1 Food Security Role of Agriculture in Ethiopian Paper Presented to the ROA Conference Oct , 2003 Rome Berhanu Adenew Ethiopian Economic Policy Research Institute

2 Outline Introduction Objectives Methods Results Conclusions

3Introduction Food security Role of a normally functioning agricultural: serves as a source of food both at a national level and international trade. helps attain food security: through domestic production and/or by supplying foreign exchange required to import food. sufficient food production enables urban dwellers to access food at a reduced cost and ensure their food security;

4Objectives To identify the positive roles of Ethiopian agriculture in ensuring the national food security; To measure and value the welfare implications of the food security role that agriculture plays at the macro and micro level. By way of assessing the determinants of the positive role of food security, to draw implications of these roles for the agricultural development policy and strategy.

5Methodology 1. The concept of food security Approach to measurement of national level food security role of agric. 2. Approach to measurement of national level food security role of agric.  National food security : - overall food availability for a country:  NFAV = domestic food production+ food import + food aid  The positive role of agriculture: - contribution to the domestic food production - and reducing dependence on food imports.

6 …. methodology 3) a taxonomy of the country situations: - per capita income, - the food trade position of a country: net food importer or a net agricultural importer or a net agricultural exporter, 4) FIVIMS : food in security and vulnerability information and mapping systems; e.g. per capita food and nutritional availability, income distribution (Gini coefficient,..), etc

7 … methodology 5) M easure of the risk of national food consumption shortfall : - an index of food insecurity, the probability for national consumption to fall below a certain threshold is computed using a procedure of Sadoulet and De Janvry (1995); where C t is the estimated trend consumption, and  is a certain threshold. This probability is estimated using historical data.

8 … methodology 6) To investigate the source of variability of total domestic food availability: regression equation is estimated using time series data 7) The welfare gain from reduced dependence on food import is estimated using the procedure by Valdes (2002); 8) Measurement of household level food security role whether income elasticity are different according to source of income: Agricultural and non-agricultural income elasticity of food expenditure and intake;

9 … methodology Data used:  FAOSTAT, NBE, CSA,….  Two data sets, urban and rural, collected by the Faculty of Business and Economics at the Addis Ababa University in 1999/2000 : 1472 urban households sampled from 7 major cities in the country 1681 rural households sampled from 18 Woredas found in the four major regions in the country.

10 Results Food security indicators Domestic food production Commercial food import Food aid Food consumption shortfall Sources of variability of food availability Welfare gain from reduced food import Income elasticity of food consumption Effects of policy on agric. and food production Hindrances to food security improvement

11 Figure: Domestic grain food production

12 Trend of per capita cereal and pulses production

13 Food security indicators for Ethiopia

14

15 Fig. Volume of food imported

16 Table: Probability of a shortfall in consumption below 95% of trend (for all food products)

17

18 Table: Welfare gain from subsidy and reduced food import

19 Table : Estimated welfare gain

20 Table: Expenditure and food consumption of rural and urban households

21 Table: Estimates of income elasticity by income source and income groups

22 ) Table: Estimates of income elasticity …. (continued)

23 Determinants of income in rural areas: Level of education of farmers (+) Access to land, oxen (+) Household labor capacity and input (+), Use of fertilizer (+) Distance to farm input supply center (-) Land quality/fertility (+) Rainfall availability, sufficiency and distribution (+)

24 Determinants of food consumption in rural areas Households income (+). Access to cash loan (+). Large family size (-) Consumer price index (-) Share of purchased food (-)

25 Determinants of food consumption in urban areas Household income (+). Age of household (+ mostly) Employment in own business (- for all sample) Renting a house (-) Food price index (-) Experiencing food shortage (-) Value of physical assets owned (+) Level of education of a father (+) Large family size (-)

26 Marco and Sectoral Policies: review Budgetary support: – Weak budgetary support for agriculture (11% of capital and 6% of total recurrent expenditure.) Economic liberalization Link b/n macro-economic stability and agric. development is found weak (Alemyayehu, 2002) Some increase in food production (area expansion) A rise in food aid

27 Policies and strategies…. ADLI considers agric. as vehicle for industrialization by providing raw materials, a market base, surplus labor and capital accumulation; extensive utilization of abundant rural labor force engaged in smallholder farming. agric. extension system for smallholders to enhance their productivity

28 Policies and strategies… Food security strategy: developed in 1996 and revised in relies on three aspects (FDRE, 2002): increasing food availability through domestic production, ensuring access to food in food deficit areas, and strengthening emergency response capabilities the strategy states: particular attention to the diversity of food production zones in Ethiopia, and tailor options and strategies depending on the situations. Expansion of investments and activities in health, education and road facilities to rural areas.

29 … Policies and strategies Major impediments to improved food security: Institutions (e.g. land policy, insecurity) – Hindered migration, aggravated population pressure and effects, productivity Input and output market system Too much dependence on nature – Rain-fed agriculture – Land/soil degradation Lack of empowerment: – farmers’ participation in technology transfer and designing development agendas – Top-down approaches Weak linkages between rural and urban economic sectors

30Conclusions  There is a huge food availability gap in Ethiopia. As result:  Heavy dependence on food aid  Food import (40% to 60% of import capacity) Risk of facing shortage (due to prices, forex constraint,..)  High risk of national food consumption shortfall  Subsidy for domestic food production can result in welfare gain  due to increased production and reduced food import  other effects including purchase and use of productive inputs

31 …conclusion – Income elasticity of consumption is found positive and highly significant in rural and urban; different by income sources and income categories. higher for urban lowest income groups than rural ones but higher for rural richer income groups than urban; – For rural and urban households in similar per capita income category elasticities are slightly higher in rural: implying food security may be enhanced by an improvement in productivity and income of farm households.

32 THANK YOU!