Food aid, cash transfers and producer prices in Ethiopia

Meron Assefa Arega & Gerald Shively

Abstract
We measured the producer price impacts of food and cash transfer programmes in Ethiopia using monthly panel data from 37 zones in four major regions over the period January 2007 to December 2010. We studied the independent and joint impacts of Ethiopia’s Productive Safety Net Programme (PSNP) and emergency relief programmes on producers’ prices for teff, wheat and maize. We estimated a series of dynamic, fixed-effects, seemingly unrelated regression (SUR) models. The results indicate that food aid allocated from both the PSNP and emergency relief programmes has either no discernible correlation with subsequent prices, or a weak negative correlation. This suggests no strong disincentive effect of food aid on agricultural producers. The magnitudes of the correlations between prices and seasonal and time trends are substantially stronger than those associated with cash and grain transfers to local markets.