International markets have shifted from a focus on reliable and affordable food to maximising earnings for market participants.

This reflects a shift in power from national institutions (e.g., wheat boards) to commodity traders and financial institutions. The financialisation of these markets displaced power from productive actors towards investors.

As many fragile conflict and affected states (FCAS) rely on internationally traded wheat, the resulting price volatility affects food security.

Given volatile international market prices, domestic value chains may be the most impactful lever to promoting food security in FCAS.

Domestically, fragility dynamics hamper production as well as distribution.

Vested interest prevents changes in the value chain to protect their own position at the expense of the food security of the population.

When improvements do occur, influential powerbrokers extract the majority of the value generated at the expense of others within the value chain and end consumers.

Increased economic activity may fuel conflict when proceeds are extracted by armed actors or when the distribution of profits aligns with existing fault lines between communities.

Food security interventions should move beyond technical approaches and work politically in order to account for political economic dynamics in order to achieve impact.

This report illustrates these dynamics through a case study of Ethiopia, a fragile state that features high agricultural production potential but struggles with persistent food insecurity, demonstrating that interventions focused on boosting production are not sufficient to improve food security outcomes.

International food market regulation should refocus on reliable and affordable food provision
Measures required to shift market dynamics in favour of consumers are known, but currently lack sufficient political backing for their sustainable implementation. In effect, trade in food related commodities in the major financial markets in the EU and USA could be refocussed through regulation focussed on:

Improving transparency;

Reducing speculation;

Reducing market concentration.

Food security interventions should address not only production, but also broader political and economic bottlenecks in the value chain
Food security interventions that focus solely on boosting agricultural productivity and total supply are unlikely to achieve their desired effect. To address the bottlenecks that prevent value chains from improving food security outcomes, interventions need to work politically – that is, they should actively engage with the power dynamics that ultimately determine who benefits from changes to the status quo. While specific measures will vary greatly from context to context, key broad steps in this regard include the following:

Improve understanding of political economy dynamics.

Target most relevant bottlenecks, be they technical, economic or political.

Programming in Ethiopia should rebalance power dynamics within the grain value chain
The main issues preventing Ethiopia from achieving food security are political and economic, rather than simply technical. In order to be effective, food security interventions should be coupled with efforts to address these broader challenges – most notably ongoing conflicts and the country’s economic crisis. In addition, a restricted number of actors currently enjoy a particularly powerful position in the value chain and are likely to capture most of the benefits generated by changes to the status quo. This limits the possibility to raise production at the farm level. To address this donors should consider:

Strengthening access to finance for farmers and agri-processors.

Strengthening the role of cooperatives as aggregators and marketers.

Promoting a more bottom-up approach to agricultural decision making.