Last week, I travelled as a guest of Gorta/Self Help Africa to Ethiopia.

I had been there 10 years ago and the changes since are truly incredible. The country has been one of the fastest-growing in the world over the last decade and the capital, Addis Ababa, resembles an enormous building site.

The old putrid open sewers in the teeming slums are gone and in their place are enormous numbers of municipal-built blocks of apartments. Most unusually for Africa, there is broad agreement that corruption among politicians and the civil service is almost entirely absent.

But away from the teeming modernity of Addis Ababa, an extraordinary agricultural policy is in place. Ethiopia is about the size of France, but with almost 90 million people, about 80% of whom are engaged in agriculture – mostly in actual farming. Most farms are tiny, 2-3ha (five to seven acres) and many below that.

The methods are truly biblical. Practically all the cereals are cut by hand with a sickle, the ploughing for crops is being done by oxen and the threshing is carried out by cattle walking around in a circle squeezing the grain out of the head.

All land ownership is vested in the state and land, if leased, is usually on a very short-term basis, typically one to three years.

The country is not self-sufficient in food, so Ethiopia is free to effectively set its own internal prices and import the extra that’s needed to feed the population. Prices are high by any standards – far higher than here in Europe.

But by the standards of a country with a GDP (Gross Domestic Product) of approximately US$500 per head, compared with Ireland at about $40,000 per head, or 80 times as much, the farm prices relative to income are staggering.

While the $500 probably does not allow fully for the large amount of home-produced food consumed by farm families on subsistence farms, the difference is still enormous. Day workers can be hired for between $2 and $4 per day and the equivalent of our district court judge is paid about $5,000 (€4,000) a year.

It is in this context that while I was reading about Irish malting barley growers complaining about getting €150/t for malting barley, I was in Ethiopia being exposed to the increases in beer consumption that are taking place in line with economic growth and how the world’s beer producers are coping with the market opportunities opening up.

Diageo, the owners of Guinness, is in the process of developing two new breweries and associated malting facilities.

The price being discussed for malting barley is approximately $500/t (€400/t) and the firm is being encouraged by the government to open up detailed specification and price discussions with farmer representatives and co-ops. Beer sells for about 60-80c a bottle, not that different to the retail takeaway price here. I will return to Ethiopia in more detail in a later edition of the Irish Farmers Journal.

Lessons for Ireland

Gorta/Self Help are doing excellent work in getting improved seeds on to farms and in mobilising farmers into co-operatives, but malting barley provides a striking example of how the end user of an agricultural product will pay what it has to – if the market opportunity is there and access to the raw material is controlled, then the price paid can be highly flexible.

I am not pretending that Ethiopia should provide a model for Ireland, but there are lessons that can usefully be absorbed in relation to commodity pricing and the importance of real bargaining power being exercised by farmers or by governments with a strong focus.