trends of formal and informal livestock marketing in ethiopia
TRANSCRIPT
Trends of Formal and Informal Livestock
Marketing in Ethiopia
By Tadesse Kuma
Paper presented on the ESSP-II/ EDRI Workshop on the theme:
Taking Stock of the Economy of the Livestock Sector in Ethiopia
Jupiter International Hotel, Addis AbabaNovember 4, 2011
outline
Background
Trends of formal and informal
livestock trade
Routs of cross-border livestock trade
Why informal trade?
What need to be done?
Background
Livestock continues to be a significant contributor to economic and social development in Ethiopia at the household and national level;
On a national level, livestock contributes a significant amount to export earnings in the formal market (250mln USD), and the informal market (~300mln USD), 10-13% export earning;
Livestock have multiple uses aside from income generation: sources of food (meat and milk), services (transport and traction), manure (for soil fertility management and fuel), and serve as store of wealth;
Livestock for pastoral community …
Trends of formal and informal LSM (1)
(a). Formal livestock marketing For many years the export of livestock and
livestock products has been Ethiopia’s second most valuable source of foreign exchange, after coffee;
Hides and skins have been by far the most important formal livestock product (account for about 70%),
Live animal and meat export remained small until very recent.
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Fig. 1: Trends of Livestock Export (000' USD) by major group
Live Animals
Animal Products
Valu
e (
000' U
SD
)
Source: Ethiopian Custom Authority, 2010/11
Trends of formal and informal LSM (2)
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
0
250000
500000
750000
1000000
1250000
1500000
1750000
2000000
2250000 Fig. 2: Trends of formal livestock export (000 USD)
CoffeeLivestock Total Export
Va
lue
(0
00
' U
SD
) Trends of formal & informal
LSM (3)
Despite a radical growth in the total national export value in the recent years, the relative growth in the earning from livestock products remained virtually stagnant
Trends of formal & informal LSM (4)
(b) Informal livestock marketing there is significant informal cross-border trade in live animals, which
substantially increases livestock’s export importance.; Although the statistics on volume of informal livestock trade is shaky,
it has considerable volume
Table 1. Estimates of informal livestock exports
Source of data Reference period
Cattle (head) Sheep (head)
FAO 1993 1987/88 150,000 300,000
World Bank 1987 1987 225,000 750,000
MEDaC 1988 1998 260,000 1,200,000
Belachew and Jemberu 2002 2001 325,000 1,150,000
GebreMariam, Amare, Baker & Solomon, 2010
2010 375,000
Routs of cross-border trade
Little (1996), identified 4 routs1. Eastern Ethiopian via
Somaliland (port of Berbera),
2. Southeastern Ethiopia or
northeastern Kenya, - The average daily castrated bulls
cross the Ethiopian border estimated to be 250, 150, 400, 450, 200, and 450 (year 2004 _ 2009) (Sintayehu, 2010).
3. Eastern Ethiopian or via Somali
4. Ethiopia-Djibouti cross-border trade;
5. Ethio-Sudan cross-border livestock trade (Metema)
Why informal trade?
Key factors contributing to large volumes of informal trade:
Requirement for export licenses, Quarantine, banking clearance for remitting foreign
exchange, Minimum weight restrictions, Better prices across the border; High transportation and transaction costs; readily availability of consumer goods prohibition on Ethiopian livestock and meat export to
ME; Financial and non-financial advantages to informality (,
tax evasion, black market foreign exchange rates).
Why informal trade? Cont…
Challenges There is only limited understanding of the
nature, magnitude, and value of the range of cross-border livestock and livelihood activities in the border regions of the country;
Ethiopia is not generating adequate benefits from its livestock sector;
What has to be done?
The first and most important action is to understand the sector through conducting an in-depth analysis of the existing marketing chain;
Designing an alternative marketing system which would benefit all actors in the chain, particularly the livestock producers;
Indeed, farmers have no reason to trek their animals for days, if they have efficient and reliable livestock market with low transaction costs at their nearest location;
What has to be done? Cont…
Improving rural road networks, market information system, and other related infrastructures and services are indispensable;
The establishment of linkages between producers’ and traders’ cooperatives;
Strengthening meat processing plants, and private abattoirs
The power imbalance at market sites between producers and traders and brokers needs also target efforts
Than
k yo
u!!