Of Bumper Crops, Hyper Inflation and Export Embargo

The economic news reported by the various organs of the EPRDF government has gotten me completely confused. Let me assure readers that I am an avid reader of Ethiopian news and consider myself to be sufficiently literate to understand what I read. So the problem is not that I have not taken the time to study what is being reported, because I do. And I do believe that it is not a reflection of any shortcoming I might have in comprehending the written word. I had the privilege of sitting through enough boring economics lectures to be able to read and understand government PR. So I have also ruled out incompetence in basic economic principles as the source of my confusion.

None of the usual suspects can explain my current state. My theory is that the level of confusion I am experiencing is actually what the masters of disinformation intended it to be. I believe I am actually getting the complete message. This government has a well established pattern of news reportage. When these veterans of misdirection and surprise attacks expect some really bad news in the horizon, they strategically place in the media sufficient numbers of misinformation with the expectation that this may turn away or destruct the reader from the real news when it finally breaks. It sounds like one of those conspiracy theories, but please hear me out and look at what has been happening over the last several days.

Dateline Addis Ababa, 28 Jan 2006: Ethiopia sees 15.1% increase in agricultural production in 2005-06 , Source: Deutsche Presse Agentur (DPA). This headline was carried by a great many papers and online sources over the weekend. The DPA story leads with the following statement: “Ethiopian Prime Minister Meles Zenawi says the country's agricultural production indicates a 15.1 per cent increase during the current harvest season and its overall economy would register a "double-digit" growth at the end of the current fiscal year ending in June, the local press reported Saturday”. Apparently in an attempt to enhance the credibility of his comments, the Prime Minister attributed his determination to “projections … established by a joint assessment team from the government and donors.”

The PM slyly mentions that the projections are corroborated by donors. That is an admission that the reading public finds his staff and their reports not worthy of their trust. So, to ensure that the reader takes these reports as rock solid facts, he casually stated that the projections were established by a joint team of the government and donors. He effectively said you can bank of this and for a couple of hours I did. I was delighted about the prospects of my siblings and cousins who try to make a living scratching the earth. I even thought that may be I don’t need to send as much money to my folks this year. Thoughts of a vacation in the Canadian Rockies swirled in my head. (Awassa-Langano yayehushi….).



Not even three full days had passed after the story of a 15.1% increase in the harvest broke when word came of a government so distressed of developments in the market place for cereal crops, that it was moving to ban all exports of grains. Dateline Addis Ababa, 31 Jan 2006: Ethiopia bans exports of four grains to stabilize local market , Source: DPA. Now if that does not throw you for a loop, you are a better person than I am. I read and reread these stories trying to understand just exactly how they might be reconciled. Anywhere else in the world, a 15.1% increase in harvest would constitute a major bumper crop. Such developments some times even spell disaster for the farmer and a windfall for the consumer as farm prices plummet. Indeed the ridiculously expensive agricultural subsidies in North America, Europe and Japan owe their genesis from repeated disasters faced by farm families in the 19th and early 20th centuries following unusually large harvests and the low prices that usually follow. These agricultural price support schemes, which now make it difficult for the Ethiopian farmer to make a decent living, were put in place as a safeguard against those times when the marketplace might turn a great harvest into a financial ruin by depressing grain prices.

So, you must understand my confusion. When supply increased by a full 15.!%, grain prices surged so much that a government committed to the ideals of a free market found it necessary to go against its principles and intervene in the market place. It intervened not by propping up prices but by embargoing the shipment of farm produce from low price markets to high price markets. I am confused because I had always thought that a major increase in supply reduced prices, not escalate them. Something else must be going on here.

I am also confused because I thought I heard the Prime Minister tell that man from the BBC that his party is the peasants’ party? Did he not tell that reporter that the TPLF was nurtured by the peasants during its guerilla days and that the TPLF now rules on behalf of the peasants? Then, why is he concerned about a development that graces the peasants with a rare double fortune – a bumper harvest at a time of surging prices? Why is he trying to snuff out the blessing God brought to his people? Why would he do that, except perhaps if he is trying to win back the support of those wily city folks who voted 23-zip and 137-1 against his party? That does not sound right either – after all these city people have been saying about the TPLF rule since the election.

Apparently I am not the only one confused by these turn of events. The once zany and now Abesha-like – I would not touch politics with a ten foot pole – sedate and careful Meskel Square reports “I'm no economist, but I thought exports were generally a good thing - or at least a neutral thing. Will banning exports of native grains really bring local prices down? Or will it damage local grain producers by cutting off their small amount of foreign income, thereby piling extra pressure on to the domestic market? You tell me. I only got a 'C' in my economics O' Level.” Join the crowd, Andrew. You have now become truly one of us, at least in your state of mind. (You better take good care of your passport though.) I bet you were even more confused after you read what the state journalists reported the very next day.

But you should not worry too much, Andrew. After all, no less a distinguished character reference than Mr. Bono just two days ago told us that “I know Meles Zenawi. I have sat with him on more than a few occasions. I know his story. He is a regarded macro-economist, believe it or not.” I just knew that there was something else to it. The macro-economist must have another explanation, those macroeconomists always do. You can go to bed tonight knowing that, according to Mr. Bono, Mr. Meles “is a person who deeply cares about the poor in Ethiopia and has done some great things. But he's bipolar.”

Dateline Addis Ababa, 31 Jan 2006: Enterprizes exporting agricultural products awarded for outstanding performances. Source: ENA. This morning, I had the distinct misfortune of coming across a report by that eternal source of veritable truth, the Ethiopian News Agency. It was a story about awards to exporters of the very agricultural products which were banned the day before. According to ENA, “Addisu Legese awarded the prizes to the exporters who stood one to third in their export performances involving one or the other of cotton, spices, tea, wild gum, cereals, live animals, legumes and pulses, fruits and vegetable, oil seeds and coffee.” I suspect Andy at Meskel Square must be feel even more conflicted this morning. He is right. Exports are good to an economy – just look at China and Japan. In Ethiopia, exporting agricultural products is such a good thing that it merits a special award – in addition to the profit that is. But, apparently they banned it without telling that Deputy Prime Minister who must have been furiously evaluating all of the candidates to select the best exporters at the very same time some one else was banning exporting.

Looking around the internet, I read all kinds of speculations. One commentator said that it is aimed at those folks north of the border. Hum…isn’t that using food as a tool of war? I swear I have heard that somewhere else before. I also read that the embargo is meant to punish Ethiopians abroad who are relentless in the fight against tyranny. I know I have been hearing reports that over the last few years, the powers to be in Addis have been reduced to eating yeGojam neCh teff as those living abroad bought up all the magna that Minjar grows. Perhaps a young EPRDF strategist trying hard to impress his higher ups came up with this creative retaliatory strike. “If they don’t behave, we will reduce them to eating Big Macs!!”

I don’t know what tomorrow will bring. What they have been reporting tells me that either the EPRDF is a heck of a lot more incompetent than we guessed even in the worst of times or something really big is in the offing. Could they really be so lost? Didn’t we all thing that PR is their forte? Stay tuned, for I believe there is more where this came from.