Ethiopia's birr has depreciated sharply against the US dollar, driving up fertilizer and fuel prices. This threatens gains from a targeted 7 million metric tons wheat harvest in the 2026/27 season. The currency weakened from 75 birr to 155 birr per dollar since July 2024, a 107 percent loss in value by February 2026.
Ethiopia's birr has lost about 107 percent of its value against the US dollar since the introduction of a market-based exchange rate system in July 2024, falling from 75 birr to 155 birr per dollar by February 2026. Fertilizer prices have risen 60 percent and fuel costs 56 percent, straining smallholder farmers and transporters ahead of a 7 million metric tons wheat harvest target for the 2026/27 season.
A USDA report indicates the devaluation impacts every stage of wheat production, from field preparation to transport and milling. Fertilizer, vital for the cluster farming model, has become harder to afford. Fuel price hikes have increased tractor operating costs and grain transport fees from rural areas to urban markets.
Wheat retail prices climbed 28 percent in one year, from 6,450 birr to 8,250 birr per 100 kilograms. This contrasts record output with rising food costs. Households are blending expensive teff with other grains or shifting to cheaper wheat-based foods like bread and pasta.
To meet demand, Ethiopia plans to import 1.4 million metric tons of wheat from Russia, Ukraine, and Romania next year, at about $45 per ton less than local wheat. Domestic flour mills operate at half capacity due to foreign currency shortages and high taxes.
