Gov't to try and avert collapse in crop prices

The Ethiopian government is to buy excess grain to prevent a collapse in prices due to a predicted good harvest, officials said on Saturday. Government officials fear that hard hit farmers will be further affected if crop prices drop due to excess supply in traditional breadbasket areas of the country. “It is obvious that the problems of agriculture and that of food shortage need not always be associated with drought,” said the ministry of information. “Even in times of good harvest, there can be market problems.” The Central Statistics Authority predicts a harvest of almost 12 million mt of grain this year, 60 percent more than last year, and above the five year average of 10.5 million mt. “In order to cope with conditions that can cause a fall in price for some types of grain which are in high supply and exchange in the market, the government will buy from the peasants and secure them at a fixed based price,” the ministry added. But critics warn that price stabilisation could come at enormous cost. “This kind of scheme is also very difficult to manage and very expensive,” one humanitarian source told IRIN. “Once subsidisation is started, it is also very difficult to stop and farmers tend to produce more and more.” As yet, it is unclear how much money would be needed to buy up grain to stabilise prices, although the government says it has already “allocated” a budget. “This effort will continue in an enhanced manner when more grain is available in the market,” the government stated. The grain stabilisation initiative could be used to distribute food bought from farmers to hungry families, rather than the exclusive reliance on imported food aid handouts.