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ETHIOPIAN DEVELOPMENT RESEARCH INSTITUTE<br />Synthesis on Livestock Study<br />Presenter<br />Stefano Caria<br />Disaster...
Research team<br />AyeleGelan (ILRI), SeneshawBeyene, ErmiasEngeda, Ibrahim Hassen, FantuNisraneBachene, KibromTafere, Hel...
Why a study on livestock?<br />A growing, dynamic sector<br />Market issues<br />Demand patterns<br />Accounts for signifi...
A roadmap in 5 questions<br />What trends?<br />What supply constraints?<br />What type of markets?<br />What type of dema...
What trends?<br />
Unprecedented stock growth in 00s<br />
Stock growth in 03-07, then slump<br />
Rising real prices of cattle show sustained demand<br />Real prices rising 03-07: demand grew faster than supply<br />Cons...
Real prices of shoats stable or declining<br />Moderate upward trend in real price of sheep<br />Moderate downward trend i...
Rising export values of live animals<br />
What supply constraints?<br />
A synthesis of diagnostic studies<br />
What markets?<br />
Proximity to livestock markets improved in 2000-07<br />
Proximity is correlated with woreda share of national livestock<br />
Formally study market integration<br />Threshold auto-regressive model<br />3 trade regimes are specified<br />Transaction...
Different commercialization for sheep and goat?<br />Sheep markets are well integrated with Addis Ababa & less so within r...
Fall in transaction cost, but still imperfect integration for cattle<br />Bull and oxen markets often well integrated with...
What demand?<br />
Consumption patterns<br />
QU-AIDS results: all goods normal<br />Beef has unitary income elasticity<br />Income elasticities for other prodcuts lowe...
Significant price elasticities<br />All own price effects are negative and significant<br />Mutton/goat meat has the highe...
What macro-economic importance?<br />
TFP shocks within a general equilibrium framework<br />Dynamic, general equilibrium model<br />Adjusted to better capture ...
Strong economic linkages for livestock<br />
Livestock has pro-poor factor income effects<br />Livestock income share of the poor is limited<br />Poor HHs have a large...
To conclude<br />
What have we learnt about livestock? <br />Significant dynamism in supply and demand<br />A number of supply constraints<b...
A roadmap of new questions<br />How do trends differ across geographical areas?<br />What price formation mechanism?<br />...
Thank you!<br />
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Synthesis on Livestock Work

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Synthesis on Livestock Work

  1. 1. ETHIOPIAN DEVELOPMENT RESEARCH INSTITUTE<br />Synthesis on Livestock Study<br />Presenter<br />Stefano Caria<br />Disaster Risk Management and Food Security Sector<br />Ministry of Agriculture, GoE<br />Ethiopian Economic Association Conference<br />July 21, 2011<br />Addis Ababa<br />1<br />
  2. 2. Research team<br />AyeleGelan (ILRI), SeneshawBeyene, ErmiasEngeda, Ibrahim Hassen, FantuNisraneBachene, KibromTafere, HelinaTilahun (IFPRI-ESSPII-EDRI), Derek Headey (IFPRI) Stefano Caria (DRMFSS)<br />
  3. 3. Why a study on livestock?<br />A growing, dynamic sector<br />Market issues<br />Demand patterns<br />Accounts for significant share of macro activity: value added and exports<br />Policy should address shocks & long term sector development<br />
  4. 4. A roadmap in 5 questions<br />What trends?<br />What supply constraints?<br />What type of markets?<br />What type of demand?<br />What economic importance for the sector?<br />
  5. 5. What trends?<br />
  6. 6. Unprecedented stock growth in 00s<br />
  7. 7. Stock growth in 03-07, then slump<br />
  8. 8. Rising real prices of cattle show sustained demand<br />Real prices rising 03-07: demand grew faster than supply<br />Consistent with elasticities<br />Real prices fell during food price crisis<br />Now picking up again<br />fast rise in international prices in 2010<br />
  9. 9. Real prices of shoats stable or declining<br />Moderate upward trend in real price of sheep<br />Moderate downward trend in goat<br />Notice both sheep and goat achieved very high growth rates<br />& income elasticity of consumption lower <br />
  10. 10. Rising export values of live animals<br />
  11. 11. What supply constraints?<br />
  12. 12. A synthesis of diagnostic studies<br />
  13. 13. What markets?<br />
  14. 14. Proximity to livestock markets improved in 2000-07<br />
  15. 15. Proximity is correlated with woreda share of national livestock<br />
  16. 16. Formally study market integration<br />Threshold auto-regressive model<br />3 trade regimes are specified<br />Transaction costs estimated from the model<br />Time-varying adjustment speed & transaction costs<br />
  17. 17. Different commercialization for sheep and goat?<br />Sheep markets are well integrated with Addis Ababa & less so within regions<br />Goat markets are not as well integrated with Addis, but better integrated within regions<br /><ul><li>Selling to Addis vs selling to local markets?</li></ul>Transaction costs are declining<br />
  18. 18. Fall in transaction cost, but still imperfect integration for cattle<br />Bull and oxen markets often well integrated with regional capital, less so with Addis Ababa<br />No tested market in Afar, Somali and Borana integrated with Addis Ababa<br />Informal exports?<br />Some producer-retail vertical integration, but extremely low for retail-meat<br />Fall in transaction costs confirmed<br />
  19. 19. What demand?<br />
  20. 20. Consumption patterns<br />
  21. 21. QU-AIDS results: all goods normal<br />Beef has unitary income elasticity<br />Income elasticities for other prodcuts lower<br />
  22. 22. Significant price elasticities<br />All own price effects are negative and significant<br />Mutton/goat meat has the highest own price elasticity<br />For beef, mutton/goat meat, and ‘other meat’, rural areas have higher own elasticities<br />Substitution relation between beef and mutton/goat<br />Significant expenditure and price response suggests policies affecting prices will have strong effects on consumption<br />
  23. 23. What macro-economic importance?<br />
  24. 24. TFP shocks within a general equilibrium framework<br />Dynamic, general equilibrium model<br />Adjusted to better capture livestock sector<br />Draft power, elasticities<br />Livestock module to better model livestock investment and stock categories<br />Model total factor productivity (TFP) shocks to agricultural sectors: cereals, cash crops, livestock<br />
  25. 25. Strong economic linkages for livestock<br />
  26. 26. Livestock has pro-poor factor income effects<br />Livestock income share of the poor is limited<br />Poor HHs have a larger share in labour<br />TFP growth in a factor in fixed s-r supply brings its price down<br />Economic linkages reinforce return to other factors<br />
  27. 27. To conclude<br />
  28. 28. What have we learnt about livestock? <br />Significant dynamism in supply and demand<br />A number of supply constraints<br />Decreasing transaction costs & different patterns of market integration<br />Significant expenditure and price elasticities<br />Important macro-linkages & income generation potential for the poor<br />
  29. 29. A roadmap of new questions<br />How do trends differ across geographical areas?<br />What price formation mechanism?<br />What further economic linkages?<br />Better capture links to crop sector through feed <br />Better model endogenous investment decisions<br />What is the economic dyanmics behind livestock sector shocks?<br />
  30. 30. Thank you!<br />

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