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Trends and Overview of the Livestock Sector
1. Trends and Overview of the Livestock
Sector
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
2. • 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
4. 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
5. Clear regional patterns, but livestock
density is high in many areas
Cattle per 1000 humans Shoats per 1000 humans
6. 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 enset
drought prone drought prone
pastoralist pastoralist
Poor Non Poor Land Labour Livestock
8. 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
9. 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
13. 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 with
price 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
14. 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
15. 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
16. Rising export values of live animals
Value of live animals’ exports (2005 Birr)
70,000,000
60,000,000
50,000,000
40,000,000
30,000,000
20,000,000
10,000,000
0
2004 2005 2006 2007 2008 2009 2010
Rest of world Other Middle East Djibouti
Egypt Saudi Somalia
Sudan UAE Yemen
17. And rising share of live animals in
exports
Value of livestock exports (2005 Birr)
120,000,000
100,000,000
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
Editor's Notes
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)
