MAIZE MARKETING IN ETHIOPIA: LIBERALIZATION AND PRICE INTEGRATION ISSUES

Abstract

: The objectives of the paper were to (a) assess the effect of market
liberalization process in the grain sub-sector; (b) study the maize marketing system;
and (c) estimate the maize price integration and its dynamic impact on various markets
in Ethiopia. The analysis was based on the rural household survey of the Grain
Marketing Research Project (GMRP) in 1996 alld wholesale price data of Ethiopian
Grain Trading Enterprise (EGTE). The results indicated that . there were clear policy
decisions to transform the entire economy into market-led economic system. The reform
process improved the efficiency and jlow of grain into markets. Maize production
variability has been very high in Ethiopia in the last 36 years, particularly after the
reform. The distribution of marketed maize by households was highly skewed and about
30 percent of the maize was marketed in 1996. The results of the co-integration test
indicated that there was short-run integration between Addis Ababa (central market)
and the rest of the markets in the study. The long-ron and short-nm co-integration test
indicated that maize markets were strongly integrated. Although the significant
reduction of government intervention enhanced the efficiency of marketing, the
government should selectively intervene by developing market centers, disseminating
price and production information, implementing quality and grade standards,
improving the legal system and infrastructure, and supporting the development of
private grain trade