Case study: Limited market information and institutional environment
In the coffee marketing in Ethiopia, limited information at all levels of the marketing chain,
limited government intervention, credit access especially for suppliers, infrastructure, etc.
are the major problems mentioned by market participants.
Task: Discuss in general the impact of policy environment on the performance of markets.
Why is government intervention in the markets justifiable? Also discuss how conducive is the
policy environment in SSA for markets to perform well? (Five point)
Case study: Facilitative organizations in the coffee markets
The facilitative organizations participating in the coffee marketing in Ethiopia include,
district agricultural office, cooperatives/unions, government and private banks, informal
lenders, ECX and Coffee Quality Inspection Office.
Task: Identify the facilitative organizations participating in the other similar agricultural
commodity market in your area and discuss about the roles of each institution/organization in
improving the performance of the market. (Five point).2
Case study:
In a move to halt runaway prices of basic commodities and also curb double digit inflation in
Ethiopia, the Horn of Africa country’s government moved to set a price ceiling for 18 types of
basic commodities in the first week of January, 2011.
The Ministry of Trade and Industry (MoT) of Ethiopia has categorized 20 domestic items that will
be covered in the controlling mechanism. From these are: edible oil, bread, pasta and macaroni,
meat, sugar, tea leaf, bananas, oranges, and wheat flour are some of the main processed and
unprocessed agricultural commodities.
From imported items: edible oil, pasta and macaroni, powder milk, rice and sugar have
been included in the imported items that will be controlled. MoT also said the price of the
items, described above, cannot be adjusted without prior knowledge of the Trade Bureau
of the Regions and Ministry of Trade. Any business person shall display the price of their
goods and services by posting such a list in a conspicuous place in his business premises
or affecting price tags on the goods in a manner that includes custom duties, taxes and other lawful fees.
Task: Based on the above case study, discuss the following: (One point each).
1. What is the justification for such price control?
2. What would be its effect on producers, traders, and consumers?
3. What would be its overall implication in improving/distorting the market?
4. Would such government intervention be sustainable?
5. What alternative solution do you suggest to achieve the same objective?
