The Implication of State Procurement and Marketing of Agricultural Products to Market Prices, Ethiopia's Case

Abstract

ABSTRACT. This paper analyzes the food grain marketing and pricing practices in Ethiopia and establishes the following
result: (a) Due to tbe behaviour of agents in the marketing chain, there is a seemingly perverse relationship between tbe
urban and TUral open market prices (b) Raising the price paid by AMC while maintaining the current institt/tional set-up and quota delivery system in fact will raise open market prices in TUral markets but will "ave an adverse effect on marketed output. On tbe otber side, raising the margill paid to grain merchants will bave positive effect on both quallfitics
and prices (c) Liberalhacion of :he grain trade will affect fanners in different regions in d~(ferent directions. Farmers in outlying regions will stand to benefit from liberalization wbile those around major urball grain markets (illeluding
Addis Abeba) aTe bound to lose.