Abstract

Purpose: We analyze several dimensions of food security in Ethiopia, taking into account projected population growth, economic growth, and price information to estimate future food consumption by income decile. The analysis looks at the potential impact of large consumer price increases on food security metrics.

Methodology: We use USDA ERS’s new modeling framework for its annual International Food Security Assessment. The modeling approach captures economic behavior by making food demand systematically responsive to income and price changes—a demand specification well-grounded in microeconomic foundations. The projected change in food consumption can be apportioned to population growth, income growth, and changes in food prices and real exchange rates.

Findings: Ethiopia is highly food-insecure, with 54% of the population (52 million people) consuming less than 2,100 calories a day in the base year (average 2013–15). Income growth under unchanged prices mitigates food insecurity with the number of food insecure people falling to 42.5 million in 2016. If domestic prices were free to fall with world market prices, the food insecure population would decrease further to 36.1 million. If domestic prices increased because of domestic supply shocks and constrained imports, the food-insecure population could rise to 64.7 million. The food gap (i.e., the amount of food necessary to eliminate food insecurity in the whole country) would reach 3.6 million tons.

Implications: The current policy of promoting food security through autarky has some severe limitations. Allowing private traders to import food grains and hedge price variations and exchange rate changes, would greatly improve food security in Ethiopia.

Keywords: food security, Ethiopia, food demand, food gap, price increase, food imports

JEL codes: Q17, Q18