By Carolyn Abdenour
Impunity Watch Reporter, Africa
ADDIS ABABA, Ethiopia – Earlier this month, the Ethiopian government removed price controls that have been in place since January of this year. The price controls were initially implemented to stabilize the price of food staples such as meat, bread, and cooking oils. Now that the controls have been removed, food prices are soaring, and many Ethiopians feel the government’s actions are causing turmoil.
During the six months the price controls were in place, the government did not observe significant changes in the price of food. However, since they were lifted, the meat market has collapsed, with the price of meat increasing $2 per kilogram in the last few weeks.
Other goods’ prices have increased similarly. Chickpea flour was $0.65 per kilogram and is now $1.60 per kilogram. Coffee, Ethiopia’s most important crop, is now too expensive for most of its citizens to purchase. An Ethiopian taxi driver reported “[My] family can no longer honor a basic Ethiopian courtesy by serving [coffee] to guests”.
The Ethiopian government blames these increasing food prices on the international market. However, the International Monetary Fund (“IMF”) counters the government’s claim by asserting that the government is over-borrowing and printing too much currency, explaining in May that Ethiopia’s money supply has expanded by 35 percent. The IMF claims this increased money supply is causing the spiraling food prices.
To combat the rising food prices, Ethiopians are boycotting meat and have created a text message campaign to voice their concerns. A local meat seller said “the campaign has affected [my] customer base but [I] can’t afford to reduce prices”. He further explained that under the price controls, he made a marginal profit. Once the price controls were lifted, he had to double his prices to remain in business.
Complicating the issue further, the government has sold land to Saudi Arabia and China for rice production. The government maintains that the land they sold to foreign investors is not being effectively used, and its sale will help Ethiopian communities. Hailemariam Desalegn, Ethiopia’s Deputy Prime Minister and Minister of Foreign Affairs, made assurances that only three percent of the arable land was being sold to other countries for food production, that the land is low-land that farmers do not want to plow, and that it is malaria ridden. However, BBC reported “local people used the land for agriculture, hunting and for gathering fruit in times of famine.”
In response to the increased food prices, Murray State University economist and native Ethiopian Seid Hassa said “the measure was taken without any careful study about the causes of rampant inflation, and the ruling party took the measures to distract public anger and potential unrest”.
For more information, please see:
Ezega – Ethiopia: Government Lifts Price Caps, Food Prices Zoom – 22 June 2011
Washington Post – Ethiopia food prices spike after govt lifts price caps, making food unaffordable for many – 21 June 2011
Bloomberg – Ethiopian Annual Inflation Rate Increased to 34.7% in May on Food Prices – 13 June 2011
BBC – Ethiopia weighs benefits of foreign ‘land grabs’ – 10 June 2011