IFPRI trains local analysts in the use of a new multi-market model

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Photo credit: IFPRI-REAP

Over the past several years, the Ministry of Agriculture (MoA) and the Ethiopian Agricultural Transformation Agency (ATA) have launched programs to boost the production of staple crops in Ethiopia. It can be difficult to predict the effects that these interventions will have on supply, demand, and prices. So Nick Minot, IFPRI Senior Research Fellow, developed a multi-market model to help policymakers understand how these programs can impact the economy.

How exactly does the model work? “Suppose the ATA believes that a new technology will raise teff yields by 20 percent and wheat yields by 15 percent,” says Minot. “At the same time, the ATA expects that the world price of wheat will decline by 8 percent. The model can be used to forecast the impact of these shocks on the production, consumption, and price of each of the four main staple grains.”

The model simulates the markets for maize, wheat, teff, and sorghum says Minot. The tool can also enhance the analytical abilities of researchers in Ethiopia.

Minot, assisted by Gashaw Tadesse, IFPRI visiting research fellow, held a one-day training course with 33 ATA analysts and program directors, five of whom were women, at the ATA office in Addis Ababa, Ethiopia. The course covered material from a brief background in multi-market modeling to running various simulations of different “shocks” and their effects on production, consumption, and prices for each crop.

“The training that Nick did on the multi-market modeling is very well appreciated and very timely because the [Ministry of Agriculture] has been talking about reforming their stock policies, but they did not have any analytical tools to do it. Neither did the ATA or other think tanks in the country,” says Shahid Rashid, IFPRI Senior Research Fellow.

The model can be calibrated each year to reflect new numbers for production, consumption, domestic and international prices. The model can also be modified to incorporate new estimates of the price elasticity of supply and demand as they become available.

 

This article originally appeared in Volume 3 of REAP's project Newsletter. Read the full newsletter here. Download a PDF of volume 3