Due to several factors, Ethiopia has emerged as the largest wheat flour importer in Africa. Population growth and shifting dietary patterns, linked to urbanization and rising incomes, have driven consumption of wheat and wheat products to rise over the past decade. Wheat now represents 14 percent of the total caloric intake in the country, making wheat the second-most important food behind corn (20 percent) and just above teff (10 percent), a local grain.

Ethiopia has become the largest wheat flour importer in Sub-Saharan Africa, importing 300,000 tons in 2020/21, mostly from Turkey, Egypt, and India. Given Ethiopia is completely landlocked, most has been low-priced Turkish wheat flour informally imported from Djibouti and Somalia through the northern border and eastern part of the country.

There have also been reports of informal bartering occurring at the border, with farmers trading cattle for wheat flour.

Despite the growing importance of wheat as a food staple, Ethiopia has dealt with wheat shortages since 2020, exacerbated by both weak production and insufficient imports. Production in Ethiopia has been hampered over the past 2 years by political tensions displacing thousands in the farming community.

As a result, Ethiopia remains a net importer of wheat, satisfying around 25 percent of the local demand with imports. Most is imported by the Ethiopian government, though a portion is imported as food aid, including from the United States. The Ethiopian government has issued multiple tenders but has had to cancel several of them. Higher global wheat prices have only exacerbated the supply issue further.

Ethiopia has been importing and distributing wheat to flour mills at subsidized prices (currently at 30 percent of the prevailing domestic price) for a decade to stabilize the market. Millers would then sell the subsidized flour to bakeries to make bread. This has put pressure on the government’s foreign currency reserves. With global prices now almost double what they were 2 years ago, the government cannot afford to purchase enough wheat to satisfy domestic demand.

In December 2021, in an effort to more efficiently stabilize wheat markets and reduce misuse of subsidized flour, the government announced a new distribution scheme for imports, where the subsidized flour would be sold from millers directly to consumers.

With both a smaller crop and reduced imports, the Ethiopian Millers’ Association estimates its affiliate members are operating below 50 percent of their available capacities2. In April 2021, to facilitate trade in order to make up the shortage of wheat flour, the government removed a value-added tax and turnover taxes on imported food grains and flour.

Source: United States Department of Agriculture Foreign Agricultural Service – Grain: World Markets and Trade, 2022

DISCLAIMER

The opinions expresses here in the post "Ethiopia Remains a Net Importer of Wheat in 2020/21" are those of the individua's contributor(s) and do not necessarily reflect the views of Business Info Ethiopia , BIE Intelligence PLC, its publisher, editor, or any of its other contributors.

Share.

Comments are closed.