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We analyze several dimensions of food security in Ethiopia, taking into account projected population growth, economic growth, and price information to estimate future food…
We analyze several dimensions of food security in Ethiopia, taking into account projected population growth, economic growth, and price information to estimate future food consumption by income decile. The analysis looks at the potential impact of large consumer price increases on food security metrics. We use the new USDA/ERS demand-based modeling framework in order to carry out this study. The modeling approach captures economic behavior by making food demand systematically responsive to income and price changes based on a demand specification well-grounded in microeconomic foundations. The projected change in food consumption can be apportioned to population growth, income growth, and changes in food prices and real exchange rates. We found that Ethiopia is highly food insecure, with 54% of the population consuming less than 2,100 calories a day at calibration levels. Income growth under unchanged prices mitigates food insecurity with the number of food-insecure people falling to 42.5 million in 2016. If domestic prices were free to fall with world market prices, the food-insecure population would decrease farther to 36.1 million. If domestic prices increased because of domestic supply shocks and constrained imports, the food-insecure population could rise to 64.7 million. The food gap (i.e., the amount of food necessary to eliminate Ethiopia’s food insecurity) would reach 3.6 million tons. The practical implications of this are that measures of food security are sensitive to changes in prices. Maintaining higher prices when global prices are low maintains higher levels of food insecurity than would otherwise prevail. Expanded access to lower cost imports could significantly improve food security in Ethiopia.