The wheat production estimate for MY14/15 is revised downward from the official USDA estimate by 600,000 metric tons to 3.8 million metric tons. Wheat imports during this same period are unchanged at 900,000 metric tons. For MY15/16, wheat production and imports are forecast to remain at nearly the same levels as the previous year. The MY14/15 corn production estimate is held relatively steady at 6.6 million metric tons with production expected to reach 7.0 million metric tons in MY15/16. Aside from wheat imports, there are no significant volumes of grain being traded outside the country due to continued export restrictions.

Overview of Ethiopia's Grain Situation:

Subsistence agriculture is the mainstay of Ethiopia's economy and is the key economic driver in the Government of Ethiopia's (GOE) five-year Growth & Transformation Plan (GTP) from 2010-15. Behind livestock, grain production is the second most important sector in the country's agriculture-based economy. Ethiopia is one of the largest grain producing countries in Africa with nearly all production done by smallholder farmers working on less than one hectare of land. Grain yields are relatively low due to the country's rugged topography, small-scale landholdings, limited mechanization, and insufficient supplies of fertilizer and improved seed. The GOE along with the Agriculture Transformation Agency (ATA) and the international donor community are working together to address these challenges in order to achieve the GTP goals of raising productivity, intensifying market-oriented agriculture, and promoting increased private investment in the agriculture sector.

Grain production accounts for nearly 80 percent of the land under cultivation and employs 60 percent of the rural workforce. Ethiopia has two crop seasons, the Meher and the Belg. The Meher season, which runs from October through February, accounts for roughly 90 percent of annual grain production. The overall performance of the MY14/15 Meher season was generally quite good due to relatively good rains in the main growing regions. Going forward, the continuous farm-level interventions in the form of improved seed, fertilizer, and extension services are expected to help lift overall grain production in the future.

Grain is an essential part of the Ethiopian diet. In fact, over 50 percent of the daily caloric intake of an average household is from wheat, sorghum, and corn. Households spend an average of 40 percent of their total food budget on cereals. Grain consumption, especially wheat, continues to climb as incomes rise and more people move to urban centers. The GOE imports wheat to meet some of this growing demand. Wheat and teff are the two most expensive grains with retail prices above $600/MT. In order to cope with these high prices, some households and businesses substitute other less expensive grains, such as sorghum and corn, when making the traditional bread which is called injera.

While most grains are for human consumption, a small portion goes to the livestock sector. With grain production expected to grow in the future, some of the surplus will likely be channeled to the livestock sector. In particular, the use of more corn and soy in the livestock diet is expected to boost productivity among the country's livestock population, the largest in Africa.

The GOE imposes limits on grain trade. Grain exports are currently restricted, though some informal trade is probably occurring in production areas located along the country's borders. Grain imports are almost exclusively limited to wheat, nearly all of which the GOE's state-trading arm purchases off the international market and later distributes in the local market at a subsidized price. Private traders are cautious about importing grains given the uncertainty about the timing and nature of government interventions in the marketplace.

Retail Prices of Cereals in Addis Ababa for CY 2014 (USD/MT)

Commodities

Teff

Wheat

Barley

Maize

Sorghum

Millet

Month

January

725

504

544

369

618

665

February

713

497

532

359

600

656

March

720

514

533

393

612

666

April

700

527

544

371

602

624

May

730

523

538

370

595

667

June

719

561

569

380

603

670

July

719

583

592

383

593

666

August

729

590

596

383

595

670

September

730

604

631

384

608

670

October

738

625

680

377

611

672

November

753

611

643

378

600

674

December

717

616

623

374

587

670

Area and Production of Common Cereals in Ethiopia for MY14/15 (Oct-Sep)

Crop

Area

(1,000 Hectares)

Production

(1,000 MT)

Corn

2,230

6,580

Teff

3,770

4,330

Sorghum

1,810

3,966

Wheat

1,580

3,790

Barley

1,198

2,034

Millet

438

736

Total

11,026

21,436