Prior to the approval of a proposed US food aid program in a recipient country, the United States Government (USG) must make a positive “Bellmon Determination.” USAID/Ethiopia has commissioned in-depth Bellmon Analyses to Social Impact, implementing the Ethiopia Performance Monitoring and Evaluation Service. The purpose of the analysis was to determine that any direct cash transfer and distribution of U.S. agricultural commodities provided for use in Ethiopia during FY18 through Title II meet the criteria set forth in the Bellmon Amendment. The report examines food availability and demand in the country and potential impact of food distribution on the local markets in Oromia, Amhara, Southern Nations, Nationalities and People’s (SNNP), Tigray regions and Dire Dawa city administration. The report analyzes the interactions beneficiaries have with the surrounding markets, the dynamics of the markets, the capabilities of local traders to cope with increased demand, and households’ access to a diversified diet. Quantitative analyses are used to show historical trends, commodity flows, price volatility complemented by qualitative data from focus groups with farmers, key informant interviews with other stakeholders, and secondary data. Results from the analyses showed that food supply in 2017/18 is about 31.45 million metric tons. Food supply will be adequate to meet the minimum energy requirements, only if imports of grains reach 987,300 metric tons, otherwise, it will be inadequate. Cereal availability in Ethiopia is low both in the surplus and deficit areas, causing prices to increase throughout the country. Short-term and short-lived inflationary pressures are evident in the market immediately after a cash transfer. Ports, storage, and inland transportation seem to be adequate for the transportation and storage of food aid commodities. There is therefore no evidence that either a Title II food distribution or cash transfer would have a substantial negative effect on the marketing and production of grains in Ethiopia in 2017/18. 

The United States Agency for International Development/Ethiopia (USAID/Ethiopia) has contracted a Crop Availability and Market Study to Social Impact, Inc.’s (SI’s) Ethiopia Performance Monitoring and Evaluation Service (EPMES). The study is meant to provide information about current and anticipated local market dynamics in Ethiopia, to enable USAID/Ethiopia to make a Bellmon Determination regarding potential Title II distributed food and possible cash transfers for fiscal year (FY) 2017/2018 programs. In 2015/2016, Ethiopia’s highland areas experienced a severe El-Niño drought, followed by a La-Niña dry effect in the lowlands in 2016/2017. The Humanitarian Response Document (HRD) in January 2017 initially estimated that 5.6 million people needed humanitarian assistance through June 2017, but the National Disaster Risk Management Commission (NDRMC) revised this figure to 8.5 million people in August 2017. A food security emergency is expected to continue in Ethiopia through early 2018. For the 2017 Productive Safety Net Program in Ethiopia (PSNP) cycle, USAID partners are approved to provide food transfers to 1.3 million PSNP IV base beneficiaries in Amhara, Oromia, and Tigray Regions, and to the Dire Dawa Administrative Region of Ethiopia. 
For FY 2017/2018 United States food aid programs to be approved, the United States Government (USG) must first ensure that: 1. The distribution of commodities in the recipient country will not result in a substantial disincentive to, or interference with domestic production or marketing in the country; 2. The importation of United States agricultural commodities and the use of local currencies for development purposes will not have a disruptive impact on the farmers or on the local economy of the recipient country; and 3. Adequate storage facilities will be available in the recipient country at the time of the arrival of the commodities to prevent the spoilage or waste. 

The objectives of the Crop Availability and Market Study are to: 1. Provide evidence of the market demand and supply situation for 2016/2017, as well as an estimate for 2017/2018, for the staple foods in Ethiopia. The study will estimate: a. Area to be planted (estimate for the 2017/2018 season) b. Availability and use of inputs (estimate for the 2017/2018 season) c. Incidence and impact of pests and diseases and net production (for the 2016/2017 season) d. Forecast incidence and impact of extreme weather conditions 2. Provide detailed updates on: a. Production, availability, and affordability of staple foods. To determine whether there is sufficient supply of key commodities (cereals and pulses via both local production and imports), both nationally and in relevant markets, serving Food for Peace (FFP)-targeted woredas during anticipated PSNP cash and/or food distributions. Food availability and affordability will ensure that PSNP beneficiaries will be able to access grain, pulses, and other important food commodities such as cooking oil at all times. b. The market’s ability to respond to an increase in effective demand without undue upward pressure on retail price. A switch to more cash in future Title II-supported woredas could cause a significant risk of inflation in local markets. 
 3. Provide information on the capacity of the country’s warehousing and transportation infrastructure to store and distribute Title II-imported food aid in a timely fashion. 4. Perform a price trend analysis and projection for FY2017 and FY2018 to provide estimates of anticipated food supply gaps and/or inflation in post-Meher 2017 (for both cereals and pulses), in terms of food availability in local markets. 

Primary and secondary data were collected through the Rapid Rural Appraisal (RRA) approach to thoroughly assess: food grain production trends and prospects; how markets operate; market location (distance); market infrastructure conditions; marketing channels; main participants in the various food chains and their potential to influence price setting; availability of supplies; trader response capacity; and trade volumes (cereals and pulses) in the sampled woredas. Participants’ perception of the cash-based and the food-based options of PSNP and cereal-only food baskets was also assessed. Primary data was collected from stakeholders in both PSNP and non-PSNP woredas in Oromia, Amhara, Tigray, SNNPR, and the Dire Dawa City Administration. Secondary data was collected from relevant governmental and non-governmental organizations (NGOs) at Federal and Regional levels, namely: the Ministry of Agriculture (MoA), the Ministry of Trade (MoT), the Ethiopia Grain Trade Enterprise (EGTE), the Strategic Food Reserve Agency (SFRA), the National Bank of Ethiopia (NBE), NDRMC, the Ethiopia Development Research Institute (EDRI), cooperative unions, regional agricultural offices, regional trade offices, FEWS NET, the United States Department of Agriculture (USDA), Catholic Relief Services (CRS), World Vision International (WVI), Food for the Hungry Ethiopia (FHI), the World Food Program (WFP), and the Relief Society of Tigray (REST). 
Multiple data collection approaches, including desk reviews, focus group discussions (FGDs), key informant interviews (KIIs), market observations, and secondary data collection, were employed to provide sufficient information on the overall objective of current and anticipated local market supply and demand dynamics in Ethiopia. The data collected are to enable USAID to determine whether a proposed distribution of Title II food aid and possible cash transfer for FY 2017/2018 programs would have a substantial impact on local markets and production incentives. 
Fifty-six woredas across four regions and the city administration were sampled. Of the sampled woredas, 34 woredas were PSNP woredas (16 from Title II PSNP and 18 from government-managed PSNP), two were from the Joint Emergency Operation Program (JEOP) woredas; while 20 woredas were sampled from the surplus-producing woredas that are of major influence on the grain market. 
Within each woreda, data were collected from two kebeles sampled using one or more of the following characteristics: extent of food security, extent of food aid distribution/allocation, agro-ecology and existence of village markets, livelihood sources, and market channels. In each kebele, one FGD was conducted with smallholder farmers with an equal number of male and female participants. Key informant interviews were held with each agricultural office, trade office, cooperative union, and at least one wholesaler and one retailer per sampled woreda. In total, the study team interviewed 47 cooperatives and visited 61 markets. 
Some challenges were experienced during the conduct of this study. The study was conducted during the rainy and peak production season, which affected the movement of the study team and the availability of respondents. The timeframe for conducting the study was also short, resulting in rushed data collection, triangulation and analysis. Security related issues caused some study Woredas to be inaccessible causing the study team to resample some Woredas at the last minute. 

There are 8.5 million Ethiopians currently covered by PSNP, a program which entered its fourth phase in 2015, and will be running until 2020. The PSNP provides cash and/or food transfer to chronically food insecure households in food insecure woredas in rural Ethiopia. Currently, the program is implemented in seven regions (Afar, Amhara, Harari, Oromia, Somali, SNNP and Tigray) and one city administration (Dire Dawa). Currently, PSNP woredas distribute cash only, food only or a cash/food mix as payment for public work labor or as direct support to those who cannot perform on community labor projects. 
Participants engage in five days of labor per month, and therefore are paid either in food or cash. 
The program transfers are typically provided for six months of the year, timed to coincide with the lean season.1 The transfer value from the beginning of the program in 2005 was equal to15 kg of cereals per household member per month, or its cash equivalent. In 2016, the transfer value increased to 15kg cereals and 4 kg pulses to increase the nutritional benefits of the transfer and provide the - kilocalorie requirement. However, beginning 2018, the pulse component of the food basket of the ration will be removed and there is a plan for a cereal-only basket. 
USAID Food for Peace also funds JEOP to distribute emergency food aid and address transitory food insecurity in areas of vulnerability in four regions (Oromia, Amhara, SNNP, Tigray and Dire Dawa Administration), and a Protracted Relief and Recovery Operation (PRRO) to provide emergency food aid in the lowlands (Somali region only)2. These programs are currently complementary to the relief intervention undertaken by the government (federal and regional) and to the PSNP and address transitory needs that cannot be covered by the PSNP’s contingency budgets. 

According to the United Nations Children’s Fund (UNICEF), approximately 10 percent of the Ethiopian population is chronically food insecure and this figure rises to more than 15 percent during drought years (UNICEF, 2014). In 2015/2016, Ethiopia’s highland areas experienced a severe El-Niño drought, followed by La-Niña dry effect in the lowlands in 2016/2017. As a result, NDRMC estimated that 7,997,298 people were food insecure. 
Typical food security hazards in Ethiopia include poor spatial and/or temporal rainfall distribution, which can cause below-normal levels of crop production in agricultural areas and reduced access to pasture and water for animals in pastoral and agro-pastoral areas. The eastern half of the country is particularly prone to such rainfall distribution issues, and often faces consecutive seasons of drought-like conditions. 
Such hazards not only reduce the direct returns households can gain on productive assets (e.g., crops and/or livestock), but they can also lead to decreases in the labor opportunities available to households indirectly associated with these livelihoods. For example, below-average rainfall that leads to crop loss is likely to decrease the amount of labor required for crop harvests. Decreased supplies of these crops are also likely to result in increased prices for these crops. In recent years, price inflation has become a food security hazard. In 2017, wholesale maize prices have increased sharply from $21.76 in 2016 to over $39.17 in mid-2017. The increase of maize prices has triggered the increase of sorghum prices, a close substitute to maize. Wholesale prices for white wheat have also increased since 2016 from $29.25 per quintal in September 2016 to $44.29 per quintal in September 2017. 

Vulnerability to poverty is very strongly associated with geographic locations in Ethiopia. The distance that rural households travel to the market town is one of the strongest predictors to food insecurity and poverty in Ethiopia. According to the 2014 World Bank Poverty Assessment, poverty rates increased 7 percent with every additional 10km distance from a market town of at least 50,000 people. 
This is an indicator that rural households who live far from towns are less likely to access farm inputs and to benefit from agricultural growth and more likely to be food insecure. Similarly, due to their poor infrastructure, lack of market accessibility and livestock based livelihood, pastoral regions like Somali, Afar and part of Oromia region (Borana, Arsi and Bale zones) are more vulnerable than other parts of the country. 
The highest prevalence of perceived food shortages is found in Somali (25% of urban, 31% of rural), Southern Nation Nationality People Regional (mainly rural at 37%), Gambela (mainly rural at 35%), and Amhara (mainly rural at 26%). Though food shortage is a subjective concept, it aligns to some degree with other more quantitative measures of food access, consumption and poverty level of households. 
There are meaningful differences between regions of the country (CARE, 2014). 
The Famine and Early Warning Systems Network (FEWS NET) released a food security alert on August 3rd, 2017 for the Somali region of Ethiopia. They report that the drought over the past year has resulted in large livestock losses which has sharply reduced household access to food and has resulted in large- scale displacement. They also warn about serious human disease outbreaks (acute watery diarrhea and measles) that are on-going and high levels of acute malnutrition, excess mortality among children and a heavy reliance on emergence food aid. The drought has been most severe in Dollo, Korahe, Afder, and Jarar Zones. 
 2016/2017 Food Supply: The Meher season food grain production was good. However, owing to inadequate amounts of rain-fall, the belg season production is estimated to be lower than that of 2015/16. This is due to decline in both the cultivated area and yield. Commercial farm production, which showed fast growth over the preceding years, is estimated to grow by 3.5 percent, which is the same as the previous year’s growth rate. Though the CSA estimate for the 2016/2017 Meher season is available, the study team preferred to use a three-year moving average to estimate the 2016/17 production rather than using the CSA estimate, which the team found to be extremely high when compared with the patterns for the previous years, and was inconsistent with the views obtained in the discussions with key informants. With this method the year 2016/17 total food grain production is estimated at 28.81 million MT. 2017/18 Food Supply: The 2017/18 Meher season land preparation in the surplus producing areas was adequate, timely and of good quality, thus favoring good crop growth and performance. This, however, was not the case in most of the deficit woredas such as East and West Hararghe and the rift valley areas, mainly due to delayed onset and inadequate rains. Moreover, use of improved seeds has substantially declined in both woreda categories in 2017/18 compared to the amount used in 2016/17, when in the latter year seeds were extensively distributed as a recovery mechanism from the preceding year’s drought. Using the moving average procedure, the forecast for the 2017/18 total national production is estimated at 30.17 million MT. 
The current livestock situation appears to vary between the low-lying central and eastern parts of the country on one hand and the central highlands and the western block of the country on the other. This is due to the consecutive rainfall failure in the lowland parts of the country. However, the situation of the livestock in the surplus producing areas is perceived to be good. 

This level of consumption will be met only if the government and donors can import of cereal equivalent food grains. The projected import amount accounts only 2.4 percent of local production, which is too small to create any disincentives in local production and/or markets in the country. 

It is evident from market observations that the level of cereal availability, especially maize and sorghum are low in 2017, both in surplus and deficit areas. This was because of unusual and unexpected high official and informal exports (especially maize). The delay of belg maize planting and its harvest by about two months in SNNPR also contributed to the increased demand, which was mitigated by the supply of green maize from the region. 
Prices of cereals especially teff, maize, wheat, sorghum and barley have increased over the past year. In 2017, wholesale maize prices have increased sharply from $21.83 in 2016 to over $39.30 per quintal in mid-2017. The increase of maize prices has triggered the increase of sorghum prices, a close substitute to maize. It has been confirmed from various sources that the main reason for this sharp increase in maize prices is Tanzania’s maize export ban, which led to increased demand for maize within the region and expansion of cross border trade between Kenya and Ethiopia, exerting pressure on domestic maize prices. There was also an increase in exports to the Southern Africa countries. 
It is this sharp increase in the price of maize that most affected cereal supplies to the most vulnerable areas. Teff and wheat are not consumed much by the poorer households. Sorghum and maize are the cheaper and dominant staple. 

Analysis of these prices reveals that cereal prices, particularly prices of teff, sorghum and barley are slightly higher in deficit areas than in the surplus areas. The wheat prices in the surplus areas are higher than prices in the PSNP woredas. Maize prices show very little variation between the surplus and deficit areas. There is no significant difference between prices of both chickpeas and haricot beans in PSNP and surplus woredas. 

The marketing channels in both deficit and surplus areas are very complex at the beginning of the season, as traders in both areas source and sell grain to and from various market participants, including farmers and assemblers. In surplus areas, the channels include major roles for assemblers, Isuzu traders who tend to aggregate grain and sell to a range of market actors i.e. traders, millers, and retailers. These participants are less important in deficit areas. As grain flows lessen, the number of active players also lessens. 

Many different market actors participate in the market chain; they include farmers, retailer, assemblers, Isuzu traders, brokers, wholesalers, and retailers. It is difficult to quantify the number of actors in the market, but generally, retailers appear to be more in number. 

Ports: Djibouti will remain the port of choice for a majority of food aid shipments to Ethiopia during 2017/18, despite seasonal congestion. Bulk grain discharge and loading facilities in Djibouti Port are modern and efficient, but need to be expanded to adequately service Ethiopian import demand for grain and fertilizer in the future. 
Transport: Truck shortages are a commonly cited reason for freight delays. An ageing and limited Ethiopia national haulage fleet, at time directed by decree, contributes significantly to port congestion in Djibouti. Increasing commercial demands, food and fertilizer imports, and GoE prioritization of fertilizer imports all contribute to truck shortages. To ensure that the availability of trucks does not impair the port’s discharge rate, it is critical that adequate distribution amongst warehouses and offloading capacity is maximized in each warehouse. 
Storage: All four FFP Development Food Security Activity (DFSA) implementing partners (Catholic Relief Services, World Vision International, Food for the Hungry Ethiopia and Relief Society of Tigray) have adequate storage capacity to safely store the anticipated volume of grain. 

The United States Agency for International Development/Ethiopia (USAID/Ethiopia) has contracted with Social Impact, Inc. to provide sufficient information about current and anticipated local market dynamics in Ethiopia to enable USAID/Ethiopia to make a Bellmon determination regarding potential Title II distributed food and possible cash transfers for fiscal year (FY) 2018 programs. 
Food insecurity in Ethiopia continues to grow, despite substantial progress that have been made over the years. Statistics show that ten percent of Ethiopians are chronically food insecure and this number has been rising to over fifteen percent during the frequent drought years. Economic statistics also show that eighty-two percent of the population remains dependent on subsistent agriculture and with over 90 million people, Ethiopia has one of Africa’s highest rural and overall population growth rates. 
To address the root causes of chronic food security in Ethiopia, the Government of Ethiopia (GoE) has been implementing the Productive Safety Net Programme in Ethiopia (PSNP) food security program since 2005. PSNP is a large-scale multi-donor food security program, with a current phrase, PNSP IV, having started in 2016, ending in 2020, with a budget of over USD $3 billion financed by ten donors. 
USAID has been a major supporter of this program, contributing approximately 16 percent of the total budget for 2017/2021 implementations. Unlike the other phrases, PSNP IV is built on a “cash first” principle that states that cash should be the primary form of transfer, except in situation where food is not available in the market or where market prices for food are very high to protect beneficiaries from food shortages and asset depletion. USAID/Ethiopia therefore introduced cash transfers to beneficiaries under PSNP IV beginning in FY2017, with the hopes of expanding to other woredas in the coming years. 
One objective of this study is to analyze the market’s ability to respond to increased disposable income and the feasibility of cash distribution to beneficiaries in operational area. 
In 2015/2016, Ethiopia’s highland areas experienced a severe El-Niño drought, followed by La-Niña dry effect in the lowlands in 2016/2017. As a result, the Humanitarian Response Document (HRD) in January 2017 initially estimated that 5.6 million people needed humanitarian assistance, but the National Disaster Risk Management Commission (NDRMC) revised this figure higher to 8.5 million by August 2017. 
Looking ahead, Famine and Early Warning Network’s (FEWS NET’s) July 2017 Food Security Alert, warns that, this major food security emergency is expected to continue in Ethiopia and the surrounding areas into early 2018, driving humanitarian needs even higher. For the 2017 PSNP cycle, USAID partners are approved to provide food transfers to 1.3 million PSNP IV base beneficiaries and in Amhara, Oromia, and Tigray Regions and Dire Dawa Administrative region of Ethiopia. In 2016/2017, 116,000 metric tons (MT) of Title II development food commodities that consists 91,600 MT of wheat and 24,400 MT of pulses are approved to be distributed in 39 chronically food insecure (CFI) districts. 
For this US food aid program to be approved, the United States Government (USG) must first ensure that: 1. The distribution of the commodity in the recipient country will not result in a substantial disincentive to or interference with domestic production or marketing in the country; 2. That the importation of United States agricultural commodities and the use of local currencies for development purposes will not have a disruptive impact on the farmers or the local economy of the recipient country; and 3. Adequate storage facilities will be available in the recipient country at the time of the arrival of the commodity to prevent the spoilage or waste of the commodity. 

The overall objective of the study was to provide sufficient information about current and anticipated local market supply and demand dynamics in Ethiopia to enable USAID to decide of whether a proposed distribution of Title II food aid and possible cash transfer for FY 2017/2018 program would have a substantial impact on local markets and production incentives. 
Specifically, the study was intended to provide: 1. The best available evidence of the market demand and supply situation for 2016/2017 as well as an estimate for 2017/2018 for the staple foods in Ethiopia: The study will be looking to estimate: a. Area to be planted (estimate for the 2017/2018 season) b. Availability and use of inputs (estimate for the 2017/2018 season) c. Incidence and impact of pests and diseases and net production (for current 2016/2017) d. Forecast Incidence and impact of extreme weather conditions 2. Detailed updates on: a. Production, availability and affordability of staple foods - To determine whether there is sufficient supply of key commodities (cereals and pulses via both local production and imports) both nationally and in relevant markets serving USAID/Food for Peace (FFP)- targeted woredas during anticipated PSNP cash and or food distributions. Food availability and affordability will ensure that PSNP beneficiaries will be able to access grain, pulses and other important food commodities such as cooking oil, at all times. b. The market’s ability to respond to an increase in effective demand without undue upward pressure on retail price - A switch to more cash in future Title II supported woredas could cause a significant risk of inflation in local markets. 3. Information on the capacity of the country’s warehousing and transportation infrastructure to store and distribute Title II imported food aid timely. 4. Perform a price trend analysis and projection for FY2017 and FY2018 to provide estimates of anticipated food supply gap and or inflation in post-Meher 2017 (for both cereals and pulses), in terms of food availability in the local markets. 

The study areas come from four Regions and one City Administration namely, Amhara Region, Oromia Region, Tigray Region, SNNPR, and Dire Dawa City Administration. These study areas were chosen because they met at least one of the following criteria: have been beneficiaries of the PSNP interventions or Title II resources; or are surplus producing woredas (see map below). The PSNP and the Title II JEOP beneficiary woredas were selected to represent the food insecure woredas receiving assistance, and the surplus woredas are included in the study to assess the functioning of food markets and food availability. 

The study used a mixed–methods approach, using both qualitative and quantitative techniques to collect evidence necessary to address the research questions. The bulk of the secondary data is quantitative in nature and the bulk of the primary data is qualitative in nature. Primary data was collected from smallholders and traders in both PSNP and non-PSNP woredas using the Rapid Rural Appraisal (RRA) methodology. Non–PSNP woredas were selected with preference being given to the most productive areas that have been included in the Agricultural Growth Program II (AGP II). 

The following methods were used to explore the characteristics of production, availability, affordability and major crop markets in Ethiopia: 1. Desk Review: The desk review provided a solid background or overview of the Bellmon Analysis methodology and past and or current Title II programs in Ethiopia. Documents reviewed included past Bellmon reports, needs assessments by the World Food Program (WFP) and other humanitarian agencies, policy documents, Wage rate study from Ethiopia Development Research Institute (EDRI), food security outlooks and alerts from FEWS NET, etc. 
A complete list of documents reviewed appears in Annex III. 2. Key Informant Interview: At field level, the analysis interviewed key stakeholders including Cooperatives Unions, traders, local agricultural officers, pulse and grain merchants, FFP Implementing Partners – Relief Society of Tigray, World Vision International (WVI), Food for the Hungry Ethiopia (FH) and Catholic Relief Services (CRS). Interviews were held with Chief of Parties, Deputy Chief of Parties and Program Managers at each of the Implementing Partner Offices. Key Informant Interviews were also conducted with: the pertinent regional government offices (like the bureaus of agriculture, trade, Regional Disaster Risk Management Commission (RDRMC) and cooperative promotion). At federal level, interviews were held with government ministries/agencies (like Ministry of Agriculture (MoA), NDRMC, Ministry of Trade (MoT), Federal Cooperative Agency, Ministry of Transport, Central Statistics Agency (CSA), National Meteorology Agency, Emergency Food Strategic Reserve Administration (EFSRA), Ethiopian Grain Trade Enterprise (EGTE), Customs Office, Ministry of Economic Cooperation (MFEC) and National Bank of Ethiopia; bilateral and multilateral organizations (like Food and Agricultural Organization (FAO), WFP, United Nations Office for the Coordination of Humanitarian Affairs (OCHA), European Commission Humanitarian Office (EC ECHO), FEWS NET, USAID, World Bank. 3. Focus Group Discussions (FGDs): FGDs were held with smallholder farmers to determine current and expected crop production and the extent to which food crops might be expected to come onto the market over the course of the year. One gender-mixed FGD with farmers was held in each sampled kebele in food insecure woredas; though the target was 50% of the FGD participants to be drawn from women the data collection was possible on average number 3.4 women and 6.5 men per FGD. Each FGD had 8-12 households. Guidelines are provided in Annex V. 4. Secondary data collection – The table below show the type of secondary data that was collected and the source of the data. 

Triangulating evidence from these multiple sources gave us an understanding of the supply and demand dynamics of Ethiopian markets and the different ways the markets could respond to an increase in effective demand and or food supply in the market. 

Purposive sampling was used in the selection of woredas, Kebeles and participants for the FGDs and key informant interviews (KIIs), to have participants who are known to have opinions and experiences on the topics for discussion. 
There are 329 PSNP CFI woredas distributed across all regions of Ethiopia except in Benishangul Gumuz and Gambella. Thirty-nine of these chronically food insecure woredas are supported through PSNP development food security activities (DFSA) and/or Joint Emergency Operation Plan (JEOP) Title II programs. Thirty-two woredas out of these thirty-nine are beneficiaries of both DFSA and JEOP programs. 
A total of 56 woredas were sampled for data collection as shown in Table 2. Of the 56 woredas, 36 were selected from PSNP/DFSA, JEOP and GoE managed PSNP woredas (some of these woredas overlap). Additionally, 20 woredas were sampled from surplus producing woredas important to grain markets. Of the 36 PSNP woredas, 16 were selected from woredas getting support from both relief (JEOP) and development (PSNP/DFSA) programs, 2 were selected from woredas getting only relief (JEOP) support (both were drawn from the Southern Nations, Nationalities, and Peoples’ Region (SNNPR)). SNNPR is only supported by Title II JEOP program. Lastly, 18 woredas were selected from other PNSP woredas not targeted by Title II JEOP or Title II DFSA programs but obtaining resources from other donors operating in the country and managed by the government. 
The regional distribution of the sampling frame depends on the number and regional distribution of the woredas under each of the food aid categories above and coverage of AGP II. While the summary of the sample of woredas is provided in the following table, the details are provided in Annex IV. Sampling of the assessment Kebeles was done in the field by a team of data collectors from PRIN, a sub-contractor to EPMES, in consultation with the local stakeholders. 

Data collected were analyzed using the following approaches: 1. Descriptive analysis was used to analyze quantitative data on staple food price trends and some KII questions; 2. Emergent patterns and themes approach was used to analyze data from qualitative sources i.e. review of documents, interviews and focus group discussions 3. To estimate the total local grain production in 2016/17, and to forecast the 2017/18 production, a three- year moving average method was employed. The evaluation team preferred to use a moving average instead of the trend approach because the experts consulted perceived that the 2015/16 CSA grain production estimate seems skewed positively when compared with: (i) the severe drought experienced in 2015/16 affected grain production; (ii) a large number of people was reported as needing food assistance during this period; and (iii) as a result, the quantity of food assistance imported into Ethiopia was higher than the previous years. Therefore, the average grain production of 2013/14,2014/15 and 2015/16 was calculated and used as the production estimate for 2016/17. Subsequently, a new moving average was calculated for 2017/18 forecast; this was computed taking into consideration the growth rate of the moving average for 2016 and computing a new production value for 2016/17 as 2015/16 production, plus the moving average growth rate for 2016/17 multiplied by the 2015/16 production. 

Some challenges were experienced during the conduct of this study. The study was conducted during the rainy and peak production season, which affected the movement of the study team and the availability of respondents. The timeframe for conducting the study was also short, resulting in rushed data collection, triangulation and analysis. Security related issues caused some study Woredas to be inaccessible causing the study team to resample some Woredas at the last minute. 

Price Control: According to the 2014/2015 Bellmon report, the GoE employed significant resources to arrest increases in the prices of bread, edible oil and sugar. The current price of a100g loaf of bread is $0.05 per loaf. In October 2017, local prices of wheat have sold for about $44.29/qt in Addis Ababa. 
To ensure that the price control is sustainable, the GoE has been importing cheaper wheat, which is sold to millers at a lower price to enable them to produce cheaper bread. 
In the case of edible oil, the GoE has been the sole importer of edible palm oil through the parastatal institution Merchandise Wholesale and Import Trade Enterprise (MEWIT) since 2010. MEWIT imports oil and sells it to cooperatives and consumer associations, who, in turn, sell it to the public at a fixed price. The current price for 3 liters of palm oil is $3.27 and $5.24 for 5 liters. Commercial traders have been able to import edible oil, but are obligated to pay 30 percent duty and 15 percent VAT so that the high retail cost can discourage sales and import (United States Agency for International Development, 2015). The government imports about 435,000MT of edible oil yearly. 
Strategic Food Reserve Agency (SFRA): Formally known as the Emergency Food Security Reserve Administration (EFSRA), the SFRA was established in 2013 with four mandates: Purchase of grain (mainly locally) Food distribution (directly or through others) Market stabilization Grain sell/export – mainly for reserve grain recycling In collaboration with EGTE and PSNP, SFRA works on various food related issues like relief and emergency responses and price stabilizations. SFRA does not get involved with any buying, selling, transportation or distribution of grain. The government and donors make pledges to build stock, mainly through food aid and imports. It is a vital partner of donors i.e. WFP and government organizations i.e. 
NDRMC implementing food-related emergency activities in the country. It maintains a rotating stock of cereals and once pledges from donors are confirmed, both non-governmental organizations (NGOs) and governmental organization can borrow cereals for distribution. When the pledge arrives in the country, it is repaid to the SFRA. This mechanism helps as an invaluable tool in reducing the time between donor pledges and actual distribution of the cereal. SFRA has been supported by many organizations such as the Canadian International Development Agency (CIDA), the British Overseas Development Assistance (ODA), USAID, UFP, and the European Union (EU) (Mulugeta, 2015). 

Agriculture is the backbone of Ethiopia’s economy. It contributes 36.2 percent of the country’s gross domestic product (GDP) and 72.7 percent of employment and 70 percent of export earnings. Due to its contribution to the GDP, agriculture highly impacts the performance of the other sectors of the economy. Ethiopia’s export commodities are agricultural i.e. coffee, oil seeds, and sesame. Owning to the fact that these commodities are the main source of foreign earning, agriculture determines the country’s capacity to import other materials used in manufacturing. Above all, current policies propose agriculture to be the main source of capital to be accumulated for the process of establishing future industrialized Ethiopia, which again shows the importance of the sector in bringing about sustainable economic development for the country in the years to come. 

Ethiopia has a wide variety of climatic features, due to its extensive altitude range and heterogeneous rainfall patterns. Temperature and rainfall are the most important climatic factors for agricultural production in the country. Altitude plays a role in climatic factors and land suitability, and influences the types of crops that are cultivated, growth rates, and natural vegetation. Temperature can vary between annual means of 34.5° C in the Dinakil Depression, to a mean of below 0° C in the Mt Ras Degen region (FAO, 2006). The lowlands, particularly the east, south east, and the north east, have much lower levels of precipitation (Platform for Agricultural Risk Assessment, 2016). 
Climatic factors and soil types are reflected in the various agro-ecological zones of Ethiopia. They can roughly be categorized as Behera (<500 m), Kolla (500-1500 m), Weyna Dega (1500-2300 m), Dega (2300-3000m), Wurch (3000-3700 m) and High Wurch (>3700 m). Most of these zones can be subdivided into dry, moist, and wet areas (Platform for Agricultural Risk Assessment, 2016). 

There are two cropping seasons in Ethiopia; Belg and Meher seasons. The Belg season receives rainfall from February to June and harvesting is done between March and September. During the Belg period, short cycle crops like maize, barley, wheat, teff and pulses are grown. Only four regions produce large volumes of belg crops; Amhara, Tigray, Oromia and SNNP. The Meher season receives rain from June to October and harvesting is concentrated within the months of September and February. Ninety percent of the country’s cereal’s output comes from the Meher crop season. 
In some highland regions, both seasons are merges into one extended growing period, allowing growth of both long cycle grains such as sorghum and maize as well as short cycle grains such as wheat, barley and teff. 

Most of the land in Ethiopia is not suitable for cultivation; cultivated crop area was about 14 million hectares in 2016/2017 accounting for just 13 percent of the total area of Ethiopia. Teff, wheat, maize and sorghum are the main cereal crops produced and consumed locally. In 2016/2017, cereals were grown in approximately 72 percent of the total area and were cultivated by a total of 16.3 million farmers. 
Together, these farmers produced a total of 25.3 million tons of cereals. Teff accounted for 30 percent of the total cereal area cultivated and only 20 percent of the annual cereal production, while maize comprised 31 percent of total annual cereal production, with only 21 percent of the cereal area cultivated. Production of cereals has generally been rising, especially since 2009, except for a 2 percent decrease in production in 2015/2016 as shown in Figure 3 below. 

After cereals, pulses are the second most important crop group in terms of acreage. In 2016/2017, 9.06 million farmers grew pulse on 11 percent of the total are cultivated. Total pulse production was about 2.8 million tons. Oilseeds form the third most important crop group. In 2016/2017, oilseeds were cultivated on 6.9 percent of the total area cultivated by 3.5 million holders who produced an average of 0.8 million tons of oil. Production of pulses had been steadily rising from 2009/2010 to 2013/2014, dropped by 11 percent in 2014/2015 but has have slightly increased year over year since then. 

According to the Agricultural Transformation Agency (ATA), the importance of the pulses and oilseed sectors is not only to increase food security and improve income but to also to contribute to environmental sustainability by being intercropped with cereals. These crops are known to produce important agronomic benefits when intercropped with cereals i.e. increasing the fertility of soil, reducing incidence of plant diseases and pests, therefore leading to higher cereal yields. 
The application of fertilizer to crop fields in Ethiopia is gaining momentum. All fertilizer is imported by the government through AISE. Since 2007, the GoE increased emphasis in the use of fertilizer and improved seeds and has been distributing these inputs to smallholder farmers using cooperative networks all over the country on credit basis. Total sale of fertilizer has grown from 352,309 MT in 2010 to 777,499 MT in 2014. An interview with MoA revealed that 817,463 MT of fertilizer was available for the 2016/17 cropping season. For the 2017/18 cropping year, fertilizer availability is about 12.9 million MT, a 35.46 percent increase. A significant portion of smallholders use fertilizer: 39 percent according to CSA. Teff, wheat, and maize cultivation account for the majority of fertilizer use. 

Both the Meher and Belg conditions have been largely affected by drought. In 2015/16, the Meher rains were not adequate and El-Niño effects lead to a 1.3 percent decrease in Meher crop production, but the total annual production marginally increased due to an increase in the belg production (CSA data, 2015/16). In 2016/17, the weather conditions were normal. The onset and performance of the Meher rains were good and crop production for the year was up 8 percent. However, parts of the northern, north-eastern, eastern, central and southern rift valley areas did not receive adequate rainfall. 
The 2017/18 belg rain started late, delayed land preparation for the next/Meher season planting in the south and may affect yields. According to CSA data, 2016/17 production was 290 million qt. which is 90.6 percent of the plan set out in the Growth and Transformation Plan (GTP II). The MoA is forecasting 2017/18 production to be 345 million qt. from 10.7 million ha of land that is already cultivated and planted. Annual crop production trends are shown in the figure below. 

Fall Armyworm: A threat to production is the effects of the fall army worm infestation. Of the 2,475,906- ha land covered by maize during the main (Meher) season, 557,000 ha (22%) was infested by fall armyworm in six regions (SNNPR, Oromia, Gambella, Benishangul Gumuz, Amhara and Tigray). The pest is controlled on 414,648 ha (74%) of the infested area; and the effort is going on. About 55% of the infestation was controlled by biological method (hand picking). 
Re-infestation by the third generation (the first was on irrigated farms, the second was on belg and long cycle crops) of the worm is expected (and already observed) on the already controlled areas –of the Meher crops. Given the favorable climate of the infested regions, the worm could continue up to the next dry season. 

In 2017, Ethiopia had an estimated population of 94.4 million people (Ethiopia Central Statistics Agency). 
It is the second most populous country in Africa, after Nigeria. Ethiopia has 32.1 million people who are undernourished or hungry, ranking first in this category5. This also makes it the fourth African Country scoring (37.1 percent) of the population being undernourished/in hunger (Africa Development Bank, 2014). Rural Ethiopian livelihoods are very sensitive to climate. Hunger and food insecurity are linked to seasonal and rainfall patterns in Ethiopia; Hunger trends show a downward trend after the rainy seasons. 
Climate related shocks affect productivity, hamper economic progress and exacerbate existing social and economic problems (Anderson et al., 2015). Ethiopia’s food insecurity situation is highly linked to severe, recurring food storages and famine, which are associated to recurrent drought. Poverty and food insecurity seem to be closely related in Ethiopia. Droughts and other related disasters (such as crop failure, water shortage, and livestock disease, land degradation, limited household assets, low income) are significant triggers, more important factors which increase vulnerability to food security and undermined livelihoods (MoARD, 2009). Other triggers of food insecurity are rapid population growth, low per capita income, red-fed agriculture, under development of water resources, land degradation, low economic development, weak institution, conflicts, livestock and human diseases, production fluctuations, high levels of illiteracy, poor health and sanitation etc. 
According to UNICEF (UNICEF, 2014), about 10 percent of the Ethiopian population is chronically food insecure and this figure rises to more than 15 percent during drought years. In 2015/2016, Ethiopia’s highland areas experienced a severe El-Niño drought, followed by La-Niña dry effect in the lowlands in 2016/2017. As a result, the HRD in January 2017 initially estimated that 5.6 million people needed humanitarian assistance, but NDRMC revised this figure higher to 8.5 million in August 2017. 
FEWS NET released a food security alert on August 3rd, 2017 for the Somali region of Ethiopia. They report that the drought over the past year has resulted in large livestock losses which has sharply reduced household access to food and has resulted in large-scale displacement. They also warn about serious human disease outbreaks (Acute Watery Diarrhea and measles) that are on-going and high levels of acute malnutrition, excess mortality among children and a heavy reliance on emergence food aid. The drought has been most severe in Dollo, Korahe, Afder and Jarar Zones. 

The coping strategy a household adopts depends on their food insecurity levels. Households facing extreme hunger and starvations for long periods of time may end up adopting negative coping practices like going without food for long periods of time and minimizing the number of meals consumed in a day. 
Households in pastoral and Agro-pastoral areas of the country move from one place to another especially in dry seasons looking for water and pasture for their livestock. Alternative coping strategies amongst the pastoralist are sale of livestock more than usual, borrowing food, reducing the number of meals, reducing the size of meals, sale of firewood and charcoal, seasonal migration, seeking alternative or additional jobs, seeking relief assistance, household splitting, remittances, etc. 

As an intervention to the food insecurity problem, the GoE has its level of intervention. The GoE launched a large scale PSNP in 2005 PSNP’s main goal is to improve the food security status for chronically food insecure household members. It does that through direct grant to labor-poor, elderly or incapacitated individuals and payments to able-bodied members for participation in labor intensive public work activities (MoARD, 2014). PSNP operates in Afar, Amhara, Dire Dawa, Harari, Oromia, SNNPR, Somali and Tigray Regions. 

Ethiopia's major exports include coffee, gold, leather products, flowers, vegetables, and oilseeds. 
Purchasing approximately 14 percent of Ethiopia’s exports in 2016, China is Ethiopia’s largest trading partner. Somalia is next purchasing approximately 10.4 percent of Ethiopia’s exports. The other major export partners are Saudi Arabia with 7.1 percent of exports, Netherlands 6.9 percent, USA 6.9 percent and Germany 6.4 percent of exports. Djibouti is also a major partner in Africa, a neighboring country through which Ethiopia must conduct all its importing and exporting since Ethiopia is landlocked and thus lacks a port of its own. 

Ethiopia's major imports include Machinery, Electrical Equipment, vehicles, cereals, mineral fuels and iron and steel. In 2016, Ethiopia’s largest import partner is China, with imports worth $5.8 billion. The United States comes second with $1.5 billion and India comes third with $1.3 billion. In Africa, Morocco is Ethiopia’s number one exporter, followed by Egypt. 

The limited availability of foreign exchange has resulted in a situation where domestic prices for some local commodities, especially wheat and edible oil, exceeded import parity at the official exchange rate (United Stated Agency for International Development, 2010). The disparity between the official and real” exchange rate negatively impacts exports that are currently key to economic growth. 

Cross Border informal trade is trade between two countries that have a common border. Informal cross border trade therefore consists of commodity flows outside the formal system and has not been recorded in government statistics. These flows vary from very small quantities moved by bicycle to large volumes trucked over the long distance (Food Security and Nutrition Working Group (FSNWG), 2017). 
The bulletin reports cross trade between the following East African Countries, Tanzania, Burundi, Rwanda, Uganda, Kenya, Somalia, Sudan, South Sudan, Djibouti, Ethiopia, and Democratic Republic of the Congo. 
According to the East African Cross Border Trade Bulletin, the main crops traded across these borders in the first quarter of 2017 were maize, rice, dry beans, sorghum, wheat flour, sugar, sesame seeds. 

Maize: According to the East African Cross Border Trade Bulletin, maize was the most informally traded commodity in the region in the first quarter of 2017 accounting for 33 percent of the total trade. 
The total trade volumes were however lower compared to 2013-2016 average due to tight supplies following below average harvests across most of the countries. The total amount of maize grain traded in the region by March 2017 was reported at 426,000 MT about 66 percent below the recent four-year average. Most of this grain was destined for Kenya about 44 percent, Tanzania, 37 percent, South Sudan 12 percent and Rwanda, 5 percent. Uganda was the main maize exporter accounting for 40 percent of the total regional exports, followed by Kenya, 38 percent, Ethiopia, 11 percent and Tanzania 6 percent. 
The 2017 exports from Ethiopia to northern and northeastern Kenyan were reported at 8,300 MT, much higher than 2016 first quarter and four years average levels because of lower supply and higher prices from source markets within Kenya. Exports from Ethiopia to Somalia were reported at 860 MT lower than normal but still higher than the 2016 first quarter and four years average levels. 
Sorghum: The bulletin also reports that 40,000 MT of sorghum was traded in the East African region in the first quarter of 2017, accounting for 36 percent of the four years average volumes. Of the total imports to the East Africa Region, most of the sorghum went to South Sudan (41 percent), to Kenya (29 percent) and to Eritrea with 22 percent. The main exporting countries were Sudan and Uganda with 53 and 43 percent respectively. 
Rice: Cross border trade in locally produced rice was reported at 57,000 MT during the first three months of 2017. Tanzania was the main exporting country with 64 percent of the total exports, followed by Somalia at 21 percent which were mainly re-exports of imported rice, and then Uganda at 12 percent. Kenya, Uganda, Sudan, and South Sudan accounted for 73, 11, 5, and 5 percent respectively of the total imports in the region. 
Dry Beans: A total of 47,000 MT of dry beans were trade in the region in the first three months of 2017, representing about 55 percent of 2013-2016 average volume. The main importers were Kenya at 73 percent, Uganda at 11 percent, Sudan at 5 percent and South Sudan at 5 percent of the total imports. 

The main exporters were Uganda at 65 percent, Ethiopia at 23 percent and Rwanda at 10 percent of total exports. Export of beans from Ethiopia to northern and northeastern Kenya was about 7,400 MT about 27 percent higher than the four years average volumes. Broad beans exports from Ethiopia to Sudan also increased at 3,700 MT due to increased availability in Ethiopia from the recent harvest. 
Livestock: Ethiopian exports to Somalia were; Goats were 60,000, cattle at 26,000 and camel at 7,500 MT, accounting for a seasonal decline of about 60 percent in the first quarter of 2017. The decline was a result of poor animal body conditions in the Somali region of Ethiopia because of poor rains during October to December 2016. 

Ethiopia is a member of the key regional groupings, including the Common Market for Eastern and Southern Africa (COMESA) and the Intergovernmental Authority on Development (IGAD), and it has signed all the regional integration protocols. The country has taken further steps since 2012 to facilitate increased regional trade with its neighboring countries. Amongst recent steps were the signature of a Memorandum of Understanding (MoU) and a Transport Corridor Service Agreement with Kenya and South Sudan in 2014. This will help Ethiopia to spread the risks of relying too heavily on Djibouti for export-import trading activities and for shipping, logistics and port services. 
Ethiopia has made slow progress in gaining formal membership in the World Trade Organization (WTO). The GoE started the process of accession in 2003. Since 2012, no tangible progress has been made, although there are now indications that the accession process may resume. The donors and some sections of the GoE support the members but the business community is reluctant to open the economy internationally, particularly in terms of foreign direct investment, which accompanies WTO membership. 
Meanwhile, developments in the WTO have been ambiguous. On the one hand, the organization will soon have 164 members and is thus approaching universal membership. On the other hand, the failure to conclude the Doha Development Round has prompted members to redirect their policy attention to negotiate and conclude trade agreements with trading partners on a bilateral or regional basis. Some observers have indeed suggested that the WTO may have outlived itself. Ethiopia thus faces the decision of whether and to what extent to prioritize multilateral or regional trade integration (Bienen, 2016). 

Food aid programming in Ethiopia has improved since it first began in the 1980s. According to the 2010 Bellmon, when the country first began receiving food aid, the GoE would make regular requests according to needs assessments collected after each Meher harvest and the Implementing Partners would program for importation in April through June, with distribution during the lean season of June through September. Food aid typically covered a discrete period, and was distributed for relief purposes. 
Around 2004, it became apparent that there were chronically food insecure communities that had recurring emergency needs. To cater for their needs, the GoE and the donor community designed the PSNP, which distributes food and cash transfers to chronically food insecure households in exchange for labor. 

The PSNP provides cash and/or food transfer to chronically food insecure households in food insecure woredas of rural Ethiopia. Currently, the program is implemented in seven regions (Afar, Amhara, Harari, Oromia, Somali, SNNP and Tigray) and one city administration (Dire Dawa) of Ethiopia; and covers a caseload of approximately 7.9 million individuals. 
The program transfers are typically provided for six months of the year, timed to coincide with the lean season.6 The transfer value from the beginning of the program to 2015 was equal to12 kg of cereals per household member per month, or its cash equivalent. In 2016, the transfer value increased to 15kg cereals and 4 kg pulses to increase the nutritional benefits of the transfer and provide the required kilocalorie requirement. However, beginning 2018, the pulse component of the food basket of the ration will be removed and there is a plan for a cereal-only basket. 
In return for the cash transfer and/or food distributions, households with able-bodied adults provide labor in the form if of public works that contribute to the development of their communities. 
Households participate in public works during six months of the year, for five days per month per family member, up to a cap of 25 days of public work per household or 15 days per able-bodied individual (Food Economy Group, 2015). 
According to the report, women’s public workload is equal to 50 percent that of men to accommodate childcare and other household duties. In addition, women are exempt from public work while pregnant and breastfeeding. 
There are three kinds of beneficiaries for PSNP: 1. Permanent direct support households (PDS) – these are households with no able-bodied adults and they are not required to participate in public works. Beginning last year, these PDS households receive transfer year-round rather than for six months of the year. 2. Public work participants (PWP) – receive transfers for only six months of the year. 3. Households that are temporarily affected by food insecurity due to crop failure or other shocks are included in the PSNP through contingency budgets. 
There is also a livelihood component to PSNP, formerly a separate program called the Household Asset Building Program). The program helps PSNP households to rebuild their livelihoods through three pathways i.e. crop and livestock, off-farm, and/or employment. The program also provides financial literacy training, technical and business advice, linkage to credit or livelihood transfers, as well as follow- up support (Food Economy Group, 2015). 
PSNP beneficiary number: When PSNP I was launched, number of the beneficiaries was 4.4 million people. Though expected to decline through successive graduations because of the positive effects of the program, this number has grown to 7.9 million during the current Program (PSNP IV). Besides, the prevailing practical need for including more beneficiaries in the program and raise this number to 10 million has been limited by resource scarcity. Table 5 provides beneficiary number between 2011 and 2017. Owing to the undesirable impact of drought, there has not been graduation from PSNP program since (2014/15). 

USAID Food for Peace also funds JEOP to distribute emergency food aid and address transitory food insecurity in areas of vulnerability in four regions (Oromia, Amhara, SNNP, Tigray and Dire Dawa Administration), and a Protracted Relief and Recovery Operation (PRRO) to provide emergency food aid in the lowlands (Somali region only). The JEOP is a consortium program implemented by a consortium of seven NGO partners, led by CRS, while the PRRO is implemented by the WFP in Somali region. These programs are currently complementary to the relief intervention undertaken by the government (federal and regional) and to the PSNP and address transitory needs that cannot be covered by the PSNP’s contingency budgets (Food Economy Group, 2015). 
In almost all cases, relief is given to beneficiaries in terms of food. In principle, a beneficiary is given 15kg grain, 1.5kg pulse, 4.5kg corn soy blend (CSB) and 0.45kg edible oil per month. However, the package could be short of one or more of these items depending on resource availability. 

PSNP woredas distribute cash only, food only or a cash/food mix as payment for public work labor or as direct support to those who cannot perform on community labor projects. Participants engage in five days of labor per month, and therefore are paid either in food or cash. 
The team found that cash/food mixes vary greatly from woreda to woreda. Likewise, the number of months for cash versus food versus cash/food mix varied widely, depending on the extent of food grain production and availability, access to food grain markets and food availability in the local markets. 
The government seems to prefer the cash-based modality for many reasons that include: the possibility to stimulate local gain production and market; ease in terms of management and logistics; and opportunity in terms of obtaining hard currency. 

Currently, in 2017, 58 percent of the beneficiaries receive cash only payments, 34 percent receive a cash /food mix and 8 percent receive only food. However, this proportion change depending on the beneficiary preferences and resource availability. Overall, cash transfers have increased over the years and food distributions are decreasing (see figure above). 
Timeliness of payments has been uneven. The 2010 Bellmon pointed out that PSNP gains are reduced if payments are not timely. The study also noted the decline in purchasing power of those receiving cash versus food for the PSNP. This was anecdotally corroborated during the team interviews with stakeholders. 
 3. The rest of Tigray, $1.92. 
As of July 8, 2017, the PSNP-4 wage rate was reduced to exclude the pulses as the program does not have sufficient resources to continue with the full food basket. 
Cash and food modality: Cash and food mix modality depends on the type of beneficiary: 1. PWP beneficiaries receive 3 months cash and 3 months food 2. PDS beneficiaries who are paid throughout the year, depending on local preferences and resource availability, receive either a. 3 months cash and 9 months food b. 6 months cash and 6 months food c. 9 months cash and 3 months food These split in the cash and food mix appears to be uniform throughout the country except for Simada woreda in South Gonder that receive 5 months food and 1-month cash as reported by Food for the Hungry. 

In almost all cases, relief is given to beneficiaries in terms of food. In principle, a beneficiary is given 15kg grain, 1.5kg pulse, 4.5kg CSB and 0.45kg edible oil per month. However, the package could be short of one or more of these items depending on resource availability. 
In this region, cash is not often used for relief purposes; but in January 2017, at the beginning of relief transfers, cash was provided to 25 woredas. Currently, cash is being transferred in only one woreda. 
The amount of the cash transfer varies from zone to zone in the region and is determined by a market study conducted by WFP. The amount of relief cash payment is different from the amount of wages paid to PSNP intervention. For example, in Oromia, the following commodities and cash were distributed in 2016/17: Grain = 415,564.20 MT Pulses = 38,734.44 MT Edible oil = 12,027.60 MT CSB = 61,961.50 MT $11,136,600.00 – (roughly equal to 36,553MT wheat). 

PSNP is directly implemented by the GoE with the support of 10 donors. All donors except USAID mobilize their resources and put their contribution to Government Accounts where the government has the direct access to the donors’ contribution for the program. 
USAID is one of the development partners who fund the PSNP. USAID’s resources are channeled to non-governmental organizations (NGOs) in a subset of woredas for the distribution of food now piloting cash-transfers to chronically food insecure households. USAID-funded NGOs also support woredas through capital expenditures for public works as well as non-salary administrative expenditures for program management at the woreda level. In addition, USAID-funded NGOs also implement complementary nutrition activities targeted at pregnant and lactating women and children under two, disaster risk management activities with a focus on support to the Early Warning System (EWS), and recently a degree of livelihood activities through supplemental funding (Food Economy Group, 2015). 

USAID Food for Peace also funds a Joint Emergency Operation (JEOP) to distribute emergency food aid and address transitory food insecurity in areas of vulnerability across the country, and a Protracted Relief and Recovery Operation (PRRO) to provide emergency food aid in the lowlands (Somali region only). The JEOP is a consortium program implemented by seven NGO partners, led by Catholic Relief Services (CRS), while the PRRO is implemented by the World Food Program (WFP). These programs are currently complementary to the PSNP and address transitory needs that cannot be covered by the PSNP’s contingency budgets. 
Over the last five years, USAID has imported 2,000,753 MT (average of about 400,151 MT per year) of food aid through Implementing Partners to support development and emergency programs. Most of the food aid to Ethiopia from 2012 – 2017 has been cereals distributed through Title II programs. Table 7 shows that except for 2016 when Ethiopia faced severe drought and lower production due to El-Nino, the amount of food aid import has been declining. 

In addition to food aid from USAID, WFP data shows that 3,021,783 MT of food aid was provided to the GOE by the other nine PSNP donors over the past five years. The average amount of food donation during this period was 604,356 MT per year. Table 8 summarizes the food aid quantities supplied by other donor through three operators – NDRMC, JEOP and WFP. 

There are currently four FFP funded NGO partners, implementing the PSNP program: CRS, Food for the Hungry (FHI), Relief Society of Tigray (REST), and World Vision (WVI). These four USAID supported implementing partners (IPs) implement the PSNP, in collaboration with GoE counterpart and local partners. USAID supported woredas account for almost 39 of the 329 PSNP woredas. 
CRS: CRS’ PSNP/DFSA activities are centered around East Hararghe, Dire Dawa, parts of Arsi and East Shewa Zones; the JEOP activities operate in four regions, in more than 70 woredas. CRS and partner NGOs account for roughly one-third of food aid distributed under JEOP. CRS also possesses the largest storage capacity of current IPs, about 134, 329 MT, and serves 340,000 beneficiaries. 
FHI: FHI operates in Amhara region in 6 woredas; 3 woredas in south Gonder and 3 woredas in Waghimira. Currently, FHI is supporting 373,705 beneficiaries and about 14,500 MT of storage capacity. 
REST: REST’s activities are centered in the Central, Eastern, and Southern zones of Tigray Region. 
REST is unique in that it is a local NGO and has been a USAID Partner since 1992. Currently, REST implements PSNP IV program in 12 of the 31 target woredas in the region using Title II food aid. They currently have 498,707 beneficiaries of whom 20 percent of them are PDS and the rest are paid through participation in public works. 
WVI: WVI is USAID’s newest IP and operates in two regions: Amhara (Wagimra and North Wollo zones) and Oromia (East Hararghe, West Hararghe and West Asri zones). In total, WVI operated in 12 woredas. Currently WVI is supporting 309,538 beneficiaries and possesses a food storage capacity of about 32,000 MT. 

This section outlines major initiatives affecting food security in Ethiopia which are known to be planned in the next year. 
FFP: Below are next year’s plans but not approved for food distribution by IPs are 597,344 MT of food. 

GoE: As a copying mechanism for the chronic national food supply shortfall and the consequent prices increases, the GoE has been importing cereals, pulses and edible oils. The imports include food aid program interventions and subsidized market stabilization programs. The EGTE did not have any plans yet of importing food commodities for next year 2017/18. 
The National Disaster Risk Management Commission (NDRMC) which often imports food aid commodities for relief interventions did not have any import plans yet for 2017/2018. In general, government agencies like SFRA, MoANR, MoT, EGTE and PPPDs that usually import grains for different purposes do not have plans, at least so far, of importing food commodities for 2017/18. 
The other donors were still developing their PSNP Annual Plans. 

Formally known as the Emergency Food Security Reserve Administration (EFSRA), SFRA was established in 2013 with four mandates: Purchase of grain (mainly locally) Food distribution (directly or through others) Market stabilization Grain sell/export – mainly for reserve grain recycling In collaboration with EGTE and PSNP, SFRA works on various food related issues like relief and emergency responses and price stabilizations. SFRA does not get involved with any buying, selling, transportation or distribution of grain. The government and donors make pledges to build stock, mainly through food aid and imports. It is a vital partner of donors i.e. WFP and government organizations i.e. 
NDRMC implementing food-related emergency activities in the country. It maintains a rotating stock of cereals and once pledges from donors are confirmed, both NGOs and governmental organization can borrow cereals for distribution. When the pledge arrives in the country, it is repaid to the SFRA. This mechanism helps as an invaluable tool in reducing the time between donor pledges and actual distribution of the cereal. SFRA has been supported by many organizations such as CIDA, the British Overseas Development Assistance (ODA), the United States Agency for International Development (USAID), the World Food Program (WFP) and the European Union (EU) (Mulugeta, 2015). 

Interviews with the Head of the SFRA’s Stock Strategic Planning relieved that, the Agency has a total storage capacity of 316,100 MT (effective capacity) to 338,750 MT (efficient capacity) – provided in the table below. It has plans to reach 1.5 million MT capacity by end of GTP II. To this end, it has planned to build six additional warehouses in different parts of the country including the surplus producing areas. 
The construction process has started for some of the planned warehouses. 

Theoretically, the Agency has 673,000 MT cereal in stock; what exists at hand, however, is 258,000 MT wheat. The rest is an amount collectable from borrowers (all of which are government agencies: NDRMC, Food Security Office/PSNP, EGTE). They borrowed the cereal in 2015/16, and have not repaid it yet due to reasons that include lack of hard currency for import of the grains; and delays in the procurement of the commodities before the end of the budget year. There is no concrete evidence showing that it will be repaid in 2017/18. The Agency does not have any clear plan for importing grain during the 2017/18 year. 

The study team used CSA data with recommendation from the Ministry of Agriculture and Natural Resources and from the Regional Agricultural and Natural Resources Bureaus. CSA production data appears to be the only systematically collected and analyzed data available for the country. 
Attempts made to crosscheck and triangulate the CSA data were not successful. For example, United States Department for Agriculture’s Foreign Agricultural Service (FAS) provides data only for a few commodities i.e. Wheat, barley, maize, sorghum and rapeseeds. Production data for teff, sesame, millet, oats, pulses etc. are not reviewed. Furthermore, FAS only reports production and estimates data for the Meher season and not for the Belg season. 
Over the years, production of food grains has been increasing in Ethiopia, even though area planted has not changed much (see Figure 13 below). 

The year 2017/18 food availability depends on: 1. The 2017/18 local production; 2. Imports planned/estimated for the year; and 3. Carryover stocks from 2016/17. 
Food availability from these sources is discussed in the following sections of the report. 

Over the years, the amount of land cultivated by smallholder farmers has not changed much. However, area planted for the belg season fluctuates depending on availability of moisture. This fluctuation can be seen with data from Gimbichu in East Shewa, a surplus producing woreda with 48,459.8 ha in 2016/17 and 49,028 ha in 2017/18 and Bora, another surplus producing area cultivating 32,431 ha in 2016/17 and 32,439 ha in 2017/18. 
Conversely, land cultivated by commercial farmers has shown an increasing trend over the years. Over the past few years, commercial farmers have been developing virgin and remote lands that have not been tilled before, thus increasing the area available for cultivation. 
Because of the poor performance of the 2016/17 belg rains, the area planted for 2017/18 belg season is estimated to be about 27.9 percent less than last year’s belg season. This reduction of the area planted for the belg season, reduces the overall amount of land cultivated for the year. 

The pattern and performance of the 2017/8 Meher season rains is perceived as favorable for land preparation. Even though, the belg season rains were not good for crop production, it provided enough moisture for animal pasture, for the Meher season land preparation and planting of the long cycle crops. 
In general, the Meher season land preparation has been adequate, timely and of good quality, thus favoring good crop growth and performance, especially in surplus producing areas. These findings were confirmed by the KIIs and FGDs. 
In the deficit woreda, due to delayed onset of the rains, quality and adequacy of the 2017/18 Meher season land preparation was not as good as it was in 2016/17. However, in the case of the surplus producing woredas, timeliness and adequacy of land preparation was better in 2017/18 than the preceding year. 

Borecha in the SNNP Region, where regional informant confirmed that delivery of inputs was timely and adequate. 
In line with the above discussion, Table 11 below shows that amount of fertilizer supplied to the sample deficit (PSNP) and the sample surplus (non-PSNP) woredas has increased in the 2017/18 production year by 4.9% and 3.3%, respectively. 

In the sample surplus producing woredas, KIIs reported that there was no significant difference in the timeliness of fertilizer delivery between 2016/17 and 2017/18. About 71.4 percent of these woredas reported the fertilizer distributions were timely in both years. By comparison, 64.7 percent of the deficit sample woreda KIIs reported that fertilizer distribution was late in 2017/18 compared to 70.6 percent in 2016/17. 
Improved grain seeds: There were discrepancies in the data from MoANR and the regional bureaus on amounts of improved seed supplied to farmers. The team preferred to use the data from the regional bureaus because the regional bureaus are closer to the farmers. MoANR reports that 90,000 MT of improved seed was supplied for the 2016/17 planting season compared with 145,000 MT in 2017/18 (61% increase). However, data from Oromia Agricultural Bureau shows a decrease in the amount of improved seed supplied in 2017/18. A total of 74,522.5 MT of improved seeds were distributed in 2016/17, an amount that reduced to 59,618 MT in 2017/18 (20 percent decrease). On one hand, the farmers complain that the prices of improved seed are very high resulting in reduced demand. On the other hand, the producers complain of high improved seeds production costs, but low prices paid to them. It is known that factors like delayed delivery also limit use of improved seeds. Farmers are now using C2 generation seeds for up to four years consecutively. Seed producers have a lot of operating costs (land, labor, input) cost to produce seeds, however, the GoE expects them to sell the seeds for lower prices, which are still high for farmers. 
Use of second and subsequent generation seeds as improved seed for teff, wheat and maize was also reported by farmers in East Este, a surplus producing woreda in South Gonder who reported availability of these seeds in the community. 
Like Oromia, improved seed supply in Amhara Region has decreased both in type and quantity. Figure 15 shows that improved seed supply in the region in 2017 declined by 33 percent compared to the supply in 20168, as a result of short supply from producers. In Tigray, owing to moisture stress, extent of improved seed utilization has shown a declining trend. 

The figure above shows that the woreda level findings confirm the regional level findings. 
The Woreda Agricultural Offices in surplus areas received on average 541MT of improved seeds in 2016/17 and 436 MT for 2017/18; a 19 percent decline. This could be the impact of the emergency seed distribution in 2016. However, there is no noticeable difference between the two years in terms of timing of supply of the seed. 
The deficit woredas received fewer amounts of improved seeds in 2017/18 (an average of 142.3 MT) as compared to 2016/17 (an average of 2879MT): a 49 percent decline. In the deficit woredas, supply of improved seeds was timelier (69 percent) in 2017/18 than it was in 2008/09 (56 percent). However, there is no difference in terms of access to local seeds in these woredas in both years. 
Majority (77 percent) of the FGDs conducted by the study reported that improved seeds are available in their community; and in the case of 73 percent of them, the seeds are also accessible to the households in the community. 
Farm chemicals: Farmers have adequate access to crop protection chemicals like pesticides and herbicides that are supplied by private traders in addition to the government extension service. 
Chemicals needed for crop pest and disease outbreak control are supplied by the government. 

Belg rains (February to May): The National Meteorology Agency (NMA) reports that the Belg 2017 rains started late in most parts of the Belg rain benefiting areas. Prolonged dry spell was also observed over the central, eastern, northeastern, southeastern and the southern lowlands during February to mid-April. However, heavy rain fall was recorded over northeastern, eastern, central, southwestern and southern highlands of the country. Extreme temperatures were also recorded in some low lands of the country. However, better weather system prevailed after mid-April (Figure 16) resulting in the improvement of the drought situation. 

Figure 17 provides details of the Belg rainfall distribution. Among the others, it shows that except for most parts of Somali Region and southern parts of Oromia, the country has received near normal to above normal precipitation. However, there are complains that not the amount, but timing and distribution of the rains was a problem. 

In general, key informants of the study in the surplus Woreda Agriculture Offices rated performance of the 2017/18 Meher rains as better than what prevailed in 2016/17. This is also confirmed by the finding provided in Table 12 below. 

The table shows that the onset of the rains was timely in both years in the surplus producing woredas, and the timeliness is even better in 2017/18 Meher than the corresponding previous year. In the case of the deficit woredas as well, onset was timelier in 2017/18 Meher season than in the preceding year. 

Fall Armyworm (Spodoptera frugiperda) surfaced in Ethiopia (seen in western zones of SNNPR -Bench Maji, Shekka and keffa Zones) in March 2017 for the first time, and infested farmlands planted with maize in SNNPR, Oromia, Gambela, Benshangul Gumuz, Tigray and Amhara. According to MoANR, 22 percent of the land covered by maize was infested by this worm in these regions. The pest is controlled on 74 percent of the infested area; and the effort is going on. About 55 percent of the infestation was controlled by biological method (hand picking). 
Re-infestation by the third generation (the first was on irrigated farms, the second was on belg and long cycle crops) of the worm is expected (also already observed) on the already controlled areas –of the Meher crops. Given the favorable climate of the infested regions, the worm could continue up to the fifth generation - up to the next dry season. Regarding its impact, the pest does not kill the affected plant, but could affect its physiological performance leading to yield reduction. Assessment of impact of the worm on grain production and yield is planned by the MoANR. However, as the worm was controlled early, significant negative impact is not expected. 
In Oromia, the worm did not cause substantial damage on the affected crops (sorghum and maize); the common understanding of the experts is that it would not cause significant impact on yield and production. It was controlled before it caused substantial damage on the corps. 
The same situation was reported by the Amhara Region Agriculture Bureau. The worm was observed in the western parts of this region. Its occurrence has significantly decreased (exists only in North Gonder and South Gonder Zones); and its impact is expected to be minimal. In line with this, FGD participant farmers in Bure Woreda (West Gojam), one of the major maize producing woreda in the country, reported occurrence of the worm, but nullified its impact as they controlled it timely. 
The worm is also controlled in SNNPR where it was first seen, and where its infestation was severe. In this region, the worm mainly affected maize and sorghum crops by infesting a total of 113,320.2 ha. 
Nevertheless, through monitoring activities and appropriate control measures undertaken, the worm has been controlled by hand picking (on 49026.20 ha) and chemical spray (on 51646 ha). 

Even so, the NGOs and international organizations appear to be very worried about the damaging impact of this worm, not only in the infested areas but also all over the country. 
In general, unless stronger and systematic monitoring and control system is put in place, the worm might eventually infest all maize fields in Ethiopia, and entail significant risk of loss on maize and other crop production in the country. 
Farmers in sample woredas in East Hararghe reported significant damage by pest on maize and sorghum. 
It appears that this is stock borer, which is chronic problem in the area. Also, the occurrence and subsequent control of African Army Worm (Spodoptera exempta, locally known as temch) in some areas in that part of the country was also reported. 
The woreda level KIIs conducted in the surplus and the deficit producing woredas confirmed that occurrence of natural calamities like hailstorm, windstorm, flood and landslide that could compromise grain production and yield did not occur or its extent was lower than that of the previous year’s, which was also very mild. 

Judging from the situation assessment made above, the following factors predicted better grain yields and production next year: The near normal, normal and above normal Meher season rainfall pattern for almost all the surplus producing parts of the country; The timely cessation forecast of the rains for almost all the areas that has been true up to mid-September; Adequacy of the last belg rains for Meher season land preparation; Increased availability and reduced price of fertilizer; and Notwithstanding the inconclusive case of the Fall Army Worm, absence of other significant crop pest and disease outbreak. 
The following factors are identified to compromise the 2017/18 crop production and yield: Decline in use of improved seeds compared to last year; Delay in supply of fertilizer in some of the areas; Land preparation gaps in some of the deficit producing areas; Failure of the Meher rains in some deficit areas like East and West Hararghe; Though inconclusive or insignificant, impact of the Fall Army Worm; Possibility for occurrence of calamities like hailstorm and windstorm in the future; and Possible occurrence of out of rains after cessation of the main rains at harvest time. 
Based on these factors, the 2017/18 grain production is forecasted to grow by 2.91% which is an average growth rate of the previous two years; i.e., 2015/16 which was bad year due to El-Nino and 2016/17 which was good year. Therefore, the next year total food grain production is predicted to be 32.36 million MT. Table 13 provides the details. 

In general, informants from the regional, woreda and community level assessments all expect a higher harvest in 2017/18 than last year’s. Both the surplus area and deficit area key informant share this view. 
In summary, overall grain production is estimated to increase by 2.91percent based on the following factors: Good performance of the Meher rains, good and timely land preparation, reasonable amounts of improve seed supply compared to recent trends, the larger quantity of fertilizer supply, insignificant impact of the FAW and the absence of other calamities (So far – mid September). 

Food commodities are imported to Ethiopia through a couple of channels and for different purposes. 
Food is imported as food aid interventions (safety net program and humanitarian/relief); for market stabilization and commercial imports. Documents show that in the recent past, Ethiopia annually imported an average of 1,116,500MT of cereal and 25,000 MT of pulses. However, it appears that due to the increasing shift away from the food-based interventions, the amount of the annual import may decline. Of late, only USAID, WFP and the government import food aid to Ethiopia. 
USAID: Figure 19 shows USAID food contribution to PSNP and relief during the last eight years. The figure indicates that except for 2016 when Ethiopia faced severe drought and lower production due to El-Nino, amount of the food aid imported by the Agency for the two interventions has been declining. 

Estimates of the amount of food aid that the Agency will import in 2017/18 have been determined. In the case of PSNP, it is estimated that the food imports for 2017/18 will be 122,780 MT. Food import under the relief operation USAID contribution through JEOP and WFP largely depends on the HRD, which is released once in a year and updated bi-annually. In 2016/17 for instance, JEOP started with supporting 887,230 beneficiaries (15.8 percent of the total beneficiaries); and in August, following an increase in the number of beneficiaries, JEOP is currently covering 1.4 million (16.5 percent) beneficiaries, at least, up to the end of 2017. The USAID the food import for 2017/18 will decrease by 10% compared to the 2016/17, amounting to 294,520 MT. Thus the total estimated USAID import in 2017/18 will be 417,300 MT (i.e. 294,520 + 122,780 MT). 
WFP: With its current resource envelop for 2017/18, WFP expects to acquire and provide 54,000 MT of food from donors (apart from USAID) where approximately up to 20,000 MT of the grain is to be procured locally, leaving an estimated 30,000 MT grain to be imported by WFP in 2017/18. 
Government grain imports: As a coping mechanism for the chronic national food supply shortfall and the consequent price increases, the Ethiopian Government has been importing cereals, and edible oils. This has been especially the case since the 2008 unprecedented grain price increases. The imports include food aid program interventions and subsidized market stabilization programs of the government. 
Figure 20 shows that EGTE alone has imported an average of about 0.64 million MT wheat every year during the last five years. Figure 20 also shows that, compared to the previous years, though the import had increased by 84 percent in 2015/16 (the severe food shortage year), it declined by 68 percent in 2016/17. 
 Based on consultations with USAID, it is estimated that the government will import 540,000MT of grain (i.e. 140,000MT as GOE PSNP import and 400,000MT GOE other imports) of in 2017/18. Government grain imports are usually intended to ensure market stabilization and to subsidize bread prices. The observed scarcity of foreign currency (USD, Pound Sterling, Euros) will likely limit imports of wheat by government. Additionally, the study team assumes an increase in local wheat production. 
The National Disaster Risk Management Commission often imports food aid commodities for relief interventions. For instance, in 2016, it imported 36,700MT food commodities that were donated by the Ethiopian Government. The Commission does not have plans yet to import food commodities in 2017/18. 

In the past few years, all government bulk imports were made through the Public Procurement and Property Disposal Service (PPPDS). The latter provided its service up on request of the federal government bodies. The Service imported 2.137 million9 MT of wheat for MoANR and EGTE in 2015/16 (2008 EC) which appears to be the highest import to be shipped to Ethiopia. This import seems related to the severe drought and food shortage caused by El-Nino. In 2016/17 (2009 EC) the Service imported only 400,000MT wheat for Ministry of Trade that was used for market stabilization. It has no current or planned so far for 2017/18. 
In general, government agencies like the SFRA, MoANR, MoT, EGTE and PPPDS that usually import grain for different purposes do not have plans, at least so far, of importing food commodities in 2017/18. 
Nevertheless, we believe that the government will continue to import grain for market stabilization and to subsidize bread prices. Accordingly, as previously mentioned, the study team assumed that at least 540,000MT of grain will be imported. 
Commercial private imports: It is known that processed or semi processed food commodities are imported to the country both legally and through illicit cross-border trades. For instance, about 44 percent of the sample food deficit woredas reported that imported wheat flours is traded in their respective woredas. However, the study could not get access to data on the formal imports. Besides, it was not possible to estimate the elicit imports. Therefore, the private commercial imports are excluded from this study. As its amount is perceived not to be substantial, it is believed that its exclusion does not affect findings of the study. 
In general, the 2017/18 food imports to Ethiopia are estimated to be 987,314MT i.e. 30,000MT by WFP; 417,300MT by USAID; and 540,000MT by GOE. 

Grain carryover stock could, in principle, exist with producers, traders, donors/aid agencies and government grain handling agencies. Last year’s Bellmon determination study found the total carryover stock in the country to be 2.97 million MT. However, for our study, it is assumed that grain stock carryover to 2017/18 may not be significant due to one or more of the following. 
Usually grain surplus producers and traders keep stocks to wait for better prices. The sudden grain prices skyrocket since May/June 2017 mainly due to: (i) unprecedented formal grain export to Kenya; (ii) failure of the last belg crop production, in SNNPR a supplier of green maize to the market starting from June; and (iii) suspected increased elicit grain export to neighboring countries, mainly Kenya. It is believed and observed that the souring price situations have initiated producers and traders to sale out their stocks with the unusually higher margins. 
Therefore, the grain stock held with producers and traders is assumed to be not more than 1 million quintals. 
Failure of the last belg season in many areas including parts of SNNPR (Gamo Gofa, Segen and Wolayita Zones) northeastern Amhara, southern Tigray, and parts of Afar bordering Amhara and Tigray, that decreased grain supply and then contributed to increased demand, hence sharp increase in prices. To collaborate this, market observations revealed that this year, grain unusually flow to parts of SNNPR that traditionally harvest and sell belg maize. Additionally, the June 2017 food security outlook provides that the 2017 Belg harvests are estimated to be below average in most Belg-producing areas of the country, which will lead to a significant reduction in household food access. Therefore, it is assumed that this situation has also contributed to the dwindling in grain stock. 
Inadequate performance of the last Meher season that affected not only many of the deficit areas, but also few of the surplus producing areas of the country, hence contributing to reduced supply and increased demand. 
The increased shift of food aid resource and payment modality from grain to cash has increased demand for grain, and contributed to declines in the traditional grain carryover. 
Government institutions and agencies that usually hold grain carryover stocks do not have any or substantial stock this year. The GoE grain imports planned for 2016/17 did not materialize first and foremost because of the shortage of hard currency. The SFRA normally has about 673,000MT of cereals in its warehouses; currently it has only 258,000 MT of wheat in its stores. 
The rest was borrowed by government agencies (NDRMC, MoANR Food Security Office/PSNP and EGTE) in 2015/16 and has yet to be paid back. There is no evidence that it will be paid back in 2017/18. MoANR has only 40,000 MT of wheat in stock, the other federal and regional government organizations do not have any carryover stock. 
Donors and NGOs in the country do not report having any carryover stock. 
Therefore, the only stock that can be carried over to 2017/18 is the amount available with SFRA and MoANR which is a total of 298,000 MT. Including the amount estimated to exist in the hands of the producers and traders, the total grain carryover stock is approximately 348,000 MT. 

Table 14 provides a summary of the food grain available for year 2017/18. By adding the local grain production, imports and carryover stock, Ethiopia is estimated to have a food grain supply of 31.45 million MT. 

The current livestock situation appears to vary between the pastoral settings and the sedentary farming areas. The difference could also be categorized as that existing between the low-lying central and eastern parts of the country on one hand and the central highlands and the western block of the country on the other. 
In the pastoral settings, following the below-average 2017 Gu/Ganna season rains, pasture and water sources were not able to regenerate. Consequently, from June onwards, until the Deyr/Hagaya seasonal rains (October to December), the availability of pasture and water is expected to be below-average. 
However, beginning in late October, following the onset of the rains, both pasture and water availability are expected to improve. 
The below-average 2017 Gu/Ganna season rains resulted, in addition to the massive livestock death that is estimated to 2 million heads, in deterioration of the surviving livestock body conditions and productivity. The animals are expected to stabilize and/or marginally and temporarily improve with enhanced late season rainfall. Assessments conclude that they will likely remain below average and deteriorate further during the dry season until the start of the Deyr/Hagaya rains in October 2017. 
Beginning in November, it is likely that with increased pasture and browse, livestock body conditions and productivity will improve. At least throughout the period, calving, lambing, kidding and milk production are expected to remain below average. Assessments report that in Somali Region, goats and sheep are expected to conceive in June and July but at below-average rates given the drought conditions (FEWS NET, 2017). 
This situation is expected to negatively affect livestock performance and household income at least up to the next rains. Livestock sales are low because of poor body conditions. Livestock prices are predicted to remain below average as staple food prices have risen and are expected to continue to rise, or remain high, through September ahead of the Meher harvest. The rise in grain prices has led to high food grain –livestock terms of trade. After October, the forecasted above-average 2017 Deyr/Hagaya rains are expected to lead to gradual improvements in livestock body conditions and productivity, improving household food and income access. 
The situation prevailing and observed in the other parts of the country is different from this. In most cases, the belg rains had substantially improved feed availability. Besides, early onset of the Meher rains and its continued better performance has also favored better performance of the livestock in this part of the country. Further, important livestock disease outbreak was not reported. These findings were also confirmed by the field level assessments and observations. Furthermore, good crop production in 2016/17 means better availability of crop residue and leftovers for livestock feed. 
About 47 percent of the sample surplus woredas reported occurrence of livestock diseases in their woredas. For about 67 percent of them the damage was low to very low while it was high to very high for the rest 33 percent. Half of the sample deficit woredas reported occurrence of such diseases; and the damage was low to very low for half of the reporting woredas and high to very high for half of them. 

About 24 percent (5) of these woredas reported that maize is used for livestock feed (for upgrading cattle) in their woredas. However, the amount of maize used is said to be only 0.01 percent to 5 percent of the annual production. Only 14.7 percent (5) of the sample surplus woredas reported the use of maize for livestock feed in the woreda. 
Participants of the FGDs conducted in the sample study kebeles reported that the livestock husbandry practice in their communities are faced with problems that include shortage of feed and grazing area (62 percent), livestock diseases (22.5 percent), and veterinary service related problems (11 percent). 

Earlier discussions and supply data presented reveal that grain production has been increasing throughout the 2009/10 to 2016/17 period. However, the growth rate between the years varied. It is also noted that drought is one of the principal constraining factors for sustained grain production growth in Ethiopia. Agricultural production in the country is dependent on rain which is unpredictable. It also varies greatly across geographic locations. 
Domestic grain production is utilized in many distinct ways; quantities for export, animal feed, seed, food use and non-food use processing, and human consumption. Losses during storage and transportation occur and are a component of food crop utilization. 

According to production data obtained from CSA, more than 62 percent of the domestic grain production was used for human consumption in the past five years. Cereals constitute 87 percent of the total grain crops production. Pulses and oilseeds account for 10 percent and three percent respectively. 
Local production of cereals, pulses, oilseeds, and starchy roots including enset/Kocho are the major source of food that makes up the staple food basket in Ethiopia. 
The following table presents the required food demand, and local grain crop production for human consumption and then calculates the level of food self-sufficiency in the country for the 2012/13-2016/17 period. The amount of food imports, both commercial and food aid, is presented in the table and its role in narrowing the food gap is reviewed. Based on the food supply and demand situations observed in the past five years, food requirement for the 2017/18 is projected. 
 Food needs is estimated based on the following assumptions: The basic requirements, assuming all energy comes from cereals, is set at 2,100 kilocalories/person/day, on average, which translates to about 218 kg of cereal equivalents/person/year, assuming about 3,000 kilocalories from 1kg of cereal. 
Production and demand quantities are recorded in grain equivalent The breakdown of the calorie intake is based on the average Ethiopian food basket including: o Cereals = 63.5%; o Pulses =10%; o Oil crops =8%; o Enset and Root Crops =6.5%; o Livestock and livestock products =6%; and o Sugar=6% On average, domestic production covers nearly 90 percent of the food requirements of the Ethiopian population. The food deficit ranges from 6.2 percent in 2015/16 to 21.4 percent in 2013/14. The level of food self-sufficiency through local production has been fluctuating during this period. From the table above, we learn that the food gap was wider in the earlier two years, 16.3 percent in 2012/13; and 21.4 percent in 2013/14. We also note that food imports (both concessional and food aid) were instrumental in narrowing the food gap. As we gather from the table, the gaps were narrower when imports increased. Food supply was adequate to meet the minimum energy requirements only in 2015/16. 

Consumption requirement for the country for 2017/18 is forecasted based on past trends discussed above and some pertinent assumptions. Due to lack of reliable information on effective demand estimates among rural and urban population, we used the ‘apparent per capita consumption or the status-quo level of consumption’ as the proxy to estimate the next year consumption requirement. The status-quo estimate (SQE) method assumes that people should eat as much in the coming year as they have in the last few years. Thus, the stable food requirement for next year is derived from the past trends or the status –quo for staple food per capita multiplied by the estimated total population. As mentioned earlier, food grain crops in general and key cereal crops are the dominant diets for majority of Ethiopians. More than 60 percent of the daily calorie intake in Ethiopia is derived from five cereal crops namely, teff, barley, wheat, maize and sorghum. 
The daily minimum energy requirement of 2,100 calorie was used as a threshold to estimate demand for food during 2012/13-2016/17 period. The same assumption holds to estimate consumption requirement for the country’s population in 2017/18. We further assumed the following to calculating the forecasted food demand: Projected production data for 2017/18 and population growth projection by CSA of 2.3 percent. 
The amount of food to be imported for 2017/18 is 987,314MT. 
The carryover stock from last year will serve as opening stock for the 2017/18 Export of food grain through both formal and informal trades will be the same as previous year Barley and maize used as raw materials for local alcohol drinks is assumed to constitute 3 percent of supply Feed will take another 3 percent; seed requirements 15 percent; Post-harvest loss is calculated to stand at 15 percent The Food Balance Sheet for 2017/18 is summarized in the following tables. 

Food grain-cereal equivalent available with imports 202.0 As the balance sheet shows, the per capita supply of food for the 2017/18 period is 202kg/year/person, which is below the recommended rate of 218kg/person/year. It is important to note that this level of consumption will be possible if the government and donors made possible the projected amount of 987,314 MT cereal equivalent food grains. 

There is a wide variation across regions and agro ecological zones in the availability of food and consumption. The population in food surplus producing areas has better access to food and consume more than those living in food deficit regions. It has been found that about half of the rural poor and one-third of the total rural population in Ethiopia live in food deficit areas where average food availability is only half of the national average. Food availability in the surplus woredas is 170 percent of the national average14. 
Variations also exist among households within the same location due to differences in access to productive resources such farmland. Poorer households in general have lower calorie intake than households in the higher wealth group. 
Key informants in woreda offices of agriculture reported that a significant proportion of households in their woreda have remained food insecure for several years. The severity of food shortage is more pronounced in lowland areas such as Fentale woreda in East Shoa Zone of Oromia region where more than 60 percent of the households in the woreda are food insecure. Besides other factors, rapid population growth was mentioned as a critical factor for the current dismal state of food security. 
Farmers in focus group discussion have cited shortage of farmland and landlessness as serious problems for poor households. The RRA also showed that increasing number of households are becoming food insecure overtime. Recurring drought, farmland shortage, decreased land fertility, low crop yields and increasing population growth are mentioned by farmers and key informants in woreda office of agriculture as being the main reasons for this trend. 
Of the 36 PSNP sample woredas surveyed, 22 of them (61%) reported the size of food insecure households in their respective woredas. Food insecure households constitute more than 35 percent in seven of the reporting woredas. In six woredas, food insecure households account for 25-35 percent of woreda total. As expected, the size of food insecure households is relatively smaller in surplus woredas. 
Only four woredas out of 20 interviewed in the surplus woredas, reportedly have food insecure households. In three of the woredas, the prevalence of food insecurity stands at between 5-15 percent of the households and in one woreda less than 5% of households are food insecure. 

The consumption pattern among the survey groups is shown in Table 16 above. More than 50% of focus group discussants reported increased consumption of edible oil, teff and wheat since the last two years. 
A third of them also increased their meat and maize consumption in the same period. However, close to fifty percent of the woredas consumed less of meat in the last two years. The main reason for the increased consumption of the food items cited is the growth in household income. Food for work program in PSNP woredas has enabled increased consumption of wheat and edible oil. The decrease in the consumption of the food items was attributed to price increase and scarcity. 

This chapter deals with the study of grain trade in Ethiopia through the reviews of core policy issues applicable to trade, studies conducted on grain market and marketing system. The study analyzed how markets function and investigated the marketing channel for main food grains (cereals, pulses and oilseeds), major sources of grain supply to central, regional and to local markets, particularly in deficit areas and whether the local market have the capacity to ensure the availability of grain supply from domestic production and imports. 
While the grain market study was entirely based on qualitative approach, the framework used for market analysis is the Structure, Conduct, Performance (S-C-P) framework employed in similar Bellmon estimation.15 Structure-Conduct-Performance (S-C-P) is an analytical approach or framework used to study how the structure of the market and the behavior of sellers of different commodities and services affect the performance of markets, and consequently the welfare of the country. Specifically: Market structure consists of the relatively stable features of the market that influence the rivalry among the buyers and sellers operating in a market. Some examples of market structure include the number of buyers and sellers of food commodities in the market, the number of sellers of agricultural inputs such as fertilizer and veterinary drugs, barriers to entry into the market and the nature of trading relations (vertical coordination mechanisms) among market participants. 
Market conduct refers to the patterns of behavior that traders and other market participants adopt to affect or adjust to the markets in which they sell or buy. These include price setting behavior, and buying and selling practices. 
Market performance refers to the extent to which markets result in outcomes that are deemed good or preferred by society. Market performance refers to how well the market fulfills certain social and private objectives. These include price levels and price stability in the long and short term, profit levels, costs, efficiency and quantities and quality of food commodities sold. 
This framework was chosen because the combined dynamics of market structure, conduct, and performance will contribute to understanding the grain market systems and the capacity of market actors (private traders, cooperative unions, etc.) to increase the supply of basic food grains to food deficit areas. 

The relationship existing between structural characteristics of a market and the competitive behavior of market participants influences the grain market performance (Scarborough and Kydd 1992; Scott 1995). 
As the relationship and a combined dynamic of actors will influence market performance, it is essential to assess the grain market structure and the conduct of market participants. 

The assumptions based in the assessment of market structure is the fact that the deviation of a market structure away from the model of perfect competition will decrease the extent of market competitiveness; and consequently, the decline of market efficiency.18 Perfect competition assumes, free entry and exit from the market, homogeneous products, many buyers and sellers: It means no single buyer or seller can affect the price, no discriminations, perfect knowledge etc. 
A major structural characteristic of markets is the number of market actors or participants and their size distribution. In the Ethiopian case, grain market is the largest of all commodity markets in terms of the volume of products handled and the number of market actors and participants involved. Naturally, market actors increase in composition and number as grain passes through the hierarchy of marketing channel from local to central market. According to the CSA, it is estimated that the number total of national urban wholesale grain traders for 2013/14 is about 6,054. From the reverse side of marketing hierarchy, the number of big traders, wholesale buyers and suppliers is often larger in regional and central markets, but decrease in composition and the size of distribution at the lower level and eventually become smaller at local markets. 
The assessment of marketing channel in the sample woredas selected for this study indicated that the composition and number of actors in marketing channel differ between PSNP and Non-PSNP woredas. 
In the PSNP woredas, wholesale suppliers, retailers and consumers are the most common actors in the market chain during lean seasons while more actors appear during crop harvest including producers or the framers who sale grain, local market collectors and assemblers. The diversity and number of actors is larger in surplus woreda markets particularly during harvest season. In comparison with the other actors, there are more producers and consumers particularly in grain markets at the woreda level; wholesaler buyers and suppliers are relatively fewer in number than retailer, assemblers and farmer traders. Depending on the woreda status, i.e., deficit (PSNP) and surplus (AGP) farmers market outlets include: 1. direct sales to consumers, 2. sales to retailers and grain millers, 3. direct sales to farmer/village traders, rural assemblers, regional and wholesale traders, and 4. sales to cooperative unions via primary cooperatives. 
 Wholesale and regional traders are active buyers from deficit woreda markets particularly at crop harvest time, while consumers source grain from wholesale suppliers via retailers and cooperative unions during the lengthy scarcity periods in the deficit areas. The local market collectors and farmer- traders in both deficit and surplus woredas buy grain from farmers at village markets for resell to consumers and retailers at woreda markets, as well as to regional market traders and wholesalers. In most cases, grain collectors and assemblers are agents of regional traders and wholesalers. These market actors buy grain on commission basis or a fixed fee rate commensurate to the volume of grain they procure. Regional traders consisting of wholesale traders, cooperative unions, EGTE, processors, etc. are the principal actors in the inter-regional movement as well as grain flow to the central market. 
Thus, grain flow through the marketing channel may not be exactly similar due to differences between regions in terms of supply volume, the extent of market integration and linkage to major market destination, both domestic and export markets. Although considerable differences exist in inter-and intra-regional grain flow, the figure shown above, adopted from the SNNP Region provide an overview of the regional grain marketing channel and major actors in the market structure. 

As the above figure depicts, almost all the major actors are involved at the higher level in the hierarchy of grain marketing chain. However, the market outlets for farmers become narrower at lower level as there are fewer actors in grain trade at woreda and local markets. Nevertheless, more actors participate in the grain market structure of surplus producing woredas in which many assemblers, commission agents and brokers work as independent traders and/or for big traders. Cooperative unions are the exception in that they are active market actors in both deficit and surplus woredas. They also differ from the private traders in that they procured grain through their members, i.e., primary cooperatives who assemble grain from farmers in each kebele. 

The focus of market conduct is the behavior of market actors (private traders, cooperative unions, state enterprise, market agents, etc.) and the strategy of major market actors, for instance, pricing policy for buying grain, selling, etc. Each of these market actors, particularly private traders undertake trading activities with the main aim to maximize profit and the return to investment in trading business. Thus, the motive and objectives of each of the actors is reflected in their behavior or conduct of trade to attain the goal they aspire. The market conduct of major actors is discussed below with emphasis on the most important market participants at the local level. 

Farmers’ grain sales and market outlets differ depending on the accessibility of market and the type of buyers in close proximity. Most farmers sell their marketable grain immediately after harvest when prices are too low. The largest share of farmers’ annual grain sales takes place between January and March. Farmers immediate cash needs to meet commitments, for instance loan repayment, annual land and income tax and to meet other social and personal obligations are some of the reasons for the sale of grain soon after harvest. As a result, a sharp fall in grain prices during seasons of crop harvest is the usual and common phenomena owing to the oversupply of grain exceeding the existing market demand. 
Although farmers are aware of the sharp fall in grain prices during harvest season, the largest share of grain sales still happen during this period. 
Farmers sell small quantities of their grain to consumers, farmer/traders and village market collectors at village market or neighbors. Nevertheless, woreda markets are the main selling point for larger quantities of grain which are transported using pack animals or carried by the farmer for direct sales to alternative buyers including wholesalers, regional traders, assemblers, local market traders, retailers and consumers. Farmers also supply grain to primary cooperatives that collect and assemble grain in their kebeles for supply to market through cooperative unions. The existence of large market actors, both in number and size also ensures grain availability to consumers through markets while enhancing market competition. 

As stated earlier, cooperative unions are one of the major buyers of grain particularly in the surplus producing woredas. They are also major suppliers of grain to consumers and households in the grain deficit woredas and urban centers. Cooperative unions’ source grain mostly from primary cooperatives in their kebeles who serve as assemblers of grain collected from their members. As market actors, cooperative unions enjoy support from the federal and regional governments; they have access to technical and financial support from the government. As a result, the total annual volume of grains handled by these cooperative unions has been increasing over the last five years. Findings from the KII interviews suggest that cooperative unions handled about 18 percent of the total grain volume traded in 2016/17. These volumes could have been higher if they had the capacity to absorb larger volume of grain supply. Capacity limitations such as capital, storage and transportation limit their trading activities. 
Private traders are still the largest buyers in the grain markets in terms of volume. 
Fertilizers are imported only by the government and is sold and distributed to smallholder farmers through cooperatives, often on credit basis. Fertilizer is subsidized by the GoE with the aim of increasing crop productivity in the country. 

At the national level, there is an increasing trend in the price of food grain. According to a CSA report, the year-on-year Food inflation increased by 12.3 percent in May 2017 compared to last year. The increase was triggered by an increase in the May 2017 Food Consumer Price Index, which rose to about 170.5 percent compared to 151.9 percent in the previous year and an increase in the prices of cereals (especially Teff, Maize, Wheat, Sorghum and Barley). Prices of vegetables, pulses, potatoes, coffee and other tubers have showed a decline21. 
Figure 23 below depicts the CSA estimated Food and non-alcoholic beverage price index in the months of January 2016 to May 2017. From February to September 2016, there was a continuous increase in the consumer price index (CPI) of food and non‐beverage until its decline from September to end of the same year. However, a significant increase is observed in the CPI during the first five months of 2017. 

CSA CPI data for oil and fat, bread and cereals are used as a proxy estimate for the food aid commodities distributed to food insecure households (cereals and oils). Figure 24 shows the price indices for oil & fat, bread & cereals, taking the base price for December 2011. 

As the above figure indicates, despite the increase particularly in oil and fat CPI prior to June 2016, both CPI has been relatively stable. Although it is difficult to conclude, a slight increase is likely as observed from the upward shift in the April CPI of oil and fat CPI. 

One of the RRA tools employed by the study is the regional market observation, to assess the types of grains available, estimate approximate volume and find out the average prices of each type of the grain observed. Based on the market observations conducted in the four major regions, i.e. Tigray, Amhara, SNNP and Oromia, the average prices of cereals, pulses and oilseeds are depicted below by Tables 17, 18, and 19, respectively. 

Market availability of oilseeds is strong in Amhara, followed by in Oromia (see table below). Tigray is a known producer of sesame. Average sesame prices are about $184.98/qt. and are higher in the deficit areas than in the surplus areas. 

In addition, the analysis of secondary data collection from Amhara and the SNNP Regions shows that prices have been relatively stable particularly in Amhara region with slight increase in the lean season from July to September 2016. Sorghum price shows a more frequent fluctuation while the average prices of wheat and maize have been more stable with slight decline after July 2016. As usual, teff especially white teff is the highest food price commodity with average retail price of nearly $87.05 per quintal. 

In SNNPR, analyses of 2016/17 regional price data show a more significant monthly price variation. Teff has the highest price with more significant price variations. Except for wheat price increases before August 2017, there is no significant variation in the prices of the other food commodities. Grain prices have been relatively stable throughout the year with slight increases during the months of April, May, August and September. 

In 2017, wholesale maize prices have increased sharply from $21.76 in 2016 to over $39.17 in mid-2017. 
The increase of maize prices has triggered the increase of sorghum prices, a close substitute to maize. It has been confirmed from various sources that the main reason for this sharp increase in maize prices is Tanzania’s maize export ban, which led to increased demand for maize within the region and expansion of cross border trade between Kenya and Ethiopia, exerting pressure on domestic maize prices. There was also an increase in exports to the Southern Africa countries. 

Retail prices for the sample woredas were collected from the trade bureaus. Analysis of these prices reveal that cereal prices particularly prices of teff, sorghum and barley are slightly higher in deficit areas than in the surplus areas, Conversely, the wheat prices in the surplus areas are higher than prices in the PSNP woredas. Maize prices show very little variation between the surplus and deficit areas. 

Similarly, retail prices of chickpeas and haricot beans were also analyzed in both the PSNP and surplus woredas. As shown in Figure 28 below, there is no significant difference between prices of both chickpeas and haricot beans in PSNP and surplus woredas. 

Food crop prices are higher during the lean season and lower immediately after harvest in both the surplus and deficit woredas. The difference between prices in PSNP and surplus woredas is minimal, except for sesame prices which are higher in the surplus woredas. In the lean season, pulse prices are generally higher in the PSNP woredas than the surplus woredas. 

The main challenges to market integration are storage capacity limitation, transportation limitation and poor road conditions especially during the rainy season. The lack of storage capacity is one of the main problems facing cooperative unions and private traders in PSNP regions. The GoE recently built 11 storage facilities in South Omo zone and there are plans to build 133 standard stores to reduce losses in the near future. 
In addition, most market actors in the PSNP areas do not own trucks, instead they rent trucks to transport and supply grain to the market. Poor road conditions in remote woredas not only make transport costs very high but limit the availability of transport services in the area. A combination of all these factors negatively impacts the day to day business operations of market actors in these areas. 

As a result, the marketing cost of private traders is higher because of the fee to be paid for brokers, grain assemblers and commission agents. Thus, it is likely that private traders’ competitive position will be weakened because of higher marketing costs implying a lower profit margin. 

As stated already, transport services and road infrastructure, the availability of storage and other facilities are crucial for the normal functioning of grain markets. The capacity of market to increase grain availability to food insecure households depends on the level of market infrastructure development, especially the extent to which road conditions are passable to link the grain deficit and the surplus areas. 
Results from the KIIs and FGDs conducted both in PSNP and surplus woredas, show that poor road conditions and the shortage of transportation are the main constraints to grain marketing in both locations. The findings from the assessment regarding the above factors affecting market capacity are discussed in more detail below. 

The high transport cost is one of the reasons for the high grain marketing cost. Transport problem encompasses the shortage of transportation as well as road availability linking the grain surplus and deficit areas. From the perspective of grain deficit areas, transportation problem limits the inflow of grain from surplus areas to consumers while in the surplus areas; transportation challenges limit the outflow of grain to markets. 
Seventy-two percent of wholesalers in the deficit areas and 87 percent in the surplus woredas have good access to transportation services. Thus, the lack of transport means is not by itself a problem affecting wholesaler grain supply but it affects grain supply in combination with the other factors, i.e., the shortage of storage, finance, etc. 
KIIs and FGD in several woreda confirmed that transport services are sufficient and road conditions are favorable to respond to increased demand for grain (Deder, Dire Dawa, etc.). However, even though transport services and road condition are favorable to respond to increased food demands, grain prices are very high due to long distance from the main sources of grain supply. For example, the main grain supply source for Dire Dawa is over 425 km away. An example of an area facing transportation challenges is Bure, a surplus producing woreda in Amhara. Transportation services in the woreda are affected by poor road conditions, which are impassible, especially during the rainy season. 
In both cases, the lack of transport services, poor road conditions and the road distance between the grain deficit and grain surplus areas are the major constraints affecting market capacity to supply grain. 
The findings from studies conducted in the past provide evidences that support these findings. The grain market study on the response of Ethiopian cereal markets to liberalization indicated that the benefits of liberalization to producers have been relatively lower in the more remote areas with poor roads and market infrastructure23. 

Even if transportation facilities are available to deliver grain from surplus to deficit areas, the lack of grain storage and other facilities in the deficit areas will affect the capacity of market to increase grain supply. The situation in which market capacity to supply grain is constrained due to storage problem varies from one woreda to the other. Storage is a peculiar problem to neither the grain deficit nor surplus areas. 
PSNP woredas: Chiro is a PSNP woreda which has storage with a capacity of about 3,600 quintals. It was also reported that wholesalers have a storage capacity of 10,000 tons, on average. Similarly, the findings from Dire Dawa (PSNP) reported that the woreda has storage with a capacity of 20,750 quintals while the storage capacity of traders is very limited. The RRA findings indicated that the lack of storage is not a common problem in all PSNP woredas. 
Surplus woredas: The RRA reports from Dejen, East Este and Bure woredas are good examples of how storage affects market capacity to supply grain to the markets in surplus areas. KII and FGD in Dejen indicated that the lack of storage facilities along with poor road infrastructure and transport are serious constraints for the woreda to access foods through markets. For traders in East Este, the lack of storage facilities hampers their capacity to respond to increased demands. 

Roughly 50 percent of the traders could access credit, although a significant proportion in all regions, especially Amhara and Oromia, did not need to do so. Only 20 percent of the traders were unable to access credit. 

According to the RRA findings, consumers’ purchasing power is one of the main factors traders consider when selling grain into a market or area. About 90 percent of wholesalers interviewed, 92 in PSNP areas and 89.7 percent in surplus woredas expressed the will to increase their grain stock if households had more purchasing power. The wholesalers’ responses imply that the purchasing power of consumers is an important factor that traders consider in trading in an area. However, consumer purchasing power will attract traders only if the number of other traders already in a market is small because the presence of many traders in a market would suggests that there is a good supply of food commodities in the market. 
The ability of households to access grain through market will also depend on the availability of grain in the market, which in turn will depend on the ability of traders to supply the food grain in the amount and quality consumers demand. This implies that traders should be able to get transport services and the storage facilities necessary to keep grain stock in regular supply to consumers at the target market. Also, grain traders are often unwilling to take risk to supply grain to deficit areas due to the weak purchasing power of consumers in the deficit areas. 
Nevertheless, it has been noted from the RRA reports of numerous sample woredas in both PSNP and surplus areas that the affordability of grain price is crucial owing to the increase of grain prices in the current year, as compared to last year. Cereal prices have been high this year, especially maize and sorghum prices. This price increases made it less possible for the food insecure households who are also income poor to buy food from the market. 

Distance to the nearest market is also a factor that could inhibit food insecure households to access a diversified diet. The average distance to the nearest market in the deficit area is 10.5 km and 8.36 km in the surplus woredas. However, regional analysis shows that markets were more accessible in Tigray and SNNPR than in Oromia and Amhara. 
In areas affected by poor performance of the belg rains and the pastoral areas where production and reproduction performance of livestock have been staggered, it is unrealistic to expect that households have access to diversified food. This is the case for areas like the south and southeastern pastoral areas of the country (most parts of Somali, southern Oromia, and southern SNNPR), the lowlands of central and eastern Oromia, the Rift Valley of SNNPR, the lowlands of Waghimra & Abay river catchment of East Gojam Zone of Amhara, Tekeze River catchments of Tigray, Belg-dependent areas of South Tigray and South and North Wollo zones of Amhara Region. 
In the case of the PSNP beneficiaries, and most likely relief beneficiaries, reduction of the food aid ration means reduction in diversity of the diet of the beneficiaries. It is known that due to resource limitation, at least the PSNP wage will no longer include pulses. 
In most cases, diversity is limited to different types of grains, and it does not include vegetables, fruits and livestock products. For some of the areas like Halaba that grow pulses in addition to cereals, diversity is limited to what they grow on their farms like cereals and pulses, and this rarely include oilseeds. 
Similarly, in Chiro, Gamachis and Guba Koricha, food deficit woredas in West Hararghe, it was estimated that about 90 to 95% of diet of the people is based on sorghum and maize. A similar situation was found in Asagirt (North Shewa). These were also confirmed by market observations as only cereals were sold in the markets. In these woredas, access to diversified foods, especially in Hararghe, is limited by economic reasons. 
In the case of the surplus producing and in the highland parts of the country, the people have better access to diversified diet. This is due to the relatively good performance of the rains that enabled them to plant early maturing greeneries and better availability of feed that improved or maintained productive and reproductive performance of the livestock. The other possible reason is the recent increase in grain prices. Farmers in East Este Woreda reported diversification in their diet since the last two years owing to improvement in their income. 
In general, even though awareness regarding importance of diet diversification is increasing, still there is limited access to and utilization of high value food items like fruits, vegetables, edible oils, and livestock products due to economic, cultural, religious and availability issues. 

This chapter briefly discusses the incentives and disincentives of food aid transfers in Ethiopia. 
According to MoANR, food aid does not have negative impact if it is targeted properly and utilized wisely. When these conditions are fulfilled, food aid has demonstrated the potential for enhancing food production and natural resource conservation, in addition to filling food and nutrition gaps. Food aid distribution modality has improved over the years. The slow but sure move to cash only and cash/food mix and timing of distributions are beneficial to the communities. At present and in the near future, Ethiopia will still need food aid; what determines its effectiveness is how it is given out. 
Interviews with woreda agricultural offices also reveal the same positive view about food aid. They argue that food aid transfers have enhanced local production by enabling beneficiary farmers to put more time and effort in agricultural production and to also save their produce for the next season. 
However, a few key informants and farmers felt that imported food aid commodities can affect local production by discouraging local producers as increased supply in the market brings about lower grain prices. 

The food aid transfer is playing a critical role in regulating food grain prices in local markets through the supply of commodities to households. For example, key informants in Amhara region cited that food distribution made in June, July and August last year helped to lower the high food prices observed in the local market during that period. 
Some key informants believe local grain purchase should be preferred as it entails positive multiplier effects on production, resource utilization, if food is adequately available in the local market. 
The implementing partners have well established system and an early warning department that monitors markets monthly. In the past, prices have increased following a cash transfer but this happens only in the first couple of weeks after the cash is distributed to the households. Very small increases in prices occur during these initial weeks. 

The most visible effect of the food for work program is the rehabilitation and conservation of natural resources. Irrigation scheme have either been developed and rehabilitated using food aid resources. In addition, the presences of food aid conservation programs have helped minimize deforestation through firewood and charcoal sales. 

The amount of food aid transferred has been too small to make significant changes. However, the food aid has enabled beneficiary households to smoothen their consumption needs during times of rising prices. The RRA showed that food insecure households produce food crops enough to feed the family for a mean of 4.3 months; and food aid keeps them for another 5.5 months. They depend on other sources to cover the deficit. The average food transfer per person is a maximum of 90 kg in a year, which is not enough for poor households to get out of the food poverty trap. The FGD also showed some beneficiary households have stayed under food aid support for about 17 years, which is an unacceptably long period of time to be under a food aid program. 

Beneficiary households in many places graduated too early without developing adequate capacity to withstand shocks. As reported by woreda office of agriculture, many of these households are readmitted to PSNP program. 

Wheat is the major commodity through which food aid is transferred to beneficiary households. It has been consumed in food aid receiving communities for decades. Thus, the distribution of Title II commodities will not change the consumption habit or taste of the local population in food aid target areas. 
In general, 80 percent of Title II commodities are from food for work (FFW) programs and 20 percent from free distribution of food. Food aid transfers will likely not cause any disincentive effects in local producers and local markets and will not exert substantial impact in the near future because: 1. Local demand for Title II commodities is much higher than local production; 2. The supply of food aid commodities is too small to create any significant impact; and 3. Daily wage rate in FFW employment is much less than the average daily wage rates in the target regions and hence there is no any indication that farmers are employed in FFW program at the expense of neglecting household food production. The average daily wage for unskilled labor collected in the regions is much higher than the FFW payment rate, which is less than $2.18 (see Table 22). 

This chapter reviews the adequacy of ports, storage, and inland transport for the purposes of a FY18 Bellmon determination for Ethiopia. Findings are based on interviews in and around Addis Ababa, a review of secondary data and reports, and interviews with key informant. 

The landlocked Ethiopia currently uses four ports at different extents: Port of Djibouti, Port of Barbara, Port Sudan and Mombasa Port. Capacity of these ports and extent of use by Ethiopia are briefly discussed under the following paragraphs. 

Ethiopia relies on the Port of Djibouti to handle about 95 percent of its foreign trade turnover; and 70 percent of the cargo at the port is shipped to or from Ethiopia. This port is managed by Djibouti Ports SA (a public enterprise) in partnership with China Market Holding International. It annually handles an estimated seven million MT fright. Of this, about 20 percent is bulk food. The bulk terminal of the port can accommodate three vessels of 50,000 MT at three of its berths at a time. One of the three berths are used exclusively for grain; and it includes quayside storage of 30,000MT. The second berth can be used for grain, but it is also used to offload fertilizer and has quayside storage of 45,000MT. The third berth can be used for either grain or fertilizer. 
In addition to the three bulk berths, other three berths can also be used to offload either bagged or bulk cargo. They are served by individual quays that are parallel to and offset from the main wharf. Other three berths are multipurpose berths of shallower depth that can also be used for both bulk and bagged cargo. Of the remaining berths, two are used for container freight; one is used for roll-on-roll-off cargo; one is used for naval vessels; and two are used for dhows and small commercial vessels. 
The port, therefore, could potentially at a time accommodate six 50,000MT vessels and another three 30,000MT vessels carrying food. Practically, however, due to other competing demands, vessels offload food commodities at most at four berths at any one time. However, the port does not always function at its full capacity and discharge shipments due to different technical and logistic problems that are directly related to the port itself (discharging difficulties) and those related to logistics capacities in Ethiopia. 
Notwithstanding all these, Port of Djibouti had been the only import-export route of Ethiopia including times when the country simultaneously imported huge amount of food aid commodities and chemical fertilizers (in addition to other commodities). Since then, however, some other alternatives are being used. 

Ethiopia in February 2015 started using Berbera Port on an agreement reached between the two countries in January the same year. This port serves Somaliland and the eastern portions of Ethiopia. 
The port has an annual cargo capacity of 1.2 million MT; and it possesses nominal capacity to accommodate up to four bulk grain ships of 25,000 MT at a time. However, realizing this potential is limited by its limited discharge capacity, which is a bagging capacity of only 1,200MT per day. Absence of other quayside bulk offloading equipment is the other problem. Consequently, the port practically handles one 25,000MT bulk grain ship at a time and for about a month. Nevertheless, this port is often used by WFP and government of Ethiopia. The latter has plans to increase its use of the port. 

Port Sudan has a capacity of handling 9 million MT of bulk cargo per year. This port is a well-equipped facility. It is divided into three areas: The North Port with 15 berths handles bulk cargoes including grain, cement, oil, and molasses. The South Port with four berths handles bulk grain, containers, and oil products, and a roll-on-roll-off berth. The third one (Green Harbor) has got four berths and handle dry bulk (fertilizer and grains), seeds, and containers. These areas also have alongside storage and discharging facilities. 
Ethiopia started using Port Sudan for the importation of 50,000MT of fertilizer in early 2015. Since then, it has been increasingly used for importing bulk of chemical fertilizers and some other commodities including petroleum. 

Mombasa is located on the east coast of Africa approximately midway between the South African Port of Durban and major ports in the Red Sea and the Middle East. It is Kenya’s and indeed East Africa’s biggest and busiest seaport. The port is the main gateway to East and Central Africa serving a vast hinterland of more than 120 million people in Kenya, Uganda, Rwanda, Burundi, Eastern DRC, South Sudan, Ethiopia, Somalia and Northern Tanzania. The main port has 19 berths comprising of one bulk grain terminal, two oil terminals/jetties, four container berths and 12 general cargo berths. 
Even though the extent is not clearly known, Ethiopia has also started using Mombasa Port. 

Storage warehouses exist both within Ethiopia and at Djibouti port. According to the 2016 Bellmon, Djibouti has 16 warehouses with a total storage capacity of 250,000 MT of bagged grain, while the bulk terminal has quayside bulk storage capacity of 30,000 MT of grain. In total, Djibouti port has 280,000 MT of storage capacity. Storage in these facilities incur demurrage, it is therefore of great importance that FFP IP should have adequate storage capacity to handle the anticipated volume of food aid. 
It is estimated that there is nearly 1.8 million MT storage capacity owned by different entities nationally. 
Major Stores are owned by Government, Public Enterprises, Private Commercial Companies and Individual Traders. Six main groups have primary storage within Ethiopia: 1. NGOs – CRS, REST, WVI, Food for the hungry Ethiopia, CARE, Save the Children, ORDA etc. 2. SFRA 3. EGTE 4. MoANR 5. WFP 6. Traders The table below shows the storage capacity of each of these organizations. 

According to data from WFP, there are a total of 10,954 trucks registered at Federal level. Of these registered trucks, only 5,653 or 52% have 30 to 40MT loading capacity and less than 10 years’ age. 1,367 trucks, or 12%, have the same capacity but their age ranges between 10 and 20 years. See the table below for age and loading capacity of trucks registered at Federal level. 

There are only about 1,500 40-45t trucks that move grain between Djibouti and the main discharge points in Ethiopia (especially Nazareth, Desie and Kombolcha) (United States Agency for International Development, 2016). The report concludes that the main factor that affects inland transportation of grain is the minimum time needed for a round trip for a truck to load and discharge grain. The minimum round trip depends greatly on the time it takes to offload at the destination warehouse and this frequently exceeds the single day allowed for in the standard minimum figure. To ensure that the rate of truck availability does not impair the port’s discharge rate, it will be important to ensure trucks are adequately distributed amongst warehouses and to maximize offloading capacity of each warehouse (United States Agency for International Development, 2016). 
Ethiopia’s dry cargo sector continues to experience regular capacity deficits, which can be mitigated by increasing the number of trucks available. 

Dry port is well underway (May 2017) but visibly far from being commissioned (Lines, 2017). The missing facilities and truck lines within the Port of Doraleh are soon to be built through a combined effort of the two governments of Djibouti and Ethiopia. The very new Djibouti Multipurpose Terminal is now connected to the railway through a truck line. 

On average, domestic production covers nearly 90 percent of the food requirements of the Ethiopian population. Food deficit ranges from 6.2 percent in 2015/16 to 21.4 percent in 2013/14. The level of food self-sufficiency through local production has been fluctuating during 2012/13 to present. The food gap was wider in 2012/13 at 16.3 percent and 21.4 percent in 2013/14. We also note that food imports (both concessional and food aid) were instrumental in narrowing this food gap. In 2017/18, food supply is estimated at 31.45 million MT and only 19.5 million MT is available for human consumption. This level of consumption will be possible if the government and donors import 987,314 MT - of cereal equivalent food grains. The annual per capita amount of food supplied is estimated at 202.6kg which is lower than the minimum requirement threshold of 218kg. 
The single most concerning aspect of imports is their current level of insufficiency. If the anticipated level of import is not attained, then food supply will be inadequate and will most seriously affect those who depend on food aid transfers. 

While there have been a number of positive developments in the agricultural sector, the private market's capacity to meet localized food deficits is uneven and limited by poor market information and poor access to credit. That said, even if domestic supplies increase, the flow of goods to deficit areas would remain hampered by weak price signals due to lack of consumer purchasing power especially among the rural poor. 
While the longer-term solutions to enhancing market performance will rely on overall investment in agriculture, infrastructure, and development of income-generating opportunities, in the near-term, continued in-kind support through the PSNP will be necessary. 
Price and food aid shipment data to Ethiopia suggest that food aid transfers should be tightly aligned to local production shortfalls to avoid price-dampening effects on wheat and maize markets throughout Ethiopia. 

A cash transfer to PNSP households in deficit areas can provide incentives for traders to move grain from surplus to deficit regions. If the value of the cash transfer is either set too low or eroded by inflation over time, as is currently the case with the PSNP cash transfer, the cash transfers will not increase effective demand as much as the PSNP intends. Faced with a weakened signal, traders will only react to opportunities for spatial arbitrage in some proportion to the increase in effective demand (after accounting for relative transportation and other transaction costs potential traders face). 
Most PSNP beneficiaries strongly prefer a mixed cash and food ration because the value of cash ration continues to be eroded by inflation. Until inflation is much lower, and/or the amount of cash transfer is adjusted upwards more frequently to account for loss of purchasing power, this beneficiary preference for a mix of food and cash or food only should continue. 
 (particularly the strength of those preference and beneficiary willingness to substitute food for another). 
Given the size of the country, the heterogeneity of livelihoods and food preferences, and the uneven performance of food markets across the country, it will be incumbent upon potential IP to develop a thorough understanding of local conditions in the areas in which they expect to distribute food aid. 
During the field visit, the study team heard that beneficiaries valued wheat rations because of taste, durability against spoilage, and as a larger asset transfer than the same quantity of sorghum (a cheaper, less preferred cereal). Interviewees noted that beneficiaries infrequently self-monetized wheat rations to meet cash needs and/or to purchase larger quantities of sorghum. Beneficiaries also seemed to value edible oil in their ration. 
The main concern for a cereal-only basket for distribution was the loss of wages since the amount of cash transferred is determined by the ration of the food distributed. Beneficiaries also voiced that cereals are usually available in the markets and they would prefer a more diversified ration. A change in the food-basket is not recommended at this time. 

For the purposes of the FY18 Bellmon determination, the study team finds that Djibouti Port is a good primary port for USG food aid imports. USG food aid destined for Ethiopia is given priority, and the port is currently the port of choice for a majority of food aid shipments to Ethiopia. 
Djibouti will continue to be the port of choice in spite of its congestion, which is largely caused by Ethiopia's growing demands on Djibouti Port as well as Ethiopia's customs procedure implementation and transport policies. A small and ageing truck fleet, often controlled by government priorities, and delays with customs processing procedures, were the most quoted reasons for clearance delays and long delivery lead times by those interviewed in logistics and related industries. 
Port Sudan is a viable option for deliveries to north western Ethiopia, while Berbera is an excellent option for eastern Ethiopian food aid deliveries, particularly to Somali Region. Port Sudan is arguably the most efficient port of the three and its national heavy truck fleet is very responsive and modern. Sudan has a thriving private sector and aggressive service providers. However, the weight restrictions on Ethiopian roads (as discussed above) raise transport costs and delivery time. If cargo is headed south of Gonder, costs will further increase, as there is only one road in good shape, which follows a long and indirect path to Addis. Again, Ethiopian customs and cross border entry procedures and the ageing Ethiopian truck fleet slow down the process. A rail link from Gedaref to Gonder should be a bilateral consideration. 
Berbera Port is the smallest of the three and in need of upgraded infrastructure and machinery. 
However, the port functions with ingenuity to maintain efficiency. 
Somaliland has an adequate truck fleet that assures timely delivery from Berbera to eastern Ethiopia. As with Djibouti, operations would benefit from a liberalized transport sector.

As mandated by Congress, prior to the approval of a proposed US food aid program in a recipient country, the USG must make a positive ‘Bellmon Determination’ that: A. for the proposed country food aid program: (1) Adequate storage facilities will be available in the recipient country at the time of the arrival of the commodity to prevent the spoilage or waste of the commodity; and (2) The distribution of the commodity in the recipient country will not result in a substantial disincentive to or interference with domestic production or marketing in that country; and B. Impact on local farmers and economy – The Secretary or the Administrator, as appropriate, shall ensure that the importation of United States agricultural commodities and the use of local currencies for development purposes will not have a disruptive impact on the farmers or the local economy of the recipient country. 
Food for Peace/Washington (FFP/W) currently complies with this legislation by commissioning market analyses to enable USAID to make Bellmon determinations. 
Over the years, USAID/Ethiopia has routinely commissioned in-depth Bellmon analyses to inform program design, and to help ensure that FFP programs in Ethiopia are well targeted and are thus not having a substantial negative impact on markets or local production incentives, as required by the Bellmon legislation. 
In addition to in-kind food transfers, USAID/Ethiopia introduced cash transfers to beneficiaries under the Productive Safety Net Program IV (PSNP IV) beginning in FY 2017 in one Woreda, with a possibility to expand to other Woredas in the coming year. As such, USAID is interested in analyzing the market’s ability to respond to increased disposable income and the feasibility of cash distributions to beneficiaries in operational areas. 
Although the Bellmon requirement pertains only to Title II resources, and not to non-Title II food assistance, USAID’s support to Ethiopia hinges on the fact that the resources delivered are need-based and that the distribution of the commodities in the recipient country will not result in a substantial disincentive to or interference with domestic production or marketing in that country. Therefore, the SOW for this Bellmon Analysis Update is intended to produce information that will enable USAID/Ethiopia and Food for Peace/Washington to determine the appropriate food-cash mix of transfers for the next cycle of Development Food Security Activities (DFSAs). 

Wheat is considered a strategic grain that is vital to ensure Ethiopia’s food security. Consequently, the Government of Ethiopia’s (GoE) seeks to increase national production, with the intent of reducing its dependence on wheat imports. However, the demand for wheat is growing faster than the country’s production capacity, which for the foreseeable future will make wheat imports a necessity. The government currently controls wheat imports, except for donor-provided wheat, and subsidizes a certain portion of the wheat being used to make bread in the major city centers. In the future, the GoE is expected to gradually withdraw from this subsidy scheme given its growing cost, and gradually open the import market to private players. However, the local millers’ and other private importers ability to secure adequate foreign exchange in a timely fashion will, to a large extent, determine the success of such liberalization. 
The US Foreign Agricultural Service, in its 2017 GAIN Report, provides an estimate of 3.9 million metric tons of wheat production in Ethiopia for 2016/17 which is 400,000 metric tons higher than the FAS production estimate figure for 2015/16. The 2016/17 year increase was largely attributed to more favorable growing conditions in the main wheat-growing areas of the country. GAIN reported that the Government of Ethiopia’s (GoE) production estimate for the same period is 4.2 million metric tons, which is nearly the same as the figure reported in 2014/15 when growing conditions were much better, which was production without the El-Niño drought. 
The GoE imports a significant quantity of wheat; in 2016/17 it is estimated that GoE’s imports would reach up to 1.5 million metric tons. Currently, close to 1 million metric tons of GoE wheat procurements have been contracted and/or delivered with more expected in the coming months. This amount includes the government’s recent purchase of 400,000 metric tons of imported wheat. The price paid for this imported wheat was about $225/MT, which is about half the price of locally-grown wheat. 
Government-purchased wheat is used for price stabilization (i.e. bread subsidy for urban poor), food assistance, and the replenishment of the country’s strategic grain reserve. 
GAIN reports that wheat demand continues to outpace domestic production capacity as evidenced by the need to import. However, consumption is partially held in check in large part because of the government’s current import controls and its bread subsidy scheme. Nonetheless, wheat consumption is expected to continue growing. This growth is fueled by rising consumer income, urbanization, and changing diets. 

The overall objective of the study is to provide sufficient information about current and anticipated local market dynamics in Ethiopia to enable USAID to make a Bellmon determination regarding potential Title II distributed food and possible cash transfers for FY 2018 programs. To achieve that objective, USAID requires the best available evidence of the market demand and supply situation for 2016/2017, as well as an estimate for 2017/2018. The study must provide detailed updates on production and availability of major crops, affordability of staple foods, and the markets’ ability to respond to an increase in effective demand without undue upwards pressure on retail prices. 
Moreover, the study will assist to design improved food security programming in Ethiopia by informing USAID’s decisions about the appropriateness of transitioning to cash transfers as the preferred mode of food assistance in most of the highland areas. 
 1) The first is to determine whether there is sufficient supply of key commodities (cereals and pulses via a combination of local production and imports) both nationally and in relevant markets serving FFP-targeted Woredas during anticipated PNSP cash and or food distributions to ensure: a) PSNP beneficiaries will be able to access grain, pulses and other important food commodities, such as cooking oil, at all times, and b) There is little risk of significant inflation in local markets, should Title II program shift to more cash in future Title II supported Woredas. 2) Development and emergency Title II food assistance that are brought into Ethiopia will not impede local production or private sector marketing; and 3) There are sufficient warehousing and transport capacity in country to store and distribute Title II imported food assistance timely. 
To reach the necessary conclusions, two lines of investigation will be undertaken: assessment of market capacity to respond to cash disbursements and food to PSNP disbursements. Details on each of these lines of investigation follow: a. Assessment and determination of overall food availability at national and local levels, b. Level of market integration, market competitiveness and traders’ response capacity to increased demand, especially, that arise from cash disbursements through the PSNP. c. Assessment of warehousing and transport capacity at national level. 
These assessment and determination require: Independent estimate of the net production of both cereal and pulse for 2016/17 Meher season and estimate 2017 belg production as well as 2017/18 Meher production forecast, including anticipated food deficits where such exist in the light of factors external to production including government imports, trade flows, and food aid, as determined by interviewing key stakeholders in both public and private sectors and reviewing existing data; o Area to be planted (estimate for the 2017/2018 season) o Availability and use of inputs (estimate for the 2017/2018 season) o Incidence and impact of pests and diseases and net production (for current 2016/2017) o Forecast Incidence and impact of extreme weather conditions Price trends analysis provides estimates of the anticipated food supply gap and or inflation in post-Meher 2017 (for both cereals and pulses), in terms of food availability in the local markets. The price trend analysis and projection will also be required for the whole of FY 2017 and estimate for FY 2018. 

The contractor should have a strong background in agricultural production estimation, marketing, commodity trading and sales, agricultural statistics methodology development, and market data analysis. 
The team leader should have a minimum of M.Sc. degree in Economics/Agricultural Economics or related discipline. Previous experiences in conducting similar studies in Ethiopia and/or other developing countries are highly desirable. The study team is expected to be 3-4 core team members with pertinent qualifications as listed above. The Team Leader will be responsible for team coordination and ensuring the timeliness and quality of deliverables. The other team members will be responsible to carry out interviews/data collections, train and monitor lower level data collectors and compile, analysis and write the report. USAID expects the contractor may need to hire a local survey firm to assist with the required primary data collection. 

The contractor will work under the guidance of Assets and Livelihoods Transition (ALT) Office in coordination with ALT senior staff in USAID/Ethiopia. Throughout the contract, the contractor is encouraged to work closely with the partner local firm/s, as well as USAID/ALT office and other pertinent offices in USAID/Ethiopia in order to ensure inclusion of key issues detailed in the scope of work and others as necessary and appropriate. 
USAID/Ethiopia, in particular, the ALT Office and the Executive Office, will provide general office support (including support letters for scheduling meetings) and technical guidance. The contractor will be responsible for arranging all local travel, logistics, meetings, and office space. 

As stated earlier in the methodology session, both primary and secondary data will be used to inform the study. 
Primary data: Primary data will be collected from: Surveys through a Rural Rapid Appraisal technique with farmers and traders. This will be done on all cereal and other crop production areas and food deficit areas too. Special focus will be on food insecure Woredas to assess how the markets operate and inform on any market failures seen. 
Key informant interviews with: (i) Ministry of Agriculture representatives, representative at EGTE, NDRMC and at the Strategic Food Reserve Agency at the federal, regional, zonal and Woreda levels; (ii) Representatives of FFP implementing partners, traders (especially major importers and wholesalers), Cooperatives Unions; and (iii) Other stakeholders such as World Food Program/ Vulnerability Assessment Mapping (WFP/VAM), FEWS NET, Food and Agricultural Organization( FAO), other donors like UK Department for International Development (DFID) and Canadian International Development Agency (CIDA) Focus groups conducted with a sample of smallholder farmers and traders. The focus will be the assessment of production and availability of food to determine the accessibility of food in both PSNP and non-PSNP Woredas. 
