VULNERABILITY ANALYSIS AND MAPPING (VAM), WORLD FOOD

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1 The nominal retail prices of food commodities across district markets were stable and further decreased in some markets where the belg crop production shows good performance and root crops are being consumed. The stable prices are also attributed to the food aid and the urban market stabilization wheat sales. Teff prices have decreased by about 10% across most markets compared to April 2009 and by about 20% compared to October 200. Teff is the major staple in urban areas, Tigray, Oromiya and Amhara regions. The local average wholesale price of maize was 48 percent below the import parity whilst local sorghum was 36 % above the import parity at Addis Ababa. The local wheat and import parity prices were converged to the same level at Addis Ababa. The wholesale nominal average prices of maize, sorghum and wheat across monitored major urban markets stood above the long term average with the lowest for maize at 11% and the highest at 52 % for sorghum. Out of 250,000mt of wheat government purchased for the market price stabilization programme from international market; at least 80% has reached warehouses and selling of the commodity is going on. The food inflation rate continued decreasing since the peak of 61.1% in February 2009 to below zero for the last three consecutive months whilst the non food inflation rate remained stable around 17.7 percent. The country level general, food and non - food consumer price index of April 2010 stood at 180.7, and percent respectively. A. Special Report Of the total 16.8 million mt of cereals and pulses produced in 2009, teff was allocated the largest area under cereals and pulses at 24.3% but its production stood at 18.6%, third from maize and wheat production. At least 85% of the teff was produced in Oromiya and Amhara regions in 2009 (CFSAM February 2010). In addition, teff is normally exported legally to neighboring countries of Djibouti and Sudan while illegally to Eritrea. However, with the unprecedented price rise of cereals in 2008, the government has instituted an export ban since then. The Urban Food Security and Vulnerability Study conducted by WFP and its partners in 2008/09 showed that food commodities take up 70% of the expenditure basket, of which two thirds was on cereals. A large proportion of the urban population estimated at 16.4% of the total population consume teff. However, following cereal prices spike in 2008, teff consumption by the poor was considered a luxury commodity. Furthermore, urban consumers started to mix and mill teff with other cereals such as sorghum, rice, wheat etc in various proportions to minimize expenditure on teff and maximize consumption. On the other hand as the price continued increasing, consumption of white teff was minimized with a shift to mixed or red teff leaving the high quality white teff for the better off income groups of the society. This indicated that teff is a major food commodity in urban and some rural areas, hence the need to closely look at teff prices from time to time. Figure 1: Contribution of Teff to Food Intake Source: Livelihood Atlas, DRMFSS/LIU The central market of Addis Ababa which is close to the main production areas had lower price of teff in April 2010, with white teff at Birr 855 per quintal, compared to other other urban centers like Dire Dawa and Nazareth were it is sold at Birr 927 and Birr 1000 respectively. The wholesale price of teff in April 2010 remained stable as compared to the last year and previous month. However, compared to October 2009, teff prices have decreased VULNERABILITY ANALYSIS AND MAPPING (VAM), WORLD FOOD PROGRAMME, ETHIOPIA 1

2 within ranges of 14 26% in these markets. As compared to 2008 level, white teff pices increased by 23% at Addis Ababa and 66 % at Dire Dawa. The mixed and red teff, consumed by the middle and low income groups, have increased by 28% at Dire Dawa, 33% at Nazareth and 8% at Addis Ababa compared to April Figure 2: Trends of teff price at Addis Ababa, Nazareth and Dire Dawa $' ##'($)& %&##'($)& Source: Ethiopian Grain Trade Enterprise Source: Ethiopian Grain Trade Enterprise B. Inflation and Consumer Price Index The country level based on 12 months moving average continued to decrease in April 2010, with the overall inflation standing at 2.9%; food inflation at (- 4.9)% and non food inflation at 17.7%. The food inflation rate continued decreasing since the peak of 61.1% in February 2009 to below zero for the last three consecutive months, whilst the non food inflation rate remained stable around 17.7%. However, the year to year general inflation has increased by 6.8% whilst food inflation decreased by 0.8%. The decrease in food inflation rate was due to the decline in the price indices of the food components, mainly cereals. The country level general, food and non - food consumer price index of April 2010 stood at 180.7, and respectively. C. Major Cereals Import Parity and Local Prices!"#$ $ Source: Central Statistics Authority The local wholesale nominal maize price at Addis Ababa stood below the import parity price since November In 2010 maize price continued to decline while import parity price remained stable and has reached about 48 percent below the import parity. The local sorghum wholesale prices at Addis Ababa is above the import parity price by about 36 percent whilst local wheat price went down and converged to the import parity at Addis Ababa as urban market stabilization wheat continue being sold. However, the local wholesale average price of wheat is higher than the import parity at Dire Dawa and Nazareth markets respectively by 14 and 4%. Generally, the import parity prices have decreased by 9% for maize, 18% for sorghum and 17% for wheat compared to April 2009, but remained stable last month. The import parity price of sorghum stood at USD286/mt, wheat at USD301/mt and maize at USD386/mt in April 2010 (see Figure 4 and Table 1). At least 200,000 mt of wheat purchased for the market price stabilization programme from the international markets have reached local warehouses and 50,000mt is still to arrive. The sale of the commodity has continued every two weeks at the Ethiopian Grain Trade Enterprise. The floor prices for the wheat remains at Birr 4.67/kg, with buyers quoting prices VULNERABILITY ANALYSIS AND MAPPING (VAM), WORLD FOOD PROGRAMME, ETHIOPIA 2

3 closer to the floor price. Since January 2010, total about 130,314mt of wheat (52% of the planned imports) has been sold.! " #" D. Cereal Prices in Large Urban Markets The wholesale nominal average prices of maize, wheat and sorghum in all major urban centers of the country stood above the long term average ( ), the lowest for maize at 11% and the highest at 52% for sorghum. Furthermore, the April 2010 average prices are also below the 2009 prices for maize by 19%; wheat by 12% and sorghum by 8%. However, April 2010 average prices for sorghum and wheat across most markets have shown minor increases of 2 to 3% compared to March In April 2010 the lowest level prices of maize was at Jimma market in the surplus producing area at 2.13/kg and the highest at Mekele at 3.20/kg (Figure 5 below). Wheat prices have significantly increased in April 2010 compared to March 2010; rising by 10 to 15% at Gonder, Bale and Shshemene markets, but decreased by 7% at Addis Ababa and by 12% at Mekele markets. The price spread between the minimum and maximum market price was 44 percent for sorghum; 43 percent for wheat and 33 percent for maize. Figure 5: Nominal Prices of Commodity (Birr/100kg) $!! %& E. Cereal Prices in District Markets Generally, the retail prices of food commodities across district markets were stables and showing a decreasing trend in some markets where the belg green harvest has started to come in or is expected and root crops are being consumed. Compared to April last year, prices could have being at their peak, hence the expected good belg harvest prospect is VULNERABILITY ANALYSIS AND MAPPING (VAM), WORLD FOOD PROGRAMME, ETHIOPIA 3

4 likely to keep the prices stable in the coming months. However, the April 2010 average prices of sorghum and maize still is above the long term average ( ) by about 37 and 10 percent respectively. Due to high seed demand for Meher production, sorghum price at Sekota market rose up by about 67 percent as compared to March 2010, prices also increased in Jijiga where sorghum is one of the major staples (Figure 6). ' ( )* +,--%."&/ " % F. Supply to Markets In April 2010, the food supply to most markets was stable, other than markets of Sekota where high demand for sorghum seed rose sharply. However, low supply levels for maize was at Bedeno, Abomsa, Wolenchiti, Alamata, Abi Adi and Awassa Zuriya resulted in price increases, similarly for wheat at Jijiga. The availability of green maize in markets of SNNP and in urban centers stabilized market prices. The market supply of food items remains low in parts of Somali region due to poor commercial activity resulting from insecurity and trade restriction that have limited food movements. G. Terms of Trade: Assessing and monitoring the value of assets against what they can purchase in the market is an important component of food security analysis more specifically for pastoralists and agro pastoralists who depend on about 60% of their food from the market and have to sell animals to access the food. Hence, analyzing terms of trade (TOT) across different markets and between livestock type and commodities is indicative of the trends in exchange, hence impact on food security. The terms of trade between wage and shoats; against cereals for specific markets are discussed below. a. TOT for wage labour to cereals The nominal average daily wage rate remained stable in Amhara and Somali whilst increased in Tigray by about 11% as compared to March The average daily wage in Amhara was Birr 24, Somali Birr 28 and Tigray Birr 45. The terms of trade between wage to maize and wage to sorghum have shown improvement attributed mainly to a decrease in the staple food prices in Amhara region and increase in the wage rate in the Somali and Tigray regions. The increases in terms of trade indicate improvement in purchasing power of the wage income earner during the month. In April 2010, the highest terms of trade was between wage and maize, at 11.42kg/day in Tigray and the lowest for wheat at 6.20kg/day in Amhara and Somali regions (see Figure 7 and Table 1). b. TOT for shoat to cereals Compared to March 2010, the prices of shoat in April 2010 increased by about 1% at Gode market, leading to improved terms of trade by the same percentage as cereal prices remained stable. However, as a result of high increases in wheat price, the TOT for shoats decreased at Jijiga in April 2010, but is above the long term average ( ). At Dire Dawa and Gode the TOT remained stable compared to the long term average. However, compared to April 2009, the terms of trade have improved at Dire Dawa and Jijiga by more than 15 percent. The maximum TOT of the month was observed at Jijiga; on shoat to maize at 181kg per shoat, with the minimum observed at Dire Dawa market; for wheat at 79kg per shoat (see Figure 7 and Table 1). VULNERABILITY ANALYSIS AND MAPPING (VAM), WORLD FOOD PROGRAMME, ETHIOPIA 4

5 0 1 )1. 2*1 )1 "2*1 )1 H. Markets Price Forecast The monthly forecasted wholesale prices of maize at Mekele, wheat at Hosana and sorghum at Gonder indicates stability in May with the tendency of increases at Mekele by about 10 percent in June while remained stable in the other two markets. Similarly, retail prices forecast of May 2010 for maize remained stable at Yabelo and Jijiga while a decline of 7 percent at Babile will be expected. In June 2010, the price of maize is likely to rise at Babile by 8% and at Jijiga by 14% (Figure 8). Figure 8: Forecasted Price of Food Commodities (Birr/100kg)." 3 VULNERABILITY ANALYSIS AND MAPPING (VAM), WORLD FOOD PROGRAMME, ETHIOPIA 5

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