Livestock Ownership, Commercial Off-take Rates and Their Determinants in Ethiopia Asfaw Negassa and Mohammad A. Jabbar Paper Presented at the National Stakeholders Workshop Addis Ababa, Ethiopia October 2, 2007

Outline of Presentation Background and objectives Data sources Summary of Key Findings Conclusions and implications

1. Background of the Study Traditionally Ethiopia used to export live animals In order to diversify export earnings from livestock, government policy is to increase meat export. Target 30,000 tons by 2009 Several large scale meat processing firms have been established, other are under consideration

The problem Existing abattoirs are apparently facing supply shortage of quality animals for meat export Consequence Underutilization of plant capacity Inability to fulfill orders adequately and timely Higher fixed cost per unit output, hence less competitiveness Need to understand causes of apparent short supply and find solutions

2. Objectives of the Study Estimate commercial off take rates for cattle and shoats for smallholder and pastoral systems Assess nature and extent of market participation by producers and identify factors related to nature of participation Assess extent of national off take absorbed by domestic demand Derive policy implications of the findings

3. Sources of Data Available secondary sources have been used ILRI-IFPRI survey of a sample of 1054 households from highlands of Tigray, Amhara and Oromia regions, 1999-2000 CSA a survey census of 458,557 households in all regions except Gambella and a few woredas in the pastoral areas in 2004-5 GL-CRSP sample survey of a panel of 150 Borana pastoral households during 2003-05 CSA sample survey of ??……. households on household expenditure in 1999/2000

4. Summary of Key Findings

Gross and net off take rates Gross commercial off-take rate = total sales of animals over one year divided by annual average stock Net commercial off-take rate = total sales - total purchases over one year divided by annual average stock Net off take is the commercial off take available for domestic and export market, hence more relevant for traders and exporters

Commercial Off take Rates of Cattle and Shoats redesign this slide Data Source Gross off take rates no need to repeat yrs and sample size , instead use the space for gross off take Net Off-take Rates (%) Cattle Sheep Goat Tigray, Oromia Amhara (8) (22) (18) All regions (7) Borana (9) (6) Note: Figures in parenthesis are net commercial off-take rates Very low net commercial off-take rates were observed over different years for both cattle and shoats for smallholder farmers and pastoralists in terms

Share of male in net commercial off-take Data Source % male in net off-take Cattle Sheep Goat Tigray, Oromia, Amhara NA All regions 57 71 75 Borana 56 100 For the highland areas males, mainly oxen , accounted for 75% of the net commercial off-take rate

Ownership of cattle and shoats Data Source Percentage of sample households owning (%) Cattle Sheep Goat Tigray, Oromia, Amhara 83 31 21 All regions 80 38 33 Borana 78 20 42 Majority of smallholder farmers and pastoralists own cattle while less than 50% of them own sheep and goats However, how many do they own?

Average Herd/Flock Sizes Data Source Average Herd/Flock Size Cattle Sheep Goat Tigray, Oromia, Amhara 3.7 2.1 1.5 All regions 1.9 2.2 Borana 13.1 4.7 Smallholder mixed farmers own fewer heads of cattle and shoats than pastoralists

Sex composition and purpose of keeping cattle by smallholder farmers (CSA, 2004-2005) Sex: 46% male and 54% female Purposes of Cattle Keeping (% of stock) Draft 39 Breeding 28 (including bulls and cows not in milk) Dairy 27 Others 5 Beef 1 Age structure is confusing so deleted. This slide may be left out altogether ??

Herd and Flocks Dynamics for Smallholder Farmers All regions (CSA data) Herd Parameter % by Species Cattle Sheep Goats Incoming Births 59 (72) 73 (72) 83 (79) Purchases 37 (24) 27 (25) 17 (18) Others 4 (4) 0 (3) Outgoing Deaths 36 (42) 29 (34) 23 (41) Sales 53 (50) 40 (39) 49 (37) 11 (8) 31 (27) 28 (22)

Herd and Flocks Dynamics for Pastoralists (Borana) Productivity Parameters % by Species Cattle Sheep Goats Incoming Births 92 84 86 Purchases 3 8 Others 5 6 Outgoing Deaths 25 44 52 Sales 66 22 34 9 14

Birth and mortality rates (%) for cattle and shoats Data sources and parameters % by Species Cattle Sheep Goats Smallholders Birth Rate (Tigray, Amhara, Oromia) 3 19 18 Death Rate (as above) 10 32 13) Death rate (all regions) 14 17 Pastoralists (Borana) 9 ?? 34?? 14?? Birth Rate 35 45 42 Death Rate 11 28 37

Nature of Participation in Cattle and Shoats Markets Market Participation Regime % by Species Cattle Sheep Goats Smallholder Farmers Sales only 23 (22) 41(26) 37 (27) Purchases only 8 (16) 7 (23) 6 (18) Sales and purchases 8 (12) 3 (8) 2 (5) No sales and purchases 61 (50) 49 (43) 55 (50) Pastoralists 47 18 25 2 6 7 4 72 66

Proportion of sellers and buyers by number of cattle purchased and sold Number of cattle purchased/sold Smallholder Farmers Pastoralists Buyers (%) Sellers (%) 1 83 (76) 73 (73) 38 60 2 12 (19) 20 (19) 29 20 3 3 (3) 4 (5) 19 8 4 2 (2) 2 (3) 5 9 6 or higher The transaction size is small for both buyers and sellers

Proportion of sellers and buyers by number of sheep purchased and sold Number of shoats purchased/sold Smallholder Farmers Pastoralists Buyers (%) Sellers (%) 1 49 (56) 20 (40) 78 52 2 30 (25) 26 (29) 14 3 12 (8) 19 (13) 11 10 4 6 (11) 15 (18) 5 6 or higher 9 19

Proportion of sellers and buyers by number of goats purchased and sold Number of goats purchased/sold Smallholder Farmers Pastoralists Buyers (%) Sellers (%) 1 63 (57) 18 (37) 38 12 2 21 (25) 33 (27) 33 47 3 11 (8) 19 (14) 17 23 4 0 (10) 7 (22) 6 5 13 6 or higher 10

Nature of market participation (% sample) Nature of participation CSA data ILRI/IFPRI data Cattle Shoats None 50 61 46 Only sold 22 23 44 Only bought 16 20 8 7 Sold & bought 12 3

Age structure of sold shoats in 9 markets in Eastern Ethiopia Age class, month % sheep n=1515 % goats n=1361 % shoats n=2886 Up to 10 15 25 19 11-15 32 29 16-20 20 17 21-25 18 26-30 3 4 31+ 12 All 100

Off take summary Low offtake Reasons Low market participation Low volume of sales Poor quality of animal sold- age, sex, health, body condition Reasons Small herd/flock size due to small land size High mortality (10-14%) , low birth rate (3-4%) Low market orientation

Volume of sales of cattle by sellers Number sold ILRI-IFPRI data % sellers CSA data 1 73 2 20 19 >2 7 8

Factors related to nature of market participation Comparison of non-participants with Only sellers Only buyers Both buyers and sellers

Comparison of participants in cattle market Compared to non-participants, a farmer’s likelihood to be only a seller is higher if it has larger herd size and larger family size above 15 yrs Lower if it has larger land size Compared to non-participants, a farmer’s likelihood to be only a buyer is higher if it has larger land size, larger off farm income and male household head Compared to non-participants, a farmers likelihood to be both a buyer and a seller is Higher if has larger herd size and male hh head lower if the hh is of older age

Comparison of participants in shoat market Compared to non-participants, the likelihood of a farmer to be only a seller is higher if it has lager flock size, larger livestock product income and larger household size Lower if it has smaller land size ands crop income, and higher price of shoat in market Compared to non-participants, the likelihood of a farmer to be only a buyer is Higher if it has access to common grazing land, higher crop and livestock product income Lower if it has higher off farm income, and if market price of shoat is higher

Conclusions net commercial off-take rates of cattle and shoats are low Large number of smallholder farmers and pastoralists do not participate in the market and the size of transaction is small Reasons for the low commercial off-take rate A good proportion do not own any animals Among owners, small herd/flock size with very low fertility and/or high mortality rates about half of the owners do not buy or sell in a given year Among sellers, volume of transaction is low : 1-2 animals per year Age, sex and body conditions of a good proportion of shoats sold will not meet requirements of abattoirs

Policy Implications can remove this slide The limited market participation of smallholder farmers and pastoralists indicate that under the current production and marketing conditions, small-scale farmers and pastoral livestock production systems do not provide regular and adequate market supply of quality live animals at competitive prices This adversely affects the efficient utilization of meat processing capacity of export abattoirs and hence their competitiveness in the domestic and export markets Fundamental changes are required in the production and marketing systems (may be different for different production systems)

Options for Strategic Interventions (1) Improve the extension messages and functions for smallholder farmers and pastoralists: Extension messages should be designed to advise producers that will result in improvement in productivity (increase fertility, reduce mortality, feed conversion ratio, etc.), quality of marketed animals (sell at optimal age, weight and body condition), market orientation of smallholder producers so that they make purchase and sale decisions to maximise household returns, and disseminate appropriate technologies for better feeding and health management practices which will significantly increase the quantity and quality of off-take

Options for Strategic Interventions (Cont.) (2) Encourage the emergence of commercial-oriented livestock production systems Both small-scale and large-scale However, this requires Careful evaluation of the social and economic feasibilities of such commercially oriented production systems, Assessing consumer preferences in the importing countries Assessing the requirements of domestic supermarkets Improving the competitiveness of beef export value chain (Identify appropriate policy, organizational, institutional, technological measures which increase the efficiency and effectiveness of meat export value chain) Assessing how to link smallholder livestock producers to the high value domestic and export market value chains

Options for Strategic Interventions (Cont.) (3) Build a sustainable and demand driven market data collection and information service that supports the business and policy decision making in the livestock sector Provision of timely, accurate, reliable, secured, and affordable production and market information to different target beneficiaries Provision of reliable baseline and historical data to monitor and assess the changes in the livestock production and marketing environments in Ethiopia

Some options for increasing off take Increased investment in animal health to reduce mortality and increase fertility Increased investment and improvement in the quality of extension Better and optimal utilisation of scarce feeds Herd/flock management, proper culling policy Beyond technology, advice on optimal marketing time to benefit from market Public and private sector (including abattoirs) partnership for complementary roles Strategic procurement mechanisms and alternative options combined with provision of incentive prices for quality a by abattoirs

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