Wheat Is Not Just Food In Ethiopia, It’s National Security

By Soko Directory Team / Published November 1, 2022 | 4:13 pm



Wheat prices

The biggest mechanized farms in land size are found in Arsi and Bale, in Ethiopia’s Oromia Regional State. It was here that the first state-owned farms were established. Of the nearly half a million hectares cultivated in irrigated wheat in the past year, 355,000 hectares are in Oromia Region, through a combination of irrigation and cluster farming.

There, farmers picked up the mechanisation trend long after the government changed. The entrenched culture and influence of mechanisation in the region are why it is now at the forefront of the government’s wheat export plan.

While former mechanization plans failed for reasons like fragmented plots, machinery failure, and lack of maintenance, these problems remain present to this day. But efforts are underway to train farmers by revising technical and vocational schools to include mechanized agriculture as part of their curriculum.

The shift of priority is another explanation for the sudden buzz. While irrigation projects were less concerned with overall productivity in the country and more equitable distribution of projects for regional states, this has now changed with Prime Minister Abiy Ahmed at the helm of this plan.

However, the pieces to the wheat puzzle are multiple, with mechanization playing just one part. This strategy has taken into consideration several factors: the appropriate use of fertilizers, improved seeds, ploughing frequency, and weed control, according to Esayas Lemma, head of crop development Directorate.

The seeds for this undertaking have since been under preparation by federal and regional seed enterprises.

Wheat in Ethiopia, as in all other seeds for cereal, except mazie, is an open-pollinated crop. Simply put, it is not a hybrid seed; it allows farmers to keep using seeds from their own harvest for multiple generations – up to three times.

“The demand for wheat seeds was always known beforehand,” said Esayas. “This time, farmers were ready to produce and sell more seeds because they were informed that the demand would be there.”

The Middle Awash Agriculture Development Enterprise, a privately owned farm that spans over 6,000 hectares in Afar Regional State, was one of many private farms contracted for wheat seed multiplication by the Oromia Seeds Enterprise. Once a giant and thriving operation, the farmlands there have dwindled due to seasonal floods and unsuccessful ventures into sugarcane farming.

The farm, which started a third wheat cropping season last year, provided six varieties of selected wheat seeds to Oromia’s Seed Enterprise, which were then redistributed to farmers. In September, the plan is to quadruple the size of the plot dedicated to wheat seed multiplication to 2,000hectare, Eshetu Habtewold, the Enterprise’s general manager, told The East African.

“We used to grow cotton and then wait for about five months and then back to cotton,” said Habtewold. “Now we are using the land continuously. We were selected because we have a well-established irrigation system and were prepared with the resources.”

Bush clearing has started, in preparation for sowing wheat on 2,000 hectares, bringing it up to 3,800hectares, with the rest on cotton. Once these are harvested, the plan is to sow on 6,000 hectares of land progressively.

The threat of flood appears imminent this year, however. Two years ago, when massive floods overcame Afar, the registered rainfall was less than predicted in this rainy season. Cities like Bahir Dar and Neqemt have registered all-time high numbers of over 100mm of rain in 24 hours. But even repeated rainfall at 30mm could spell instantaneous floods for lowlands like Afar.

The impacts of wheat import substitution for Ethiopia could be astronomical; it spends an average of 1.7 billion dollars annually on cereal imports. About 90 percent of this goes to wheat. Producing wheat domestically saves this amount which will go long in tipping the long-skewed scales of the country’s budget deficit, says Alemayehu Geda, professor of economics and a researcher at Addis Abeba University.

Says Alemayehu: “This is equivalent to increasing the country’s export revenue by 50 percent. It’ll ease the current forex crunch in the country.”

Wheat plays a vital role in food inflation, which is often higher than general inflation. According to the economist, headline inflation is further influenced by food inflation; over half of what accounts for general inflation is comes from food prices.

The fiscal deficit, galvanized by government subsidies, is yet another domino effect.

“For a country with budget deficits for over 20 years, this can have a huge impact”, he said.

Wheat is not just food but has strategic importance. It is a matter of national security – if anything – that disrupts the world market, with Russia’s invasion of Ukraine being a prime example. It would be a risk, even when there is money to buy the wheat.

There are additional costs, like transportation, erecting silos, and building storage. Import also means that the farmers’ livelihood in the country could be impacted.

Adane Tuffa, assistant professor of economics at Addis Ababa University, sees wheat as a commodity that can be used in many ways.

“It can substitute for other grains in hard times,” said Adane. “Other countries subsidize wheat to a great extent because they understand the strategic importance, despite being able to import. The work needed to make the country self-sufficient means that either farming will be intensified or more land will be farmed, creating more work for farmers.”

However, it is hard to see the enormous expansion of land used for wheat production if data from the Ethiopian Statistics Service can help measure changes. For almost a decade, the land used for wheat farming averaged a little over 1.7 million hectares. This changed last year but only grew by 108,000 hectares, according to the data from the federal agency.

The demand for wheat is ever-present globally, with a yield of 7.8 billion quintals. Federal officials believe that Ethiopia’s ambition to produce over 10.7 million tonnes (double the average over a decade) will give it an edge in the export market. Recent discussions among members of the Council of Ministers include lifting the embargo on wheat export.

However, farming wheat for local consumption and preparing export standard are two different things, requiring far more precise work. Several of the essential works, from expanding arable land to transporting fertilizers and seeds and building networks of silos to importing farming machinery, are yet to be visible.

But technological innovations on newly improved seeds for wheat give planners an additional edge as does the ecological boundlessness of the grain, according to experts.

“Wheat can grow in different landscapes,” said Adane. “This is not the case with teff, for instance, which is also difficult to farm with irrigation.”

Next year’s ambitious plans to scale up harvest are double the estimated yield projected by the Food & Agriculture Organization (FAO), whose periodical crop prospect reports Ethiopia as one of 33 countries in Africa which will need external assistance for food this year.

The UN-OCHA warned that the number of people pushed to chronic food insecurity may reach 15 million this year, driven by soaring food prices, political instability and climate shocks.

Ethiopian authorities’ narrative of “agricultural transformation” comes not without grave concerns. Bloomberg recently quoted the US Department of Agriculture calling the plan a “very unrealistic and unachievable target.” This could be a view informed by a study the USAID office in Ethiopia commissioned this year: “Crop Availability and Market Analysis for 2021/22.” Not even in five years Ethiopia can exceed seven million tons, ploughing 2.1 million hectares of land, the study finds.

The Department’s Foreign Agricultural Services bureau forecasts Ethiopia’s production for the coming year at 5.5 million tons, half the volume the authorities look forward to seeing and one million tons short of the projections the study USAID-Ethiopia commissioned. However, Ethiopian authorities have taken a gamble in stopping the imports of wheat, which has been vital in stabilising domestic food prices and subsidising the low and fixed-income urban population.

They may have the fallback plan in the 600,000 tons of wheat they have budgeted to import, but through the World Food Programme (WFP), according to the USAID study. It will be double the volume imported last year, again through the WFP.

Nonetheless, Alemayehu, the economics professor, remains hopeful that the “prospects of it [the initiative] becoming a reality.” He urged the authorities to institutionalize the strategy “lest it lives and dies with those that hold power.”

Says Alemayehu: “If this doesn’t tie into marketing value chains, it wouldn’t be the first-time overproduction has resulted in a fall in price for a commodity. Farmers might lose interest come next season.”

Only time will tell.




About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system.Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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