Ibrahim Worku.

Abstract: Ethiopia is known to have one of the largest livestock populations in the world. Yet the overall contribution of livestock products to households’ daily consumption is very limited. The average per capita annual consumption of meat and dairy products are just 4.6 kg and 16.7 kg, respectively. Given recent growth in income, there is potential for growth in the demand for livestock products.
This study attempts to estimate elasticities of livestock products. We use the Household Income, Consumption, and Expenditure Survey (HICES), the Welfare Monitoring Survey (WMS), and Retail Prices of Goods and Services of 2004/05 data sets of the Ethiopian Central Statistical Agency (CSA).

Descriptive analysis of budget shares from livestock products shows that such products account for a very small share of total household expenditure and food expenditure, even by African standards. There is also a remarkable difference in the composition of livestock products between rural and urban areas. When viewed across income categories, the study also reveals that richer households tend to have higher consumption of livestock products. For the econometric analysis, we chose the Quadratic Almost Ideal Demand System (QUAIDS) model for its efficiency and reliability of results. The estimated figures reveal that there is a considerable expenditure and price response for livestock products in Ethiopia. It also appears that rural areas have higher expenditure elasticities than urban areas. Furthermore, price responses are higher in rural areas than urban areas. Similarly, own-price responses exhibit wide variation across commodities. We also found a strong substitution relationship among most livestock products.
Limited market access, high dependence on subsistence agriculture, poor marketing infrastructure for perishable products (such as a lack of cold chains), low level of urbanization, indivisible nature of the product (specifically for beef and mutton), and lack of rural retail markets for such products all constrain rural households, resulting in a low demand for livestock products. Our results also suggest that there is an opportunity to take advantage of the country’s huge livestock resources and to increase the consumption of livestock products through policies aiming at raising household income. The findings also suggest that improving the country’s marketing infrastructure for livestock products could also improve opportunities for substitution among livestock products in response to preferences and market signals.

Download the pdf (1011KB).

Find more ESSP Working Papers on the Publication page.

ESSP II Newsletter May-June 2012

mmekuria — Wed, 09 May 2012 08:44:06 +0000

Ethiopia Strategy Support Program II would like to present you
its bimonthly newsletter for the months May-June 2012.
The newsletter presents:

Upcoming events

May 24, 2012: workshop on ‘Food Price Dynamics and Policy Implications in Ethiopia'
Third week of June 2012: workshop on ‘Roads, Agriculture, and Welfare in Ethiopia’
July 19-21, 2012 at the Ethiopian Economic Association: 'The Tenth International Conference on the Ethiopian Economy'

List of recent ESSPII publications

ESSP II Working Paper 36: The Brokerage Institution and the Development of Agricultural Markets: New Evidence from Ethiopia.
ESSP II Research Note 12: Seed, Fertilizer, and Agricultural Extension in Ethiopia.
ESSP II Research Note 11: Crop Production in Ethiopia: Regional Patterns and Trends.

Highlights of presentations
Policy Related Analysis 'Structural transformation in Ethiopia: Evidence from cereal markets'
and more.

Download the pdf (283KB).

New ESSP Publication: ‘Growth in Total Factor Productivity in the Ethiopian Agriculture Sector: Growth Accounting and Econometric Assessments of Sources of Growth’

ilamoot — Wed, 09 May 2012 06:22:26 +0000

ESSP II Working Paper 37 "Growth in Total Factor Productivity in the Ethiopian Agriculture Sector: Growth Accounting and Econometric Assessments of Sources of Growth" by Fantu Nisrane Bachewe.

Abstract: During the 2003/04–2008/09 period agricultural production in Ethiopia grew annually at 9.3 percent while cultivated area expanded at 4.7 percent. The remaining growth resulted from intensive use of other inputs, increased productivity, increased efficiency, or a combination of these factors. This study applies growth accounting and two econometric approaches on sector and administrative zone level data to investigate the issue.

The baseline three-factor growth accounting specification applied to sector level data covering the 2004/05–2009/2010 period implies an average year-to-year change in total factor productivity (TFP) of 4.5 percent. The five-factor specification that includes the effects of intermediate manufacturing and services inputs implies that out of the 8.4 percent average, annual growth in real value of output TFP growth accounted for 4 percent. Out of the remaining 4.4 percent growth in output, increased application of labor accounted for 2.7 percent, land and capital for 1 percent, and intermediate inputs for 0.7 percent. A modification of the growth accounting model, to take into account factors that indirectly affect TFP, resulted in an average annual growth in TFP of 2.7 percent. I applied the Cobb-Douglas and stochastic production frontiers on zone level data of four agriculturally important regions. The results of the Cobb-Douglas production function (CDPF) imply that TFP grew at an average annual rate of 5.6 percent. Growth in cultivated area and employment of labor accounted for 3.6 and 1.0 percent of the growth in output. Similarly, results of the stochastic production frontier model imply that growth in labor and cultivated area accounted for 0.6 and 3.7, respectively, of the growth in output. Changes in TFP and gains in efficiency accounted for 3.9 and 0.5 percent of the growth in output. A typical farmer in these regions had an average level of efficiency of 0.73, which implies that output can be increased by about 37 percent from its current level without increased application of inputs.

During the same period, efficiency improved as the proportion of literate farmers grew. It also improved with the application of the extension package, and as the number of farmers who receive advisory services grew. The fact that growth in efficiency between 2003/04 and 2005/06 represents about 84 percent of the average annual change in TFP, which mainly occurred between 2003/04 and 2005/06, has an important policy implication. This result, together with the sources of growth in efficiency, implies that the Ethiopian government’s efforts to educate farmers and expand modern production practices—efforts that have been going on for well over a decade—are starting to pay off.

Download the pdf (1209KB).

Find more ESSP Working Papers on the Publication page.

New ESSP Publication: ‘Integrating livestock in the CAADP framework: Policy analysis using a dynamic computable general equilibrium model for Ethiopia’

ilamoot — Wed, 02 May 2012 08:37:42 +0000

ESSP II Research Note 13 "Integrating livestock in the CAADP framework: Policy analysis using a dynamic computable general equilibrium model for Ethiopia"
Summary of ESSP II Working Paper 24.
David J. Spielman, Dawit Kelemework, and Dawit Alemu

This study examines the magnitude of the macro and welfare effects generated by a realistic acceleration in the productivity growth of the Ethiopian livestock sector, as compared to historical trends and to alternative scenarios of productivity expansion in the cereal and cash crop sectors. Results from the dynamic general equilibrium simulations show large aggregate gains from livestock productivity acceleration and effects on poor households’ incomes and consumption that are roughly in line with those obtained under cereal growth. This bears important initial implications for the allocation and prioritization of public investment in agriculture in Ethiopia.
Download the pdf (567KB).

Find more ESSP Research Notes on the Publication page.

New IFPRI ESSP II Brochure

ilamoot — Tue, 01 May 2012 10:53:16 +0000

Download the new IFPRI ESSP II Brochure (268KB).

Learn about ESSP II's

Program Objectives
Research Areas
National Advisory Committee
Collaboration and Partnerships
Capacity Strengthening and Outreach

Déjà Vu in the Horn of Africa

IFPRI — Wed, 18 Apr 2012 16:04:12 +0000

Source: 2011 Sven Torfinn/Panos

In lowland areas of the Horn of Africa, droughts and floods are frequent events, but the scale of the 2011 food emergency was somewhat unusual. Why is the region seemingly more vulnerable now than it has been in the past? How can development efforts be improved to render the people who live and work in the Horn more resilient to the next emergency? The answers to these questions are complex.

While drought obviously greatly contributed to the 2011 crisis, the role that the conflict in Somalia played cannot be ignored. In addition, even slower-moving stresses have long undermined the progress of communities in the region, including, for example, the reduction of herd sizes and the loss of herd mobility. Identifying the root causes of these stresses is far from easy, but those who have researched the topic can agree that a vicious cycle involving population growth, local conflicts, land fragmentation, and reduced mobility is at fault.

Enhancing resilience in the Horn of Africa requires striking a balance between strengthening pastoralism—the region’s primary economic activity—and promoting meaningful economic diversification. Currently, the most common secondary occupation is to collect and sell natural products like firewood and charcoal. This livelihood not only has incredibly low returns but also causes long-term damage to an already fragile environment.

Migration and urbanization may seem more promising options to people living in the Horn of Africa, but the main prerequisite for successful migration and urbanization is greater investment in education, which, if undertaken successfully, could have major impacts over the next 10 years. Health and nutrition interventions are also a top priority for pastoralists.

Other pro-poor improvements to the livestock sector that could prevent future famine or other types of crises include strengthening market competition, access, and efficiency to enable pastoralists to buy and sell livestock before a drought for higher prices, rather than losing their herds to drought-induced mortality. Better management and regulation of land and water resources will also be critical to avoid the negative impacts herders often face, including the fallout of poorly implemented and designed irrigation schemes, “land grabs,” and the generally weak protection of community property rights. These land policies are not only unjust, but also inefficient because they inhibit the performance of the livestock sector and interfere with the principal mechanism pastoralists use to cope with drought: mobility.

New technologies and institutional innovations could also help mitigate the disadvantages of distance and the vagaries of the climate in the Horn. Mobile phones are likely to be particularly critical for reducing economic distance, and innovations like weather insurance, microfinance, and education also hold promise. Ultimately, though, figuring out what works and what does not will require greater investment, systematic experimentation, and more rigorous scientific evaluation.

IFPRI’s 2011 Global Food Policy Report—the first in a new annual series—reflects on the challenges and developments of 2011 and provides an outlook for 2012.

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New ESSP publication: ‘The brokerage institution and the development of agricultural markets: new evidence from Ethiopia’

ilamoot — Thu, 05 Apr 2012 14:06:36 +0000

ESSP II Working Paper 36 "The brokerage institution and the development of agricultural markets: new evidence from Ethiopia" by Maria Quattri, Adam Ozanne, and Seneshaw Tamru Beyene.

Abstract: Recognition that policies aimed at ‘getting prices right’ in less-developed countries have not been successful due to incomplete markets has spurred a new wave of reforms aimed instead at ‘getting markets and institutions right’. Previous studies of this policy shift have documented the potentially crucial role played by the brokerage institution in crop commercialization. However, few have investigated the factors that influence wholesalers’ decisions regarding their use of brokers. Results from a primary survey with traders show that brokerage services are particularly valuable for wholesalers who lack social capital and storage capacity, who are based in areas with low population density, and who trade at a distance, especially when roads are not asphalt. Buyers in drought-prone domains rely on brokers more for their long-distance purchases, while sellers in moisture-reliable domains employ brokers more for their long-distance sales. These results provide useful indications regarding where and how the recent formalization of brokerage functions through the Ethiopian Commodity Exchange (ECX) could be most beneficial for the functioning of Ethiopian agricultural markets.
Download the pdf (1007KB).

Find more ESSP Working Papers on the Publication page.

New ESSP publication: ‘Seed, Fertilizer, and Agricultural Extension in Ethiopia’

ilamoot — Wed, 04 Apr 2012 07:19:05 +0000

ESSP II Research Note 12 "Seed, Fertilizer, and Agricultural Extension in Ethiopia"
Summary of ESSP II Working Paper 20.
David J. Spielman, Dawit Kelemework, and Dawit Alemu

Decisionmakers in Ethiopia have pursued a range of policies and investments to boost agricultural production and productivity. An important tool has been to increase the availability of improved seed, chemical fertilizers, and extension services for small-scale, resource-poor farmers. While there is some evidence to suggest that the process has led to improvements in both agricultural output and yields, there is an urgent need for more substantial progress. A rethinking of approaches is required, one that reallocates the roles of the public and private sectors in the agricultural input sector.
Download the pdf (368KB).

Find more ESSP Research Notes on the Publication page.