Value Chain Resiliency and COVID-19: Results from Ethiopia
- Eastern Africa
- Africa: Sub-Saharan Africa
- Value Chains
- Food Systems
- COVID-19 Economic Impacts
- Input Markets
- Agricultural Inputs
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As Ethiopia’s population has become increasingly urbanized over the past decade, more and more households have come to rely on markets, rather than their own farms, for their daily food needs. This dependence means that well-functioning agri-food value chains have become increasingly vital to food security for much of the population. The onset of the COVID-19 pandemic raised serious concerns about the resilience of these value chains; while Ethiopia never closed its borders or imposed full lockdown measures, efforts to contain the virus still had the potential to disrupt the agri-food system and negatively impact food and nutrition security. A new series of working papers from IFPRI’s Ethiopia Strategy Support Program (ESSP) examines how two important value chains – the dairy value chain and the vegetable value chain – fared during the pandemic.
The studies draw on in-person survey data from February 2018 (for dairy) and February 2020 (for vegetables) and phone survey data from June and September 2021 (for dairy) and March 2021 (for vegetables). Comparison of these data allowed the authors to examine how value chains have responded and adapted to the COVID-19 pandemic. The authors used a cascading survey approach to collect and analyze data across the entire value chains, from rural and peri-urban producers to wholesalers and urban retailers.
Overall, Ethiopia’s dairy value chain appears remarkably resilient to the impacts of the COVID-19 pandemic and the associated containment measures imposed by the government. While nine percent of dairy farmers stopped engaging in the dairy value chain between February 2018 and June 2021, this decline can be attributable to rising feed prices, and potentially to a lack of access to credit and extension services, rather than to the pandemic’s impacts. Similarly, while 36 percent of milk wholesalers reported that they stopped trading dairy products within the study timeframe, they attributed this decision to increased competition within the sector and limited supply of milk and butter from rural areas, not to COVID-19. While a small number of urban retailers cited the pandemic as at least one of the reasons they stopped selling dairy products, the study found that the quantity of dairy products traded actually increased between 2018 and 2021.
Milk prices have risen steadily and significantly in Ethiopia over the past three years, matching the general high inflation seen in the country. Between 2018 and 2021, however, milk prices remained relatively stable (0.92 USD/liter in 2018 compared to 0.91 USD /liter in 2021). In addition, the amount that farmers received from the final retail price rose slightly during that timeframe. The dairy sector also did not experience a rise in post-harvest losses (as measured by quantity of milk wasted) during the pandemic.
While slightly more mixed, impacts of the COVID-19 pandemic on Ethiopia’s vegetable value chain also appear minimal. Farmers’ main concern was rising input prices; these price increases, rather than the pandemic itself or related containment measures, largely drove production decisions.
At the wholesaler level, the pandemic had more direct effects. At the start of the pandemic, the major wholesale vegetable market in Addis Ababa, the capital, was moved to the outskirts of the city to allow for more effective social distancing. Many surveyed traders reported that this relocation more negatively impacted their business than the pandemic itself. Between February 2020 and March 2021, most traders saw a loss in both number of clients and volume of vegetables traded, and the majority of these traders cited the relocation of the market as the cause.
Urban retailers also reported negative impacts from the relocation of the wholesale market. In addition, two-thirds of retailers said that they had fewer choices when it came to transportation of goods from wholesale markets than they did prior to the pandemic; while the majority of these cited the market relocation as the reason for this, 19 percent stated that it was due to the pandemic itself.
The study found significant volatility in vegetable prices throughout the study timeframe. The price of many key vegetables in household food baskets, such as onions, rose at the start of the pandemic, and many farmers initially responded by ramping up production to benefit from the increased prices. This in turn resulted in an oversupply in the Addis Ababa market, which drove farm gate and final consumer prices back down. All value chain actors—farmers, wholesalers, and retailers—reported that this price volatility was a major concern for them in the long term. It is important to note, however, that prices and price movements vary among the different vegetable crops. In addition, the volatility seen during the survey period cannot be attributed to the COVID-19 pandemic with any certainty, as the vegetable value chain in Ethiopia is generally characterized by a high degree of price volatility.
Post-harvest losses along the vegetable value chain also varied by crop. The largest losses were seen for tomatoes (11.5 percent, while the lowest were seen for onions (2.6 percent). In addition, where these losses occurred also differed widely. Tomatoes saw the highest losses at the retail level, while nearly all of the losses for cabbage occurred at the wholesale level.
Overall, the ESSP surveys suggest that important agri-food value chains in Ethiopia remained generally resilient in the face of the COVID-19 pandemic’s direct impacts.