Appendix to Chapter 6


market and price liberalisation, market prices of cereals have come close to import parity
price levels. This refers specifically to wheat which constitutes a main staple food that is
locally produced as well as imported.

During the year 1994 (from January to December), the retail prices for cereals on the Addis
Ababa market increased by 31.5 percent, while overall food prices increased by only 18.8
percent and the general retail price index by 14.7 percent This confirms the conclusions
which can be drawn from the data in table6.6, that commercial cereal imports and monetised
cereal aid (169,000 MT) were insufficient to cover the prevailing market supply deficit in
1994. The market supply deficit was definitely wider, possibly close to the 284,000 MT
estimated by the FAO/WFP mission, or even larger.

Table A6-1: Analysis of the Structure of Food Deficits (in Cereals) in Ethiopia, 1994

 '000 MT
Estimated domestic cereal supplies (production + stock draw down) 6,859
Estimated total cereal requirements 7,831
Estimated total cereal import requirements ("Structural deficit") 972
broken down in:
1) Emergency and project food aid required for direct distribution to 688
 beneficiaries (the assumed "Effective demand deficit")
2) Project food aid (cereals) earmarked to be monetised ca. 20
3) Programme food aid (cereals) requirements ca. 114
4) Commercial cereal import requirements 150
Implicitly assumed "Market supply deficit" in cereals (2+3+4): 284
Effective cereal imports in 1994, of which 918
5) Emergency and project food aid for direct distribution 786
6) Commercial food imports 37
7) Programme food aid 75
8) Monetised emergency and project food aid (excluding "informal" 57
 monetisation by recipients of emergency and project aid)*)
 Actual contribution of cereal imports to market supplies (6+7+8) 169

 *) The recipients of emergency relief and food for work rations usually sell part of their rations. According to
 rough guesstimates, based on ad-hoc survey results, such sales may average around 35 percent of the rations
 distributed. In regard of the high volume of emergency and project food aid in Ethiopia. this form of
 "informal monetisation" makes a substantial contribution to overall market supplies and needs to be taken
 into account when the market situation is assessed..

 Sources of data: FAO/WFP 1993, WFP Addis Ababa Food Aid Information Unit

 Programme food aid in 1994 was exclusively provided in wheat, and wheat also constituted
 the major part of the food aid that was monetised in 1994. It can, therefore, be assumed that
 the dynamics of the wheat market show distinctive features compared to the other cereal
 markets. The price series data presented in Table A6-2 confirm this hypothesis: The price


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