Global Policy Forum

By Roger Thurow*

When peasant farmers trekked to this market town two years ago, they carried heavy sacks of grain, the fruits of the best harvest they had ever seen. This year, farmers arrived cradling emaciated children in their arms. "He is our youngest," said Tesfaye Ketema, nodding toward his five-year-old son, Hagirso. The boy, who was on the verge of starvation, sat listlessly between his father's legs on the floor of an olive-green tent at an emergency feeding center here.

Drought is once again choking Ethiopia, leaving more than 12 million people desperate for food aid from abroad. But this food shortage began before the rains stopped. In the 1990s, Ethiopia went through a decade of global initiatives that sought to boost agricultural production but at the same time withdrew state support for the farming sector. The government, under pressure from international lenders and aid donors, was pulling out of the grain markets in favor of an underfunded and inexperienced private sector. However, little provision was made to support this fledgling free market with storage facilities, transport and financing. When a bumper harvest came in 2001, the markets were overwhelmed. Prices collapsed, sapping the incentive for farmers such as Mr. Ketema to produce as much as they could.

After he barely covered his costs two years ago, despite his surplus, Mr. Ketema sowed cheaper, lower-quality corn seed on his three-quarters of an acre last year and didn't bother with fertilizer. He knew his harvest would be less but still hoped to have enough to feed his family. Then the drought set in and most of what he planted turned to dust. It wasn't long before he was carrying his starving boy 1½ hours from his farm to the feeding center.

On a mattress near Hagirso, two emaciated babies were being fed through nose tubes. In this warren of tents -- one of more than 20 therapeutic feeding centers set up across the country -- 166 severely malnourished children battled for their lives. "We've never seen a disaster like this before around here," says Emmanuel Otoro of the government's Disaster Prevention and Preparedness Commission in Boricha's region. A few years ago, he notes, this area had declared itself self-sufficient in food. That didn't last long: "First the market failed," he says. "And then the weather."

The result is that Ethiopia's unfolding tragedy is compounded by this absurdity: While the country begs for food, great stretches of fertile land in the more-drought-resistant wheat and corn belts are lying fallow or being under-worked. "I know that when I cut the size of my farm, I'm contributing to the food shortage," says Bulbula Tulle, a commercial farmer and grain trader in Ethiopia's western highlands. "But at least I'm not losing money." In 2001, he planted 2,700 acres of corn, reaped one of his best yields ever and lost nearly $200,000 because prices fell below his costs for labor, seed, fertilizer and fuel. The next year, to reduce his costs and his exposure to the market, he planted only about 500 acres. The rest of his land has gone to grass and is feeding grazing cows rather than hungry people. Meanwhile, more than 1.5 million tons of food aid has been rushed into the country by international donors.

The roots of the current food shortage stretch back to 1984, when an epic famine hit the country and nearly a million people died. In the aftermath, the government and international relief organizations -- such as the U.S. Agency for International Development and the United Nations' World Food Program -- pledged that such starvation would never again afflict Ethiopia . They came up with a two-pronged solution that involved boosting production and building an early-warning network. To improve production for a population of about 67 million, including five million chronically in need of food aid, Ethiopia expanded its rural extension service to teach farmers new tilling techniques and to distribute high-quality seeds and fertilizer. Yields soared: Grain harvests in the latter half of the 1990s averaged 11 million tons annually, about four million tons more than in the 1980s. In the bumper years of 2000 and 2001, harvests hit more than 13 million tons. The early-warning network was working well, too. Weather failures were predicted throughout the 1990s, and appeals for food aid rallied international support in a timely fashion. But the early-warning system had also picked up an ominous trend: falling grain prices. Grain supplies accumulating in the bigger markets were "driving prices below farmers' expectations and may discourage farmers for the next production season," said a monthly report of the Ethiopia Network on Food Security, a coalition of groups that do forecasting in the country. It was February 2001.

The problem was that the government, at the same time it was pushing to boost production, was also dismantling its system of state aid to farmers and intervention in the agriculture sector. In its place came a private-sector system that was inexperienced and woefully underfunded. It couldn't absorb or distribute the bountiful harvests that came. Storage facilities were inadequate. Traders still relied on donkeys for transport. Export markets were nonexistent. There was no money to support prices or help farmers get through losses.

The warning on prices, though, triggered no great alarm. "The market side hadn't been thought about at all. The government was saying, 'That's a second-generation problem,' " says Eleni Gabre-Madhin, an Ethiopian who explores market dynamics at the International Food Policy Research Institute in Washington and regularly meets with Ethiopian officials in the capital, Addis Ababa. "The emphasis was on, 'Let's just produce.' " While satellite and climate imagery provided by the U.S. kept an eye on the weather and crops, a swarm of local researchers and Western aid staffers, called "ground truthers," descended on markets and farms. By mid-2001 they were reporting that record harvests were fetching record low prices. A 220-pound bag of corn that could go for $10 in good times was getting as little as about $2 -- and that was less than half of the standard production costs.

Both peasant farmers and commercial operators had no option but to sell for what was being offered. They were caught without a safety net between the withdrawn government intervention and the incomplete free-market system. In more-developed farming markets, meshing aspects of both the free market and government support, storage facilities would allow grain to be held until prices improved, and crops could be sold on a futures market. Loans might be guaranteed by the government, and farmers protected by crop insurance. Ethiopia's farmers had none of this. The banks and government agencies that had extended credit to pay for seed and fertilizer were clamoring for their money. Many farmers defaulted on these loans or were forced to sell their cattle to make the payments.

At the central market in Addis Ababa, the grain traders who buy from the farmers were also having money problems. "I go to the bank to get money to build a warehouse. The bank says I need collateral. I have no collateral, so I get no money," says Yoseph Yilak, the general manager of an Addis Ababa grain traders association. His office is a tiny shack in the middle of the market. Inside, pictures of Jesus and the Virgin Mary look down on his cluttered desk. Outside, the parking lot is a chaotic mix of pickup trucks, donkeys and goats, all laden with bags of grain. "I'd like to have a truck to take the grain to the places of the country that need food," Mr. Yilak says. "But I need collateral to buy a truck, too."

Despite constant warnings in 2001 and 2002, there was little effort to stabilize prices or intervene in the country's underdeveloped storage and trading system. The grain got bottled up at the market, depressing prices even further. Belated efforts to create export markets offered no relief. A meeting of government experts in March 2002 determined that the country's wretched roads and landlocked situation made exporting a money-losing proposition. Less than two months later, the first of 2002's seasonal rains was sparser than normal. Within weeks, the government launched its food appeal. Now, with the crisis in full bloom, it seems everyone is paying attention. Policies and philosophies that have guided development aid and famine relief for years are now under siege. "It's been a wake-up call," says Ishac Diwan, the World Bank director in Addis Ababa.

The bank has long prodded poor African governments to privatize their agriculture sectors and abandon any type of farming subsidies. Now, bank officials concede there might be a place for government involvement in the grain market after all, as well as in support for farmers. The bank and the Ethiopian government are studying the creation of a warehouse-receipt system, where farmers would deliver their grain, get a receipt for the amount and quality, and then use the receipt as collateral for loans for the following year's crop.

Other donors, including AID, acknowledge that their assistance to Ethiopia has been too heavy on food aid and too light on agricultural investment. AID, for example, has provided an average of about $220 million in food aid annually in recent years, compared with only about $4 million in agriculture-development aid. The current crisis has highlighted the need for investments that will improve the wretched rural transport network and antiquated trading system. Donors are considering using some aid money to guarantee bank credits to farmers or underwrite crop insurance. There is also greater pressure from the government as well as traders and commercial farmers for the big food-aid providers from the U.S. and Europe to buy the food from local markets. Buying locally could bolster prices, while bringing it in from abroad tends to undercut local sales.

The government is rewriting its food-security strategy. In the prime minister's office, the talk has shifted from an obsession with corn and wheat production to diversifying into peppers, apples, bees and chickens. A broader range of produce gives farmers a better diet at home and more flexibility in the marketplace. The strategy is also focusing on water-conservation projects and rural-development programs. "What we're trying to do is enhance the incomes of drought-affected areas," says Prime Minister Meles Zenawi. On the slopes of Ethiopia's Rift Valley, Kunfe Adam has brought his badly eroded 1¾ acres back to life. He has terraced his land to preserve water and prevent soil erosion. Onions, peppers and apple trees now flourish where corn and wheat once struggled. He says his family is eating better, and he has made enough money to buy two oxen and build a better outhouse.

"Now we're thinking about a market, and what to do with all our produce," says Erkeno Wossoro, an official in the local office of the Ministry of Agriculture. Mr. Wossoro is a crusader for soil conservation as a means of preventing future famines. Driving across Ethiopia's highlands, from Addis Ababa south to the border with Kenya, is a journey through a moonscape of heavily eroded gullies and hills. In his country's obsession for production, he says, it forgot about conservation. About 100,000 acres are lost to cultivation by erosion annually. Even at modest yields, that's about 60,000 tons of corn a year. He surveys a badly eroded plateau that is newly checkered with stone fencing. Villagers from the Alaba district, participating in a food-for-work program where the World Food Program provides grain for labor, have reclaimed 1,730 acres by terracing plots and erecting water-retention points. Grass has begun to grow again. Soon cattle will be grazing. In a year or two, he says, the villagers will begin planting potatoes, beans, chilis and corn.

Mr. Wossoro bends over a small puddle of water, collected from the previous week's brief rain. "This water is a precious thing for us," he says. "It is our future." Outside the village of Adami Tulu, about a two-hour drive north of Boricha's feeding center, farmer Chombe Seyoum walks through his parched field to the river where his irrigation pump, resting under a big fig tree, now sits silent. Before the market collapse forced him to turn the machine off, he says, "this was a paradise." Mr. Seyoum studied civil engineering in Edinburgh, Scotland, but six years ago he decided to become a commercial farmer. With the government and international donors pushing all-out production, he thought he could never fail. "I wanted to help the country, grow food, employ people," he says.

His fields, in three parts of the country, stretch over 4,400 acres. In the western highlands, corn, sorghum and soy beans covered 2,700 acres in 2001. The next year, burned by the price drop, he planted just 500 acres; this year 1,200. In the southern region, he has kept his 1,500 acres in wheat and barley, because it is part of an area he services with his farming equipment. At harvest time, his combines go from farm to farm, running day and night. But at his fields in Adami Tulu, he says he had no option but to stop farming. The 200 acres he had there were dotted with tomatoes, cabbage and beans, and some banana and papaya trees, but mainly they were covered in seed corn, which Mr. Seyoum grew on contract for a seed company. When farmers reduced their use of high-quality seed to cut down on costs after the price collapse, Mr. Seyoum lost his contracts. With no guaranteed revenue to pay the $100 daily fuel cost of running the irrigation system, he turned off the flow of water. The bananas and papayas withered away. Seventy farmers who tilled the soil with him lost their jobs. Now he provides food aid to them from his wheat fields.

About the Author: Write to Roger Thurow at This e-mail address is being protected from spambots. You need JavaScript enabled to view it

FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.