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Marketing
In Ethiopia, nearly 66 per cent of cereal produced is used for household consumption, while 17 per cent and 12 per cent is for sale and seed, respectively. The remaining 5 per cent of cereals produced is used for other purposes like wages, animal feed, etc. As far as marketing is concerned, teff is the highest marketed crop in Ethiopia. About 30 per cent of teff production is supplied for the markets (see Figure 4.1 below).
Maize production is mainly used for home consumption. Based on the Central Statistical Agency’s crop utilisation report (CSA, 2015), 74 per cent of maize production is consumed at household level. Available data shows that the maize commercialisation rate is low, with only 13 per cent being supplied to the market. The majority of maize production is marketed during the peak season when prices are low. Rashid et al. (2010) have indicated that about 60 per cent of maize is marketed during the first three months after harvesting. Farmers are forced to sell maize immediately after harvest owing to fear of storage losses and to settle outstanding loans for agricultural inputs.
Similar to other staple food crops in Ethiopia, maize is marketed through negotiation and mutual agreement between traders and farmers. Buyers and sellers meet personally, negotiate prices, inspect the grain on the spot, and complete the transaction (Demeke, 2012). Since there is no organised market information and exchange system, farmers rely on their negotiation skills and information from relatives.
Figure 4.2 below shows the maize crop marketing channel, from production to consumption stages. The maize value chain in Ethiopia consists of multiple actors and channels. A range of actors, that include smallholder farmers, wholesalers, retailers, cooperatives, traders, brokers, processors, Non-Governmental Organisations (NGOs), the parastatal organisation, and private consumers, take part in maize value chain. Typically, smallholder farmers sell surplus maize production to local small-scale traders. Local traders assemble the product and sell it to regional traders. Regional traders either supply the product to cooperatives or transport and sell the product in Addis Ababa to wholesalers and processors via brokers. In most cases, regional wholesalers do not have the financial strength to store maize for long periods and for supply during lean seasons. They own or rent grain storage, but usually do not store for more than one month. They also have limited scale in product reallocations – transactions are on the basis of one truckload (about 5 tons) and trade is conducted on 4 market days a month (Rashid et al., 2010, cited in Woldegiorgis, 2011).
Cooperatives collect maize from their member farmers and supply it to the local food procurement programme of World Food Program (WFP) or sell it to the EGTE. The EGTE is the only parastatal organisation involving in grain purchases for the food security reserve and emergency distribution. Although the EGTE was initially mandated to generate foreign exchange through the export of pulses and oilseeds, it is also involved in the maize market for price stabilisation purpose.
Wholesalers are the dominant role players in the maize marketing channel. In fact, Rashid et al. (2010) reveal that wholesalers command about 70 per cent of the marketed volume of maize. Regional wholesalers supply to Addis Ababa or wholesalers in deficit areas through brokers. Wholesalers in the central market mainly supply to processors and retailers. Few commercial farms are involved in maize production and marketing. They are mechanised and operate at a large scale, with > 50 ha of land. They mainly sell to wholesalers, the EGTE, the Purchase For Progress (P4P) programme, and cooperatives. Despite the long marketing channels and relatively large number of actors involved, value addition in maize is minimal. The only significant value addition is in storage and transportation.
CHAPTER 1:
1.1 INTRODUCTION .
1.2 EVOLUTION OF CEREAL PRODUCTION IN ETHIOPIA
1.2.1 Trends in cereal acreage
1.2.2 Production and yield trends of major cereals .
1.2.3 Wheat and maize price discovery
1.3 RESEARCH PROBLEM
1.4 RESEARCH OBJECTIVES
1.5 HYPOTHESIS
1.6 LIMITATIONS OF THE STUDY.
1.7 ORGANISATION OF THE THESIS .
CHAPTER 2: UNDERSTANDING MARKET-RELATED CAUSES OF HIGH GRAIN PRICES
2.1 INTRODUCTION
2.2 MARKET-RELATED CAUSES OF HIGH FOOD PRICES .
2.3 METHODS OF MARKET INTEGRATION
2.4 CHAPTER SUMMARY
CHAPTER 3: A REVIEW OF THE ETHIOPIAN AGRICULTURAL SECTOR
3.1 INTRODUCTION
3.2 INPUT SECTOR POLICIES
3.2.1 Fertiliser market.
3.2.2 Seed systems
3.2.3 Agricultural extension service
3.2.4 Access to agricultural credit
3.3 AGRICULTURAL OUTPUT MARKET
3.4 STATUS OF MARKET FUNDAMENTALS .
3.4.1 Road network development
3.4.2 Trucks and transport service
3.4.3 Telecommunication service
3.5 CHAPTER SUMMARY
CHAPTER 4: SPATIAL MARKET INTEGRATION AND ASYMMETRY IN THE ETHIOPIAN MAIZE MARKET
4.1 INTRODUCTION .
4.2 MAIZE MARKET STRUCTURE IN ETHIOPIA
4.2.1 Production
4.2.2 Marketing
4.2.3 Milling industry
4.2.4 Consumption
4.3 ASYMMETRIC PRICE TRANSMISSION: THEORETICAL AND EMPIRICAL CONSIDERATIONS
4.4 DATA
4.5 ECONOMETRIC FRAMEWORKS
4.5.1 Testing time series properties
4.5.1.1 Unit root tests
4.5.2 Bai and Perron structural break test
4.5.3 A Stock-Watson Dynamic Ordinary Least Square Approach (DOL
4.5.4 Asymmetric Error Correction Model (AECM)
4.6 RESULTS AND DISCUSSIONS
4.7 CHAPTER SUMMARY
CHAPTER 5: THE INFLUENCE OF POLICY INTERVENTION ON PRICE DISCOVERY IN THE ETHIOPIAN MAIZE AND WHEAT MARKETS
5.1 INTRODUCTION
5.2 THE RATIONALE FOR GOVERNMENT INTERVENTION: EVIDENCE FROM AFRICAN COMMODITY MARKETS
5.3 POLICY RESPONSES TO HIGH FOOD PRICES IN ETHIOPIA
5.4 PARITY PRICE ANALYSIS
5.5 EMPIRICAL FRAMEWORK
5.6 RESULTS AND DISCUSSIONS .
5.7 CHAPTER SUMMARY
CHAPTER 6: MODELLING PRICE FORMATION IN THE ETHIOPIAN WHITE MAIZE MARKET
CHAPTER 7: SUMMARY, CONCLUSIONS, AND POLICY IMPLICATIONS
