Policies for improved land management and agricultural market development in the Ethiopian highlands

“The objectives of this workshop are to review and discuss the main findings and policy implications of recent research conducted on these topics by IFPRI, Wageningen University and Research Center (WUR), the International Livestock Research Institute (ILRI), Mekelle University (MU), the Ethiopian Agricultural Research Organization (EARO) and other Ethiopian collaborators; to discuss options for improving the development of agricultural markets and land management in Ethiopia, considering different stakeholders’ perspectives; and to develop recommendations for priority policy actions and further research based upon lessons learned from the research and remaining knowledge gaps. IFPRI has worked for more than a decade in Ethiopia studying the root causes of the interrelated problems of famine, rural poverty, low agricultural productivity and natural resource degradation, and helping to identify strategies and policies to overcome these problems. The need for effective and efficient markets for agricultural commodities and productive inputs, as well as effective measures to combat land degradation are clearly recognized by the government of Ethiopia in its current rural development strategy and poverty reduction strategy. Ethiopia has made great strides in recent years in increasing farmers’ access to productive technologies. Yet as we are all increasingly aware, these advances are necessary but not sufficient to achieve the goal of agriculturally led industrialization. Market development and sustainable natural resource management are essential building blocks of a successful rural development strategy, requiring policy makers and other stakeholders to identify and invest in an appropriate mix of institutions, infrastructure, information, and innovation systems. This workshop is intended to help contribute to these important efforts by taking stock of what is known and what we have learned from several years of recent research on sustainable land management and agricultural market development

A global perspective of food market integration: A Review

Markets are important determinants of food availability and accessibility. The extent to which they make food available, accessible and keep prices stable depends on whether or not they are integrated. If markets are well integrated, it is assumed that market forces are working properly. Considering the importance of market integration in the food sector, a lot of research has been done to test integration of food markets. This paper analyses the state of the art research on food market integration, classifies it and poses questions that future research in this field can focus on. A total of 65 published articles on food market integration from all over the world were reviewed. All the reviewed papers were published between 1990 and 2014 in high quality journals. The search for literature was based on the keyword descriptor “food or commodity market integration/price transmission/price volatility” for selected databases and websites for a period ranging from 1990 to 2014. We selected the databases for keywords in titles, abstracts, keywords list and full text. The search produced thousands of papers. We then reviewed the full text of the papers, subject to relevance, in order to select the ones related to this study. Based on relevance and consideration of the time period for this study, we finally obtained 65 articles. We then classified the articles based on year of publication, country and source of study, data sampled, methodology adopted and findings and conclusions of the articles. Findings show that the majority of research has concentrated relatively more on identifying the degree of linkages among the markets but not on its implications. The paper also identified the following factors as very important in increasing/decreasing the degree of market integration: physical infrastructure, market institutions, information, competition, market power, trade, social capital, public/government intervention and export restrictions/ban. Based on these findings the paper recommends future research on food market integration to address these questions. How does the quality of physical infrastructure/roads affect the speed of adjustment of markets in case of a shock? How has popularity of mobile phone use among the farming communities affected the degree of food market integration? How does trust and networking among farmers and traders influence price transmission and market integration? What is the effect of export restrictions on price volatility and price transmission in food markets

Market institutions and transaction costs influencing trader performance in live animal marketing in rural Ethiopian markets

In this paper, the hypothesis that performance of trading firms depends on their assets (physical, financial, human capital and social capital) and trading practices is tested with data from a sample of 131 live animal traders in 38 rural Ethiopian highland markets. Most traders used own capital as access to credit, especially formal credit, was limited. The livestock market was characterised by non-standardised products and lack of information in the public domain about supply, demand and prices. Consequently, livestock trading was largely a personalised business though brokers and regular buyers and sellers, a form of social capital, were sometimes used for gathering information, searching buyers/sellers, price negotiation and contract enforcement. Business relationships with these intermediaries were principally based on trust, without strong ethnic, religious or family ties. Although most transactions were conducted in the physical presence of parties, contract violations were common, which were settled mainly through informal means as formal legal systems were either absent or time-consuming. Estimated costs and margins of most recent transactions showed low returns, and losses in some cases. Market levies, transport, travel and feeds were major items of variable cost, with some variation between cattle and small ruminants. Multiple regression analysis showed that traders' financial and human capital and trading practices such as use of brokers and regular suppliers and customers had varying effects on margins and costs of cattle and small ruminant trade. Unstable price, multiple taxes, non-transparent tax system, limited access to credit and weak demand for the quality of the products traded were perceived by traders as major problems of marketing. All the problems were amenable to public policy to improve the market environment and marketing efficiency

Food Aid, Food Prices, and Producer Disincentives in Ethiopia

Although the short-term aims of food aid are well conceived, strong concerns have been voiced regarding the long-term impacts of such aid on incentives for agricultural producers in recipient countries. This article examines the statistical link between food aid shipments and food prices in Ethiopia over the period 1996-2006. Monthly data from three markets and three commodities are used to estimate a system of seemingly unrelated regression models for food prices. Results indicate that previous year food aid shipments reduce prices in all producer and consumer markets. These effects, however, appear to be limited to the set of internationally traded commodities that are domestically marketed. A recursive regression procedure is used to identify the food aid threshold at which a negative aid effect emerges. Food aid shipments that constitute less than 10% of domestic production appear to be benign, but shipments above this level show signs of being disruptive to local markets. We use a simple policy simulation to argue that production-sensitive targeting, e.g., conditioning food aid on local food production, would help to circumvent disincentive effects. Copyright 2009, Oxford University Press.