Prices and Quality in Urban Food Retail: Evidence from Addis Ababa

We study food retail in Addis Ababa based on a large survey of food retail outlets selling cereals, fruits and vegetables, and processed foods. The study shows high variation in quality and prices in the city and an increasing differentiation in food retail markets in recent years. On the high-end, we see the emergence of domestic private modern retail outlets that deliver high quality products at high prices and that focus mostly on wealthier areas and consumers. At the other side, we see cooperative retail that delivers food at controlled and subsidized prices. The latter shops are characterized by typical price control policy problems, reflected in regular lack of supplies and queuing. It seems that food retail markets would be improved by stimulating the emergence of a competitive private retail sector and the abolishment of price controls, while providing targeted subsidies or safety nets for the urban poor to ensure their access to food.
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