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Grain supply shortage ignites high food costs

Scarcity of basic grain including that of wheat and teff in the market pushes food costs beyond the reach of many.
Capital’s assessment from the market showed that essential products such as Teff, Wheat, Barley and Sorghum showed price increment from the last two weeks, with earlier this week food table must haves like Bread, Injera and flour going at higher costs.
In most bakeries in Addis Ababa bread prices have likely increased between 1 to 2 birr. As a result 100 grams of bread which was sold for 6 birr would be sold for 7 birr while 200 grams of bread has risen from 12 birr to 13 birr. Price increase on flour is cited as the main reason for bakeries price increment while millers stated lower supply of wheat from farmers as a challenge in the chain. Similarly at the source of the supply chain, farmers on there end complained that this was as a result of price increase of fertilizer from 1500 birr to 4,500 birr from the prior season.
The government recently issued a new directive that compels farmers in wheat-growing localities to supply their wheat production to cooperative unions at a low price. Accordingly, the farming communities are expected to hand over to Unions a quintal of wheat for 3, 200 birr.
“It is unfair to oblige us to sell a quintal of wheat for birr 3, 200 in a situation where the price of a quintal of fertilizer is sky-rocketed to birr 4, 500,” lamented one farmer indicating that in the last harvesting season they had been selling a quintal of wheat for 4,000 birr.
Last year, the price of fertilizer more than doubled in the international market, a situation that led to the bulge of Ethiopia’s annual budget for the commodity from USD 600 million to USD 1.2 billion.
Farmers who decline to obey the directive seem to hide yields and have been forced to engage themselves in smuggling jobs. Following this, a new directive has come out to punish those farmers who hide their wheat production. Those who will be arrested stand a high chance of having their wheat looted.
Recently, about 190 tracks loaded with wheat have been stopped in different tolls in Oromia region.
Capital’s effort to get information from the Ministry of Trade and Regional Integration (MoTRI) has not been successful. Teshale Belihu, State Minister of MoTRI has however expressed that the ministry will give a press statement next week.
Ethiopian Millers Association also has been expressing its concerns over shortage of wheat supply to their factories. The association, which has more than 220 member factories, usually buys wheat from different parts of the country based on the season and the type of wheat including from Bale, Awash, Arisi, and Gojam.
According to Muluneh Lema, president of the association, based on the season, factories had been expecting wheat supply from Bale, Oromia Region’s largest wheat producer, however, the wheat market has been rattled by interruptions for more than two and half months now.
As the association indicated, previously one quintal of wheat used to be sold for 4,700 birr which now has jumped to 5,700 birr.
“We have also confirmed through field observations that Ethiopia has increased its wheat production,” said Muluneh, emphasizing that production in itself was not the thorn in the scenario but the way how the market process is run. However, due to the interruption of the wheat market, the president alluded that factories are also buying smuggled wheat at high prices.
As Muluneh explained the trade bureau is now working to stabilize the situation, “I hope things will get better in the coming few weeks.”
Few weeks ago, Prime Minister Abiy Ahmed attended the national wheat export launch program in Bale Zone, Oromia Region as part of the government’s plan to halt import of wheat and embark on the export of its own wheat production.
According to the Ministry of Agriculture from this year’s autumn harvest season, 112 million quintals and 52 million quintal of wheat production from irrigation and summer season is expected to be reaped.
Therefore, the forecasted production rate indicates that there will be excess production in terms of domestic demand which is estimated at 97 million quintals with an additional 32 million quintals of wheat being projected for export.
Ever since the problem occurred, the association has been informing the Ministry of Trade and Regional Relations and the Ministry of Finance by letter, and they believe that the efforts they are making by going to the front will yield results.
Additionally in the past couple of weeks price of teff per quintal has shown between 1500-2000 birr. As many of traders indicated instablity, increased price of fertilizer and transportation has played huge role for the price hike.

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