Highlights

Given the uncertainty over the latest drought’s impact in certain parts of the country, production estimates for corn, sorghum, and millet for MY17/18 (Oct-Sep) are being held steady. In contrast, production of wheat and barley, which is largely grown in areas unaffected by the drought, is forecast to increase. Meantime, wheat demand continues to outpace local production, making imports necessary in MY17/18 and beyond.

Wheat

Production:

Post is predicting that wheat production for MY17/18 (Oct-Sep) will increase 200,000 metric tons from the previous year’s newly-revised estimate to reach 4.1 million metric tons, which is comparable to pre-drought production levels. This production estimate assumes, among other things, that there will be adequate rainfall, as is being predicted, in the highlands. Sufficient rainfall is the primary factor influencing the country’s production of wheat and other cereals.

Post estimates MY16/17 wheat production at 3.9 million metric tons, which is slightly above USDA’s current official estimate for this period and 400,000 metric tons higher than Post’s updated production figure for MY15/16. This year-over-year increase was largely attributed to more favorable growing conditions in the main wheat-growing areas of the country.

MY15/16 production is adjusted upward to 3.5 million metric tons, which is slightly above the current official USDA estimate. By comparison, the Ethiopian government reported production for this same period at 4.2 million metric tons, which is nearly the same as the figure they reported in MY14/15 when growing conditions were much better. Taking this into consideration, these production numbers suggest, at least from the Ethiopian government’s perspective, that the 15/16 drought had a relatively small impact on the country’s wheat production. Post, however, feels the impact was far greater based on our own crop survey assessment and the reported humanitarian food needs that existed in the country at that time.

Consumption:

Wheat consumption is forecast at 5.3 million metric tons in MY17/18, which is down from the past two years in large part because wheat imports are expected to return to more normal levels as the volume of humanitarian food needs are lower than what they were during the 15/16 drought.

Wheat demand continues to outpace domestic production capacity as evidenced by the need to import. However, consumption is partially held in check in large part because of the government’s current import controls and its bread subsidy scheme. Nonetheless, wheat consumption is expected to continue growing. This growth is fueled by rising consumer income, urbanization, and changing diets.

Trade:

Wheat imports are forecast at 1.2 million metric tons in MY17/18, which is lower than the MY16/17 estimate of 1.5 million metric tons. For MY16/17, Post is currently tracking a little less than 1 million metric tons of contracted and/or delivered wheat cargoes, with more expected in the coming months. This amount includes the government’s recent purchase of 400,000 metric tons of imported wheat. The price paid for this imported wheat was about $225/MT, which is about half the price of locally-grown wheat.

Government-purchased wheat is used for price stabilization, food assistance, and the replenishment of the country’s strategic grain reserve. Historically, nearly all of this wheat has come from the Black Sea region because it is relatively less expensive compared to wheat from other major foreign suppliers.

Stocks:

Post is forecasting ending stocks at 190,000 metric tons in both MY17/18 and MY16/17, which is about half of the newly-revised estimate for MY15/16. This reduction in stocks is anticipated because of lower import volumes.The government holds about 60 percent of the country’s wheat stocks. The state-run entities holding wheat are the Ethiopia Trading Business Corporation (ETBC), which is the former Ethiopian Grain Trade Enterprise (EGTE), as well as the Strategic Food Reserve Agency (SFRA) and the National Disaster Risk Management Commission (NDRMC). The remainder is held by private mills, farmers, and traders, as well as NGOs.

Policy:

Wheat is considered a strategic grain that is vital to ensure the country’s food security. As a consequence, the government seeks to increase national production, with the intent of reducing its dependence on wheat imports. However, from Post’s perspective, the demand for wheat is growing faster than the country’s production capacity, which for the foreseeable future will make wheat imports a necessity.

The government currently controls wheat imports, with the exception of donor-provided wheat, and also subsidizes a certain portion of the wheat being used to make bread in the major city centers. In the future, the government is expected to gradually withdraw from this subsidy scheme given its growing cost, and gradually open the import market to private players. However, the local millers’ ability to secure adequate foreign exchange in a timely fashion will, to a large extent, determine the success of such liberalization.

Wheat

2015/2016

2016/2017

2017/2018

Market Begin Year

Oct 2015

Oct 2016

Oct 2017

Ethiopia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

1600

1595

1600

1600

0

1610

Beginning Stocks

491

491

581

391

0

191

Production

3340

3500

3800

3900

0

4100

MY Imports

2600

2500

1500

1500

0

1200

TY Imports

2450

2400

1500

1200

0

1200

TY Imp. from U.S.

458

458

0

0

0

0

Total Supply

6431

6491

5881

5791

0

5491

MY Exports

0

0

0

0

0

0

TY Exports

0

0

0

0

0

0

Feed and Residual

250

300

300

300

0

300

FSI Consumption

5600

5800

5300

5300

0

5000

Total Consumption

5850

6100

5600

5600

0

5300

Ending Stocks

581

391

281

191

0

191

Total Distribution

6431

6491

5881

5791

0

5491

Corn

Production:

Post is predicting MY17/18 corn production at 6.5 million metric tons, which is left unchanged from the previous year because the effect of maize lethal necrosis disease (MLND) and the impact of latest drought are unknown at this time. With that said, the drought’s impact on the country’s overall corn production is expected to be limited since the majority of the country’s corn is grown in the western half of Ethiopia, which remains largely unaffected by the current drought. MY16/17 corn production is expected to reach 6.5 million metric tons, up 200,000 metric tons from the official USDA estimate and about 1.5 million metric tons higher than the previous year. While production is up, it still remains below the pre-drought record of 7.2 million set in MY14/15 in large part because of the residual impact of the 15/16 drought. Meantime, the Ethiopian government has insinuated that the MY16/17 corn crop was a bumper harvest and that an exportable “surplus” exists. MY15/16 production is kept at a little more than 5 million metric tons. By comparison, the Ethiopian government reported production for this same period at nearly 7.2 million metric tons, which is slightly more than the figure they reported in MY14/15. These production numbers suggest, at least from theEthiopian government’s perspective, that the 15/16 drought had a negligible impact on the country’s corn production. Post, however, feels the impact was far greater based on our own crop survey assessment and the reported humanitarian food needs that existed in the country at that time.

In the future, corn production is expected to continue growing, especially with the introduction of improved seed varieties, fertilizer, and irrigation. At some point, as domestic demand increases for other crops, such as soybeans to make cooking oil and livestock feed, these commodities are likely to compete for some of the same acreage that is currently being cultivated in corn.

Consumption

Corn consumption in MY16/17 is forecast at about 6.5 million metric tons, up marginally from the previous year in response to growing demand. MY16/17 consumption is raised to 6.3 million metric tons, an increase of 200,000 metric tons over the current USDA official estimate. Corn has traditionally been used as an important staple food. It is the cheapest of all the major grains produced in the country at roughly half the cost. In recent years with the gradual emergence of cattle fattening and poultry operations, corn has started to be used in greater quantities in livestock feed. More recently, because teff is the most expensive grain in the marketplace, consumers have started substituting some of it for corn and rice when making injera. Injera is the traditional flatbread consumed at mealtimes in Ethiopia and is commonly made from teff.

Trade:

The Ethiopian government is exploring the possibility of exporting what they consider to be a “surplus” of corn. Post disagrees that such a surplus exists considering Ethiopia’s current humanitarian needs. It is possible that some limited volume of exports could occur. For the time being, though, post is holding export figures for MY16/17 and MY17/18 at zero, but will re-visit if exports do in fact materialize. In the meantime, informal exports are common in corn-growing areas near borders with Sudan and South Sudan.

Corn

2015/2016

2016/2017

2017/2018

Market Begin Year

Oct 2015

Oct 2016

Oct 2017

Ethiopia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

2150

2150

2200

2200

0

2220

Beginning Stocks

1150

1150

205

200

0

400

Production

5050

5050

6300

6500

0

6500

MY Imports

5

0

0

0

0

0

TY Imports

5

0

0

0

0

0

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

6205

6200

6505

6700

0

6900

MY Exports

0

0

0

0

0

0

TY Exports

0

0

0

0

0

0

Feed and Residual

400

500

500

600

0

650

FSI Consumption

5600

5500

5600

5700

0

5800

Total Consumption

6000

6000

6100

6300

0

6450

Ending Stocks

205

200

405

400

0

450

Total Distribution

6205

6200

6505

6700

0

6900

Sorghum

Production:

Sorghum production is estimated at nearly 3.7 million metric tons in MY17/18, which is left unchanged from the last year’s estimate because the impact of the current drought on production is unknown at this time. A sizeable portion of the country’s sorghum is grown in drought-affected areas of the country, especially in the lowlands.

For MY16/17, production is held at 3.7 million metric tons, which is unchanged from the current official USDA estimate. Post does not believe additional growth is warranted because of the residual effects from the 15/16 drought. Sorghum production for MY15/16 remains unchanged at 2.6 million metric tons. In comparison, the Ethiopian government reported production for this same period at 4.3 million metric tons, which nearly matches the figure they reported in MY14/15. These production numbers suggest, at least from the Ethiopian government’s perspective, that the 15/16 drought had a negligible impact on the country’s sorghum production. Post, however, feels the impact was far greater based on our own crop survey assessment and the reported humanitarian food needs that existed in the country at that time.

Sorghum growers still prefer longer-stocked sorghum varieties since it is more suitable for village home construction, fuel and animal feed. However, these longer varieties require more water than shorter-stocked sorghum and are, therefore, more susceptible to drought damage.

Consumption:

Sorghum consumption is estimated at nearly 3.8 million metric tons in MY17/18, which is up from a little more than 3.6 million metric tons from the previous year. This anticipated increase in consumption is largely driven by consumer substituting teff for sorghum in making injera.About three-quarters of the country’s sorghum production is consumed at the household level in the form of injera, homemade beer, as well as animal feed.

Trade:

Sorghum imports in MY17/18 are estimated at 20,000 metric tons, down from last year by more than half. This anticipated reduction is based on the assumption that international humanitarian resources could run thin in responding to other crises around the world.

Post has previously included informal cross border sorghum trade in our sorghum import estimates. However, owing to the difficulty of accurately calculating this number, Post will now use Ethiopian government trade statistics and trading partner trade data. Meantime, for the last several years, the government has imposed a ban on cereal exports to ensure sufficient domestic supplies were available. As a consequence, formal exports are relatively insignificant. Taking the above into consideration, Post does not expect sorghum exports in MY17/18. For MY16/17, based on Ethiopia’s official trade data, post anticipates a small volume of sorghum exports, totaling 5,000 metric tons, which is lower than the current USDA official estimate of 25,000 metric tons. MY15/16 exports are lowered to zero.

Stocks:

Stocks are forecast at 145,000 metric tons in MY17/18, down slightly from Post’s newly-revised estimate for MY16/17.

Sorghum

2015/2016

2016/2017

2017/2018

Market Begin Year

Oct 2015

Oct 2016

Oct 2017

Ethiopia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

1500

1500

1800

1800

0

1820

Beginning Stocks

537

537

52

40

0

175

Production

2600

2600

3700

3700

0

3700

MY Imports

40

40

50

50

0

20

TY Imports

40

40

50

50

0

20

TY Imp. from U.S.

30

30

0

0

0

0

Total Supply

3177

3177

3802

3790

0

3895

MY Exports

25

0

25

5

0

0

TY Exports

25

0

25

5

0

0

Feed and Residual

100

137

150

110

0

200

FSI Consumption

3000

3000

3500

3500

0

3550

Total Consumption

3100

3137

3650

3610

0

3750

Ending Stocks

52

40

127

175

0

145

Total Distribution

3177

3177

3802

3790

0

3895

Barley

Production:

Post is projecting barley production levels for MY17/18 to stay relatively unchanged from the previous year at a little more than 2 million metric tons. Normal rainfall amounts are expected in barley-growing regions, which is largely isolated mainly the upper highlands of the country.Meantime, Post is making a slight downward revision to MY15/16 production to 1.9 million metric tons. This figure nearly matches the current Ethiopian government number. In recent years, barley productivity has improved with the introduction of better seed varieties, a sizeable portion of which is used to grow malting barley to supply the rapidly-expanding brewing industry. Looking ahead, the production of malting barley is expected to increase as beer demand in the country grows.

Consumption:

Barley consumption is expected to grow incrementally over the previous year to just over 2.1 million metric tons in MY17/18. As mentioned, some of this growth is attributed to the brewing industry, as well as rising demand for barley as a snack food and as a feed ingredient for cattle fattening. About 2 percent of domestic barley production, which is about 35,000 metric tons, is used for making beer at the country’s nine breweries. As local malting barley is insufficient to meet brewers’ demands, the industry imports sizeable volumes of malt.

Trade:

Barley imports for MY17/18 are held at 20,000 metric tons, unchanged from Post’s updated estimate for the previous year. The MY15/16 import figure is revised upward to 37,000 metric tons based on new trade information.Meantime, sizeable imports of barley malt (HTS 1107) are required to meet the growing demands of the brewing industry. According to Ethiopian statistics, imports of barley malt reached nearly 300,000 metric tons in CY16, up from 180,000 metric tons the previous year.

Stocks:

Ending barley stocks in MY17/18 are forecast at 125,000 metric tons, down marginally from Post’s newly-revised estimate for the previous year. Stocks are primarily held by two malt factories, traders, and smallholder farmers.

Barley

2015/2016

2016/2017

2017/2018

Market Begin Year

Oct 2015

Oct 2016

Oct 2017

Ethiopia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

1200

1200

1200

1200

0

1200

Beginning Stocks

210

210

173

170

0

190

Production

1950

1857

2050

2050

0

2070

MY Imports

3

37

25

20

0

20

TY Imports

3

37

25

20

0

20

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

2163

2104

2248

2240

0

2280

MY Exports

0

0

0

0

0

0

TY Exports

0

0

0

0

0

0

Feed and Residual

125

125

125

130

0

135

FSI Consumption

1865

1809

1900

1920

0

2020

Total Consumption

1990

1934

2025

2050

0

2155

Ending Stocks

173

170

223

190

0

125

Total Distribution

2163

2104

2248

2240

0

2280


Millet

Production:

Millet production for MY17/18 is forecast at 800,000 metric tons, nearly unchanged from the previous year’s newly-revised estimate because the impact of the current drought is unknown at this time. The MY16/17 production figure was adjusted upward from the current USDA official estimate to 800,000 metric tons because of better growing conditions during this period.

Consumption:

Millet consumption for MY17/18 is forecast at 800,000 metric tons in light of the anticipated harvest. Post has made minor revisions to millet consumption figures for MY16/17 to reflect increased production.Since millet is generally cheaper than teff, some poor families substitute it for millet when making injera. Millet is also used to make traditional homemade alcohol.

Trade:

There is no formal trade of millet, though informal transactions may occur in border regions.

Stocks:

Millet

2015/2016

2016/2017

2017/2018

Market Begin Year

Oct 2015

Oct 2016

Oct 2017

Ethiopia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

360

360

440

440

0

440

Beginning Stocks

89

89

0

15

0

15

Production

385

385

700

800

0

800

MY Imports

0

0

0

0

0

0

TY Imports

0

0

0

0

0

0

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

474

474

700

815

0

815

MY Exports

0

0

0

0

0

0

TY Exports

0

0

0

0

0

0

Feed and Residual

15

15

25

50

0

50

FSI Consumption

459

444

675

750

0

750

Total Consumption

474

459

700

800

0

800

Ending Stocks

0

15

0

15

0

15

Total Distribution

474

474

700

815

0

815