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Cereal Consumption Patterns in Ethiopia: An Analysis of the 2004-05 Household Income Consumption and Expenditure (HICE) Data
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Cereal Consumption Patterns in Ethiopia: An Analysis of the 2004-05 Household Income Consumption and Expenditure (HICE) Data

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  • 1. ETHIOPIAN DEVELOPMENT RESEARCH INSTITUTE Cereal Consumption Patterns in Ethiopia: An Analysis of the 2004-05 Household Income Consumption and Expenditure (HICE) Data Kibrom Tafere Zelekawork Paulos Alemayehu Seyoum Taffesse Nigussie Tefera Seneshaw Tamiru ESSP – II Conference October 22-24 We gratefully acknowledge CSA for providing the 2004/05 HICES data for this analysis
  • 2. Introduction • Ethiopia’s agriculture and household food consumption patterns are complex • No single staple dominates food consumption such as: – Rice in East Asia – Maize in Latin America and Eastern /Southern Africa – Wheat in central Asia – Cassava in central Africa • In Ethiopia, four cereals (teff, wheat, maize and sorghum) and enset (in SNNPR) are major staples in various parts of the country INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 3. Introduction • Some of the variation derives from: •Topography in Ethiopia varies widely, even across small areas •Annual rainfall varies across space: Rainfall is highest and least variable in the western part of the country and the western slopes of mountains • The majority of Ethiopia’s population lives in rural areas; 16% of the population is defined as urban, or lives in a town of at least 2,000 people INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 4. Data: HICES 2004/05 • This analysis is based on the Central Statistical Agency’s (CSA) Household Income Consumption Expenditure (HICE) survey (2004/05) data. • For this analysis, the country is divided into 3 major categories and 5 agro- ecological zones • Rural • Major Urban Centers: Regional capitals and other 4 major centers • Other Urban Centers: All urban centers that are not classified as major urban centers Definition of Urban Areas • All administrative capitals • Localities with Urban Dwellers’ Associations • All localities with a population of 1000 or more persons, and whose inhabitants are primarily engaged in non- agricultural activities. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 5. Data: HICES 2004/05 (cont.) Sampling procedures: • Rural and Major Urban Centers: 2 stage cluster sampling design • Other Urban Centers: 3 stage cluster sampling • A total of 21,595 households were surveyed • 12,101 of households are in urban areas • 9,494 of households are in rural areas INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 6. Household Food Consumption Patterns: Rural / Urban Cereal Consumption : Kgs per capita Rural Urban Kgs. per capita Kgs. per capita Poor Non-poor Poor Non-poor Teff 15.3 24.6 48.6 74.1 Wheat 23.1 38.8 18.5 21.8 Maize 34.3 49.7 12.3 8.5 Sorghum 27.4 44.0 10.0 8.6 Other cereals 17.1 27.3 32.9 38.9 Enset 14.5 28.1 3.4 2.0 Total 131.7 212.5 125.7 154.0 * Enset is converted to cereal equivalents by dividing by 2.2 • Urban consumption of teff is three times as much as rural consumption. • Maize and sorghum are the most widely consumed staples in rural areas. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 7. Household Food Consumption Patterns Consumption of Staples in Kilograms by AgroEcological Zone • In the highland-enset 250 zone, enset accounts for 43 and 60 percent of the quantities of staples 200 consumed (in cereal equivalents) for poor and 150 Enset non-poor households, Other Cereals respectively. 100 Sorghum Maize Wheat • Consumption of maize Teff 50 and sorghum is minimal in large cities, whereas they are important 0 poor nonpoor poor nonpoor poor nonpoor poor nonpoor staples in rural areas. Highland - Cereals Highland - Enset Drought Prone Large Cities INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 8. Household Food Expenditure Patterns • In large cities, poor and Per Capita Expenditures (Birr per person per year): non-poor groups spend the Agro-ecological zone largest share on teff and other cereals in 600 comparison to other grains 500 • Drought prone areas spend a higher share on 400 sorghum, maize and wheat Enset Other cereals • In highland enset areas, 300 Sorghum the non-poor spend more Maize 200 on maize than other Wheat cereals Teff 100 • Highland – cereal areas have a relatively even 0 distribution of Poor Non-poor Poor Non-poor Poor Non-poor Poor Non-poor expenditures with the Highland-cereals Highland-enset Drought prone Large cities exception of enset INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 9. Household Food Budget Shares: Urban Poor Non-poor Price Food budget shares Price Food budget shares Teff 2.26 17.3 2.55 16.4 Wheat 2.08 6.0 2.24 4.3 Maize 1.63 3.2 1.60 1.2 Sorghum 1.75 2.7 1.74 1.3 Other cereals 3.23 16.7 3.93 13.3 Enset 0.79 0.4 0.81 0.1 Subtotal 46.4 36.6 Total Food Expenditures (Birr) 634.8 1151.0 • Maize and sorghum are the lowest priced cereals. • Poorer households allocate a larger share of their food budget for teff and wheat but spend less in absolute monetary terms. • Prices are higher for the non-poor for teff, wheat, and other cereals, largely reflecting higher quality of products purchased by the non-poor. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 10. Household Food Budget Shares: Rural Poor Non-poor Price Food budget shares Price Food budget shares Teff 3.09 7.9 3.03 7.3 Wheat 2.52 9.8 2.50 9.5 Maize 1.94 11.1 1.88 9.1 Sorghum 2.16 9.9 2.08 8.9 Other cereals 3.01 8.6 3.03 8.1 Enset 0.83 2.0 0.91 2.5 Subtotal 49.4 45.5 Total Food Exp. (Birr) 597.0 1021.4 • Poor households spend 49 percent on staple cereals and enset, whereas non-poor households spend 46 percent. • Prices are similar among both income groups for all cereals. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 11. Household Food Budget Shares: Rural AgEcol Zone Food budget Shares on major cereals by AgroEcological Zone Highland - Cereals Highland - Enset Drought Prone Large Cities Poor Non- poor Poor Non- poor Poor Non- poor Poor Non- poor Teff 12.1 11.6 2.9 2.6 6.2 4.3 21.5 17.3 Wheat 10.3 11.6 5.4 4.8 11.8 9.2 3.9 3.1 Maize 10.3 8.3 13.9 11.7 10.1 9.0 1.0 0.4 Sorghum 7.6 6.3 7.6 5.1 13.2 14.4 0.6 0.3 Other Cereals 11.0 9.8 4.7 5.4 8.3 7.2 21.4 15.7 Enset 0.7 1.1 5.2 6.5 1.8 2.4 0.0 0.0 Subtotal 52.0 48.7 39.7 36.1 51.5 46.4 48.5 36.7 • Wheat is a predominate expenditure in the rural highland–cereal and drought prone areas • A large share of the household food budget is used on sorghum in drought-prone areas • Larger cities have extremely low maize and sorghum expenditures • Highland – enset areas spend more on enset compared to other agecol zones • Highland – enset areas spend more on maize in comparison to other cereals and other zones INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 12. Ethiopia: Calorie Consumption 2004/05 Enset & Other root Pulses & Animal Teff Wheat cereals crops oil seeds products Others Total National 254 294 938 306 214 59 265 2330 Urban 602 201 461 100 272 65 288 1988 Rural 197 310 1017 340 204 58 261 2386 Expenditure Quintiles Q1 162 197 643 196 127 33 171 1529 Q2 208 259 913 290 186 52 229 2137 Q3 264 351 1070 329 240 60 273 2588 Q4 311 387 1095 394 271 77 319 2853 Q5 425 338 1154 395 317 98 425 3151 • On a national level, rural areas have a higher level of calorie consumption than do urban areas. • In general, the level of calories consumed rises with per capita expenditures. • 3 times more teff is consumed in urban areas. • 3 times more enset and root crops are consumed in the rural areas. • One and a half times more wheat is consumed in rural areas. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 13. Ethiopia: Calorie Consumption 2004/05 Rural Urban 2% 11% 8% 15% 3% Teff 13% 30% Wheat 9% Other Cereals 14% Enset & root crops Pulses & oil seeds 14% Animal products 5% 10% Others 43% 23% • A majority (over 50%) of calories in urban areas are derived from teff and other cereals • A higher share of calories in urban areas is derived from teff and pulses than in rural areas • The majority of calories in rural areas are derived from wheat, other cereals and enset. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 14. Data and Methods: Linear Approximate AIDS Model INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 15. Data and Methods: Quadratic AID Model INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 16. Estimation Procedure • This analysis uses enumeration area quintile level data was generated by taking the mean of household level data • Reduces zero expenditures compared to household level data • Larger number of observations compared to EA level data •Two sets of elasticities are estimated: • Elasticities by location (Urban / Rural Regression) •Elasticities by income groups •Categories: For the LA–AIDS there are 9 categories and QU–AIDM there are 10 categories • Maize and sorghum are combined to create a single category in LA-AIDS model INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 17. Estimation Procedure (cont.) •Unit values are used to proxy price: •The use of unit values have certain drawbacks: (Deaton 1987, 1988, 1990 & 1997) • Measurement error of quantities and values • Unit values carry quality differences that are masked •Zero expenditures in the data arise from imperfect recall, permanent zero consumption and zero consumption during the survey period • We partially adjust for these figures by aggregating the household level data at the EA quintile level •Elasticity estimates for the richest 60 percent and the poorest 40 percent of households are calculated using the coefficients from the entire rural (urban) sample regression, evaluated at the mean budget shares of each group INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 18. Econometric Results: LA-AIDS parameters Significance of LA-AIDS parameter estimates fruits, pulses & vegetables maize & other animal & root other teff wheat sorghum cereals products crops foods Rur Urb Rur Urb Rur Urb Rur Urb Rur Urb Rur Urb Rur Urb teff-price *** - - *** *** *** *** *** *** *** *** * *** *** wheat-price - *** *** - *** *** - - *** *** *** *** - *** maize & sorghum-price *** *** *** *** *** *** ** *** *** *** - - *** ** pulses & other cereals-price *** *** - - ** *** *** *** - - *** - *** *** animal products-price *** *** *** *** *** *** - - *** *** - *** * * fruits, vegetables & root crops-price *** * *** *** - - *** - - *** *** *** *** - other foods-price ** *** - *** *** ** *** *** * * *** - *** *** expenditure *** * *** *** *** - * *** *** * ** - *** *** *** p<0.01, ** p<0.05, * p<0.1 • All own price response parameters except teff and wheat in urban areas are significant. • Overall, expenditure response parameters are significant. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 19. Econometric Results: QU-AIDM parameters Significance of QU-AIDM parameter estimates fruits, pulses & vegetables other animal & root other teff wheat maize sorghum cereals products crops foods Rur Urb Rur Urb Rur Urb Rur Urb Rur Urb Rur Urb Rur Urb Rur Urb teff-price ** - - - *** - *** *** - *** *** *** *** *** *** *** wheat-price - - - *** - - *** - * - *** *** *** *** *** *** maize-price *** - - - *** *** *** *** *** ** *** *** *** *** *** - sorghum-price *** *** *** - *** *** *** *** *** - *** *** *** *** - *** pulses & other cereals-price - *** * - *** ** *** - *** *** *** ** *** *** *** *** animal products-price *** *** *** *** *** *** *** *** *** ** *** - *** *** - *** fruits, vegetables & root crops-price *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** other foods-price *** *** *** *** *** - - *** *** *** - *** *** *** *** *** expenditure ** *** - - * *** *** - * *** *** *** ** *** - *** expenditure squared - *** *** - - - * *** - *** - *** - *** - - *** p<0.01, ** p<0.05, * p<0.1 • All own price parameters except for teff and animal products in urban areas and wheat in rural areas are significant. • Most expenditure response parameters are significant. •Only few expenditure squared parameters are significant (most in urban areas). INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 20. Findings: Expenditure Elasticities National Results • Rural households have Expenditure Elasticities by Location and Income Group LA-AIDS QU-AIDM higher expenditure National Top 60% Bottom 40% National elasticities of animal Item Rural Urban Rural Urban Rural Urban Rural Urban products; fruits, vegetables Teff 0.20 0.90 0.12 0.20 0.28 0.94 0.90 0.90 and other foods Wheat 0.59 0.70 0.57 0.59 0.61 0.77 0.95 0.86 Results by income group •The bottom 40% Maize - - - - - - 0.89 0.81 households have more Sorghum - - - - - - 0.88 0.72 Maize & responsive demand for Sorghum 0.43 0.90 0.39 0.43 0.47 0.95 - - cereals Pulses & Other Cereals 0.91 0.60 0.90 0.91 0.92 0.67 0.93 0.95 • Expenditure elasticities for Animal cereals are higher in urban Products 1.52 1.10 1.54 1.52 1.49 1.08 1.02 0.93 Fruits, areas in both categories Vegetables & • Expenditure elasticities for root crops 1.17 1.00 1.19 1.17 1.14 1.03 1.00 0.94 animal products; fruits, Other foods 1.16 0.80 1.15 1.16 1.16 0.80 1.03 0.90 vegetables and other foods are higher in the top 60% urban areas INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 21. Findings: Own-Price Elasticities National Results • Own price elasticities for all Summary of Own Price Elasticities cereals (teff, wheat, maize and LA-AIDS QU-AIDM sorghum) are higher in urban areas National National Item Rural Urban Rural Urban • Price elasticities for animal Teff 0.35 -1.22 -0.68 -0.87 products; fruits, vegetables and Wheat -0.21 -1.18 -0.91 -1.11 root crops; and other foods are Maize - - -0.05 0.16 higher in rural areas – this may be Sorghum - - 0.10 0.37 - - due to: Maize & Sorghum 3.12 7.48 • Income disparities between Pulses & Other Cereals -1.69 -1.63 -1.12 -0.89 rural and urban areas Animal Products -1.18 -0.76 -1.07 -0.97 • Rural households have Fruits, Vegetables & root crops -1.95 -1.48 -1.24 -1.10 relatively higher per capita Other foods -1.31 -0.97 -0.92 -0.85 consumption of cereals INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 22. Findings: Own-Price Elasticities (cont.) • In both models, at the national level, some cereals show positive elasticities: • LA-AIDS model: maize and sorghum in both rural and urban areas show positive elasticities • QU-AIDM: sorghum in rural areas and maize in urban areas are positive • These positive elasticities may be due to: • Expenditure / income effect is greater than substitution effect • Farmers are both producers and consumers of food • Maize and sorghum may be perceived as extremely inferior goods (Giffen goods) in comparison to other cereals such as teff and wheat. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 23. Findings: Own-Price Elasticities by Income Group Summary of Own Price Elasticities • For both income categories, LA-AIDS price elasticities of demand for Top 60% Bottom 40% all cereals is higher in urban Item Rural Urban Rural Urban areas Teff 0.46 -1.15 0.22 -1.10 Wheat -0.17 -1.19 -0.24 -1.11 • The top 60% households have a Maize - - - - higher price elasticity of demand Sorghum - - - - than the bottom 40% overall. Maize & Sorghum 3.35 7.46 2.84 4.02 Pulses & Other Cereals -1.75 -1.66 -1.62 -1.44 •Price elasticities for animal Animal Products -1.19 -0.77 -1.17 -0.74 products; fruits, vegetables and Fruits, Vegetables & root crops -2.07 -1.49 -1.81 -1.39 root crops; and other foods are Other foods -1.29 -1.05 -1.33 -1.03 higher in rural areas INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 24. Comparisons of Elasticity Estimates Pulses & Fruits, Other Animal Vegetable & Teff Wheat cereals Product root crops Grain Cereal Foods LAIDS Rural 0.35 -0.21 -1.69 -1.18 -1.95 - - - Urban -1.22 -1.18 -1.63 -0.76 -1.48 - - - QAIDS Rural -0.68 -0.91 -1.12 -1.07 -1.24 - - - Urban -0.87 -1.11 -0.89 -0.97 -1.10 - - - Alemayehu Seyoum Taffesse1 (2003) - - - - -1.09 -1.30 - - Abebe Shimeles2 (1993) LES - - - - - - - -0.68 ELES - - - - - - - -0.88 Abi Mamo Kedir3 (2001) -1.77 -2.54 0.36 -1.21 -0.20 - 0.10* - (2005) -0.29 - -0.02 -0.04* -0.01* - -0.03* - • Alemayehu Seyoum Taffesse- rural areas; ERHS-1994; AIDS • Abebe Shimeles- Addis Ababa (LES) & rural (ELES); HECSAA-1979/80 & RHICES-1980/81; LES & ELES •Abi Mamo Kedir- urban areas; EUHS-1994; Deaton 1987, 1988, 1990 & 1997 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 25. Conclusions • There are substantial differences in staple food consumption across rural and urban, across agro-ecological zones (for rural households) and across income groups. • Teff consumption (kgs per capita) is 3 times higher in urban than in rural areas. • Maize and sorghum account for 34 percent of calorie consumption in rural Ethiopia. • Enset accounts for 22 percent of calories in the highland enset-based agro-ecological zone. • Expenditure elasticities of demand for staples are generally higher for the poor than for the non-poor: poor households tend to spend a higher percentage of additional incomes on food staples than do non-poor households. • For most household groups in Ethiopia, own-price elasticities for cereals are large (-0.21 to -1.69) indicating substantial response to change in prices. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM
  • 26. Conclusions (cont.) • Imposition of a uniform income tax would affect food consumption of urban households more than rural households • Urban households have higher expenditure elasticities for staples • The poorest 40% would be more affected than the richest 60% because they have higher budget shares for staples • Although public wheat imports and food aid is designed to primarily benefit low and middle income households, the richer 60% of households also benefit substantially from reduced grain prices and would significantly increase their wheat consumption • Their own-price elasticity of demand for wheat is high (-1.19 ) • The wheat budget share is higher for the poor, however • Poor households also have price-elastic demand for wheat and increase their wheat consumption when market prices fall. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE – ETHIOPIA STRATEGY SUPPORT PROGRAM

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