Chapter 5


Box 5.2: Assessing the food security reserve requirements for Ethiopia

In the case of food emergencies, the food security reserve has the role of bridging the period until food imports
(commercial and/or concessional) arrive. The food from the reserve shall be distributed as relief assistance to
the population affected by food shortages A probabilistic approach is applied to assess stock levels at a given
risk of stock run-out of 5 per cent, meaning that in one out of twenty years the food stocks will be insufficient to
meet the requirements. Higher risk levels would lead to a reduction, lower risk -levels to an increase in stock
requirements. In calculating the level of FSR, the marketable internal production and the food requirements up
to arrival of imports are taken into consideration.

The determinants of the level of the food security reserve requirements are:
* cereal production by region,
* population by region,
* cereal consumption requirements by region,
* auto-consumption of cereals as share of total consumption by region,
* expected inter-regional transfers of grain during the import delivery period, and
* the delivery period of food imports.

In the model statistical data on production, population and marketed surplus are used. In addition, the following
assumptions are made:
* Delivery period of imports: alternative periods of 3 to 6 months between identification of the food needs and
 actual deliveries are considered. Past experiences have shown that commercial food imports require about 3
 to 4 months to arrive from the time an order is placed, while food aid imports normally require at least 4
 months from the time the need is assessed and a request is made.
* Average per capital cereal consumption requirements: 123 kg p.a.
* Inter-regional transfers between surplus and deficit regions within the country contribute to cover the
 deficits. Alternative percentages are applied, depending on the time lapse from the emergence of deficits. It
 is assumed that 33% of marketed regional surpluses can be transferred to deficit regions within 3 to 4
 months, 50% within 5 months and 66% within 6 months.
* In addition to the food security reserve, there exists a food buffer stock of 100,000 MT. established for
 market and price regulatory purposes and managed by a parastatal marketing agency. Without the buffer
 stock, the requirements for the food security reserve would be 100,000 MT greater.

The results of the model calculation are presented in the table below. The figures show the volume of food
security stocks needed to secure supplies until food imports arrive, assuming different scenarios of delivery
periods.

 Delivery period for Inter-regional Risk of stock out Food security Storage costs p.a.2)
 food imports transfers reserve stock level1) Million ETB
 3 months 33% 5% 51,290 MT 18
 4 months 33% 5% 212,950 MT 75
 5 months 50% 5% 343,010 MT 120
 6 months 66% 5% 505,640 MT 177

 I) in addition to a food buffer stock of 100,000 MT
 2) Only variable storage costs of 350 ETB/MT p.a. are considered, value of stock not included. ETB stands for
 the local currency Ethiopian Birr, exchange rate (in 1993) 5 ETB = I US-$.

 Source: GTZ, Management and Effects of Food Aid Interventions in Ethiopia, Eschborn 1993


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