Food security: Economics of famine, food aid and market integration in Ethiopia

Food security issues in practice have long been the purview of supply side oriented policy makers. Most of the work on this front progressed on the basis of measuring rainfall deviations, production shortfalls, etc. This research was motivated by the need to develop a comprehensive and practically applicable model for early warning and food aid distribution, incorporating both supply and demand side factors. Ethiopia provided a good case study in this regard for a variety of reasons. It faces chronic food insecurity. Even during normal production years, food deficits are almost to the tune of a million tonnes (or about 5% of demand) requiring knowledge of the spatial location of deficit areas and quantities of food aid needed.;The two specific questions sought to be answered by this study are; (a) How much food is needed each year and where; a quantitative food needs model within a spatial context. (b) Where could markets be used as a food aid distribution tool (save transportation costs); deriving price transmission surfaces and their validation using spatial analysis techniques.;This research explores the interaction between the prices of foodgrains and Vegetation Index data in a linear regression setting, for the purpose of food security early warning to identify the numbers and spatial extent of "people affected" each year. The prices will attempt to capture the exchange entitlement losses (and partial endowment losses) and the Vegetation Index, the endowment losses.;Most of the food aid distribution in countries like Ethiopia have not paid much attention to the functioning of food grain markets in question. The common assumption has been that of very weakly integrated markets and hence very little room for influence of price changes over space. If we could understand the extent of market integration across space, then we might be able to use markets as a food aid distribution tool in areas that are well integrated and concentrate on direct distribution in those that are not. This study will measure the extent of price transmission across space from central markets that are well connected infrastructurally to that of surrounding local markets using a variation of the Ravallion model of market integration.