Should traders be blamed for soaring food prices in Ethiopia? Evidence from wholesale maize markets

Abstract

The prevalence of imperfect price transmission in the agricultural food markets continues to be an important policy concern for most countries in Africa. Motivated by the coexistence of soaring food prices and high domestic food production, this article investigates the performance of wholesale white maize markets in Ethiopia during the post-agricultural market liberalization period. The presence of price manipulation in the grain market structure has important welfare implications as it impedes the full transmission of price reductions and increases among marketing intermediaries. Results indicate that regional maize markets adjusted more quickly to price decreases than price increases to the central Addis Ababa wholesale maize market prices, suggesting the absence of positive asymmetric price transmission. Our findings are in contrast with existing studies conducted in southern, western and eastern Africa major food commodity markets.