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Kebebew Debebe, a farmer, lives in the Nano Kebele
of the town of Ejere, 98Km south east of Addis
Abeba. On his five-hectare plot of land, he has been
cultivating wheat ever since he departed from his
parents to tie the knot with the mother of his
children. He was disappointed with his 10qts of
wheat that he harvested last December.
The father of eight previously harvested over 12qts
of wheat from the same farm plot that he is
cultivating now.
“The harvest in the years earlier was even better,”
Kebebew told Fortune. “The fertility of the
land has significantly depreciated these days.”
In the face of decreasing productivity, using a
larger amount of fertilizer does not cross his mind.
It is too unreasonable for him to invest more in
either Dap or Urea whose prices have skyrocketed
recently.
On average, fertilizer prices have been rising by
200 dollars on every tender offer this budget year,
reaching 871 dollars per tonne at the last
procurement. Compared to last year, the price has
almost doubled.
Last year, a tonne of Dap fertilizer was sold for
366-400 Br. When distributed to the farmers, a
quintal of fertilizer went for 350-420 Br. This
year, however, a quintal of fertilizer is expected
to be distributed to farmers for 600-700 Br.
Ethiopia’s annual fertilizer consumption has been
increasing every year. Suppliers of the commodity
are also gradually changing from private companies
to cooperative unions. In the 2005/2006 budget year,
376,000tn of fertilizer were imported and this grew
to 650,000 metric tonnes in the following year. For
the 2007/2008 budget year, 530,000tn of fertilizer
have already been procured but it has yet to be
purchased by farmers.
Kebebew thinks there is only one way out; increasing
the price of his output in a bid to gross the income
that he used to generate some years back. Even when
compared to last year, he has slapped a notable
increase on the price of wheat.
He is currently selling a quintal of the commodity
to the nearby merchants for 480 to 500 Br. This is a
sharp rise compared to last year’s price that
hovered around 300-320 Br per quintal.
In that small town of Ejere 25 Km far from Modjo,
there are close to 20 businesses engaged in the
trading of wheat that have installed their own
warehouses.
Gutema Tesfaye, one of the merchants owning a
warehouse in the town, is extremely baffled with the
surge in the price of wheat.
“The current price is 100 Br higher than the price
two months ago,” he told Fortune. “The
increase just does not stop.”
From the 2,500 dwellers of Ejere, 472 practice
farming in the Nano Kebele in an average land
holding of eight hectares. The lion’s share of the
farming land is covered by wheat which they planted
in early July. The second and third most cultivated
cereals in the region are chick peas and peas
respectively. Most of these farmers agree on one
thing, that the land is not giving them as good a
return as it used to.
However, they do not only put the decrease in
productivity as the cause for the monthly, or worse
still the weekly, hike in grain prices. Like the
urbanities, they also claim that they are struggling
to stay afloat amidst the increasing cost of living.
Kebebew now toils to fill the bellies of his wife
and three children. Thanks to the early marriage
culture, often considered disgraceful in his
locality, five of his eight children are no more
dependent on him. In spite of that, he grumbles due
to the increasing cost of the other children’s’
needs.
“We buy a bottle of kerosene for 3.5 Br,” said
Kebebew, picking up a soda bottle from a corner. “It
has more than doubled from the 1.5 Br per bottle
eight months ago.”
He is even more appalled with the rise in the price
of edible oil. A litre of edible oil is now sold for
26 Br per litre in retail shops.
Soaring inflation is deepening in the Ethiopian
economy. This is aggravated by the continuously
increasing oil prices globally. Oil price reached an
all time high of 122 dollars a barrel last week, on
May 7, 2008. Although the Ethiopian government tried
to subsidize oil consumption in the country, it
could not stop its repercussions on other
commodities.
It is not only Ethiopia that is grilled with the
consequences of oil price hikes, especially on the
prices of grain commodities. Countries like the
United States are using more and more chunks of land
for the cultivation of Jatropa and castor seeds in a
bid to substitute oil with bio-fuel. Concerned with
the oil price peak, these countries have gone to the
extent of using edible crops for the production of
bio-fuel, which is increasingly gaining popularity
globally.
The global price increase on wheat and other grain
items is also attributed to the increase in
consumption in India and China, due to the rise in
the per capita income of the population of the two
countries, as explained by pundits.
Ethiopia as well is undergoing trying times with the
grain price hike despite the fact that the
government is claiming that the country has
registered a double- digit growth for five
consecutive years.
The primary measure the government took to alleviate
the enigma is a crack down on supposedly grain
stockpiling business people who it blames for the
price increase that boosted the food index to 28pc.
This increase was due to the increase in prices of
cereals (23.4pc), pulses (16.9pc) and bread and
other prepared food (23.5pc), according to the
Central Statistical Authority.
According to a PhD Economics lecturer at the Addis
Abeba University, one of the reasons why grain
prices are picking up in Ethiopia is because of the
significant decline in food aid to Ethiopia over the
last three to four years.
Indeed food aid has decreased from 1.6 million
tonnes to 150,000tn, according to the USAID.
Kebebew and his fellow farmers do not seem to be
scorched by the rise in prices of consumer goods as
they directly transfer the cost to the next level,
selling their grain products at a dear price. The
pain is borne by the urban dwellers who have no
option but to spend their meager income on these
grain products.
At Ihile Berenda in Merkato, the largest open-air
market in Africa, a quintal of wheat was tagged at
600-650 Br last week on Wednesday May 7, 2008.
According to Nigussie Tefaye, a wholesaler in the
market, there is an increase of 200 Br compared to
last year at the same time.
This does not conflict with the argument by the
Prime Minister that the rural dwellers are not
haunted by the rise in the cost of living.
In his performance report to parliament, Prime
Minister Meles Zenawi had said it is only close 10pc
of the total population, which is the urban poor,
that is suffering from the price hikes.
If indeed the growth the government is bragging
about is real, it should have at least offset the
increase in grain price hikes, says the economist.
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