Abebe HaileGabriel and Bekele Hunde - Farmers Post Harvest Gr

8/7/2019 Abebe HaileGabriel and Bekele Hunde - Farmers Post Harvest Gr

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Farmers' Post-Harvest Grain Management Choices Under Liquidity Constraints

and Impending Risks: implications for achieving food security objectives in Ethiopia

Abebe H. Gabriel and Bekele HundieDepartment of Economics

Ethiopian Civil Service College

Summary

Based on an empirical observation and analysis the paper set out to identify the different post-

harvest management processes and techniques farmers have been employing, the underpinning

reasons for their choice of certain (or a set of) techniques over the others, whether and in what

ways would liquidity constraints and/or perceptions about post-harvest risk of loss would

influence their post-harvest grain management techniques including their marketing behavior,

which aspect of risk (physical crop damage, or market risk) would be more important in

influencing their marketing practices, whether inter-crop differences in post-harvest risk of loss

are significant determinants of the relative importance of crop-share marketed, and which options

could be harnessed to achieve the objective of food security through improvements in post-

harvest grain management practices and capacities both at micro and macro levels.

Results indicate that farmers perceived post-harvest grain loss as an imminent risk. Both farmers

expectations as well as realized post-harvest losses were found to be quite high especially for

crops such as maize. Application of insecticides, aeration and traditional methods of treatment

were the most widely techniques used by farmers. Other stock management techniques (lending

to others, etc) exist but they are less important. Marketable surplus was estimated to be above

40% of total grain output but more than one-half of it was actually sold within the first three

months following harvest. Econometric results suggest that instant sales of grains immediately

after harvest are triggered by temporary but immediate liquidity preferences to meet purchased

items for the family members in absence of or limited sources of cash other than crops sales, and

by an impending risk of post-harvest grain loss and the limited capacity to prevent it. Hence,

family size, female headedness, and tax dues and loan repayment schedules were found to be

significant variables positively associated with instant crops sales. On the other hand, livestock

ownership and the capacity to apply chemicals (both indicators of wealth) were also found to besignificant variables but negatively associated with instant crops sales. Cropping patterns suggest

that those farmers (and regions) who cultivate more susceptible crops to pest-attacks (e.g., maize)

The research was conducted as part of the International Food Policy Research Institute's (IFPRI)

Competitive Research Grants Program of the 2020 Vision Network for East Africa. Comments arewelcome!


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are most likely to dispose off their crops immediately after harvest at cheaper prices than those

who cultivate less susceptible ones (e.g., teff).

The results underscore the need for taking on board post-harvest grain management issues as a

matter of strategic policy concern, not just from the perspective of reducing losses but also from

the view point of considering it as a viable and dynamic economic activity in terms of generation

of employment, value addition and income linkages.

The paper highlights the importance of relaxing the seasonal liquidity constraints through theoperation of financial credit markets and/or through rescheduling of financial obligations that are

due to government until later seasons as crop prices get better (e.g., payment of land taxes, input

loans repayment). The significance of chemical treatment suggests for linking input markets with

future product markets. Diversification of cash sources and in general integration of the

production process with markets so that farmers would be more market informed and oriented intheir decisions than subsistence driven is necessary for relaxing the liquidity constraints. It is also

important that disadvantaged sectors such as female headed households and the poor need special

support since they are more susceptible to shocks than the relatively better-endowed ones and that

interventions take into account and build on farmers resources and knowledge including

indigenous techniques.

Relaxing of the farmers liquidity constraints must be complemented with an intervention to

enhance the capacity of farmers to prevent post-harvest losses, which could be organized at

household, community and national levels. Otherwise, there is an imminent danger that farmers

would dispose or lose their grains any way (in fear of risk of loss) and might find it difficult to

repay their loans, which makes the matter even worse. There are also legitimate reasons to

suspect that increased production and availability of grains on farm might lead to increased

consumption by the farmers themselves instead of being marketed.

Since markets often do not perform so efficiently as to achieve optimal solutions, there is a need

for introducing and strengthening appropriate institutions that would enable markets work better.

One viable option could be to introduce grain warehouse receipt system so that farmers woulddeposit their marketable surplus to be sold when prices get higher. Some of the reasons as to why

warehouse receipt system of grain management and forward grain markets make a lot of sense, in

addition to preventing post-harvest loss, are because they help facilitate monetization of the

production process, reduce availability of grains for direct consumption by the producers, and

facilitate processing. There are lessons to be drawn from other countries experiences that there

are a number of advantages including easing access to finance at all levels in the marketing chain,

moderating seasonal price variability, maintaining quality standards and promoting instruments to

mitigate price risks. They also help reduce the need for government intervention in grain markets

as well as the costs of such interventions. Above all, the introduction of well managed

warehouses in rural villages will reduce post-harvest grain losses which ultimately support the

countrys effort to ensure national food security.

More in-depth further studies are necessary to inform policy on credit and saving options

(including options for introducing grain warehouse receipt systems), traditional methods of grain

treatment (effectiveness, economy, health issues, etc.), and farm-nonfarm linkages and the scope

for the development of agro-processing industries, including those small-scale farmer-managedgrain processing technologies.


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1. Background

1.1. The Significance of Marketed Surplus of Food Grains

Food grains (cereals, pulses and oil crops) constitute the major sources of food intake in Ethiopia

accounting for 82% of total calorie intake1 and 70% of total food expenditure (CSA, 1988;Abebe, 2000:260). Cereals alone would provide about 70% of the average Ethiopians calorie

intake (Howard, et al, 1995). Other studies report quite high figures2; for example, Shiferaw

(1986) reports that in the eastern part of the country (Hararghe) 98% of food requirements come

from grains only. Similarly, Tesfaye (1989) estimates that grains meet 95% of the food

requirements in the central highlands. Perhaps a reflection of this, the bulk of agricultural

production is dominated by grain production; of the 16.5 million hectares of land that is under

cultivation, 14.6 million (88.5%) is under annual crop production (Tesfaye, et al, 2001). Grain

production in Ethiopia is virtually a smallholding farmers activity and yield levels are one of the

lowest in the world. Studies indicate that of the total food grains produced by farmers, only about

a quarter is marketed (Eleni, 2001; Abebe, 2000; Gebremeskel, Jayne, and Shaffer, 1998) with

the bulk of production being retained for on-farm consumption3.

Table 1. Area, Output and Yield levels of Cereals (1974-1999 average)

Yield (Quintals/ha)

Crop

Area

(000 ha)

Output

(000 qts) Ethiopia World Best World Average

Wheat 665.57 7,787.27 11.71 57 (Holland) 28

Barley 838.97 9,164.25 11.06

Teff 1,535.83 13,097.21 8.55

Maize 1,033.11 16,063.96 15.48 74 (New Zealand) 30

Sorghum 837.86 10,134.58 11.92 48 (Spain) 13

Cereals (Total) 5,115.00 57,869.41 11.28

Source: (1)Ethiopian Economic Association, Annual Report on Ethiopian Economy, 2002 (for Ethiopia)(2) Beets, 1990 (for World best and World Average figures).

The concern over marketed surplus of food grains has always been at the center of policy

formulation and implementation in Ethiopia. The previous regime attempted to get hold of

marketed surplus of food grains through captive production processes; that is, by setting up state

farms the major reason being the difficulty of controlling marketed surplus of food through

markets only. That practice lasted for more than a decade, i.e., between late 1970s and early

1990s. The contribution of state farms was insignificant both in terms of share in total area

cultivated as well as output produced as it constituted only 2.8% of total area cultivated and 3.6%

of total grain production (Abebe, 1990; PMGSE, 1984)4; but it permitted direct access and control

of output in a sense that whatever was produced could be captured directly. There was also a

heavy hand of government in marketing of grains when the state-owned Agricultural Marketing

1 The most important grains in terms of consumption are teff, wheat, and maize, which together constitute

roughly two-thirds of caloric intake in Ethiopia (Alemayehu, 1993).2 A high concentration of cereals (over 75%) in food intake is a symptom of unbalanced diet. Diets high in

cereals and tubers are low in micronutrients. (see FAO, 1998)3

Of the total grain production, some 72 percent is retained for on-farm uses (Gebremeskel, Jayne, andShaffer 1998).

4 Provincial Military Government of Socialist Ethiopia, 1984. Ten Year Perspective Plan.

1


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Corporation (AMC) was set-up in 1976 with unprecedented powers and duties including, among

other things, of fixing grain prices at below market levels and setting of compulsory procurement

quota (see Abebe, 2000: 80-83). It used to run about 2,200 warehouses throughout the country

with a total capacity of over 1 million tons of grains (Alemayehu, 1992). With the change in

government in early 1990s the importance of AMC dwindled as it was downsized into an

Ethiopian Grain Trade Enterprise with primary role to play as market stabilizer through managing

buffer stocks. With pro-market reforms in place, the single most important source of marketedsurplus of food grains is expected to come from the smallholding farmers who also retain a

significant proportion of their output for household consumption.

1.2. Post-Harvest Grain Management as a Missing Link

The crucial importance of ensuring sustained levels of marketed surplus of food both in terms of

sufficient quantities as well as fair prices cannot be overemphasized if development is to take

place for poor countries such as Ethiopia. However, government policy seems to have

concentrated more on aspects of production and marketing proper and less on what happens in

between these two processes. For example, there has been a lot of emphasis and support given for

increased grain production through the package of agricultural technologies and inputs. Indeed,

partly due to these interventions, output for some grains (maize) has increased to the extent that itcaused maize prices to fall dramatically. Following that, there has been an argument whether

market stabilization mechanisms should be introduced to absorb the shock so that depressed

market prices would not have disincentive impacts on the part of producers. This may serve a

short-term purpose, but it also shows that attention revolves around the orbit of production proper

and marketing only.

There seems to exist an assumption that the bulk of food production would be marketed instantly;

this assumption tends to fail to appreciate the fact that farmers produce food grains first of all to

meet their household consumption requirements and then consider marketing. In many cases, the

farming system that integrates crop-livestock husbandry tends to facilitate liquidity preferences

through rearing and selling small ruminants rather than food grains; i.e., with small ruminants

playing as major sources of cash. Hence, the fact that farmers produce food grains not primarilyfor sale (which is also evidenced by the low proportion of marketed grains) implies that much of

the production is retained and therefore would not reach marketplace. It also implies that food

grains are retained for longer period of time and that marketing is staggered over several seasons

even though much of the marketing is concentrated in the few months immediately following

harvest; about 79 percent of the annual sales of farmers occur in the period between January and

March5 (Gebremeskel, Jayne, and Shaffer 1998). Taking the 75% retention rate by farmers and

the 79% concentration rate of marketing season between January and March, the proportion of

grains that are marketed immediately after harvest season would be about 20% of the total

production which also implies that as large as 80% of total production is either retained for

household consumption or marketed in a seasonally staggered fashion.

This situation makes a strong case for sound post-harvest grain management system if food loss isto be minimized, which should be justified especially for Ethiopia where a great majority of

people is food insecure. It is important to recognize that post-harvest grain management practices

and capacities (not just production and marketing) are consequential for many reasons including

attaining high level of food security objective. Some estimates would suggest the magnitude of

5This implies that farmers bear the full price risk in marketing their output, without informal mechanismsto lock in prices and without the financial means to withhold sales to mitigate the fall in prices at

harvest (no forward contracts or credits) (see, Eleni, 2001)


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post-harvest loss in Ethiopia to be tremendous; for example depending on the type of post-harvest

handling method, losses could range between 5 and 19% for maize, 6-26% for millet, 6-23% for

wheat, and 5-20% for teff (see, Dereje, 2000). Clearly a better post-harvest grain management

capacity and practice would minimize the extent of loss. This is in addition to the potential

employment and income linkage effects and gains that would result from post-harvest grain

management practices as economic activities. Despite its significance however, there has been

very little effort in terms of studying post-harvest management practices and capacities inEthiopia. Those studies that remotely touched upon post-harvest aspects emphasized only on

marketing and understandably their policy recommendations would not go beyond improvementof transportation, storage and information infrastructure and/or regulatory frameworks (see, for

example, Alemayehu, 1993; Wolday, 1994, 1998; Bekele and Mulat, 1995), with little mention of

processing as an important post-harvest grain management system. Other limited studies (e.g.,

Jonsson, 1972; Dereje, 2000) focus on the engineering and design aspects of storage

infrastructure without any reference to wider perspectives such as food security. Empirical studiesof the sort proposed here, i.e., investigation of the relationships between post-harvest grain

management practices and food security at different levels of analysis, are fundamental for

designing sound food policies. This is what this study aims to achieve.

2. The Problem and the Purpose

It is ironic that the immediate victims of a state of food insecurity, or even worse famine, have

traditionally been farmers who are the very producers of food. Each year hundreds of thousands

of rural households are food insecure and therefore literally depend on food-aid for their survival;

and this is despite weather conditions.

The fact that farm households lay direct claims on their own produces means that they do depend

less on markets for meeting the bulk of their consumption requirements. Production turn over is

mostly only once a year, and at most twice, in which about 95% of production comes from the

main season only. Moreover, long gestation period is involved between planting and harvesting

of crops, which in addition to low productivity levels has constrained grain availability from own

production. Consequently many rural households run the risk of food insecurity for severalseasons of a year. In other words, seasonality of food security follows food production cycles;

that is, a relatively higher level of household food security during the season immediately after

harvest is followed by longer season of food insecurity extending up to next harvest season. The

extent of food insecurity is most severe during seedbed preparation and sowing season, whereas

seasons following harvest are those in which one could find the largest volume of available grain

at household level but also at market levels, since the major marketing seasons are also these ones

as far as peasant households are concerned. Some studies indicate that 79 percent of the annual

sales of farmers occur in the period between January and March (Gebremeskel, Jayne, and

Shaffer 1998). Some of the factors that would attribute to such an instant disposal of food grains

by farmers may include cash needs to effect payments of various dues (to government such as

taxes, fees, loans, etc), social obligations (loans, festivities, etc), or fear of the risk of post-harvest

grain loss.

Such seasonal fluctuations of grain availability both at household as well as market levels and

thus of the level of household food security could be related with farmers post-harvest grain

management systems and capacities. In fact, smoothing out of food consumption seasonally, as

well as ensuring stability in food availability in markets, thus in food prices, could be determined

by the extent to which there exists an efficient post-harvest grain management system not only at

a household level but also at macroeconomic level. Unfortunately, this crucial area has not

received the attention it deserves, the reason probably being the often easily held assumption that


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what matters after all is production, and that if success could be achieved at the level of

production, then there will be more availability of grains both at the household and market levels,

etc. (see also Goletti and Wolff, 1999). It is interesting to note that the strategy of decreasing

post-harvest losses is more economical because it requires smaller inputs per unit of the final

product than a strategy of increasing production extensively, especially in the short-run (Toma,

et al 1990).

If there is one lesson that should be drawn from a recent past grain production and price trends in

Ethiopia, it must be that of the failure of post-harvest grain management systems to sufficientlyrespond to increases in production levels so as to stabilize grain markets. Often boom cropping

years are followed by depressed prices. Evidences show that cereal production has increased

between 1999/2000 and 2000/2001 crop year in the order of 19%. Prices on the other hand

declined up to 40% (see MoA, 2001). There were mounting field reports that farmers were

finding it difficult to sell their products since the prices offered were extremely low. This maypartly be due to the fact that agricultural products are not processed before they are sold to the

consumer; they are marketed as harvested without undergoing any transformation process. Such

processes have made storing of agricultural products difficult for farmers since most of the

products are perishable while farmers generally do lack the necessary infrastructures to keep them

for longer time without being damaged. Therefore, what had been witnessed is that, at the macrolevel, the poor post-harvest grain management capacities could not live up to the production

expectations, which have led to depressed market prices with the pernicious disincentive effects

on the producers. Similarly, at a more micro-level, the situation depicts one of poor capacity of

the post-harvest grain management systems by farm households in the sense that they tend to

dispose of most of the grains immediately after bumpy harvest at lowest prices of any season in

the year. Such lack of post-harvest grain management capacities that has surfaced both at macro

(national) and micro (farm household) levels are inter-related; but they mirror the extent of what

post-harvest loss might be in terms of physical crop damage, quality deterioration and value

depreciation. Obviously, its implication on food security at national as well as household level is

of paramount significance for a country such as Ethiopia in which food insecurity has become a

structural problem. It is important to examine the post-harvest grain management practices and

capacities of farmers and its impacts on levels of food security.

This paper aims to achieve the following objectives:

a) identify and document the different post-harvest grain management processes and techniques

practiced by farmers and investigate the factors that determine the choice of a given (or a set

of) post-harvest grain management technique over other techniques;

b) examine the extent to which farmers perception of risk about post-harvest grain loss

influences their marketing behavior, that is, to explain as to why farmers dispose of most of

their output immediately after harvest and at cheaper prices and explore in what ways would

such marketing behaviors relate with levels of household food security;

c) investigate the relative importance of the potential risk associated with physical post-harvest

grain losses and that of loss in income due to inter-seasonal price variations in explainingfarmers post-harvest grain management practices and its impacts on food security.

d) explore the extent to which inter-crop differences in post-harvest risk of loss are important

factors in determining the share of marketed surplus of food grains;

e) highlight on crucial policy issues that relate to attainment of food security objectives throughimprovements in capacities and practices of post-harvest grain management both at a micro

as well as macro level of organization.


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3. A Conceptual Framework

Post-harvest grain loss is the loss of grains (quality and/or quantity) between the moment of

harvest and consumption of the crop. Reduction in food losses are sometimes considered as the

third dimension to the world food supply equation, i.e., in addition to increase in food

production and increases in population (Toma, Fansler and Knipe, 1990). Crop losses could occurat all levels of the post-harvest system, during pre-processing, transportation, storage, processing

and packaging and marketing. Post-harvest grain losses could be classified into two categories,namely quantifiable (weight loss, economic loss) and non-quantifiable (nutritional loss, energy

loss, and quality loss) (Toma, et al, ibid).

The commonest forms of post-harvest grain management practices include storing, treatment,

processing, and through stock management (loans, sales, purchases, etc). In Ethiopia, grainstorage at farm level is carried out by means of grain pits, underground holes, and sacks. Grain

losses due to poor storage by farmers are reported to range between 11-19% (Kassahun, 2000).

Grain traders also store grains in warehouses with small but varying capacities; moreover, these

are characterized by poor ventilation and dirt floors (Dadi, Negassa, and Franzel 1992). Hence,

poor storage naturally leads to high grain damages from pests and moisture whether at farm levelor anywhere along the marketing channel for that matter. Although storage capacity has increased

since the enactment of market reforms, roughly two-thirds of traders indicate that their storage

facilities are still inadequate in terms of availability, capacity, and location, with 19 percent of

traders reporting in 1998 that they were unable to obtain rented storage space (Gebremeskel,

Jayne, and Shaffer 1998). This inadequacy of storage, combined with the vulnerability of crops to

damage, makes traders unwilling to store stocks beyond the minimum turnover period. Similarly,

pre-damage treatment (aeration, application of pesticides, etc) is seldom practiced by most

farmers, and post-damage treatment is limited to aeration. This may be because of the designs of

the storage facilities not allowing for an easy ventilation or poor capacity of farmers to purchase

pesticides or even non-availability of treatment facilities.

Often what happens between production of a given crop until it reaches consumers table is ablack-box. In Ethiopia, consumers buy unprocessed crops and much is actually unchanged since

processing is not undertaken either by producers or middlemen; it is essentially undertaken as and

when grains are prepared for consumption rather than as an important economic activity. As a

matter of fact, it is generally the ultimate consumers who undertake the processing of grains

(milling, etc.) which in a way reflects the addition of no value of substance in space and time

between points of sale by farmers and purchase by ultimate consumers the sole marketing

function being transportation and temporary storage, that is without subjecting grains to further

transformation. Hence, in view of fast perishability of food grains, the risk of loss involved could

be of quite a higher order of magnitude.

Absence of mechanisms for proper handling, treatment and generally post-harvest management of

grains may be an important factor that may induce farm households to dispose of most of theirgrains immediately after harvest thinking that they would buy when needed; however, cash is

often quickly dissipated than grain holdings through other ways6. In fact, this has also intra-

household distributional dimensions; i.e., grain consumption is distributed more fairly among

members of households than cash obtained from grains sales. In many rural areas marketing

(particularly that of goods and services for household consumption) is primarily the domain of

6 For example, there are reports that husbands who usually got direct claims on such cash would squander it

on drinks.


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female members (housewives) of households by which they take some small amount of grains,

chicken, some eggs, butter, etc. to the market and purchase in exchange household consumption

items (oil, detergents, salt, spices, etc). Usually such practice takes place throughout a year, in

some places as frequent as once or twice a week. For expenditure involving relatively larger

sums, households resort to small ruminants (sheep, goats), heifers, or grains of larger volume,

which is entirely undertaken by the head of the household who are predominantly men.

In some sense, storing of grains could also be considered as farmers choices of saving in kind.

Farmers cash holdings may be small, but since saving institutions are non-existent in ruralEthiopia it may be considered as a close substitute for the later. In addition to prevalence of

missing markets, the convenience of constantly drawing on grain stock for consumption purposes

year round could also be an important factor explaining farmers behaviors to save food grains in

kind. Farmers may practice some kind of stock management whereby they may lend/sell out

grains at different seasons of the year to other farmers and get repaid either in kind or cash later.Hence, in absence of well functioning formal financial institutions, stock management may play a

very important role as post-harvest grain management practice.

The extent of post-harvest losses widely differs from crop to crop; but it could be quite enormous

in the case of some perishable vegetables reaching as high as 100% (Toma, Fansler and Knipe,1990). It could also be quite significant for food grains and horticultural crops; for example,

Coursey and Proctor (n.d) report that about 25% could be lost between harvest and consumption7.

Cereals and pulses are vulnerable to insect attack at all stages and therefore require continuous

protection. Inadequate storage methods immediately after harvest and before processing add to

the problem, and infestation continues to increase during transportation and long-term seasonal

storage before processing, causing an estimated overall loss of over 30 per cent.8For particular

crops and countries earlier reports indicate wheat loss by weight in a range of 8 - 52 per cent for

India, 6 - 19 per cent for the Sudan, and 15 - 20 per cent for Brazil (ibid). Experts in this kind of

analysis cite minimum post-harvest losses of 10 per cent for durable crops and 20 per cent for

non-grain staples, perishables, and fish.

Post-harvest loss studies are generally rare in Ethiopia; and even those few available are bentmore on aspects of engineering structures and are not linked with aspects of food security.

However, some preliminary estimates show that post-harvest grain losses could range between 5

and 26% of production, which is enormous given the state of food insecurity in the country.

The relationships between post-harvest grain management practices and food security could be

conceptualized as in Fig. 1. At the household level, food security could be defined by both

availability and access to enough food at a point in time. It is determined by the amount of output

produced (1 in fig. 1), which is a function of resources endowment (4) - which is often identified -

as well as by the amount of post-harvest grain losses (3) and food prices (2) - which is often

neglected. Grain losses could either be in terms of quantity damaged or in quality deteriorated,

but it is related with post-harvest grain management practices (5), i.e., storage, handling,

processing and stock management, which in turn is a function of endowment and access to

7 For horticultural crops, for e.g., in the tropical world, some conservative estimates would suggest that out

of the more than 200 million tons of horticultural crops (including perishable staple foods) produced

annually, a proportion of the order of 25 per cent is lost between harvest and consumption (Coursey and

Proctor(n.d.). The average minimum losses reported for roots and tubers and fruits and vegetables were

16 per cent and 21 per cent respectively; many more 'qualitative' references, not included here, indicateestimates of 40-50 per cent and above (see http::/www.unu.edu/unupress/food/8f012e/8f012E01.htm.)

8 see http::/www.unu.edu/unupress/food/8f012e/8f012E0b.htm


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resources including credit (6). Output level may also influence the choice of grain management

practices (7), which would determine the magnitude of post-harvest grain losses (8) as well as

farmers stock management behavior. The magnitude of post-harvest grain losses, whether actual

or expected, would influence farmers behaviors in marketplace (8); that is, in absence of a

working insurance markets, the fear of running high risk of grain loss may induce farmers to

dispose of most of their produces immediately after harvest time and probably repurchase at some

future date. Obviously, this would entail inter-seasonal price discrepancies (9), which wouldaffect the level of farmers income and therefore access to food (2). Hence, the level of household

food security may be affected directly by the magnitude of post-harvest physical grain loss orindirectly by loss of grain prices due to quality deterioration and inter-seasonal price variations.

.

Post Harvest

Grain Management

Practices

Food security:

Availability Access

2

PHGMP

Storage+treatment Processing Stock management

Production Process

Endowment &

access toResources (e.g.

credit)

6

3

Grain Loss

quantity

quality5

8

Instant grain sales Grain Repurchase

Price variations:

(Sales-repurchase)

9

8

9

7

4 Output

level

Fig. 1. A Conceptual Framework: Post-Harvest Grain Management as determinant factor for household

food security levels.

Given resource endowments and output level, poor post-harvest grain management practices

would result in low level of food security through: (a) output effect, that is, reducing grain

availability due to physical losses and involuntary sales; and (b) income effect, that is, reducing

access to food due to low prices received when grains are sold immediately after harvest and/or


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higher prices when grains are repurchased, or quality of grains deteriorates so that they fetch

lower prices. It could be hypothesized that:.

a) Farmers perception of risk of post-harvest grain loss and seasonal liquidity constraints

influence their marketing behavior, that is, it explains as to why farmers dispose off most of

their output immediately after harvest and at cheaper prices, eventually producing sub-

optimal outcomes and resulting in low level of household food security.b) The potential risk associated with physical post-harvest grain losses are more important than

the potential risk of loss in income due to inter-seasonal price variations in explainingfarmers post-harvest grain management practices and its impacts on food security.

c) Inter-crop differences in post-harvest risk of loss are important factors determining share of

marketed surplus of food grains; that is, the crops which are mainly marketed instantly are

those for which risk of post-harvest loss are the highest.

4. The Data and Methods of Analysis

The study basically employed a household level analysis. Relevant secondary information were

collected from the archives of various organizations (e.g., CSA). Primary data were collected by

conducting field surveys. The most important set of information collected include resourceendowment patterns, socio-economic characteristics, production, post-harvest infrastructure,

inventory of storage, processing, stock management practices, food availability, sales, purchases,

prices, functions and importance of rural institutions (formal or non-formal) such as credit,

saving, cooperatives, etc.

Three areas that are dominantly producing maize (Bako, west of Addis), wheat (Chilalo, south of

Addis), teff (Ada, east of Addis) were included in the study for the obvious reason that these

crops are the major food items (together they would constitute for 2/3 of total calorie intake).

Although these three crops have been considered for selecting target sites, data wee collected for

all other crops grown in the area and analysis was done accordingly. Two peasant associations

from each region were purposively considered - one with a superior potential and another with

moderate potential, making a total of 6 peasant associations. The list of peasant households thatwas furnished by peasant association served as a sample frame for stratification purposes and

ultimate selection of sample households. Peasant households were randomly selected after

excluding the food-deficit (or poorer) ones. This is because post-harvest grain management

assumes the existence of surplus production over and above immediate consumption, which the

poorer households cannot afford. 50 peasant households from each peasant association were

selected; hence, a total of 300 households were included in the survey.

Primary data were collected using questionnaire, interview guides, participatory discussions with

focus groups and informants.

Both descriptive (both qualitative and quantitative) and econometrics methods9 of data analysis

have been employed. Farmers post-harvest grain management systems, as well as productionlevels, past post-harvest grain losses and their causes, traditional loss minimizing strategies, etc.

are described in detail.

We wanted to know what factors would influence farmers grain marketing behavior; in

particular their decision to dispose of most of their grain produces immediately after harvest, and

if the risk of post-harvest loss is significant in explaining such a behavior. Also we wanted to

9 For specification of the econometric estimation model, see Annex.


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know if and in what ways these are inter-related with household food security issues. Hence, our

dependent variable is farmers instant disposal behavior (Di); while the explanatory variables

would be risk of post-harvest grain loss (z)characteristics of the post-harvest grain managementpractices (m), grain prices (p), household characteristics (w), and farmers resource endowments

(x).

6. Empirical Results

7.1. Description of Survey Findings

7.1.1. Farm Resources and Grain Production

As explained above, grain production in Ethiopia is almost entirely based on rain-fed agriculture

and is characterized by a dominant harvest (meher) around November and December and asecondary harvest (belg) around May and June. Of course, this is a general description and there

exist variations among different agro-ecological zones in relation to production cycles. The study

areas depend on meherproduction of cereal crops.

Land is the major farm resource in the study areas, and it could be accessed through two ways:land allocations by peasant associations (PAs) and/or through informal land markets. About 98

per cent of the sample households acquired land from their peasant associations. In addition, 51

per cent of the households acquired some of their farm plots through either sharecropping or

rental arrangements. On the other hand, few sample households (5.4%) shared/rented out their

farm plots during the year under consideration. The low proportion of farmers who shared out/

rented out their land compared with those who shared in/ rented in land is because our sampling

procedure was biased towards the relatively better-off farmers who usually seek for additional

lands. As discussed in the methodology section, the selection of better-off farmers was deliberate

because the basic research problem, post harvest grain loss, assumes surplus production and

therefore the selection of surplus producing farmers.

On average, cultivated area per household was about 2.7 hectares. This is on the higher side,which might perhaps reflect the importance of informal land markets; i.e., since the farmers

included in this study are the relatively better-off ones, there is a tendency for them to have leased

in land from other resource-poor ones. Significant variations exist among the three sites vis--vis

the average area allocated to production of different crops. Table 1 shows the cultivated area

under major crops included in the study during the 2002/03 main season. Apparently, wheat, teff

and maize respectively take the lions share of total cultivated land in Hetosa (65%), Ada (47%),

and Bako (75%).

Table 2. Average Cultivated Land Area per Household of by Major Crops (hectares)

Hetosa Ada Bako

Crops Area % of total Area (ha) % of total Area (ha) % of total

Teff 0.052 1.79 1.17 46.54 0.20 7.69

Wheat 1.88 64.56 0.80 31.82 0.00 0.00

Maize 0.27 9.27 0.024 0.95 1.95 75.00

Sorghum 0.14 4.81 0.0 0.00 0.23 8.85

Other crops 0.57 19.57 0.52 20.68 0.22 8.46


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Total 2.91 100.00 2.51 100.00 2.60 100.00

Livestock are the other important assets owned by the sample households. Almost all sample

households own some livestock. In fact, as mentioned above the study areas are characterized by

mixed farming in which farmers rear some animals while producing crops. Various types of

animals are raised in the study areas including large and small ruminants, pack animals (equines),

and poultry. An average livestock holding, excluding poultry, was found to be 11 animals per

household, which is equivalent to 8.5 tropical livestock units10. Almost every household owns at

least two milking cows and three oxen, again a reflection of a relatively better resource

endowment position of sample households.

Livestock are important income sources for the sample households. More than one-half of the

households sold either their livestock or livestock products to generate cash revenue. On average,

a household generated about 460 birr from the livestock sub-sector in the year under

consideration11. Households enumerated various reasons for selling livestock and their products;

the main ones included repayment of input loans (28.1% of households), to replace old animals

(19% of households), to purchase house equipment and furniture (14.3% of households), and to

cover expenses related to education and health (9% of households).

7.1.2. Post Harvest Grain Management Practices and Losses

(i) Farmers Grain Management Practices

Unlike what is observed in mechanized farms where mowing and threshing could be undertaken

simultaneously, grain harvesting by Ethiopian farmers takes place manually and involves hand

mowing of crops using sickles and later threshing by letting a group of animals trampling upon it

on a leveled ground until the grains and the shaft are separated. Harvesting of maize is unique in a

sense that it is undertaken by removing the ears by hand. Several days could elapse before mowed

crops are threshed; i.e., crops stay piled for some time either around homestead or in situ before

threshing. In most cases losses during harvesting process could be significant (due to attack by

rodents, moisture, livestock, etc.).The length of time in which crops are kept piled varies among

crops. Usually crops that are susceptible to loss (such as pulses) do not stay long while some

other crops (such as teff) can be piled for longer time. It also varies depending up on the status ofthe household vis--vis food and financial requirements; i.e., those with immediate need would

thresh their crops instantly.

Farmers use various methods and types of facilities to store their crops. Maize could be stored

either shelled or unshelled. In the latter case, maize is shelled manually in a staggered manner

when required for consumption or sale. Shelling of maize is also done by using hired machines

especially when production is large. The traditional grain stores identified in the study areas

include gotera (grain pits), bags (made of polyethylene, sisal or goat skin12), earthen pots and

some others. More than 70% of the respondents used polyethylene bags and sacks made of sisalwhile about two-third of them usegotera (Table 2). The latter is usually preferred to store cropsfor longer period of time and also in a larger quantity. Some farmers also use pots and other small

10 TLU is a standardized measure of livestock numbers. (see Abebe, 2000).11 This amount doesnt include the revenue generated indirectly from livestock use, for instance, by renting

out draft animals to others.12 This traditional container is commonly known assilicha and it is estimated to hold 50 to 60 kilograms of

grain.To produce silicha, a special skilland care is required when the goat is skinned.


13/33

granary entirely made of mud. Slight variation has been observed among the three sites vis--vis

the proportion of farmers using each type of storage; gotera is widely used in Bako whereas bags(or sacks) are the common grain stores in the other two sites, perhaps suggesting that farmers

store grains only temporarily in Ada and Hetosa.

Table 3: Types of Stores Used (by number & percentage of respondents)

Hetosa Ada Bako Total

Type of Storage No. % No. % No. % No. %

Gags/ sacks 93 94.9 84 84.0 33 33.0 210 70.5

Gotera 73 74.5 49 49.0 80 80.0 202 67.8

Pots 14 14.3 9 9.0 5 5.0 28 9.4

Underground pits 1 1.0 - - - - 1 0.3

Others 4 4.1 32 32.0 18 18.0 54 18.1

Farmers acquire their grain stores in different ways. The majority ofgotera users construct it bytheir own, which is a reflection of weak dependence on markets. In most cases, goteras are

constructed from flexible materials (such as bamboo trees) and are mud-walled and thatched-roof.

Although not common, farmers could purchase these traditional granaries from local markets.

The average owner-estimated monetary value ofgotera is about 62 birr with the figures rangingfrom 10 birr to 500 birr. Virtually, the value of a store depends upon its capacity and materials

used for its construction. Polyethylene bags and sacks (made of sisal) are commonly purchased

from local markets. In fact, farmers use fertilizer bags to store grains when the bags are empty of

the fertilizer input. The average estimated monetary value of these containers is 3.25 birr. We

have also observed some higher figures (up to 35 birr) probably indicating the value ofsilichawhich is relatively durable. The other small traditional granaries are mostly self-made. These areusually used to store seeds or grains produced in smaller quantity and their estimated values range

from 4 birr to 30 birr.

Table 3 shows the number of grain stores and their storage capacities owned by peasant

households. As could be observed, the average storage capacity of the sample households was

3.27 metric tons, which can only hold food grains for one or possibly two production seasons. If

all kinds of storage mechanisms (temporary and fixed) are considered,13 few households could

store more than 5 metric tons of food grains. If, on the other hand, bags and sacks are excluded

from the analysis, the average storage capacity per household could be reduced to 2.52 metric

tons. This is quite low as compared to the average volume of total grain produced (4.39 metric

tons) indicating the existence of storage constraints in the survey areas. To put it in a different

way, about 79 per cent of the farm households didnt have adequate fixed stores for their produce.

A disaggregated analysis by site may show a more detailed picture (Table 4). While fixed stores

could absorb more than three-quarters of total output in Hetosa and Bako, these are not widely

used in Ada possibly arising from the fact that the major crop in Ada ( teff) is relatively lesssusceptible to storage pests (particularly weevils), hence could be readily stored in bags, or even

sold instantly. That this wasnt the case is clearly apparent, with respect to Hetosa and Bako

where the bulk of grain production respectively is wheat and maize which are more susceptible to

storage pests.

13 Strictly speaking, bags and sacks are not permanent grain stores. Rather they are used to store grains which

would be disposed to the market instantly.


14/33

Table 4. Number and Capacity of Grain Stores Owned by HouseholdsNumber Capacity (MT)

Storage type Mean Maximum Mean Maximum

Gotera 1.6 8 2.105 26.0

Bags/sacks 12.9 200 0.739 11.0

Pots 0.5 7 0.025 2.5

Others 2.7 96 0.385 20.0

Total 3.27 37.0

Table 5. Capacity of Stores as Compared to Total Grain ProductionTotal Capacity (MT)

Study Sites All Stores Percenta Fixed Stores Percenta

Total output

(MT)

Hetosa 4.74 102.6 3.52 76.2 4.62

Ada 1.69 39.4 0.78 18.2 4.29

Bako 3.41 80.2 3.35 78.8 4.25

All Sites 3.27 74.5 2.54 57.9 4.39aFigures represent storage capacity as percentage of total grain produce

Grain losses could arise either from poor post-harvest handling or from production over and

above the capacity of the available stores, or both. In case production exceeds total storage

capacity, two options are possible to solve the problem: instant disposal of the excess produce

(e.g., sales, loans, etc.) or increase storage capacity. If grain markets are demand constrained, or

supply price elastic as it is true in the case of grains, instant sale of grains immediately after

harvest will have a price reducing effect. Hence normally this option seems to be less preferable

for producers. In the study sites, however, the majority of the sample farmers (about two-third)resorting to selling their grains whenever production is in excess of their storage capacity.

Grains are stored both outside as well as inside residential houses. The majority of the

respondents (71.6 per cent) reported that they locate their stores inside their homes; the reasons

for doing so include the need for protecting grains from theft and moisture as a result of rain

during post harvest seasons. Similarly, grains are stored outside but very close to home because

of the advantage of outdoor environment that provide better aeration to keep crops for longer

period of time without damage due to insect pests. Locating grain stores outside home may also

have another advantage; the living rooms would be free which would otherwise be crowded of

grains especially after harvest14. It is common to locate gotera outside residential houses as itoccupies larger spaces as compared to other stores.

(ii) Post Harvest Grain Losses

The majority of the farmers (93.3%) perceived an imminent risk of grain lose due attack by

storage pests and/or other factors if they stored their crops for longer period of time. The

minimum per household expected average amount of loss is about 150 kilograms (for Ada site,

14 In most cases peasants live in traditional huts having single room in which the whole family dine and sleep;

the same room may also be used to prepare food.


15/33

where teff the less susceptible crop - is the dominant crop) for all grain crops whereas the

maximum per household expected average amount of loss is more than 800 kilograms (for Bako

site, where maize the most susceptible crop is the dominant crop). Also as could be observed

from Fig. 3, there are large dispersions about the median post-harvest grain loss in Hetosa and

Bako as compared to Ada, again depicting the inter-crop differences in post-harvest grain losses.

In some cases the magnitude of loss could even go as high as 2000 kilograms.

The respondent farmers reported to have actually lost large quantities of their produce due to

various factors. The per household average actual loss (as opposed to expected loss) was about500 kilograms of total grain output during the previous year, which is equivalent to 12 per cent of

the average total grain produce of the sample households. Farmers in Bako and Hetosa areas

reportedly lost about 700 and 620 kilograms of crops respectively due to post harvest damages,

while the figure for Ada was much less. Of course, these variations reflect differences in

cropping patterns among the three sites and therefore the high degree of susceptibility of somecrops such as maize and wheat than the others such as teff. The reported amount of loss is quite

substantial and definitely suggests that what matters is not only getting success in raising yield

levels but also ensuring the entire produce reaches the consumers table without loss. Hence,

yield enhancing interventions cannot be considered in isolation from minimizing post-harvest

grain losses.

Fig. 3 Box-plots Distribution of Expected Loss if Grains were to be Stored Until the 4th

Quarter.

9910098N =

Sites

BakoAddaHetossa

Expectedlo

ss(Kg)

4000

3500

3000

2500

2000

1500

1000

500

0

Table 6. Estimated Grain Loss During 12 Months Preceding the Survey Period (kgs by site)

Study Areas Mean SD CoV

Hetosa 618 438.6 0.71

Ada 237 308.9 1.30

Bako 707 1118.6 1.58

All Sites 520 744.0


16/33

As could be seen, maize is the most affected crop i.e. on average a maize producing household

lost 500 kilograms of maize during 12 months preceding the survey time. The average loss by

wheat producers could be around 250 kilograms. On the other hand, as expected, teffwas reportedto be less susceptible to post harvest loss enhancing factors as compared to wheat and maize i.e.

on average, the sample households lost about 106 kilograms of teff after harvest for the year

under consideration. Taking the nominal average producer price15 that prevailed during the year

2002 for the three crops, the amount of loss in birr could be estimated to be 244, 185, and 360 forwheat, teff, and maize producers respectively. As could be seen the variations have narrowed

down owning to price differentials; teff and wheat fetched higher prices than maize.

It could also be noticed that estimated grain losses for the three crops are less than the estimates

for the regions (all crops); perhaps such variations would suggest that post-harvest losses of other

crops such as pulses might have been larger.

Defining shelf-life of grain crops as the number of months in which they could be stored without

facing loss in quantity and quality, it may vary depending up on the type of storage infrastructure,

type of crop, weather condition, treatments made to reduce loss and so on. In the study sites, grain

crops can reportedly be stored on average for about 7 months without loss. Of course, the shelf-

life may increase to about 10 months if grains are treated with chemicals. It was reported by thesample farmers that grains, particularly maize, would turn virtually into powder just in few

months due to weevils attack if not treated with insecticides. The largest average shelf-life was

reported for tef (with or without chemical treatment) and the smallest was reported for maize(without chemical treatment) (Table 6). It is also apparent from the figures that maize can only be

stored for a relatively shorter period of time (half year) even if it is treated with chemicals.

Table 7. Estimated Shelf-life of Selected Crops With and Without Chemical Treatment

Estimated Shelf-life (Months)

Crop With chemical treatment Without chemical treatment

Teff Not applicable 19.0

Wheat 11.5 6.4Maize 6.9 2.8

There are several causes for the observed post-harvest losses experienced by peasant households.

Attacks from weevils and rodents, and moisture or growth of molds are among the factors and

agents contributing to the losses. Among these, weevils attack was reported as the mostimportant and commonest cause (Table 7). Rodents and moisture and/or growth of molds are also

important in areas such as Hetosa and Bako.

Table 8. Respondents Identification of the Causes for Grain Losses

CausesHetosa

(N=98)

Ada

(N= 100)

Bako

(N=100)

All Sites

(N=298)

Rodents 28.2a 18.9 59.1 30.8

Weevils 90.4 82.2 95.3 87.7

15 Producer Prices were computed from CSA various reports; average producer prices for 2002 for wheat, teff

and maize were 100.2, 174.6, and 71.9 per 100 kilograms.


17/33

Moisture/molds 22.6 11.4 45.7 22.5

Others 1.1 1.9 9.4 3.3a figures indicate percent of respondents who reported each cause of grain losses.bnumber of respondents

The most important techniques used by farmers were chemicals and aeration. The majority of the

sample farmers (83.2%) used chemicals to reduce grain losses that would result from pest attackbecause storage losses without chemical treatment can be substantial. Chemicals are usually used

to treat maize and wheat since these crops are among the most susceptible to weevils attack as

indicated above. In addition, a quarter of farmers reported that they use aeration. Grain

management practices such as lending to others, selling and repurchasing latter are not widely

used. Some farmers also reported that they practiced various indigenous methods to reduce post

harvest grain losses due to pest attack. For instance, in Bako and Hetosa areas grains (especially

maize and wheat) are mixed with chilly pepper to prevent storage pests. Farmers hold the opinion

that the pepper has a repelling effect on pests hence that they would constitute effective measures

to prevent pest attack. Similar observations are reported elsewhere (see, Blum and Abate, 2002).

However, the effectiveness of such practices is yet to be confirmed by scientific research.

Table 9. Techniques Used by Farmers to Reduce Grain Losses

Techniques UsedPercent of households

(N = 298)

Aeration 25.1

Use of Chemicals 83.2

Sell and repurchase latter 0.8

Lend to others 1.1

Others (including indigenous techniques) 8.5

Moreover, farmers were asked if they knew techniques other than those they have been practicing

so far. The objective was to explore whether farmers have some options by which they could

reduce grain losses. While the majority of them (71.4%) replied that they didnt know any othertechnique, the remaining nearly 30% reported that they in fact were aware of the existence of

various post-harvest grain management techniques. However, they couldnt apply them due to

various reasons. For example, more than fifty percent of the interviewed farmers didnt utilize

those other techniques because they perceived that the existing techniques they have been

practicing were reportedly found to be more effective in reducing grain losses than other

techniques.

7.1.3. Grain Marketing Practices and Patterns

Almost all farmers (99%) reported that they sold some crops under normal conditions. Some

farmers also did purchase grain crops; about 40% of the respondents purchased crops by making

claims on their previous savings. Usually, crops are sold in a staggered pattern across the quartersof a year. Table 9 presents the proportion of grains marketed to total output produced. As could

be observed the proportion of marketed surplus of grains to total grain output for Hetosa, Ada and

Bako were respectively 40%, 63% and 48%. With the exception of Ada, more than one-half of

total grain production does not reach market place; it is consumed within the farm household. The

fact that farmers do produce large assortment of crops and sold some proportion (not most of it)

mirrors the extent of production orientation towards household consumption rather than for sale.

On the other hand, the proportion of total production that is marketed, i.e., the extent to which a


18/33

given crop resembles a cash crop, varies among crops as well as among sites. A considerably

higher proportion of total productions of the major crops, i.e., wheat, teff and maize, weremarketed compared to other crops in Hetosa, Ada and Bako sites respectively. Obviously these

three crops are dominant in terms of area cultivated as well as output produced in the respective

areas. For example, 65% of the total cultivated area in Hetosa was allocated for wheat production;

and about 42% of wheat output was marketed. Similarly, of the total cultivated land in Ada, 47%

was allocated to teff, while 32% was allocated to wheat production; the corresponding figures forproportion of marketed output of these crops were 67% and 57.4% respectively. Similar pattern

could also be observed in Bako where 75% of land cultivated was allocated to maize production,and 44% of maize output was marketed.

Table 10. Percentage of Crops Marketed in Total Output ProducedCrops Hetosa Ada Bako

Tef 0.0 67.0 3.9

Barley 0.0 14.1 ---

Wheat 41.9 57.4 ---

Maize 5.2 0.0 44.0

Sorghum 1.5 --- 12.6

Horse bean 1.8 14.6 0.0

Field Pea 1.8 11.2 ---

Chickpea 0.0 47.4 ---

Others 0.0 31.9 29.1

All Crops 39.7 63.2 48.3

On aggregate levels, proportion of actually marketed output during the first quarter of 2002 was

about 51% of total marketable surplus for the entire year. The average percentage of crops sold

declines as one moves from the first quarter through to the forth quarter (Fig. 4a). On the

contrary, producers grain prices tend to rise as one moves from the first quarter through to the

third and in some cases even during the fourth quarter (Fig. 4b).

Fig. 4a. Movement of Crops Sales by Quarter (Percent of total sales)


19/33

0

10

20

30

40

50

60

70

1st 2nd 3rd 4th

Quarters

PercentageCropsSold

Hetosa

Ad a

Bako


20/33

Fig. 4b. Movement of Producers Prices of Selected Crops (2002)

West Shoa, Bako Area

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

Q1 Q2 Q3 Q4

Quarter

P

ro

d

u

cers'p

ric

e

Tef

Wheat

Maize

Arssi, Hetosa Area

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

Q1 Q2 Q3 Q4

Quarter

P

ro

d

u

c

e

rs

'

ric

e

Tef

Wheat

Maize

East Shoa, Ada Area

0

0.5

1

1.5

2

2.5

Q1 Q2 Q3 Q4

Quarter

P

ro

d

u

cers'P

rice

Tef

Wheat

Maize

Also a considerable variation exists among the three sites with respect to the proportion of crops

sold during the first quarter. In Hetosa and Bako sites, for instance, the average figures are

apparently higher as compared to the Ada site indicating that farmers in the former two sites sold

the bulk of their crops immediately after harvest (Table 10). It is worthwhile to note that farmers

are unorganized in their sales decisions; hence they lack bargaining power while dealing with

traders who have better resources, information and coordination to influence market outcomes.


21/33

Table 11. Crops Sold as Percentage of the Total Crop Sales in a Year (by Quarter)Percentage Crops Sold

QuarterHetosa Ada Bako All Sites

1st Quarter (January-March)57.6 35.8 59.5 50.9

2nd Quarter (April-June)15.9 35.4 24.9 25.5

3rd Quarter (July-September) 12.3 11.4 13.9 12.5

4th

Quarter (October-December) 14.6 17.6 1.8 11.1

Such a general pattern of seasonal price fluctuation is apparently known by farmers. The farmers

reported that they were in fact aware of the fact that prices would increase after the first quarter,

especially during the lean season. Then, it would be interesting to ask the question that, if farmers

actually expect that grain prices would rise during the lean months, why would they want to sell

large proportion of their marketable surplus just immediately after harvest when grain prices are

the lowest in the year?

One important reason could be the high demand for cash during the first quarter. That particular

season is the time when farmers need money to settle various types of dues including social

obligations (such as marriage, religious festivals and ceremonies), input loan repayment,

payments for land tax etc. For instance, the interviewed farmers reported that about 33 per cent oftheir marketed grains during the first quarter went to finance repayment of input loans and/or pay

land taxes.

The other important reason might be fear of risk associated with post harvest grain losses. As

indicated earlier, the majority of the interviewed farmers perceived that post-harvest problems are

matters of grave concern.

The commonly held view, which apparently happens to be true most of the times, is that crop

prices would be the lowest during the first few months following harvest and start to rise

monotonically until they reach maximum during the months of July-August after which they start

to decline. The decline might be associated with expectation of harvest in few months time. But,

what happens to the pattern of prices during seasons following a bumper harvest? It

monotonically declines including during the months in which it normally peaks and gets even

depressed further with the expectation of a better harvest that is forthcoming. This is what

actually happened in the year 2001. (See Fig. 5).

The year 1999 was followed by an expectation of good harvest in 2000. Prices in 1999 were

consistently increasing from January up to September for all crops after which they started to fall.

Maize price dropped earlier than that of wheat and teff because of early harvest season for maize.But the decline of prices after October in all crops is associated with expectation of next harvest

in 2000.

Now compare this with what actually happened to prices in 2001. As could be observed it is the

reverse of the previous story. Instead of rising, prices continuously declined and in fact started to

pick-up only after October with expectation of bad harvest the following season. As could be

noted, that year was a bad year in terms of harvest which brought famine in much of 2002/03.

This illustrates the extent of market failures. The crisis is both when harvest is good as well as


22/33

when it is bad. In times of good harvest, especially when this is matched with expectation of good

harvest next season, grain prices tend to be depressed; hence storing of grains might not be an

advisable option since prices might not get better even during lean seasons. On the other hand,

during normal years, storing of grains until the third quarter might pay if the risk of grain loss is

minimized below market risks.

When grain prices are substantially reduced, it discourages farmers to apply chemicals to preventpest attacks, thus leading at times to substantial crop decays. This is because the marginal benefit

as a result of chemical treatment could be less than the marginal cost of the treatment. Forexample, during 2001/02 crop season, maize prices were reduced by up to 80% as a result of an

increase in output by about 40%. Under such circumstances crop prices might not be attractive

enough for farmers to pay even transport charges to take their grains to the nearest market place

for sale let alone realizing profits.


23/33

Fig. 5a. Monthly Average Wholesale Prices (birr/100kilograms. 1999 and 2001)

Teff

190

200

210

220

230

240

250

260

janua

r

febru

arma

rc apri

ma june

jul

augu

s

sept

embe

octo

be

nove

mb

dece

mb

0

50

100

150

200

250

300

350

teff2001 teff1999

Wheat

0

50

100

150

200

250

janua

r

febru

arma

rc apri

ma june

jul

augu

s

sept

embe

octo

be

nove

mb

dece

mbe

0

20

40

60

80

100

120

140

wheat 1999 wheat 2001

Maize

0

20

40

60

80

100

120

140

160

180

january

february

m

arch

april

m

ay

june

july

august

septem

ber

october

novem

ber

decem

ber

0

10

20

30

40

50

60

70

80

90

maize 1999 maize 2001

Source: Central Statistical Authority, various issues.


24/33

7.2. Regression Results

Table 12 presents the tobit regression results16. Non-bag storage capacities hold the right sign but

it was found to be not significant. Education also was not found to be significant in explaining

variations in the dependent variable. Similarly, farmers expectation of grain loss, should grains

were to be stored until the 3rd quarter, carries the right sign but found to be not statisticallysignificant.

Table 13 Regression Results (Tobit estimates dependent variable is proportion of sales

during the 1st quarter to total sales during the year)

Parameter Coefficient T-ratio

Constant 0.7694* 6.296

FSIZE 0.0135** 2.119

SEX -0.1407*** -1.926

EDUC 0.0014 0.303

CHEM -0.0762** -2.440

STCAP -0.0011 -0.183TLU -0.0084** -2.547

PRICDIF -0.3026** -2.429

EXPLOSS 0.0984 1.081

TAXLOAN 0.0001* 3.150

Sigma 0.2598

Number of samples 292

Log likelihood function -30.9562

*, **, *** significant at 1%, 5% and 10% levels respectively.

As could be seen a total of six variables have turned out to be significant explaining the variations

in proportion of crops sales during the 1st Quarter to total sales by households. Moreover, with the

exception of the SEX variable, the signs of all of these variables are also according toexpectations, hence leading to the following conclusions.

(i) The pressure on households triggered by larger family size to meet non-grain purchased

consumption needs tends to force farmers to instant crop sales;

(ii) Female household heads are more susceptible to instant crop sales during 1st quarter than

male-headed ones. This may be ascribed to fewer options available to female headed

households in terms of resorting to other sources of cash incomes (e.g., livestock sales);

(iii) Application of chemicals (insecticides) reduces the risk of pest attack hence that of the

tendency to instant sales;

(iv) Livestock ownership reduces the pressure on cash needs as households tend to resort to

livestock sales and of its products rather than crop sales;

(v) inter-crop differences are important explanatory variables for households behavior insales decisions; i.e., farmers who mainly grow maize (more susceptible crop) and wheat

tend towards instant sales than those who mainly grow teff (less susceptible crop); and

(vi) Households immediate cash needs to meet various obligations explain the reason as to

why they dispose of their grain crops instantly at cheaper prices.

16 for details see footnote


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8. Conclusions

8.1. Summary of major points

Ethiopia is a structurally food-deficit country. It has also been a food-aid dependent country.

Production of food crops in sufficient magnitude is a strategic objective for the countrys food

policy (e.g., for achieving food security both at national and household levels, industrialcompetitiveness, etc). Post-harvest loss is an impending problem it reduces the already

produced output both physically and in terms of quality deterioration and thus leading to valuedeprecation. In a sense it is a wasted effort and wasted resource. Fearing such an impending risk,

farmers tend to sell larger proportion of their marketable surplus during the season that

immediately follows harvest when prices are actually depressed. Despite its strategic significance,

however, not much attention was given to post-harvest grain management practices. Studies are

not generally available.

Efficient and effective grain management practices minimize post-harvest losses both at

household, community and national levels. Their additional advantage is that is that apart from

reducing loss, they generate additional employment opportunities, add significant value on

products, maintain quality, enhance competitiveness in market place (of producers, the country atlarge), maintains market stability, etc.

The purpose of the study was to identify such post-harvest grain management techniques as

practiced by farmers and determine the extent to which farmers perception of risk (market and

post-harvest grain loss) influences their grain marketing patterns. Three areas that are known for

the production of the major food crops in Ethiopia were selected for the study; these include Ada

for teff, Bako for maize, and Arssi for wheat. A survey on a total of 300 sample farm households

drawn from six peasant associations was conducted to collect the relevant data. Both descriptive

and econometric (tobit regression) analysis of the data was conducted.

Apparently crop losses are not limited to just post-harvest; in fact substantial grain losses also

occur before and during mowing and threshing of crops. However, the scope of the present studyis limited to only what happens after grain crops have been harvested. The findings of the study

are summarized as follows.

Storage capacities are limited fixed structures have capacities of about 58% of average volume

of total output; about 80% of households reported that they didnt have adequate fixed storage

structures, and use temporary packing materials such as sacks as storage. As a result, as large as

two-thirds of the households resorted to instant sales when production exceeds storage capacity.

There is a widespread perception among farmers that post-harvest grain loss is an imminent risk.

Expected post-harvest grain losses could vary substantially from a minimum of 150 kilograms to

over 2000 kilograms depending on crops and seasons. Actual reported post-harvest grain losses

during the year preceding the study period was reported to have varied from about 240 kilogramsin Ada area (where teff is the dominant crop) to about 700 kilograms in Bako area (where maize

prevails). On average about 12% of grain production was reportedly lost after harvest and while

in stores assuming that this portrays what is obtaining at a national level, this amount of loss if

prevented could substantially narrow down the deficit in food balance.

Some crops such as maize cannot stay longer (about 3 months only) before they are attacked by

storage pests (notably weevil). In absence of processing, treatment with chemicals and other

indigenous techniques are practiced to reduce grain losses due to pest-attack. Aeration and


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treatment with chilly pepper are the most common indigenous techniques used by farmers. Other

stock management techniques (lending to others, etc) exist but they are less important.

The proportion of marketed surplus of grains to total grain output for Hetosa, Ada and Bako were

found to be respectively 40%, 63% and 48%. A considerably higher proportion of total

productions of the major crops, i.e., wheat, teff and maize, were marketed compared to other

crops in Hetosa, Ada and Bako sites respectively. On aggregate levels, proportion of actuallymarketed output during the first quarter of 2002 was about 51% of total marketable surplus for

the entire year17. The average percentage of crops sold declines as one moves from the firstquarter through to the forth quarter. On the contrary, grain prices tend to rise as one moves from

the first quarter through to the third and in some cases even during the fourth quarter.

Tobit regression was estimated to identify the factors that explain why farmers would resort to

instant sales and at cheaper prices. That is, proportion of actual sales during the first quarter(following harvest) was regressed on a number of explanatory variables including family size, sex

of the household head, education level achieved, chemical usage to reduce pest attack, storage

capacity, livestock ownership, expectation of loss, inter-seasonal price variations, and financial

dues to the government including taxes and repayment of input loans.

Results indicate that instant sales of grains immediately after harvest are triggered by temporary

but immediate liquidity preferences to meet purchased items for the family members in absence

of or limited sources of cash other than crops sales, and by an impending risk of post-harvest

grain loss and the limited capacity to prevent it. Hence, family size, female headedness, and tax

and loan repayment schedules that coincide with the season, were found to be significant and

positively associated with instant crops sales. On the other hand, livestock ownership and the

capacity to apply chemicals (insecticides), both indicators of wealth, were also found to be

significant but negatively associated with instant crops sales. Cropping patterns suggest that those

who cultivate more susceptible crops to pest-attacks (e.g., maize) are most likely to dispose off

their crops immediately after harvest at cheaper prices than those who cultivate less susceptible

ones (e.g., teff).

8.2. Policy Implications

As indicated above, traditionally there has been a policy focus on production and marketing of

food grains almost to a complete neglect of post-harvest grain management practices. This is true

both at macro and micro levels of organizations. Not surprisingly, to date there is very little

capacity of an efficient and effective post-harvest management system in place both at national as

well as household level. As a result, grain markets are characterized by high inter-seasonal as

well as inter-temporal volume and price fluctuations. On the one hand, there is a high incidence

of food insecurity in the country. On the other hand, an important opportunity seems to have been

lost by way of reducing post-harvest losses.

Hence, it is important to consider post-harvest grain management as strategic policy concern. In

particular, it is significant that policy makers raise their awareness of the state of affairs and

appreciate the importance of post-harvest grain management practices not just from the

17 The figures for marketable surplus of grains are significantly higher than the national average reported

elsewhere (i.e., 26%), whereas the percentage of actually marketed grain crops during the 1st

quarterimmediately after harvest is lower than the national average reported elsewhere (79%). This reflects the

upward bias in the selection of regions and sample households which was on purpose.


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perspective of reducing losses, but also equally important, from the view point of considering it

as an economic activity with employment, value and income linkages.

Liquidity constraints and impending risk of post harvest grain losses are the two most important

factors explaining farmers tendencies to instant sales of their grain crops immediately after

harvest when grain prices are at their lowest levels. On the other hand, practices of selling and re-

purchasing of grains as a post-harvest grain management practices was found to be lesssignificant. As it stands now, both grain credit and output markets are not to be relied upon and

market risks are substantial. Lending grains to others was also found to be less important as astock management strategy in the context of an imminent risk of post-harvest grain loss. This

perhaps has to do with low demand for grain credit during seasons immediately after harvest.

Apparently the demand is expected to come from other rural households who would be deficient

in their grain production or those unable to buy from markets due to cash constraints. However,

demand for grain credit is the least during the 1st quarter and the highest during the 3rd quarterafter harvest; a pattern that strictly follows grain price levels.

Liquidity constraints could be relaxed through the operation of credit markets and/or through

rescheduling of financial obligations that are due to government until later seasons as crop prices

get better (e.g., payment of land taxes, input loans repayment). Mechanisms could be sought thatlink credit markets with grain markets for example, farmers could take loans in cash to cover

various obligations during this particular season whereas repayments (including those that are due

to government such as fertilizer credits, land and income taxes, etc.) could be scheduled for latter

seasons when prices pick up. Diversification of cash sources and in general integration of the

production process with markets so that farmers would be more market informed and oriented in

their decisions than subsistence driven is necessary for relaxing the liquidity constraints. It is also

important that disadvantaged sectors such as female headed households and the poor need special

support since they are more susceptible to shocks than the relatively better-endowed ones.

But this must be complemented with an intervention to enhance the capacity of farmers to prevent

post-harvest losses, which could be organized at household, community and national levels.

Otherwise, there is an imminent danger that farmers would dispose or lose their grains any wayand might be unable to repay the loans, which makes the matter even worse. The significance of

chemical treatment suggests for linking input markets with future product markets. Interventions

need to take into account and build on farmers resources and knowledge including indigenous

techniques.

The problem is that quite often markets do not perform well; hence there is clearly a need for

introducing and strengthening appropriate institutions so as to enable markets work better. One

viable option could be to introduce grain warehouse receipt system so that farmers would deposit

their marketable surplus to be sold when prices get higher. There are legitimate reasons to suspect

that increased production and availability of grains could lead to increased consumption instead

of marketed surplus. Farmers produce primarily for own consumption, not for sale. One of the

reasons as to why warehouse receipt system of grain management and forward grain marketsmake a lot of sense, in addition to preventing post-harvest loss, is because they help reduce

availability of grains for direct consumption by the producers; they facilitate monetization of the

production process; and facilitate processing. There are lessons to be drawn from other countries

experiences that there are a number of advantages including easing access to finance at all levelsin the marketing chain, moderating seasonal price variability, maintaining quality standards and

promoting instruments to mitigate price risks. They also help reduce the need for government


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intervention in grain markets as well as the costs of such interventions18 (see, Coulter, J and G.

Onumah, 2002). Above all, the introduction of well managed warehouses in rural villages will

reduce post-harvest grain losses which ultimately support the countrys effort to ensure national

food security.

The importance of attitudinal changes, although not reported as a variable as such in this study, in

respect of consumption vis--vis saving and accumulation cannot be overemphasized if effortsshould lead to better livelihoods among the farming community and if agriculture as a whole is to

play a productive role for the countrys socio-economic transformation in general. There is aconcern with regard to the extent of expenditure (grain or cash) during the season immediately

following harvest to be quite high by the farmers standards. Wedding and other social

ceremonies, etc., prey on much of the farmers produce.

Finally, the recommendations are forward looking in a sense that more in-depth further studiesare necessary to inform policy on credit and saving options (including options for introducing

grain warehouse receipt systems), traditional methods of grain treatment (effectiveness, economy,

health issues, etc.), and farm-nonfarm linkages and the scope for the development of agro-

processing industries, including those small-scale farmer-managed grain processing technologies.

18 Based on warehouse receipt system (WRS) farmers store their marketable surplus (and/or part of their

produce not required for immediate

Abebe HaileGabriel and Bekele Hunde - Farmers Post Harvest Gr

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