Price Fluctuations Create Market Uncertainty

Businesses and customers alike have reported price instability in wake of the political unrest in parts of the country; a dawn of hope could be on the horizon, however, for the first time since the New Year, report Samson Berhane and Hawaz Merawi. The issue has largely been driven by the difficulty in transporting goods to the capital from crop producing areas, as a direct result of the protests - road blocks, in particular. The market does, however, appear to be taking a positive turn since the announcement of a state of emergency in the country, according to a number of actors in the sector.

The past week has seen a slight reawakening in the cereal, vegetable and fruit markets, after diminished supply led to soaring prices over the past two weeks.

The capital gets almost all of its supplies from the surrounding Oromia Region. Although some shipments come from different parts of the country, all have to pass through this region.

The market has experienced hiccups at different stages over the past few years, depending on the rise of clashes and property damage in certain source areas. Such trends are felt strongly when demand on the consumer side increases and where systematic interventions, including boycotting supplies, occur – especially during the holiday seasons. The impact, however, was not as significant as what took place in the week that followed the stampede at the Irreecha celebration, which led to death of over 50 people.

The vibe of the protests in the aftermath of the stampede were particular in their nature, targeting economic institutions, and both foreign and local investments. The intensity was overwhelming, leading to the destruction of over 60 company vehicles, as well as other equipment and facilities.

Samson Tadesse, 50, is a wholesaler who has been trading kitchen utensils for the past 15 years. He sources the items for retailers in Merkato. He felt the shock, with a sharp cut in the appetite of his clients to take his products.

“The number of customers has declined at an alarming rate due to the recurrent instability that has spread throughout the country,” he said. ”The week after Irreecha brought a peak impact of the unrest.”

The political unrest began a year ago, with resistance to the proposed master plan for Addis Abeba. It began anew following the death of a school child, killed by a police bullet after he and his friends opposed the proposed relocation of their schools. Though the government cancelled the plan, protests escalated to unprecedented levels throughout the region. It even spread to the Amhara Region in August 2016.

“The fear and uncertainty that has engulfed the country has been adversely affecting my business the whole year and the worst came during the previous week,” Samson added.

Days after the Irreecha celebration, no less than three factories, 13 flower farms and two lodges were destroyed by protesters in Oromia.

Samson has customers throughout the country. However, he makes most of his sales to retailers and consumers residing outside of Addis Abeba.

“The new vibe of protest since the Irreecha incident was like pouring fuel onto a fire,” Samson said, bitterly.

Situated in Merkato, close to the area commonly known as Chid-Tera, Samson was visited by an average of four people a day the week after the Irreecha incident – a quarter of the average number under normal circumstances.

Merkato is located in the North West part of the city, in the Addis Ketema district. After the Italians founded the area in the 1940’s, it stood out in its attraction to retailers and consumers looking for different commodities, due to its huge size and variety of suppliers, like Samson.

Samson thinks that the state of emergency declared by the government will increase the fear of his customers to buy his products, although his sales have started to increase again compared to previous weeks.

Last week, the government declared a state of emergency following the violent anti-government protests in some parts of the country. The declaration by the Premier came on Sunday, exactly one week after the Irreecha festival.

After the declaration of the state of emergency on October 9, 2016, Merkato’s cereal market, Ehil Berenda, saw a decline in the price of teff.

Girma Bogale, a wholesaler of staple crops in Ehil Berenda in the past, argues that the market has stabilised after the government called a state of emergency. Girma gets the crops he sells from farmers who reside in Bale, Wellega and Sheno.

Since the outbreak of unrest in Amhara Regional State in August 2016, there have been serious supply shortages due to the high risk associated with traveling on the roads linking Addis Abeba with other cities.

“The Irreecha incident caused violent demonstrations, which worsened the situation further,” Girma added.

Two months ago, the price of teff was 2,000 Br a quintal, but since the Ethiopian New Year, the price has escalated to 2,500 Br a quintal.

“People feared that teff would disappear from the market and started to buy large quantities, which caused a further price increase,” Girma noted.

The price has fallen to 2,400 Br a quintal now, while the prices of other crops, like maize, are still not stable as a result of the short supply.

Girma thinks that a further downward push in price is to be expected as a stable political environment prevails.

To attain that, the government said the state of emergency will remain in place for the next six months, with the aim of calming the anti-government protests. This marks a hardening of the government’s position, after months of protests in different parts of Ethiopia.

Another market that has been disturbed due to the unrest is the vegetable market.

In the seven days immediately after the Irreecha incident, vegetable retailers in Atikilt Tera affirmed that the price of vegetables increased by between nine and 112pc.

The blocking of roads that connect the city with Oromia and the South Nations, Nationalities and Peoples’ regions was the major reason for the rise.

Amanuel Mengistu, 26, a restaurant owner around Atena Tera, argues that the price of vegetables has shown a decline in comparison with the previous week.

The week after the Irreecha incident, onions showed the lowest increase of nine percent, while French beans displayed an increase of over 110%. However, according to Amanuel, last week this situation reversed.

Onions declined by 100pc to 16 Br a kg, while onions reverted to their previous price of 20 Br – exactly the same as before the incident.

The Addis Abeba Trade Bureau is aware of the market disturbances over the past two weeks.

“Some businesses in the city were even closed,” said Yosef Assefa, a marketing expert at the Trade Bureau.

However, he asserts that the situation is under control since the unrest has calmed almost back to normal.

In order to stabilise the market over the past two months, the city has created linkages between farming cooperatives. The Lume-Adama Farmers’ Cooperative is one of those that supplies teff and other crops to unions in Addis Abeba.

The cooperative sells teff at a market price of 1,875 Br a quintal to unions in the Lideta District.

A week after the Irreecha incident, the Cooperative lost over four million Br since it was hard to get in to the city due to the blocking of roads.

“The blocking of roads stopped us reaching our customers,” said Tadele Abdi, the manager of the Lume Adama Union, which comprises over 30 thousand individual members. “Our sales this week were better than the week after the Irreecha incident.”

Furthermore, the country’s month-on-month price index, showed a two percent rise. Among the components of the price index, the food inflation rate hit a 3.3pc rise in September 2016, compared with August 2016.

It is not only sellers affected by the market disturbance; households also had the same experience.

Abebache Awake, a mother of three, buys most of her food items from the Kera area. She explained that the vegetable prices increased suddenly after the Irreecha incident.

“Teff showed a 300 Br and a 1,000 Br rise compared to a week and a year before, respectively,” Abebech told Fortune.

Though, she thinks, the market still needs more stabilisation compared to last year.

“It’s the final consumer who will face the brunt more so than anyone,” she added.

By Samson Berhane and Hawaz Merawi
Fortune Staff Writer

Published on Oct 18,2016 [ Vol 17 ,No 859]



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