Good harvest predicted but warning of collapse in grain prices

Ethiopia is predicting a good harvest after one of the worst droughts in its history left 13 million facing starvation, government officials said on Wednesday. Adequate rains have boosted crop production compared to previous years, according to the government’s Central Statistics Authority (CSA) in Addis Ababa. “This is very important for the Ethiopian people after such a hard year,” said Samiya Zekaria, the deputy general manager of the CSA. “Despite small areas of problems, everyone will be better off.” The harvest, which is predicted at almost 12 million tons of grain, is 60 percent more than last year, and almost a fifth bigger than the good harvests of 2001, CSA officials said. According to the UN's World Food Programme, the annual average crop harvests for the last five years is 10.5 million mt. But critics are warning that without price stabilisation, a bumper crop could spark a massive collapse in grain prices and leave already-impoverished rural farmers bankrupt. Economist Brehanu Nega warned that unless the international community and government buy up excess grain to sustain prices then a collapse is inevitable. “If the price collapses it is big trouble for farmers especially if they have borrowed to grow their crops because they won’t be able to pay back their debts," said Brehanu who heads the Ethiopian Economic Association in Addis Ababa. “The alternative is that the farmers sell their assets and become even more vulnerable,” he added. Ethiopia was hit by a price collapse due to the bumper 2001 harvest, which, according to Brehanu, helped fuel the latest crisis. But even as predictions for a good harvest are made, aid agencies are warning of a renewed crisis in remote parts of eastern Ethiopia where rains have once again failed. The US government’s Famine Early Warning System (FEWS) has warned that up to nine million people will need aid next year. “This translates to between approximately 1 million and 1.3 million mt of food assistance over the course of the year,” said FEWS. It noted that food surpluses in western parts of the country often could not reach remote areas in eastern Ethiopia, where big shortages are predicted, because of poor roads. FEWS also said that cereal prices were beginning to fall in markets and this would be exacerbated as farmers offloaded their crops to pay debts and taxes.