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Trends and Overview of the Livestock Sector
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Trends and Overview of the Livestock Sector

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  • Livestock products account for 4.4% of total household expenditure and 8.7% of food expenditure.Expenditure share larger in urban areasPoorer people tend to have a higher expenditure share on beef and dairyPoorer people tend to have a lower expenditure share of mutton & goat and eggAnnual per capita meat consumption in Ethiopia is very low. The African and East African average for the same period (2004) stand at about 15 kg and 10 kg respectively (Ethiopian is 8 kg) (FAO, 2010 )Improves with income and in urban areas
  • QU-AIDS Two-step procedure to address zero expenditure problem Residuals included to control for expenditure endogeneity
  • This growth rates compare very favourably to those very close to zero reported in 702, 80s and 90sAlso the above rates were spread between the intensive and extensive margin. The pctage of farmers engaged in crop agriculture only dropped feom 18 pct in 2000/01 to 9 pct in 200/08Measured growth rates are consistent with the history of disasters in Ethiopia2002 and 2003 saw a prolonged drought. Livestock number quickly picked up after that2008 was characterised by poor belg and deyr rainy seasons, while 2009 also had a poor belg and an erratic performance and early cessation of kremt rainsIf supply side story, we should find further evidence in birth and death ratesHas demand played a role as well?
  • Cattle stock growth from 2 pct in 2003/04 to 10pct in 2006/07 (average 4.9 for 03-09)Economic growth above 10pct consistently and unitary income elasticitiesSo, roughly, for most years demand growth > supply growthHigh births rates may thus also have been the result of increased investment in livestock productivity from livestock holders
  • Avg annual growth rate in stock for 2003-09 is 8.1 pct for goat and 7.9 for sheepMutton and goat meat income elasticity 0.67 (would also need elasticity of live animal purchase)

Trends and Overview of the Livestock Sector Trends and Overview of the Livestock Sector Presentation Transcript

  • Trends and Overview of the LivestockSector Presenter A. Stefano Caria University of Oxford, Department of Economics Centre for the Study of African Economies Taking Stock of the Economics of the Livestock Sector November 04, 2011 Addis Ababa 1
  • • Today we look at the economics of the livestock sector• In doing this, we should keep in mind the key stylised facts about the sector 1. Time trends 2. Geographical patterns 3. Supply contraints• In this presentation we give a general overview of the sector and its trends
  • A STATIC SNAPSHOT
  • Livestock accounts for substantial macro flows (EDRI SAM & HICE data)• 1/3 of agricultural value added – Draft power 10 pct of factor value into crop production• 14 pct of GDP• 6.4 pct of total export revenue• 8.7 pct of household food expenditure
  • Clear regional patterns, but livestock density is high in many areasCattle per 1000 humans Shoats per 1000 humans
  • Ownership not high among the poor (Does not mean not important for poverty reduction!!) Distribution of livestock Factor income of the poor 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100%humid lowland humid lowland humid cereal humid cereal humid enset humid ensetdrought prone drought prone pastoralist pastoralist Poor Non Poor Land Labour Livestock
  • Consumption patterns Beef Mutton Chicken Other Fish & Dairy Egg Honey & goat meat fish products meat (camel, po products rk...)National 40.9 8.3 7.3 0.5 0.4 39.5 2.6 0.8Urban 55.8 11.7 9.3 0.5 0.3 17.4 4.7 0.7Rural 37.9 7.6 6.9 0.5 0.5 44.1 2.2 0.9 Exp. QuintilesQ1 43.0 7.4 7.8 0.5 0.5 38.5 2.0 0.7Q2 39.9 7.5 7.1 0.5 0.4 42.1 2.0 0.8Q3 41.0 7.2 7.4 0.5 0.4 41.0 2.2 0.7Q4 40.5 8.8 7.4 0.4 0.5 39.2 2.7 0.9Q5 40.4 10.3 6.8 0.4 0.4 37.1 4.0 1.0
  • High expenditure elasticity for beef, lower for other livestock Total Urban Rural Beef 0.939*** 0.896*** 0.985*** [0.0178] [0.0198] [0.0423] Mutton & Goat meat 0.671*** 0.304*** 0.917*** [0.1268] [0.1138] [0.1361] Other meat & animal products 0.538*** 0.519*** 1.045*** [0.0455] [0.0551] [0.0757] Dairy products 0.420*** 0.389*** 0.479*** [0.0148] [0.0136] [0.0061]• Beef has unitary expediture elasticity – Higher than most foods, apart from teff and pulses
  • Significant price elasticities• All own price effects are negative and significant – Mutton/goat meat has the highest own price elasticity• For beef, mutton/goat meat, and ‘other meat’, rural areas have higher own elasticities• Substitution relation between beef and mutton/goat• Significant expenditure and price response suggests policies affecting prices will have strong effects on consumption
  • MAIN TRENDS
  • Unprecedented stock growth in 00s Average annual growth rate 1980-89 1990-99 2000-08 Cattle 1.05 1.84 3.88 Sheep 0.36 -7.14 10.44 Goat 0.40 -7.54 9.48 Poultry 1.40 -7.65 -0.16 Source: FAO & CSA, reported in Negassa et al 09
  • Stock growth in 03-07, then slump Annual stock growth rates. CSA data24.0%19.0%14.0% 9.0% 4.0% -1.0% 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 -6.0%-11.0%-16.0% Cattle Goat Sheep Poultry
  • Rising real prices of cattle show sustained demand Average annual real prices of cattle (2001-2010) • Real prices rising 03-07: 1900 demand grew faster 1700 than supply 1500 – Consistent withprice in 2006 birr 1300 elasticities 1100 900 • Real prices fell during 700 food price crisis • Now picking up again 500 Bull (2-4 years) Cow (4 years and above) – Fast rise in international Ox (4 years and above) Heifer (2-4 years) prices in 2010
  • Real prices of shoats stable or declining• Moderate upward trend Real shoat prices in real price of sheep Addis Ababa w/sale market 500• Moderate downward 450 400 trend in goat 350 300• Notice both sheep and 250 200 goat achieved very high 150 100 growth rates 50 0• & income elasticity of Jul-01 Jul-03 Jul-05 Jul-07 Jul-09 Nov-02 Mar-04 Nov-04 Nov-06 Nov-08 Nov-10 Mar-02 Mar-06 Mar-08 Mar-10 consumption lower Sheep Goat
  • Distribution of holdings is stable• Remarkable stability in Distribution of cattle holdings by the distribution of size holding size 30.0% – Cattle, sheep and goat 25.0% 20.0%• In 06/07, 1-2 and 3-4 15.0% heads holdings reduced 10.0% in favour of 5-9 and 10- 5.0% 19 0.0% – But limited: how do we reconcile this with the demand led story? 2003/04 2006/07 2009/10
  • Rising export values of live animals Value of live animals’ exports (2005 Birr)70,000,00060,000,00050,000,00040,000,00030,000,00020,000,00010,000,000 0 2004 2005 2006 2007 2008 2009 2010 Rest of world Other Middle East Djibouti Egypt Saudi Somalia Sudan UAE Yemen
  • And rising share of live animals in exports Value of livestock exports (2005 Birr)120,000,000100,000,000 80,000,000 60,000,000 40,000,000 20,000,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Raw Hides Live bovine Bovine meat Shoat meat