Ethiopia Borena Maize Market Analysis - Aug 2011 FINAL

Borena, Ethiopia Market Analysis:
August 2011
An assessment of the maize market’s capacity to
respond to cash programming
Oxfam & GPDI* Research Report:
12 – 20 August 2011
Research team:
Tafadzwa Makata,
Gregory Matthews,
Blessing Mutsaka,
Huqa Adhi Gedho*,
Gollo Wako,
Jo Zaremba.
* GPDI = Gayo Pastoral Development Initiative

Borena, Ethiopia Food Market Analysis
Ethiopia Market Analysis - Borena - Aug 2011 (v. 5 Oct 2011) Page 2 of 25
06/10/2011
Borena Market Analysis: August 2011
An assessment of the maize market’s response to cash programming
Introduction
This report provides a summary of a rapid market assessment carried out into the market systems
for maize (primarily) and beans (secondary) in Borena Zone, southern Ethiopia between 12 and 20
August, 2011. The objective of the assessment was to determine how well the market in Borena
could respond to meeting the basic food needs of pastoralists and agro-pastoralists in Miyo, Dire,
Dillo and Teltelle woredas. The specific purpose of the analysis was:
1. To determine the availability of key food items (see below) in the Borena market system
relative to demand;
2. To assess how the markets would respond to increases in purchasing power of pastoralist
households which would result from cash disbursement to 5,500 households (OGB) + 4,000
households (OA)
3. If food availability is constrained, to recommend specific market-based responses that would
ensure access to key food commodities as prioritised by beneficiaries;
4. Consider market mechanisms for transferring cash to beneficiaries (e.g. through traders).1
The study focused on the following commodities which were identified as the most important and
preferred foods of a food basket for poor households in the area.
Figure 1 – Most important and preferred food products
Primary products Secondary products
Maize Milk
Beans Oil
Sugar Wheat
While maize, beans and sugar were identified as products of primary importance for beneficiaries,
this assessment focuses on maize as the most important food commodity for rural pastoralists, and
the commodity for this rural populations are most dependent on markets to obtain.
Maize and beans are important crops in the agro-pastoral areas of Borena, grown for both
subsistence and surplus sales within the District. The failed rains for the past two seasons have
reduced production in these areas to almost nil, affecting food security and incomes of pastoralists
and agro-pastoralists. Sugar which forms another important source of food was excluded from
detailed analysis due to the controlled nature of trade of this commodity.
Summary & Conclusions
Purchasing power in Borena zone has been severely curtailed on account of the drought and
consequent high losses of animals and livestock value. People within the zone are dependent on
livestock for both income and food, and as both these have fallen, reliance on markets for the
1
Cash disbursement plans are being developed separately by OGB and OA and are not part of this document.
OGB and OA premised this assessment on plans to provide cash to 2,500 – 5,500 and 4,000 beneficiaries
respectively.

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Figure 2: Ethiopia National Maize Prices (WFP 2011)
purchase of staple foods has risen. Equally, crop producing households’ food security has been
impacted by two consecutive failed rains raising their need to buy food. Due to lowered purchasing
power, the rise in food needs has not translated into market demand.
The market centres are currently operating in Borena, albeit at reduced capacity for staples. We
estimated that stock levels in traders whom we visited were running at about 30 – 50% of usual
capacity, and recorded almost universal complaints that ‘business’ and turn-over is lower than a year
ago. The cause of this lowered level of trade in maize is primarily due to lower demand because of
the reduced purchasing power. The main market centres should begin to restock once demand rises
– though how quickly they can meet a rise in demand will vary depending on the trader and the
remoteness and nature of the market centre.
Maize is available outside the zone, and high
prices nationally (maize is trading at 81% higher
price compared to the same period last year) 2
are reflected in local markets and will continue
to be a challenge to poor buyers. These prices
are expected to stabilise and fall over the
coming months with forthcoming harvests
between September and November (predicted
to be average) increasing supply, in line with
price trends over the past year (see Figure 1).
However, high transaction costs - transport and
various levies imposed on goods brought in from
outside the zone – act as a deterrent to some wholesalers from stocking up whilst demand and turn-
over are low. One trader interviewed explicitly stated that these high transaction costs deter her
from stocking more goods from Sheshemane (a large maize production and trading centre) as she is
unable to sell the product at a price that covers these incremental costs.
The combined effects of reduced purchasing power and low and expensive supply have led to critical
situations for many households. Oxfam has assessed the best form of intervention to be through
cash disbursement to needy households in Dire, Dillo, Miyo, Teltelle and Moyale districts which
would address the purchasing power.
Given the immediate need for food in Borena, it is important to ensure that when demand increases,
stock is available to meet this demand. Some traders are reluctant to restock with high-priced maize
that has to be transported from afar, and there is a risk that stocks will still be poor by the time that
demand rises. It will be important to communicate to traders any plans for cash disbursements in
order for them to prepare for the demand and increase stock levels. However this may not be
sufficient to increase supply, particularly as prices may start to fall once harvests come to market in
upland areas, leaving some wholesalers with expensive product that they may have to sell at a loss
compared to traders who held back from buying early. A secondary priority would involve helping
willing traders to restock before cash disbursements actually translate into increased demand. Cash
disbursements to traders to supplement their own working capital could help to buffer the risk
involved in buying early, and also help to cover some of the additional costs of bringing maize from
upland areas (i.e. transport and 'customs')
2
WFP, Ethiopia. 2011. ETHIOPIA MONTHLY MARKET WATCH, Vulnerability Analysis and Mapping (VAM). July –
2011

06/10/2011
Objectives and Methodology
The objective of the assessment was to evaluate the ability of markets to provide priority food grains
during a cash-distribution (either conditional or non-conditional) for six months in five woredas in
Borena Zone: Moyale, Miyo, Dire, Teltelle, and Dillo. The specific purpose of the analysis was:
1. To determine the availability of key food items (see below) in the Borena market system
relative to demand;
2. To assess how the markets would respond to increases in purchasing power of pastoralist
households which would result from cash disbursement to 5,500 households (OGB) + 4,000
households (OA)
3. If food availability is constrained, to recommend specific market-based responses that would
ensure access to key food commodities as prioritised by beneficiaries;
4. Consider market mechanisms for transferring cash to beneficiaries (e.g. through traders).
The study examined a list of ten key commodities, prioritising them in terms of preference, priority
and importance in meeting the food security needs of the target population (pastoralists), usual
consumer base, and ability of an intervention to influence market prices and availability. While
maize, beans and sugar came out as top priority in terms of target group preferences and needs,
sugar distribution is controlled by the government and thus was eliminated from the research.
Research eventually focused only on maize, as more information was readily available and it
appeared beans did not feature strongly in the target population’s food basket at this time of year.
Primary research was carried out through semi-structured interviews with six government officials,
nine wholesalers / larger traders and 15 small traders / retailers across five markets in Borena zone
plus Gedebe and Sheshemane which act as main supply markets for Borena.3
Eight of the
interviewed traders were female. Field research days were alternated with de-brief and analysis
where the team regrouped to map out findings into a ‘market map’ as well as geographic maps. The
research teams split into sub-teams for ease of research and each sub-team worked with a
translator. Secondary research included numerous sources available on the internet and through
key contacts in Addis Ababa, Borena and across Oxfam.
The study tried to visit markets on operating ‘market days’ where possible. Traders were selected
when identified visually. (Lists of traders were not available.) When it was not possible to visit on a
market day, traders were interviewed who operated on non-market days.
Market Distance from Yabello Market Day
Teltelle 100 km / 2 hours Saturday
Dillo 155 km / 3 - 4 hours Monday
Miyo 150 km / 2.5 hours Saturday
Dire – Mega 120 km / 1.5 hours Saturday
Dire - Dubuluk 100 km / 1.25 hours Friday
Yabello Saturday & Tuesday
(Sunday for livestock)
Gedebe 140 km / 2 hours Friday
Sheshemane 360 km / 4 hours All week
Nazaret 500 km (?) Thursday
Konso 100 km Monday & Thursday
3
Please refer to Annex F for a copy of the assessment questionnaire used to guide interviews.

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Background
Borena zone in southern Oromia Region has a total population of over 962,489 (49.4% female) of
which over 90% are classified as ‘rural’.4
According to zone authorities, the prolonged drought
situation has affected 331,000 people - the UN has this figure at 412,000 - and are now (as of July) in
need of food aid, in addition to the PSNP-targeted population of 124,000, and an estimated 185,000
heads of cattle have died so far. Malnutrition levels have also gone up.5
Of eight woredas, five
(Teltelle, Moyale, Dillo, Dire, and Miyo) have been identified as most vulnerable, and Oxfam America
will be working in all five of these Woredas, while OGB will focus on Dillo, Dire and Miyo.
There are two rainy seasons in the southern part of Ethiopia: the main season, Ganna, runs from
March to June, and the small season, Hagaya, from September through November. (Note that the
rain seasons for Borena vary from the rest of Ethiopia, and that actual times appear to vary). There
have been no or minimal rains across Borena for the past two rainy seasons (i.e. since September
last year) and predictions for the lowlands remain below average for the coming months. However,
most meher producing areas are expecting good rains for the coming season.6
Figure 3: Seasonal Calendar for Borena7
Figure 4: FEWSNET Seasonal Calendar Ethiopia
Borena is described as mainly lowland (kola) zone with the main source of livelihoods being
livestock, though some (mainly poorer) households also produce crops, mainly maize and beans.
Agricultural produce is consumed, and surplus is traded locally. Pastoralists rely on livestock
4
Government of Ethiopia, 2007. Population and Housing Census of Ethiopia: Statistical Report for Oromiya
Region.
5
Oxfam, 2011. Borena and Guji Zones Mission Report, July 2011. Borena and Guji Zones Mission
Report_Final_July_27_2011.docx
6
GoE 2011. Early Warning and Response Analysis. Early Warning and Response Directorate DRMFSS, MoA.
August 18, 2011.
7
Livelihood Profile, 2008. Oromiya Region, Ethiopia Borana-Guji Cattle Pastoral (BGP) Livelihood Zone February
2008. Bgp.pdf

06/10/2011
production (meat, milk, and some other animal products) predominately from goats, sheep, cattle,
and camel for income and food. In a normal year, poorer households will receive around 60% - 80%
of their income from livestock sales and rely on a further 10 – 20% on safety nets, with the balance
coming from a combination of wages, remittance, collecting and selling of firewood and charcoal.8
In normal years, these households meet over 60% of their food requirements through buying
staples.9
Figure 5: Sources of household income & food – ‘good’ years10
The main sources of income for medium wealth-ranking households are livestock and related
products, agriculture, and government employment. Agro-pastoral communities produce a range
of crops including maize, barley, haricot beans and teff, mainly from April to June during the Ganna
rains, with lesser cropping season from September to December, during the Hagaya rains.
Consumption of meat, milk and other products is largely dependent on household level production,
perhaps with some trade happening across households within one Pastoral Association or village.
Unique to this part of Ethiopia, children will be prioritised for food in times of need and will receive
any rations available at the cost of adults’ well-being. The preferred foods during times of need are
maize followed by sugar, beans, and oil that can be mixed into porridge for children to eat. Adults
will subsist on tea and sugar. Oils, sugar and tea are all imported into the area – sugar under
government controlled quotas distributing to local cooperatives for sale to community members.
Despite the ‘thinness’ of these markets, a study conducted in 2005 in Dire, showed that trade
constitutes the second and third most important livelihood strategy for medium- and low- income
members of the community respectively. The main constraint for poorer community members to
engaging in trade was lack of capital.11
8
Gemtessa, Kejela; Emana, Bezabih; Tiki, Waktole. 2005. Livelihoods Diversification in Borena Pastoralist
Communities of Ethiopia – Prospects and Challenges. www.saga.cornell.edu/saga/ilri0606/24presentation.pdf
9
Livelihood Profile, 2008. Oromiya Region, Ethiopia Borana-Guji Cattle Pastoral (BGP) Livelihood Zone.
February 2008.
10
Livelihood Profile, 2008
11
Gemtessa, Kejela; Emana, Bezabih; Tiki, Waktole. 2005. Livelihoods Diversification in Borena Pastoralist
Communities of Ethiopia – Prospects and Challenges. www.saga.cornell.edu/saga/ilri0606/24presentation.pdf
Sources of Food – A good year (2006 – 07)Sources of Cash – A good year (2006 – 07)

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Market Assessment - Findings
National market overview
Ethiopia, the second largest African producer of maize and third largest of wheat, produces at least
70 percent of the total food available in the country. Availability is hugely variable, and closely
related to local production, suggesting that markets do not compensate for shortages through
imports (international or domestic), with the possible exception of food aid. According the African
Development Bank (ADB) the major food security challenges for the country include undeveloped
rural infrastructure and markets, large non-tradability of staple crops, low import financing capacity
of the country, and the need to accelerate food production.12
Figure 6: Ethiopia Cereal Production 13
While the country experienced an above
average harvest in 2010, keeping prices low until
January 2011, prices began to rise in February
2011. The price of maize rose between 73 and
142 percent between February and July 2011 in
surplus (Bahirdar) and deficit (Diredawa, Addis
Ababa) markets respectively. Prices for wheat,
teff and other crops have also risen in the order
of 30 – 54 %. 14
The national average price for
Maize was Birr 626 per quintal (1 quintal = 100
kilograms) in August 2011 – compared with 450
per quintal during the same period in 2010.15
Prices are starting to stabilise, and maize prices reported a slight drop in June nationally. However, in
line with trends over previous years a significant decline would not be expected until harvests begin
to enter the markets, around October.
Grains trading in Ethiopia was not researched extensively during this study. A Grains Commodity
Exchange has been established, however access to its web site has been down during the
assessment period.
Following good rainfall in many areas, including parts of SNNPR, southern Amhara and Oromia (not
Borena), national maize production estimates have recently been revised upwards and forecast to
be slightly above average (2006 – 2010) but below the 2010 harvests. 16
With the main harvests due
between October and December (Meher season production relevant) prices of maize are expected
to fall in these markets. However, country-level inflation rates remain high affecting other costs of
doing business: national general and food inflation rates have increased by 39.14% and 47.43%
respectively as compared to one year ago. 17
12
African Development Bank Group, Ethiopia. Review of Bank Group Assistance to the Agriculture and Rural
Development Sector. Operations Evaluation Department (OPEV), 18 April 2008
13
GIEWS, 2011. Country Brief, Ethiopia. Global Information and Early Warning System on Food and Agriculture.
28-July-2011
14
GIEWS, 2011. Country Brief, Ethiopia.
15
Source?
16
GIEWS, 2011. Country Brief, Ethiopia.,
17
WFP, 2011. Horn of Africa Weather Outlook. Issue 1 - August 2011.

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Upland market overview
The main source markets for maize for Borena are Sheshemane and Gedebe, with Nazaret and Addis
also cited as possible sources. Sheshemane is a major agricultural area, with large commercial farms
displaying ample maize crop in the fields at the time of writing. There are a number of agribusiness
signs on the main road, and the government is also reported to be procuring produce in
Sheshemane.18
Sheshemane buyers have been procuring maize and other cereals from outside their
immediate locality for the past few months. Normal supply from surrounding areas is expected to
be restored in the coming months as harvests are anticipated to be good. 19
There is also a large
local market, and over 25 large wholesalers with capacities in excess of 1,000 bags and over 250
medium to large sized traders. Research in both Sheshemane and Gadebe were limited in time and
timing – Gedebe was shut when the team visited and only one trader was available for interviews.
Traders in Yabello have reported a range of trading relationships with Sheshemane and Gedebe.
Some physically travel to the markets to buy stock, though this is more usual for Gedebe. Others
know merchants and can contact them by mobile phone, place orders, transfer funds through the
banking system and organise transport remotely. Some traders ask transporters returning empty
from Addis to act as agents and stock up for them. Most of these transactions are on a cash basis,
with credit arrangements reported only from traders interviewed in Teltelle and Yabello.
Sheshemane and nearby Hawasa have a range of commercial and government services including
banks.
Maize stocks in Sheshemane and Gadeb are low (around 10% of stock capacity) and prices high
compared to last year (Birr 700 / quintal in August, up from Birr 650 in July). A good harvest is
expected for October onwards which will replenish stocks and bring prices down.
Harvests are anticipated to be high with above normal rainfall reported across Sheshemane.
Observations by the research team were that there is abundant crop starting from within 100km
from Yabello, and all the way to Sheshemane. There are usually between one and two harvests over
a 4-5 month period from September through December and possibly an early harvest in
July/August/September timeframe20
. This schedule roughly coincides with FEWSNET cropping
calendar.
Other markets referenced by informants as important markets source markets included Jima (in
western Oromia) and Konso (despite proximity to Yabello, this market was infrequently cited and
therefore not visited).
18
GIEWS, 2011. Country Brief, Ethiopia.
19
WFP, Ethiopia. 2011. ETHIOPIA MONTHLY MARKET WATCH, Vulnerability Analysis and Mapping (VAM). July,
2011
20
Observations by field team August 2011.

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Borena Zone – Normal Market Situation
Borena’s ‘market system’ consists of a few physical
trading centres that act as feeders to smaller market
centres. Access to markets is difficult for many who
have to travel long distances (up to 80 km), often by
foot. Market centres operate once a week, with only
some proportion of traders available in major centres
during the rest of the week. Despite these limitations,
market centres provide the main resource for trade of
both livestock, food and non-food items in Borena
zone, with few observed village level shops in
operation. (See Annex D – Normal Situation Market Map.)
The Market Chain
The supply chain for maize and beans typically involves local producers bringing surplus to the
closest market and selling it at spot prices to a selected trader. When local supplies run out, these
traders may source from markets in the uplands – Gadebe or further afield like Sheshemane,
Nazaret or even Addis Ababa. While wholesalers and larger retailers have developed a network of
contacts in these markets, this is fairly loose and traders will ‘shop around’ for the best deal at time
of ordering. Trade with more distant locations involves relatively higher transaction, transportation,
and taxation costs than with local suppliers. There is some cross-border trade with Kenya in
Moyale’s markets, however these were not studied in detail.
There are a range of different types of traders in Borena, as shown in Figure 7, below. In addition to
traders, co-operatives operate at the Pastoral Association (PA) level, often buying maize and other
key commodities (such as sugar or oil) on behalf of households in their communities. Some have
storage capacities and working capital.
Figure 7: Estimated Number of Market Traders by Size (based on storage capacity, in
quintals) and Location
Tiny Small Medium Large
Market Location < 2 Q 10 - 50 Q 50 - 200 Q >200 Q Notes
Dillo 2
District Officer thought there are 6 – 7
traders but we only saw 2.
Dire (Mega) 30 7
Dubuluk (Mega)
Visited on non-market day when all traders
were closed.
Miyo 50 4
1 medium trader interviewed – 3 were
closed on market day.
Teltelle 15 3
Yabello 20 15 6
Did not visit on market day so only saw 3
wholesalers (medium / large)
Total Borena 70 47 26 9
Many of the traders are women (100% of traders observed in Miyo and Teltelle were women, in
Mega all small vendors were women and 2 out of 7 larger traders were women).
On the consumer side, Borena’s rural population is widely dispersed. Access to markets can require
trekking up to 85 km to coincide with one of the ‘market days’ across dry, un-paved routes.

06/10/2011
The transportation network consists of the main Addis – Moyale tarmac road and rough feeder
roads running off this main route. Many people rely on informal financial arrangements, such as
buying on credit from traders, or Savings and Credit Cooperatives (SACCOs).
Market Support Services
There are few market services, and those that do exist are mostly of an informal embedded nature.
Traders rely on private trucks for transportation. Most traders reported some form of rental
agreement for transportation – either by hitching a ride with their cargo on an ‘ISUZU’ truck or
renting space in a truck. Only one or two traders reported owning transportation. Markets along
the main route are serviced by trucks (ISUZUs) available for hire or run by some local traders,
sometimes taking goods (primarily livestock) to Addis and returning laden with other goods ordered
by the local trader. The markets of Miyo and Dillo are accessible by rough, dirt roads only. Dillo has
ISUZU truck transport at most a couple of times a day. There are plans to ‘build’ the road however,
and surveying teams have been observed along the route. (Whether this means paving or not was
not confirmed).
Larger traders reported most transactions with their suppliers as being either cash based, or through
direct credit arrangement with their supplier. A common arrangement between street vendors and
larger wholesalers who provide a ‘sack’ of maize to a vendor in the morning on ‘credit’ and the
vendor repays the wholesaler in the evening. Any leftover stock may be left in the wholesaler’s store
over-night for sale the following day. While no data is available for the number or capacity of
SACCO’s across Borena, several projects have in the past helped to develop and strengthen these
institutions (ACDI/VOCA and CARE).21
There are currently at least two commercial banks operating in Borena: Commercial Bank of
Ethiopia (CBE) and Oromia International Bank S.C (OIB). The Commercial Bank of Ethiopia is the
largest financial institution in the country with a rural banking network that has committed to
support rural financing through agricultural input loans, (including loans for the purchase of
fertilizer, account for Birr 4 billion), linking microfinance institutions (MFIs) to the funds they need to
lend to the poor but productive segments of society in the rural areas of the country. In the last two
years alone, the CBE has extended loans amounting to more than Birr 800 million to five MFIs for on-
lending purposes. CBE has established a specialized unit called “Small and Medium Enterprises (SME)
and Agricultural Unit” specifically to target small rural areas and help meet the financial needs of the
petty trade operators in these towns and the small-holder farmers in the nearby rural areas..22
A
bank is planning to open a branch in Mega this year.
Both CBE and OIB offer ‘Demand Deposit’ or current accounts and require a minimum deposit of
between Birr 500 – 1,000, identification, a trader’s license (for traders), photograph, and Tax
Identification Numbers to open an account. One bank specifically states that its accounts are for
‘literate’ clients. Women traders who hold an account did not report any gender based obstacles to
opening an account. Two of the nine wholesalers interviewed explicitly reported having a bank
account, which they use for payment of orders placed in distant markets such as Sheshemane.
Smaller traders responded that they did not have accounts, and banks do not exist in Dillo, Miyo,
Teltelle, or Mega (although one is being planned).
21
Assefa, Tesfaye. Revitalizing Market-Oriented Agricultural Cooperatives in Ethiopia, ACDI/VOCA, 2002.
www.acdivoca.org/acdivoca/CoopLib.nsf/.../$FILE/Final+Eth.pdf
22
Sano, Ato Abie. “Ethiopian Bank Targets the ‘Unbankable’.” The African Executive, 2008.
http://www.africanexecutive.com/modules/magazine/articles.php?article=3790

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Mobile-telephone banking currently does not exist in Ethiopia, and electronic banking, including
ATM’s, is hugely under-developed across Ethiopia. A number of companies are currently entering
the market to improve banking software and connectivity, including Temenos,23
Belcash (whose
products include mobile banking facilities).24
There is one state-controlled mobile telephone
company in Ethiopia (ETC). Network coverage is mixed across Borena, with Dillo currently having no
mobile coverage at present. However, a mobile phone transmitter has been erected waiting for
connection.
There is little evidence of value addition to primary production in the area – the main activity
observed was milling of maize, teff or wheat, a service paid for by customers requiring the flour.
During normal times, livestock is largely traded in local markets providing cash for buying other
commodities. Some products (chicken and eggs) are produced solely for commercial purposes
serving urban markets (Mega, Yabello, and Teltelle). (There is a local taboo of eating ‘feathered’
animals).
Market Environment
Rules governing trade exist at national and local levels. There are three forms of taxes imposed by
the Government of Ethiopia, with local authorities responsible for collecting revenues and
submitting these to the central government. Some markets require licenses, which can range from
Birr 2 – 3,000 per year (cited by a medium wholesaler in Yabello) to 5 birr per market day traded or
40 Birr for a car-load entering a market. Some markets (Teltelle) reported ‘rules’ reserving rights to
trade to local traders. Produce being brought in from the uplands attracts a local ‘customs’ charge
at Yabello of up to Birr 10 per quintal. Depending on the source of produce, additional charges may
be rendered along the highway between Addis Ababa and Yabello of around Birr 5 per quintal.
Other costs for traders include labour paid to load and unload trucks – at Birr 5 per quintal bag in
Yabello.
Drought-Affected Market Situation (See Annex E – Drought-Affected
Market Map)
Markets are functioning, albeit at a lower
level of supply (in terms of maize in
particular) available for sale. Prices of
maize and other food items are high
throughout the zone, reflecting overall
price rises nationally and regionally. Other
costs of doing business, especially
transportation, have increased for traders.
Despite high levels of need for maize (a
staple crop and the only food item available
for many poor families) demand has
dropped and is particularly erratic around
the time of food aid distribution. With
limited sources of livelihoods or financing, pastoralists’ terms of trade for livestock has significantly
eroded, causing a drastic decline in purchasing power and ability to buy sufficient quantities of maize
to feed their families.
23
http://www.temenos.com/
24
http://www.belcashethiopia.com/introduction

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This decline in demand has impacted the markets. In August 2011, stocks being held by traders in
markets across Borena were observed to be at around 30% to 50% of the maximum estimated
storage capacity. Traders interviewed cited lower demand due to reduced purchasing power of
pastoralists and drought relief (food distribution) as two main reasons for not maintaining stocks.
Additionally, local production levels being nil means that local produce has not made its way to
market. The Ganna (July – August) harvest in Borena would not normally be expected to produce a
surplus and contribute to maize stocks in Borena. However, traders are currently procuring from
outside the region, mainly in the uplands – though some small street vendors in Miyo are crossing to
Kenya by foot to buy poor quality maize (presumably relief food) to sell in local markets.
Figure 8: Estimated Capacity of Traders in Borena, August 2011
Trader Description
Normal
Capacity
(Number of
100kg bags)
Stock in
August 2011
(% of maximum
storage
capacity)
Normal
Turnover
(100kg bags
sold per
month)
Current
Turnover
(100kg bags
sold per
month)
Estimated
Restocking
Time
Comments
Tiny
(street vendor) 1-2 bags 50 - 70% 40 bags 20 bags 1 day
no fixed
storage
Small
(Retailer) 10-50 bags 50 - 70% 170 bags 100 bags 5 days
no fixed
storage
Medium
(Retailer and/or Wholesaler
50-200
bags 30 - 50% 5 bags 2 bags 3 days
Large
(Wholesaler and Retailer) > 200 bags 25% 300 bags 150 bags 1 - 3 days
Extra-Large
(National-level Wholesaler)
> 1,000
bags 10 - 30% 200 bags 100 bags 3 days
Note – this table is a very rough depiction of the stock levels in Borena based on observation of
limited number of traders interviewed only and should not be used as a basis for absolute
calculations of availability of maize in markets. Restocking days are estimates from time of demand.
High prices of supply combined with increased and high (compared to local trade) transport costs
and ‘customs’ duties have brought the price of maize in Borena to record highs of between 6.50 –
9.00 Birr per kg. Prices have risen across the board, reflecting the high market prices nationally.
Maize retail prices across Borena have nearly doubled compared to the same time last year, while
beans and transport have risen by nearly 50%.25
Figure 9: Prices of Maize in Borena & Sheshemane, 2011(in ETB)
August 2011 May - July 2011
Borena
Wholesale 600 - 700 per 100 kg 600 - 700 per 100 kg
Retail 6 - 8.5 per kg 5.5 - 6.0 per kg
Sheshemane
(wholesale)
650 per 100 kg 600 - 700 per 100 kg
National
(wholesale)
N/A 492 per 100 kg
Note: RETAIL traders use a heaped TIN to measure and not a scale. Actual 'weight' is probably around 700 - 750 g
Prices vary dramatically across the region. In remote areas like Miyo and Dillo, the prices were cited
at 9 Birr per kg for ‘upland’ maize in Miyo and 6 Birr per kg in Dillo. (Dillo is far more remote than
25
Oxfam Field research, August 2011.

06/10/2011
Miyo so one would expect prices to be higher.) The main trading centres are trading at between
650 and 800 Birr per quintal. These prices are an average of 50 – 70% higher than the same time last
year, but expectations are that the prices will begin to fall, or at least stabilise in the coming months
as harvests in the upland areas enter markets. Selling prices have stabilised over the past three
months, and except for Miyo, they are roughly in line with prices in source markets of Sheshemane,
taking transportation costs into account. This indicates that Borena market prices are sensitive to
national up-country prices, and are not only driven by local demand and supply dynamics.
Figure 10: Borena Market Prices for Maize and Beans, 2010 to 2011 (in ETB)
Overall traders are reporting that ‘business’ has been declining over the past three months, with
lower turn-over compared to previous months and the same period last year. This is despite prices
stabilising over the past three months, and increased household needs for food, indicating that
purchasing power has declined amongst pastoral communities. Additional demand would also be
expected from agro-pastoral households who normally rely on crops both for household
consumption and trade. Thus the overall prognosis on the demand side is that while needs are high
for the basic commodity maize, demand is actually down due to lack of consumer cash. Whilst some
credit is available in part from traders, it will not be sufficient to cover household food and other
needs.
Terms of trade between livestock and food have eroded significantly. Pastoralists have had to sell of
more animals to meet basic food requirements, with herd sizes estimated to be reduced by 75% -
90%.26
Food security indicators (number of meals per day) from several PAs in Dirre, Teltelle, and
Dillo indicate a severe reduction in food intake relative to a normal period. The number of meals per
day has decreased from a normal of 2-3 meals to 0-1 meals per day in the current situation.
These indicators of reduced purchasing power and reduced demand for maize in the market system
help explain why the supply of maize is less than the actual need. Consumers are purchasing less
because of less purchasing power, resulting in lower food security. As a result, wholesalers supply
less maize to the Borena market because there is low demand.
Additionally, trader business is affected by food aid distributions, which are not always predictable in
terms of timing. As traders see their sales reduced markedly at times of relief distribution, the
uncertainty of timing makes it difficult for traders to anticipate when they need to stock more or
less. With prices currently stabilising and potentially falling, traders will hesitate to hold stock that
may fall in selling price.
26
Household interviews in Dire and Dillo, August 2011.
Aug-10 May - July 2011 Aug-11
Avg Retail Price of Maize: 3.76 5 7.25
Avg Retail Price of Beans: 4.5 6.5 7.5
Local Transport (per 10kg) 4 6
0
2
4
6
8
PRICE-Birr
Borena Price Changes 2010 - 11

06/10/2011
Conclusions
1. The maize market in Borena is functioning, but at a much reduced capacity due to the low
purchasing power of pastoralist households. Although maize supplies are lower than normal in
the markets, maize is available and there is also supply available in highland source markets.
There are appropriate numbers of traders active in the market centres, and these traders’
linkages with regional and national markets are still in place and functional.
2. It is likely that the market will respond to increased purchasing power of consumers. Traders
have connections with suppliers, and upstream suppliers do have access to maize. Additionally,
the primary maize harvest will become available in October or November, greatly increasing
availability in Borena zone and throughout the country. However, it could take Borena traders
from two weeks to two months when prices come down in November to increase their
availability of maize in local markets. Since cash is likely to enter the market slowly (potentially
phased) this will also dampen any strong ‘demand’ signals to traders, but will at the same time
give traders time to anticipate an increase in demand and respond by expanding maize stock.
(The market in Dillo is a notable exception due to the low capacity of that market vis a vis
potential beneficiary households – see recommendations below).
3. Based on current stock levels (30%-50%), supply is low for a number of reasons and if purchasing
power increases with cash infusion on the demand side, supply needs to be increased. Whilst
supply will likely increase by occur by October / November when harvests are due in the uplands
(and prices will likely stabilize), this timing is very late for many people facing severe food
insecurity.
4. Inflationary pressures on maize are likely to be tempered by a) presence of food aid increasing
supply of cereal throughout the period of intervention; b) sensitivity of the local market to up-
country, national pricing; and c) the maize harvest in October/November will put downward
pressure on national maize prices. These trends, and prices throughout the operational areas,
will need to be monitored.
Recommendations
Cash Transfers: Targeted cash transfers to vulnerable households are recommended over other
forms of support to households to a) address the lack of purchasing power of poor pastoralists; b)
improve household food security; and c.) improve livelihood outcomes of traders and other actors
participating in the maize market system. Cash is preferred over other forms of assistance because
cash transfers provides consumers the choice purchase/substitute food items they prefer and that
are available and provides overall liquidity to needy households to repay debts were necessary etc.
Additionally, voucher programming would be costly and difficult to implement in this diverse and
immature market due to multiplicity and low capacity of traders.
Market Support: To accelerate the supply of maize into Borena in order to meet the anticipated
rising demand for food grains that would accompany cash transfers, market support at two levels of
the market chain for maize could be considered, as listed in the table below. In the case of Woreda-
level wholesalers, the purpose of this assistance would be to mitigate the wholesaler’s risk of
purchasing more grain stock now, right before the harvest time, when prices are highest. For
support to cooperatives, the purpose of this assistance would be to assist in developing a market-

06/10/2011
based supply and delivery route to both beneficiary households and all others living in the
communities serviced by the cooperative.
Market Level Nature of Support Rationale
Woreda level
wholesalers
Providing incentive payments to wholesalers that
covers some of their (additional) costs of procuring
maize from the uplands and spreads their risk of
‘buying high selling low’
Woreda level wholesalers are the
key link in the markets and have
capacity to increase stock
Cooperatives Cash grant to cover administrative and transport
costs and an advance for the supply of maize to
identified beneficiary households
Cooperatives can increase PA level
availability of maize and can be used
for supply of maize to specifically
identified beneficiaries.
Wholesaler and cooperative selection should be based on a set of pre-determined criteria which
includes agreeing to a set terms associated with the support package. Support would be in the form
of cash (working capital) and some basic business capacity building / training.
Cash Transfer Modality: Several modalities of cash disbursement using traders were considered.
Given the capacity of traders and limited experience of their working with Oxfam, disbursement of
cash through the traders is not considered appropriate. Setting up a system of transfer through
traders would be costly both in terms of time and finance. Many traders will not have enough
capital to disburse funds and with the absence of banking systems (physical or mobile) they would
carry all the risk of physically transporting cash on distribution days.
Recovery Phase and Long Term Planning: The market assessment provided an opportunity to also
consider the types of interventions which would help in the recovery and long term livelihoods
development processes in Borena. Further markets studies and more complete proposals would
need to be worked out, and this section serves to capture some of the learning about what these
could look like in order to reduce risks of future interventions leading to the type of food shortages
witnessed during this assessment.
1. Agro-pastoralists play an important role in Borena, with small holder farming providing a key
livelihoods strategy as well as surplus staples for pastoralists to consume. While it is likely to be
too late to support crop production for the coming season where rains have already started,
future support to this sector is going to be important through:
a. Further detailed assessments will be needed to assess the need and feasibility of
seed/input support.
b. Considering markets based interventions which support agro-pastoralists with cash,
voucher, seed-fairs, or direct distribution of inputs, depending on assessment findings.
c. Timing is critical for these interventions, and careful consideration is required for any
potential support and whether it is appropriate at this time.
2. Focus on market services to improve finance, transport, and capacity building businesses for
both inputs and output markets.
3. Consider support services to non-livestock value chains (i.e. milk; aloe)
4. Explore opportunities for value addition in Borena, for instance drying crops locally.
5. Develop market based livelihoods recovery programmes, for instance through cash transfers to
pastoralists that enable asset recovery or demand for their preferred livelihoods strategies.

06/10/2011
Annexes
Annex A: Key Sources and Contacts
Name Position & contact details Location
Hussein Galgalo Head, Dillo District Pastoralist Development
Office
Dillo
Oromia International Bank S.C.
Yabello Office
+ 251 46 446 0733 / 16
Yabello
Commercial Bank of Ethiopia
Yabello Office
+ 251 45 445 0234
Yabello
Patrick Foley International Federation of Red Cross/Red
Crescent Societies
patfoley@@counterpoint.net
Addis Ababa
Ketay Baye Ethiopian Red Cross
Ketaybaye22@gmail.com
Addis Ababa
Hussein Pastoral Development Officer, Miyo Miyo
Nyo Mohammed Pastoral Development Officer, Dillo Dillo
Tekay Wiyou Pastoral Development Officer, Teltelle Teltelle
Liban Arero Deputy Head Pastoral Development Office,
Borena Zone
+251 916 607 062 / + 251 046 446 0776
Yabello
Lamman Ajjaman Pastoral Development Officer, Yabello Yabello
Stefano Caria ODI Fellow with Ministry of Agriculture DRMFSS
+ 251 912 803 335
Caria.a.stefano@gmail.com
Addis Ababa
Persom Getachew Food and Agriculture Organization
+ 251 911 457 160
Addis Ababa

06/10/2011
Annex B: Glossary
Embedded services: Services included as part of another trading relationship – i.e. small vendors
receiving bags of maize on credit from their suppliers are enjoying an ‘embedded’ financial service.
Enabling environment: The policies, regulations, norms, systems, governance systems and major
infrastructure that allow a market system to function.
Market System: The whole web or system of people, trading structures, rules, power relations
through which products are produced, exchanged and accessed. This may or may not be a series of
‘physical’ markets.
Market Integration: Level or degree to which market actors are connected to each other.
Horizontal integration refers to linkages between actors in the same value chain – in other words
local, regional, national, international traders. Vertical integration refers to the linkages between
different market system actors – in other words business services.
Werreda / Woreda – administrative unit in Ethiopia below ‘zone’ level. Oromia Federal Region –
Borena Zone – Werreda (Woreda). Often used synonymously with ‘district.’

06/10/2011
Annex C: Map of Borena Zone
Reproduced from: Livelihood Profile, 2008. Oromiya Region, Ethiopia Borana-Guji Cattle Pastoral
(BGP) Livelihood Zone February 2008. Bgp.pdf

Annex D: Normal Situation Market Map, Borena Zone

06/10/2011
Annex E: Drought-Affected Market Map, Borena Zone

06/10/2011
Annex F: Assessment Questionnaire
Zone: Woreda: Market: Villages covered:
Date of Survey: Surveyor name: Trader / Retailer Name or id: Contact Tel No:
Name of person interviewed: OWNER / Employee * MALE / FEMALE
If the person interviewed is NOT
the owner - Name of Owner
MALE / FEMALE
Length business has been
operating:
Trader Profile
1. What commodities does the business trade in? Maize Sugar Oil Beans Other
2. Where does the trader operate from? Own
Warehouse
Rented
Warehouse
Open Market /
Street
Home Other
3. Where does the trader store goods? Warehouse Shop front Market stall Off-site (specify) Other (specify)
4. What is the trader size in terms of usual stock and
turnover
[__] X- Large
Wholesaler (>
1000 bags)
[__] Large
Wholesaler (200
– 1000 bags)
[__] Medium
Retail / WS (200
- 500 bags)
[__] Small -
Retail (10 – 50
bags)
[__] Tiny – Street
Vendor (1 – 2
bags or less)
5. How much stock is the trader currently carrying compared
to capacity? (Estimate from amount of stock on shelves /
in storage)
[__] 100 – 75%
of capacity
[__] 75 – 50% of
capacity
[__] 50 – 25% of
capacity
[__] 0 - 25% of
capacity
6. Does the trader operate in any other markets? How does
trade here compare to those other markets?
YES / NO

06/10/2011
Customers & Sales
7. Who are your main customers (Number / location /
relationship etc.)?
8. What do your customers buy from you and in what
quantities?
9. How often do your customers buy from you (daily /
weekly / monthly?) How does this compare with
last year?
10. How do your customers pay (cash, credit,
barter?) Do you see a change from one to another
form of payment these days?
Maize Sugar Oil Beans Other
11. How much stock do you sell every week?
12. How do sales compare with last month
13. How do sales compare with same period
previous year?
Why do you think that demand has changed?

06/10/2011
Storage and stocking
14. Are you out of stock of any product which you are being asked
for? What is it?
15. How long ago was the last order placed and filled? (Number of
days / weeks / since the last replenishing of stocks.)
16. How many days does it take to restock? (Number of days from
placing an order to having the stock in store?)
Where and what type of storage does the trader have? (Describe if it is an area in the shop; outside area; if the area is locked; do they have to pay for
storage?)
If stocks are low, why? What are the barriers to keeping stocks high / restocking?
If demand suddenly increased, how quickly would you be able to respond? What challenges would you face? What support could you use?
Transportation
17. What transport does the trader use? [__] Own
vehicle
[__] Rents vehicle [__] Jointly rents
vehicle
[__] Public
Transport
[__] Food / Donkey /
Cycle
[__] Other (Please specify): ......................................................................................................
18. What is the cost of transportation? How does this
cost compare with a year ago.
How is transport organised? Is it any more difficult to organise / pay for transport than last month? A year ago? Why?

06/10/2011
Ordering and payments
19. How are orders placed? (If other please specify) [__] Phone [__] Through transporter [__] In person
20. How are suppliers paid? (If other please specify) [__ Cash in person [__]Bank transfer / cheque [__] Credit note
21. Does the trader have a credit line with his / her
supplier? (Note – if possible, please ask and specify
how much credit is available from each source)
[__ Credit with suppliers
Birr ....................................
[__]Bank credit
Birr ....................................
[__] family / friends
loan
Birr ............................
Birr ....................................
22. What is the availability of credit compared to last
month? Previous year?
Financials
23. Does the trader have a bank account? What bank? YES / NO
24. How much working capital does the trader have?
25. How much capital does the trader currently have invested in stock / other business commitments?
26. How much debt does the trader have and whom does he owe it to (bank / suppliers etc.)
27. How much are you owed by your clients?
28. How often / when do you expect repayment?
29. What rate of default do you experience by your clients now? Compared to last year?

06/10/2011
Trader monitoring of prices and volumes
30. For each commodity, please provide best estimates for each of the below.
Commodity &
Unit
Current Stock
levels
Source
(Where does the
trader buy these
goods from?)
Current
average price
(Birr)
Price compared to
last month
Availability
compared
with last month
Price compared to
last year
Availability
compared to last
year
0: n/a
1:
lower
2: same
3: higher
0:
none
1:
lower
2: same
3: higher
0: n/a
1: lower
2: same
3: higher
0: none
1: lower
2: same
3: higher
Maize (grain) -
kg
Beans / Protein
kg
Sugar - kg
Cooking fat - kg
Other 1
Other 2
Other 3
Other comments on market monitoring:

Ethiopia Borena Maize Market Analysis - Aug 2011 FINAL

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