The marketing of foodgrains in Ethiopia
This thesis seeks to investigate the efficiency implications of the operation of the Agricultural Marketing Corporation (AMC) established in 1976 with the aim to succeed where the 'invisible hand' of the market was ineptly presumed to have failed. The thrust of the analysis, however, indicates that policies governing the operation of the markets for foodgrains have been wrongly conceived. It is shown that the AMC, as a major marketing agent, has served neither the efficiency nor the equity objectives of policy, and that farmers would perform much better without it. In Ethiopia, the-marketing of foodgrains has always covered a relatively small part of the total output, with most of the production earmarked for subsistence. Historically, the weak farm-to-market link has widely been believed to be a major constraint on the marketing of foodgrains and hence on the expansion of marketable surplus. This still remains to be the case in most parts of Ethiopia. But on the basis of the evide nce borne by this study, it appears that the advantages of proximity to market can be substantially eroded by the prevalence of marketing policies restricting the flow of foodgrains from points of production to points of consumption. Peasants in Dibandiba and Oudie, the districts chosen for our survey, have the advantage of being near to the Addis Ababa foodgrain market, and also to big local markets, namely, Nazareth and Debre Zeit respectively. Despite this locational advantage, however, most of the farmers in the sample - particularly those from Oudie - are observed to be inefficient. This appears to give credence to the view that proximity to Addis Ababa, by making them more accessible to control, had, the effect of embarrassing their productive effort. And Yet, peasants are not unresponsive to price and other material incentives. Indeed, the rate of marketable surplus of farmers in Dibandiba and Oudie is observed to be much higher than the national average. Rather than improving the income status of the peasants, the high rate of marketable surplus, however, goes to subsidise the AMC and to benefit a handful of licensed foodgrain merchants working under the vassalship of the AMC. If present marketing policy were allowed to continue to apply for long, it would blunt the supply resposiveness of most of the farmers in the areas surveyed; and agricultural efficiency would suffer the more for it. The study, therefore, suggests that it is high time the AMC gave way for the market to handle the production and distribution of foodgrains. The evidence from Dibandiba and Oudie suggests that where the AMC failed on grounds of efficiency and equity the market can succeed.