Food prices on the rise, pushing millions into deeper poverty

Already grappling with political instability, foreign exchange shortages, Ethiopia now has to worry about the rising price of food - price of sugar


Already grappling with political instability, foreign exchange shortages, Ethiopia now has to worry about the rising price of food

“Any sugar?” says the young woman, leaning into a shop in the town of Merawi, 34kms away from Bahir Dar. The shopkeeper shook his head. “Come and check next week.”

Behind him, the shelves are filled with products such as eggs, sweats, tea, hair products, milk powder, candles, matches, cigarettes, bottled water, spaghetti, onion, but the shopkeeper, Zelalem Alebachew says sugar and cooking oil have been in short supply for a quite a while. He has some oil type like Niger seed oil but that is too expensive for many of his clients who came looking for vegetable oil, he added. Sugar and oil, two products that are provided to him by the state-organized union, disappear for days or weeks, he says. When it is available, the price of sugar is 22 birr per kg and he distributes to those registered and who have ID cards indicating they live in the area. But most residents of the town look for the underground market where they pay between 40 and 50 birr per kilo, he explained.

Merawi is not another town in another pervasive story of scarcity in Ethiopia. Located on the main highway between Addis Ababa and Bahir Dar and in the midst of rich farming territory, the town is reputed for exporting fuelwood, the alcoholic drink Areke, cattle, and milk to different parts of the country and even Sudan. However, these days it is going through a difficult economic situation, as it is the case for many urban centers and rural areas across the nation, attributed to low production and poor performance in sectors including sugar, large import bills of food, medicine, and fuel, accompanied by the security issues and massive displacement in different parts of the country.

Looking at recent trends in commodity prices, the prices of foods have been increasing in most parts of the country. The Central Statistical Agency (CSA) announced that headline inflation has reached a record high rate of 17.9pc in August. Shortages of certain key food items and retail price hikes have become a serious daily problem for millions of Ethiopians. “It has unfortunately become features of everyday life. Consumers are becoming incensed each passing day,” says a businessman in Bahir Dar.

Affordable food is a volatile issue in Ethiopia, where millions live in a precarious condition and economic discontent has triggered widespread anger and massive protests for about four years short before Abiy Ahmed became Prime Minister. The dangers are not lost on the Prime Minister who has promised to respond to stabilise increasing prices and to protect Ethiopians from the worst effects of double-digit inflation, which has been testing the country for the past decade. Momentarily, the government is working on securing supply of wheat and edible oil, which are in dire shortages, Abiy said in a recent press conference. The Prime Minister also said agriculture would experience a boost this year due to a good rainy season.

But for the time being, the cost of goods and services continue to rise, pushing more families deeper into poverty. Drastic increases in prices and low incomes have turned even onion into a priced item, its price going up to 30 birr a kg, which has provoked much grumbling. A joke that circulated on social media has it that these days onions cause tears when consumers pay to purchase them. Equally, the price of garlic surged by more than 50 percent in the past month, selling 150 birr a kilogram. Prices for lentils have also doubled, 80 birr a kg in the past few months. Teff, a prized cereal, rose to 3000 Br from 1500 Br. Chicken, beef and lamb prices have been creeping up, too.

The country has recorded an average annual average GDP growth of ten percent for the past decade. But state and private companies have been hit hard by the hard currency shortages. The shortage has also made it difficult for Ethiopia’s importers to buy medical drugs from abroad. A pharmacist in a drugstore of Debre Markos town says that there is a serious lack of basic medicines such as nasal puff, PTU tablet to treat an overactive thyroid gland, Ventolin to treat breathing problems. Occasional shortages have been the norm for the past decade, but this has been one of the worst in recent memory, the pharmacist told Ethiopia Observer. Consumers reportedly had to resort to the black market to secure much- needed medicines.

Dr. Beyene Tadesse, an economist and author of the book, The Impact of Policy Reform And Institutional Transformation on Agricultural Performance explains that there could be many reasons that can drive prices but the main one is communal violence and displacement in the country has disrupted farming activities and eliminated coping resources like livestock. He says the indications are further upward pressure on prices is expected over the next year. Even locally produced grains such as Teff have shown increase due to the surge in the cost of imported raw materials such as fertilizers, he says. The share of the population working in agriculture is also declining, more and more young people leaving the subsistence farming for other occupations in urban centers, which should be a concern for the country, the economist says. Dealing with the food shortages requires greater economic activity, finding ways to increase incomes, Beyene says. However importantly, the government has to improve security to reassure large farming enterprises that stopped production into resuming activities, he says.

The state-owned Amharic daily Addis Zemen has recently published an article saying that food supplies are plentiful but problems arose because some traders and merchants are hoarding food items in order to sell them later when market fluctuations would allow for a profit. The paper also points fingers on some unions that are given the responsibility by the government to distribute items for citizens for failing their mission. On September 9, Addis Zemen wrote that certain of the unions are engaged in fraudulent practices, such as selling the wheat flour procured by imports and provided by the state in another package at a different market instead of distributing to the people who were supposed to.

Strict control of such fraudulent activities might be necessary, but analysts say the government should not be complacent of considering clamping down on traders and merchants as the only solution, but rather it should work on increased domestic private sector, revising policy on imported goods, as well as promoting higher exports.

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