ETHIOPIA MONTHLY MARKET WATCH

Transcription

1 ETHIOPIA MONTHLY MARKET Highlights The country level general and food inflation rate increased by 40.6% and 49.9% respectively compared to Cereal inflation rate increased by 52.3%. The Ethiopian Grain Trade Enterprise procured 300,000mt of wheat from the international market. The procured wheat will be delivered in country in mid of September and will be distributed to millers. Compared to local price at Addis Ababa, the import parity stood 43% higher for maize whilst stood at the same level for wheat and sorghum. The import parity price of maize stood at US$ 600/mt, at US$ 489/mt for wheat and at US$ 438/mt for sorghum. The national average wholesale price increased by; 18% for maize and sorghum and 6% for wheat compared to a month ago. In all monitored markets the prices of these commodities have increased.. The terms of trade between shoat and maize have deteriorated by 11% at Dire Dawa, remained the same at Gode and Increased at Jijiga by 19% compared to July. Special issues The Ethiopian Grain Trade Enterprise (EGTE) has distributed about 153,000mt of wheat since March to millers with the expectation of these millers to distribute the milled wheat to bakeries at the pre-determined prices. The millers get the next round wheat from EGTE based on the evidence presented from Ministry of Trade for their distribution to the targeted bakeries. However, implementation challenges by different actors were identified where some traders sold wheat grain to traders and similarly some bakeries sold the flour wheat to consumers instead of selling bread. The Ministry of trade and EGTE disregard those traders engaged in such activities for next round distribution. The EGTE has procured 300,000mt of grain wheat from the international markets for distribution to millers and the first round wheat will be in country in mid of September. Of total procured volume, 100,000mt will be repayment to the EFSRA (Emergency Food Security Reserve Agency) for the loan taken and the remaining for markets stabilization. Given the high demand and three to four month ahead of the main harvesting season the imported volume may not be sufficient to cover the gap. In the new Ethiopian budget year (July - June 2012) EGTE has planned to undertake local procurement amounted 90,000mt of maize and 23,000mt of wheat. The volume of procurement is subject to change depending on the supply situation of cereal in the markets. The procurement of cereal from the local market during the peak harvest season will protect farmers from selling their product at low price. Furthermore, if the enterprise sells back during the lean season it will have implication on the supply of cereal in lean season. Inflation and Consumer Price Index The country level general inflation and food inflation rate has increased by 40.6% and 49.9% respectively in 2010 as compared to the same month a year ago. Similarly, the cereal Page 1 of 5

2 index of the month has increased by 52.3% against which contributed to the rise in the indices of food and general consumer price index. The food inflation is continuously increasing since 2010 where it was at -1.1, exception to this was February The components of food indices have shown increases particularly wheat, maize, barley, sorghum, pulses, meat butter, coffee and tealeaves, pepper whole, potatoes, tubers and stems. The increases in the staple food cereals, potatoes, tubers and stem are of concern in the coming months till the new harvest appear on markets. Major Cereal Import Parity and Local Prices In, the import parity price of maize (Durban) at Addis Ababa stood at US$ 600/mt, at US$ 489/mt for wheat (Europe) and at US$ 438/mt for sorghum (Argentina). Compared to July, maize, wheat and sorghum import parity prices remained the same at the elevated level. Compared to the local price at Addis Ababa, the import parity stood 43% higher for maize whilst stood at the same level for wheat and sorghum. The continued increases in local prices lead to convergence to import parity prices of wheat and sorghum. This situation in local market may continue for the next two to three months and the local price may stand above the import parity particularly for wheat. Cereal Wholesale Prices in Large Urban Markets In, peak of the lean season for meher main season dependent, the prices of staple cereal have increased compared to long term average, last year the same month and July. The national average wholesale price increased by; 18% for maize and sorghum and 6% for wheat compared to a month ago. In all monitored markets the prices of these commodities have increased. Compared to the same month of 2008, the prices of maize and sorghum in stood below but wheat price stood above the 2008 level. Compared to 5 years long term average, the prices in stood higher by; 81% for wheat, 78% for maize and 31% for sorghum. The national wholesale average price of cereal stood at Birr 7.87/kg for wheat, 5.90/kg for sorghum and Birr 5.79/kg for maize (see Figure 1, Figure 2 and Table 1). As indicated in previous reports, most of the district Figure 1: National average wheat price (Birr/kg) Figure 2: National average maize price (Birr/kg) Source: Ethiopian Grain Trade Enterprise Source: Ethiopian Grain Trade Enterprise markets are supplied from major urban markets and the increased prices at the wholesale level have direct implication for the increase in price at retail level. The food security situation of markets dependent households is badly affected and most likely the price increases may continue for the next three months to come. The Government has bought 300,000mt of Page 2 of 5

3 wheat as markets stabilization programme and the first batch of food is expected to arrive in country by mid of September. The import of wheat is for sale to the millers and due to various factors in the implementation the contribution in stabilizing the markets price particularly at lower level may not be as expected. Cereal Retail Prices in District Markets Almost all monitored markets at district level showed increased prices of staple cereal mainly maize, wheat and sorghum. Out of 22 markets monitored for maize price, increased price more than 20% observed in 9 markets and 7 markets behaved increases of 3% to 10% compared to July. The highest maize price in the month stood at Birr 11/kg at Gode followed by Birr 7.80/kg at Meskan and Birr 7.50/kg at Yabelo market (see Figure 3 and Table 1). Except at monitored markets in Amhara and Tigray, the price of maize stood above Birr 6.00/kg in the remaining monitored markets. Similarly, out of 22 monitored markets for wheat in 12 of them wheat price stood above Birr 8.30/kg (see Figure 4 and Table1). Compared to July, the highest wheat price increases was observed at Debark (21%) followed by Hawzen (18%). In most district markets the price of wheat stood above Birr 8.00/kg. However, in areas where distribution of emergency food is on - going relative stability of cereal prices were observed though big decline was not seen. Given three months ahead of the main harvesting season, the increased prices of cereal in most markets will have a negative consequence on the food security situation of the poor and very poor people living both in rural and urban areas. Figure 3: Trends of maize price (Birr/kg) Figure 4: The trends of maize prices (Birr/kg) Supply to Markets As the lean season reached its peak period, supplies of cereals to the markets are declining and hence kept the prices to increase. Similar to previous months, supply of cereals particularly maize is moving from the major urban centers to the district markets. On the other hand the first round wheat procured from the international markets by EGTE will be delivered in mid of September. However, it will have marginal impact on the price as the distribution of wheat is to the targeted millers. The current cereal supplies may not be improved for the next two to three months, however green harvest of maize and other cereal in meher dependent areas will reach for consumption in the month to come. Page 3 of 5

4 Terms of Trade (TOT) TOT for shoat to cereal: The average price of shoat at Jijiga and Dire Dawa has increased respectively by 19% and 4% whilst remained the same at Gode markets compared to July. The increased price of shoat at Jijiga market was higher than cereal price change and the terms of trade showed improvement. At Dire Dawa market change in price of cereal was greater versus shoat and deterioration in terms of trade was observed in. However, at Gode market both shoat and cereal price remained the same to July and the terms of trade remained unchanged. The increase in price of shoat at Jijiga and Dire Dawa was factored to the festivity of Ramadan Holyday. The terms of trade between shoat and maize have deteriorated by 11% at Dire Ddwa, remained the same at Gode and Increased at Jijiga by 19% compared to July. The terms of trade stood at 136 kg/shoat at Jijiga, at 100 kg/shoat at Dire Dawa and at 43kg/shoat at Gode market (see Figure 5 and Table 1). TOT for wage labour to cereal: The average daily nominal wage rate (skilled and unskilled casual daily labour) in monitored markets remained the same in Somali, Tigray and Amhara. The daily average wage in monitored markets stood at Birr 43 in Amhara, Birr 50 in Somali and Birr 52 in Tigray. It should be noted that obtaining daily job in the lean season is challenging particularly for unskilled as more people are looking for daily wage. The unskilled labour wage stood as far as half of the indicated rate. The increases in cereal prices impacted the terms of trade to deteriorate in these regions. The terms of trade between wage rate and maize (cheapest cereal) in stood: at 10.4kg/day in Tigray, at 8kg/day in Amhara and at 5.6kg/day in Somali (see Figure 6 and Table 1). Compared to July, wage to maize terms of trade have decreased by 27% in Tigray, 13% in Amhara but remained the same in Somali. Wage to wheat terms of trade deteriorated in Somali and Amhara by 7% and 6% respectively. Figure 5: Trends of TOT (100kgs of maize/shoat) Figure 6: Trends of TOT (kg of maize/daily wage) Page 4 of 5

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