The Wheat Irony

The Debate on Self-Sufficiency Before Export

Ethiopia has had one administration after another campaigning for food self-sufficiency. No single administration in the past several decades has been able to achieve it. When Prime Minister Abiy Ahmed (Ph.D.) first announced his administration’s plan to export wheat, citizens briefly indulged in the idea that the country had achieved self-sufficiency and was able to put food on the table. To the contrary, the news of wheat exports has been overshadowed by the millions of citizens who are in dire need of food assistance. In this article, EBR’s Bamlak Fekadu explores the paradox of a nation that sells wheat to aid agencies that donate it back to its own citizens.

Ethiopia launched its first wheat export program in mid-February with the first round of production from the Bale Zone in the Regional State of Oromia.  Prime Minister Abiy Ahmed (Ph.D.), Shimelis Abdisa, President of the Regional State of Oromia, and Ahmed Shide, Ethiopian Minister of Finance, were proudly present at the announcement, among other officials.

The announcement of the first batch of exports came four months after the plan to export wheat was made public in Tuli Guled District in the Regional State of Somali. It’s vital to note that it’s been three years since Dr. Abiy’s administration started a campaign for the mass production of wheat, adding a third cropping season by utilizing small and large-scale irrigation schemes as well as a cluster farming approach to effectively utilize agricultural machinery and equipment beginning with land preparation and ending with harvest.

The crawling effort of Ethiopia has borne exportable fruit by increasing its wheat cultivation area from 50,000 hectares in 2018 to 167,000 hectares in 2021 to as much as 405,000 hectares in 2022, helping the nation halt wheat imports. The government is now expected to step up its export bid and has already secured contracts with six countries, including neighboring Sudan and Kenya, keen to buy Ethiopian wheat.

Following the first shipment of 1.2 million quintals of wheat to the international market, the PM officially launched the start of Ethiopia’s wheat export with these remarks: “We have fulfilled what we promised our people, and today we have made Ethiopia’s wheat export dream a reality.” Abiy Ahmed’s administration aims to develop 5.2 million tons of wheat from the arable 1.3 million hectares to reach the neighboring countries. In recent months, international organizations have warned that around 350 million Africans face food insecurity, with 20 million children threatened by hunger and thirst in the drought-hit Horn of Africa region.

A month after the PM disclosed to Sputnik News that Ethiopia was preparing to supply USD 200 million worth of wheat to non-governmental organizations, including the UN World Food Programme (WFP), and announcing that the country had already signed a contract to export 300,000 tons of wheat to six countries, including Kenya and Sudan, the Minister of Communication Services, Legesse Tulu (Ph.D.), announced that the WFP and the World Bank are buying wheat from Ethiopia in foreign currency to feed citizens who are suffering from food shortages within Ethiopia.

In his briefing, Dr. Legesse stated that WFP bought 35,000 metric tons of wheat, while the World Bank bought 127,000 metric tons domestically from Cooperative Unions in foreign currency to support drought affected parts in east African countries.

Contrary to the government’s wheat export hype and hoopla, international humanitarian organizations such as the International Rescue Committee (IRC) are warning of a severe crisis in Ethiopia. Drought and violence have left 28 million people in need, with over 1.7 million Ethiopians facing starvation in the Borena Zone, and over 3 million cattle reportedly dying as a result of the drought.

Similarly, the UN Office for the Coordination of Humanitarian Affairs (OCHA) published a drought situation update on March 10 that shows that 6.85 million livestock have died since late 2021, over 4 million people are currently living in drought-affected areas, and 11 million of them are estimated to be food insecure. OCHA also stressed that 13 million people require immediate life-saving relief and are seeking USD 2.05 billion in funding.

By July 2023, the Ministry of Agriculture projects that wheat production will reach a record high of 160 million quintals, which is predicted to provide the country with much-needed relief by saving between USD 700 million and USD 1 billion a year from importing wheat.

The International Center for Agricultural Research in the Dry Areas (ICARDA), along with the African Development Bank’s Technologies for African Agricultural Transformation (TAAT) project, helped promote an irrigated wheat project initiative to produce irrigated wheat to enable Ethiopia to work toward becoming the region’s breadbasket.

The TAAT project, launched in 2018, is an important part of the Bank’s 2016–2025 Feed Africa Plan, which aims to lessen food insecurity in Africa. The TAAT initiative aims to boost agricultural output in the continent by offering improved, climate-smart, high-grain yielding, better grain quality, water use efficient, and heat-tolerant wheat varieties able to grow on arid Ethiopian lowlands. The bank lauded the giant strides recorded under TAAT’s 1st phase, and has galvanized the investment of more than USD 800 million in agricultural value chain projects in 21 African countries including Ethiopia and neighboring countries such as Sudan and Eritrea.

The initiative has revolutionized Ethiopia’s agricultural policies, which have been heavily dependent upon crop production during the short rainy season, known as the Belg rains, from February to May, followed by the long rainy season of winter, known as the Meher, which is between June and mid-September. TAAT offers new and better seeds that could make Ethiopia self-sufficient within five years. In the past two years alone, TAAT organizers have bulked up supplies of five improved types of wheat seed and set up 20,000 hectares of irrigated farmland used by about 28,000 smallholder farmers in the country’s lowlands.

The irrigation-based wheat planting campaign was regarded as part of the effort to achieve food self-sufficiency in the country often hit by climate change-induced drought by cultivating the crop throughout the year. Ethiopian farmers cultivated 2.3 million hectares of wheat in 2021–2022, yielding 25 million quintals of grain—a notable achievement for a country without a long history of irrigated wheat production. The campaign, which supports smallholders pooling resources to purchase inputs, has increased the cultivation area to 1.3 million hectares from 400,000 hectares in 2022. The current fiscal year’s campaign, unveiled last year in October, plans to produce more than 52 million quintals of wheat through irrigation to harvest 4 metric tons per hectare.

Ethiopia’s Ten-Year Development Plan (2021-2030) places a strong emphasis on sustainable and top-notch agricultural initiatives as its national strategy to foster economic growth and provide national food security. Its 13 ongoing irrigation projects, which cover a total command area of more than 400,000 hectares, are funded mostly by irrigation investment. Irrigation investment, which is the main part of the plan, receives the majority of the total USD 582 million budget.

The summer wheat irrigation strategy that has been developed, introduced, and implemented in all parts of Ethiopia is a good start but its goal to reach self-sufficiency in wheat success has yet to be accomplished and remains questionable.

According to Fekadu Kassa, an irrigation engineer with three decades of experience, expanding irrigated and mechanized commercial wheat farming in the lowlands is necessary to meet the set targets for increasing production and achieving self-sufficiency, while also attempting to replace imports. The average smallholder’s land size is 0.5 hectares. With the cluster farming scheme and irrigation projects, they can significantly increase productivity by tripling their arable land to 1.5 hectares and harvesting across three farming seasons.

“Wheat is now grown in the lowlands of Ethiopia, a completely new area, due to heat-tolerant varieties and small and medium irrigation projects,” Fekadu says. Ethiopia’s irrigation practices date back to the time of King Lailibela, despite the expensive cost of building irrigation dams. Experts contend that, with the right direction, enhancing the traditional building irrigation methods may also be able to reduce costs and increase output.

The method would substitute commercial imports and foreign food aid with home production, saving millions of dollars and restoring national dignity. Yet, the implementation has violated investors’ rights in some lower locations, such as in the Regional State of Afar where officials have been witnessed pushing agricultural investors to harvest wheat against their will. Ethiopia’s wheat output has jumped by about 70 Pct this past decade but has failed to keep pace with rising demand.

“Ethiopia imports wheat and pasta for millions of dollars despite its rising wheat yield and output,” Fekadu notes. “Discussions on wheat exports may unnecessarily draw attention away from the most crucial goal of self-sufficiency.”

Agriculture is a key sector in Ethiopia, employing approximately 73Pct of the workforce and contributing 35Pct of the country’s GDP. It also contributes 70Pct of the export commodity. Wheat is an essential food security crop in Ethiopia. Currently, the country’s 6 million families produce only 5.52 million tons on 2 million hectares. Because of the expanding urban population and changes in food culture, such as increased consumption of bread, cookies, pasta, noodles, and porridge, there is a considerable imbalance between wheat production and supply. Ethiopia’s yearly wheat demand is estimated to be around 7 million tons.

On the last days of February, the government introduced a new directive that compels farmers in wheat growing areas to supply their wheat production to cooperative unions at a lower price than they usually sell it for. The new directive requires farmers to surrender their wheat to cooperative unions for ETB 3,200 per quintal for those in the Regional State of Amhara and for ETB 3,500 per quintal for those in the Regional State of Oromia, leaving many farmers and millers distressed.

The selling price cap set by the federal government aimed at stabilizing inflationary pressure, however, it left farmers displeased, as they perceived it as inconsiderate and unfair. Consequently, some farmers seem to hide yields and have been forced to engage themselves in smuggling their own product to sell at a price they prefer. The directive, which was introduced to secure exportable wheat, warns of punishment for those who hide their own products.

The latest game of cat and mouse between farmers and the government has also impacted mill factories and the market for flour. Consequently, the market has set a new trend of wheat smuggling into the black market. Wheat has now become a contraband item that no one can purchase or sell. The government’s plan to export wheat is affecting flour milling factories and manufacturers of related products. Disgruntled flour and pasta manufacturers complained that they have faced a critical shortage of wheat supply since the Ethiopian government started exporting wheat.

Currently, there are more than 600 small and large flour mills in Ethiopia, with a total production capacity of between 3 and 4.2 million tons of wheat flour a year, according to the World Bank. It is estimated that a third of these mills are located in and around the country’s capital, Addis Ababa. Due to a lack of wheat, the Ethiopian Milling Association (EMA) believes that its affiliate members are only functioning at 20 Pct to 30 Pct of their installed capacities, compared to an average national milling capacity of 50Pct.

The lack of wheat supplies to their plants is causing concern among EMA members. The association, which has over 220 member factories, typically utilizes its funds to purchase wheat from various states of the nation, such as Bale, Awash, Arsi and Gojam, depending on the season and type of wheat needed. As a result, the capital Addis Ababa and the Regional State of Oromia’s flour, biscuit, and pasta manufacturers are severely short on wheat. Currently, factories are running out of inputs, and some are halting their operations, while others are striving to buy wheat on the black market. Apart from the price hike witnessed on bread, the problem has also put pressure on the price of a kilo of macaroni, which has risen from ETB 40 to ETB 90, and the price of pasta rose by ETB 20 within a month, reaching ETB 70.

Recently, mill factories and others affected by the latest development have organized a committee to appeal before the Federal Food, Beverage, and Pharmaceutical Industry Development Institute. They hope to lobby the government to prioritize the local market and demand.

Flour manufacturers were told that they would get the wheat through Unions. Then 12 entrepreneurs were selected and allowed to enter into business. However, flour manufacturers have not been able to get wheat,” says an operation manager at a mill in Adama, Oromia. Wheat growers in the Bale and Arsi zones, which are both known for their fertile land and high wheat production, had hoped to receive a premium price for their product. To their dismay, the Regional State of Oromia compelled the farmers to only sell their produce to unions and cooperatives at a lower price.

“It is unreasonable to require us to sell a quintal of wheat for ETB 3,200 when the cost of a quintal of fertilizer has risen to ETB 4,500,” a farmer in the Arsi Zone told EBR on condition of anonymity for fear of reprisals from the authorities. “We were warned against selling our wheat to dealers and that any farmer who keeps more than ten quintals of wheat at home will be detained.”

When a quintal of fertilizer was sold for ETB 1,500, he and his partners were selling a quintal of wheat for ETB 4,000. A quintal of wheat in the producing localities has been sold at a price of four to five thousand birr. However, in Addis, the price has reached as high as ETB 7,000. The government has collected 1.3 million quintals of wheat for export from the State of Oromia. A grain trader in Asela, the capital town of the Arsi Zone in the State of Oromia, told EBR that they were warned against buying wheat from farmers.

“If we are observed transporting wheat from the Arsi and Bale zones, we will be arbitrarily detained and interrogated,” the trader stated.

Daniel Fikadu, an attorney of law specializing in business law, sees measures of the government as a paradox.  He argues that the directive is just anti-competition trade practice and goes against fair allocation and distribution.

“The government’s ambitious plans violate national and sub-regional laws and regulations, including the COMESA Competition Regulation and international consumer protection laws and recommendations,” Daniel told EBR.

The government needs to concentrate on proper control so that traders do not improperly store goods or sell contraband, according to Daniel. The best solution to the problem is to let farmers sell their products to other regions and cities of Ethiopia that they believe will benefit them unconditionally and without control.

EBR 11th Year • April 2023 • No. 116