Food Security To Improve Over Coming Months

BMI View: We have revised up our Ethiopian corn production forecasts for the 2013/14 season, as the country's 'kiremt' rains were relatively abundant. Supply of agricultural inputs was also relatively abundant, and only a few minor regions saw erratic weather. The improved supply has also enabled livestock conditions to improve, and local maize prices in key markets have collapsed as supplies starting coming online as of December. Food security should improve in the coming months, but we expect the country will record moderately growing deficits over the long term.

We have revised up our 2013/14 Ethiopian corn production forecasts, and now see production growing by 9% for the season to reach 6mn tonnes. Corn in Ethiopia is generally harvested during the 'meher' season, which runs from October to December. The crop relies heavily on the 'kiremt' rains, which run from June to September, and these were generally abundant and well distributed according to local sources. Distribution of agricultural inputs was also timely. Indeed, there are only a few areas where the weather was erratic, mainly in marginal producing areas. Of the 11 main regions in Ethiopia, only eastern Oromia had significantly less rainfall than its long-term average. The good growing weather has also improved conditions for livestock in most areas.

Food prices had been rising in Ethiopia in recent months leading up the maize harvest, as the 'belg' harvests (which ended in August) were relatively poor for some crops. However, food prices have collapsed since supplies came online starting in December. The drop in prices has meant an improvement in food security in most of the country, with deteriorating food security only in small pockets.

Steep Decline
Ethiopia - Wholesale Maize Prices In Selected Cities (ETB/100kg)

Food Security To Improve Over Coming Months

BMI View: We have revised up our Ethiopian corn production forecasts for the 2013/14 season, as the country's 'kiremt' rains were relatively abundant. Supply of agricultural inputs was also relatively abundant, and only a few minor regions saw erratic weather. The improved supply has also enabled livestock conditions to improve, and local maize prices in key markets have collapsed as supplies starting coming online as of December. Food security should improve in the coming months, but we expect the country will record moderately growing deficits over the long term.

Steep Decline
Ethiopia - Wholesale Maize Prices In Selected Cities (ETB/100kg)

We have revised up our 2013/14 Ethiopian corn production forecasts, and now see production growing by 9% for the season to reach 6mn tonnes. Corn in Ethiopia is generally harvested during the 'meher' season, which runs from October to December. The crop relies heavily on the 'kiremt' rains, which run from June to September, and these were generally abundant and well distributed according to local sources. Distribution of agricultural inputs was also timely. Indeed, there are only a few areas where the weather was erratic, mainly in marginal producing areas. Of the 11 main regions in Ethiopia, only eastern Oromia had significantly less rainfall than its long-term average. The good growing weather has also improved conditions for livestock in most areas.

Food prices had been rising in Ethiopia in recent months leading up the maize harvest, as the 'belg' harvests (which ended in August) were relatively poor for some crops. However, food prices have collapsed since supplies came online starting in December. The drop in prices has meant an improvement in food security in most of the country, with deteriorating food security only in small pockets.

Even with the increased production, the country has been largely unable to improve its domestic corn production balance in recent years, and we believe that over the long term the country will record growing deficits in corn production. The country rarely imports more than 10,000 tonnes of corn in a single year, with most of the corn coming from Argentina or India according to the international trade map, making it one of the few countries in Eastern Africa that doesn't import much corn from either Zambia or South Africa, the continent's two dominant exporters. However, the sector remains highly fragmented and storage capacity relatively low, meaning that a growing economy is likely to lead to increased corn demand, and ultimately our view of a moderately growing deficit over the long term.

ETHIOPIA Corn Production & Consumption
2013 2014f 2015f 2016f 2017f 2018f
Corn Production, '000 tonnes 1 5,500.0 6,000.0 5,650.0 5,966.7 6,333.4 6,700.1
Corn Consumption, '000 tonnes 1 5,671.0 e 6,011.3 6,371.9 6,754.3 7,159.5 7,589.1
Notes: e BMI estimates. f BMI forecasts. Sources: 1 USDA.
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