Thursday, March 30, 2023
Money TalksCrop market in chaos

Crop market in chaos

Government intervention causes more problems than solutions

How the crop market is handled has recently been a puzzle even for insiders like Abera Mengiste, a farmer of several crops himself and head of a cooperative around Bishoftu, Oromia Regional State.

Starting from the government’s interference to the strong arms of private merchants, the market has usually been manipulated, with the consumers being forced to deal with a high cost at the end. “It must be getting difficult for low-income consumers,” Abera commented, imagining what it would be like to be a consumer of such crops.

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The recent story behind the drastic increase in teff prices is never explained, nor is the scarcity and price increase of wheat after Ethiopia began exporting.

Abera, one of the main players who are confused by what has happened in the last few weeks, is getting more worried about merchants’ “unfair” involvement in the teff market. The sole suppliers of teff to Abera’s cooperative, Ude Cooperative, were the farmers in the area. The cooperative then supplies the crops to unions in Addis Ababa or to individual consumers.

What happened to be the root cause for the drastic increase recently is unknown for Abera and his colleagues; he keeps being asked for high amounts of money from the farmers for their products.

“The price of teff is increasing almost daily, and the maximum price being sold to us two weeks ago was 6,000 birr a quintal, growing high since then,” he said. “It is even difficult to buy at this price from the farmers currently.”

Even though they advertised in their office for farmers to come see and sell the teff to Abera’s cooperative at the same price tag, no one showed up with interest to receive such a price.

Merchants are getting the upper hand on cooperatives, approaching the farmers with high amounts of money. “We don’t know how they find them, but they are buying from the farmers at higher prices,” he explained, pointing out that these same merchants were previously dealing with the market in the same way as cooperatives, long before the current price increase became a topic.

Over a year after the new initiation of producing high quantities of wheat was made public, it was announced two weeks ago that the country sent the first batch of wheat exports from Bale Zone in Oromia region.

In the presence of Prime Minister Abiy Ahmed (PhD) and the region’s president, Shimeles Abdisa, the export launching ceremony went viral, as it was considered a milestone for wheat donation-dependent Ethiopia. Where the wheat will be exported, how much will be earned, and other details are still unknown.

It was also said that exporting had started because the annual local demand of 97 million quintals was being met and there would be no shortage.

Melese Mekonen, the state minister of the Ministry of Agriculture, said that they expected to get 117 million quintals of wheat from the rainy season and 52 million quintals from the dry season. These crops were grown with irrigation. The export plan for this year was 32 million quintals of the expected surplus.

However, the news coming out was different. Speaking with The Reporter two weeks ago about the operational constraints they are facing, two days after the Prime Minister’s presence in the wheat export launch, the president of the Ethiopian Millers Association, Muluneh Lema, said his member millers are facing problems sourcing wheat.

This was supposed to be the time when factories producing wheat-based foods like pasta, macaroni, and flour could get bulk wheat at reasonable prices. But, contrary to that, some factories are closing due to the shortage of wheat.

The shortage isn’t just affecting factories in Addis Ababa; factories in other parts of the country are also having trouble. The problems, according to the people in charge of the association, were caused by a ban that meant merchants couldn’t move wheat however they wanted.

Reports say that the market has a lot to do with government-selected unions and the regional government.

The regional government seized about 400 quintals of wheat last week and stored them in the cooperative’s warehouse on their way to Addis Ababa. The government then procured the wheat itself at a price of 33.81 birr per kilogram and took it away.

For the past two months, the government has been controlling the wheat market, and the price set for the procurement of wheat is 33.81 birr per kilo from the farmers. With production reportedly growing, Abera doesn’t get why the government decided to control the market.

“I’m a farmer myself, producing teff, wheat, and soya beans. I can attest to how the wheat production is growing,” he said, asking why the government needs to put its hands on a product that is relatively in higher volume this year. “It might not be overproduced, but it is definitely increasing.”

Compared to the previous year, when the farmers were harvesting about 30 quintals from a hectare, this year’s production grew by 20 quintals per hectare, harvesting over 50 quintals per hectare.

Even though there is no indication that production of teff is decreasing this year, the growth recorded in wheat isn’t achieved in teff as well. “No increase in production of teff, if not a decrease, has been registered this year compared to the previous harvesting seasons,” Abera said.

Another farmers’ amalgamation from the Amhara Regional State, Kesem Farmers’ Cooperative, is on the verge of stopping the teff trade as it is unable to source teff from the farmers. Members of Kesem are seeing merchants buy teff from them at a higher price than usual, similar to Abera’s cooperative, Ude.

Alemayehu Berhane, a cooperative board member and farmer himself, explains the farmers’ intention of selling their teff at a high price in light of rising input and commodity costs.

“The price increase has been in effect for three weeks. We will no longer source teff,” he said.

The main reasons for the price increase, according to Alemayehu, are the increasing number of consumers and the opening of a new market for merchants along the route to Mekelle.

Further to that, Alemayehu strongly condemns the government’s market interference. He wonders what the government was hoping to accomplish by reducing the price of wheat to 32 birr a kilogram when it can fetch as much as 45 birr on the black market.

“The government is causing more problems without providing solutions. How can a farmer be expected to sell a quintal of teff for 4,500 birr when the market has grown much higher? No one wants to lose after spending so much money on fertilizer and other inputs,” he explained.

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