Oromia Region removes price caps that oblige farmers to sell a quintal of wheat for 3, 200 birr only for unions. Smuggling of agricultural products, notably wheat and Teff to neighboring countries has created shortage in the market, state officials from the Ministry of Trade with the same sentiments being echoed by regional trade bureaus.
The government recently issued a new directive that obliged farmers to hand over to Unions a quintal of wheat at 3, 200 birr with the aim to accelerate the export and local supply with the Unions selling to factories at 3,381 birr to flow supply. However, the directive has not had a smooth sailing.
Farmers who decline to obey the directive seem to hide yields and have been forced to engage in smuggling.
According to Tesfaye Gesho, Deputy Head of Oromia Trade Bureau, after assessing the situation, the region has now removed the price and local check points so that anyone who is legal can move and accelerate the trade in tandem with unions for the supply to the market.
Scarcity of basic grain including that of wheat and teff in the market has in recent weeks pushed food costs beyond the reach of many.
On a press conference held on Thursday March 16, 2023, after discussing with regional trade bureaus on the matter, the trade ministry indicated that the situation was linked partly, to economic sabotage; “Illegal traders and brokers are worsening the situation,” stated the ministry.
Blockage of checkpoints leading to the capital Addis Ababa and the existence of merchants who are attempting to manipulate prices artificially by withholding cereals (including teff) instead of making them available to buyers were also cited as a contributing factor to the shortage.
“Free movement is also a challenge that traders are facing,” stated Ibrahim Mohamed, Head of Amhara Regional Trade Bureau, showing additional challenges in conjunction to trade sabotage despite there being enough production.
Also as indicated, there are illegal traders and exporters who smuggle the cultivated wheat every year across borders. A huge amount of agricultural commodities have been smuggled through Moyale to Kenya and others which is now becoming difficult to control with the need of attention required.
Both the regional trade bureaus and the ministry indicated that there is enough production, underlining, “Things will get better soon” and as indicated on the press briefing, both the federal and regional governments are working to create a direct market linkage between farmers and consumers with regional states set to provide finance to cooperatives as a revolving fund.
A month ago, a quintal of Teff was anywhere between 5500-6000 birr. Now it is selling for 9500 birr at a price difference of 2500 to 3500 birr. As many traders indicate, instability, increased price of fertilizer and transportation has played a huge role in the price hike.
In similar headlines, the Central Statistics Service announced that the price increase recorded on crops has continued for consecutive months with most of the grains increase peaking in February.
On its monthly inflation report, the service indicated that in the stated months, although the country’s overall inflation had decreased slightly compared to the same month of last year, most of the cereals such as teff, wheat, barley and sorghum, meat, milk, cheese and eggs showed a slight increase.
The February 2023 General inflation currently stands at 32.0 percent while the country level food inflation soared to 36.2 percent with Non-food inflation rates standing at 31.5 percent.