Essays on Welfare, Demand and Resilience to Food Insecurity in Rural Ethiopia

I prezzi dei generi alimentari sono cresciuti in modo considerevole in Etiopia a partire dal 2004. Questa tesi esamina a fondo gli effetti distributivi degli alti prezzi dei generi alimentari nelle zone rurali dell’Etiopia. Utilizzando il Rapporto di Beneficio Netto non parametrico ed il Sistema Quadratico di Domanda Quasi Ideale nonché stimando la Variazione Compensata, dimostra come gli alti prezzi dei generi alimentari possano avere effetti positivi sul benessere sociale delle famiglie rurali a livello aggregato. Tuttavia, i guadagni non sono distribuiti uniformemente tra le famiglie; una significativa percentuale di esse sono compratrici nette di cereali e potrebbero essere sfavorite da un aumento dei prezzi dei cereali qualora non beneficiassero di un aumento del reddito associato ad attività diverse dall’agricoltura. Teoreticamente, le famiglie rurali dovrebbero beneficiare di un aumento del prezzo dei generi alimentari poiché sono sia produttori sia consumatori dei prodotti. Un aumento della produttività agricola, attraverso l’intensificazione e la diversificazione delle produzioni, è un’importante strumento di politica economica che può limitare gli effetti negativi, di breve e di lungo periodo, sugli acquirenti netti rurali di generi alimentari derivanti da un aumento del loro prezzo. La tesi esamina anche la resilienza alla mancanza di cibo, la stagionalità nel consumo del cibo e la partecipazione nel mercato così come il ruolo dei trasferimenti monetari e delle preferenze dei beneficiari degli stessi.Food prices in Ethiopia considerably rose since 2004. This thesis thoroughly examines the distributional impacts of high food prices in rural Ethiopia. Using the non-parametric Net Benefit Ratio analysis as well as Quadratic Almost Ideal Demand System and estimating Compensated Variation, it shows high food prices have positive impact on the welfare of rural households at aggregate levels. The gains, however, are not evenly distributed among households; large proportion of them are net cereal buyers (major staples) and could be adversely affected by rising cereal prices unless compensated by increase in income from off-farm activities. Theoretically, rural households should benefit from rising food prices as they are both consumers and producers of the products. Promoting agricultural productivity, through intensification and diversification, is an important policy tool to overcome short and long-run negative impacts of high food prices on rural net buyers. It also examines resilience to food insecurity, food consumption seasonality and market participation as well as cash transfers and beneficiaries preferences

Building sustainable resilience for food security and livelihood dynamics: The case of rural farming households in Ethiopia

Building sustainable resilience for food security and livelihood dynamics is explored using the Ethiopia Rural Household Survey panel data. Household resilience scores are derived from measures taken to protect against shocks. The impact of several demographic and socio-economic factors on resilience dynamics is then tested. The result shows that the experience of resilience in the past leads to a subsequent higher chance of continuing to be resilient (‘true state-dependence’). It also demonstrates that measures that promote asset creation, diversified enterprises and access to improved technologies are positively and significantly correlated with dynamics of building resilience for food security.JRC.D.5-Food Securit

Global analysis of food and nutrition security situation in food crisis hotspots

This report provides a global overview of food insecurity due to different crises and natural disasters to support programming of the Pro-resilience Actions (PRO-ACT) funding mechanism, a component of the Global Public Goods and Challenges (GPGC) thematic programme of the European Union. The analysis covers the period January 2015-January 2016 that has been marked by food crises in several countries because of extreme weather events due the El Niño phenomenon but also because of conflicts and political crises. In a number of countries, in particular in West Africa, food insecurity remains a major concern because of chronic vulnerability despite good crop production in 2015.JRC.H.4-Monitoring Agricultural Resource

Welfare Impacts of Rising Food Prices in Rural Ethiopia: a Quadratic Almost Ideal Demand System Approach

Ethiopia has experienced high food prices, especially since 2005. This paper examines the welfare impacts of rising food prices in rural Ethiopia using Quadratic Almost Ideal Demand System (QUAIDS) approach controlled for expenditure endogeniety and zero consumption expenditure. The elasticity coefficients from QUAIDS are used to estimate Compensated Variations (CV), which explicitly accounts for profit function and substitution effects. The study uses Ethiopia Rural Household Survey (ERHS) panel data, encompassing both low and high price periods. Prices of all food and agricultural products increased during the entire survey period of 1994 to 2009 but the increases were much higher in recent years, 2004 – 2009, compared to the earlier period of 1994 - 2004. The results have shown that the price hikes in recent years increased welfare gain of rural households by about 10.5% on aggregate, as compared to less than 1% for the reference period (1994 - 2004). The welfare gains further improved to 18% for the high price period and 7.2% for the low price period with substitution effects. It could be argued that the welfare gains at aggregate level is not equally distributed among rural households as 37 to 46% of the sample households were net-cereal buyers (major staple crops) during the survey period. However, the analysis revealed that high food and agricultural prices benefit not only net-cereal sellers but also autarkic and net-cereal buying families. Autarkic households and net-cereal buyers apparently seem to have benefited from high prices of commodities such as pluses, fruits & vegetables, live animals and animal products. They also appear to have gained from increased off-farm income as average income from wage and transfer has indeed increased in 2009. Only very poor families with limited farm and non-farm income need to be supported with safety net programs (both input and consumption support). In the long-run, high agricultural prices would encourage net-sellers to expand production, leading to lower food prices for net-buyers. More importantly, many current net buyers could become net-sellers if grain prices are stable and remunerative for producers

Welfare Impacts of Rising Food Prices in Rural Ethiopia: a Quadratic Almost Ideal Demand System Approach

Ethiopia has experienced high food prices since early 2004. This paper examines the welfare impacts of rising food prices in rural Ethiopia using Quadratic Almost Ideal Demand System (QUAIDS) approach controlled for expenditure endogeniety and zero consumption expenditure. The elasticity coefficients from QUAIDS are used to estimate Compensated Variations (CV), which explicitly accounts for profit function and substitution effects. The study uses Ethiopia Rural Household Survey (ERHS) panel data in four waves encompassing both low and high price periods. The results have shown high food prices in recent years (between 2004 and 2009) increased welfare gain of rural households by about 10.5 percent on aggregate, as compared to less than 1 percent for the reference period (between 1994 and 2004). The welfare gains further improved to 18 percent (high price periods) with substitution effects, compared to 7.2 percent (low price periods). The welfare gains at aggregate level may not be equally distributed among rural households as about 37-46 percent of the sample households were net-cereal buyers (major staple crops) over the survey periods. However, the analysis has revealed high food price benefits not only net-cereal sellers but also autarkic and net-cereal buyers. The autarkic and net-cereal buyers could diversify income sources and benefits from high prices of other commodities such as such as pluses, fruits & vegetables, animal and animal products. They could also diversify to off-farm activities as average income from wage and transfer has indeed increased in 2009. Only poor families with limited farm and non-farm income need to be supported with safety net programs (both input and consumption support). It should be noted that, in the long-run, high prices could encourage net-sellers to invest and increase production which will eventually lead to lower food prices, which in turn benefit net-buyers. Meanwhile, many current net buyers could become net-sellers if grain prices are stable and favourable and if productive inputs are made available and affordable

Can modern input use be promoted without subsidies? An analysis of fertilizer in Ethiopia

Fertilizer use in Ethiopia has nearly quintupled since official elimination of direct input subsidies in the early 1990s. During this time, policies changed from liberalization, with both private and public sector participation, to a government monopoly over imports along with exclusive marketing through farmers’ cooperatives. This article presents estimates of detail costs and margins in the value chain, econometrically derived profitability and yield responses, as well as costs of the government’s fertilizer promotion policies. Results suggest that (a) irrespective of the methods of calculation, fertilizer use in major cereal is profitable; (b) while there is no official subsidy program, fertilizer promotion has involved large fiscal costs—estimated at US$40 million per year since 2008; and (c) there has been a mismatch between government’s policy targets and the effective fertilizer demand, resulting in large carryover stock with estimated implicit costs of US$30 million per year during 2008–2011. Areas of policy attention, value chain improvements, and ongoing efforts to improve for fertilizer use and profitability are discussed.JRC.H.4-Monitoring Agricultural Resource

A quadratic almost ideal demand system approach

Non-PRIFPRI5MTID; ESAR