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Much of Ethiopia's agriculture and food production is rain fed. Rainfall is highly variable year to year and there can be prolonged periods when harvests fail leading to food shortages. Droughts usually manifest themselves as a food security crisis long before they manifest themselves as an absolute shortage of drinking water. There are government and international donor (World Bank, WFP, EC) sponsored programmes aimed at improving local level food security through establishment of food banks. These provide a buffer when there are food shortages. I couldn't comment on whether every community has access to these food banks or what the conditions for accessing them are. There is also a government initiative called the Productive Safety Net Program (PSNP) which aims to increase the amount of infrastructure designed to improve the food security of the most vulnerable.
How does WaterAid help? WaterAid works with local partners to provide access to groundwater resources. Groundwater is far more resilient to changes in temperature and rainfall than surface sources which often dry up during dry periods. WaterAid therefore provide access to the only source of water available during droughts in many areas. Boreholes fitted with handpumps or motorised pumps are often the only sources that people can depend upon during drought periods. These not only provide water for drinking and basic needs but they also provide for kitchen gardens and livestock watering thus boosting household food security. Partners also work to boost soil water conservation, essential for crop production through construction of sand dams (there are not many of these).
What do farmers do? In some parts of Ethiopia, particularly in parts of the arid SNNPR region, farmers practice ancient methods of soil water conservation through terracing of steep hillsides. Without conserving soil water it would not be possible to grow very much food in this region. These ancient farming practices are now under pressure from the need to meet growing food requirements of a rapidly growing population.
If you need further info contact the Ethiopia team.