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Last Updated: Friday, 21 March 2008, 13:06 GMT
Ethiopia's price hikes 'normal'
By Elizabeth Blunt
BBC News, Addis Ababa

Failing crops in Boricha district, southern Ethiopia
More income for farmers means higher prices in shops
A UN report says that contrary to popular perceptions inside Ethiopia, greedy traders and speculators are not to blame for recent price rises.

The food assessment report comes just a few days after a special parliamentary session devoted to the economy, and in particular to rocketing food prices.

Prime Minister Meles Zenawi announced the creation of a special task force to monitor and prosecute "greedy" traders.

Traders were now complaining about the farmers' market power, the report said.

Mr Meles had accused businessmen of profiteering and exploiting the situation.

But the new report by the United Nations agencies concerned with food and agriculture, the Food and Agriculture Organization and the World Food Programme, says the traders are not to blame for the high prices.

Dilemma

As markets get less centralised, and farmers become more sophisticated and better informed, it says the traders are starting to complain about the market power of the farmers.

The one popular perception the report does support is that farmers are now better off, and able to wait and spread their grain sales through the year, rather than having to rush everything to market immediately after harvest when prices are at their lowest.

But the main message of the report is that grain prices in Ethiopia, however much they may have risen, however unaffordable they may be to the urban poor, are still below world prices and below prices in most neighbouring countries.

This, the report says, poses a dilemma in terms of government policy.

Buying grain locally to give to those needing emergency aid might push up domestic prices.

But while importing food from outside and giving it away or selling it cheaply could stop the price from rising, that would then encourage more and more grain to flow out across the borders to other places in the region where the price is higher.

Subsidised wheat targeted at the poorest Ethiopians costs 90 birr ($9.5) for a 50kg bag - less than half the shop price of 4 birr/kg.



SEE ALSO
Fake fears over Ethiopia's gold
13 Mar 08 |  Africa
Ethiopia's food aid addiction
02 Feb 06 |  Africa
Country profile: Ethiopia
06 Feb 08 |  Country profiles

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