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1. CHAPTER FOUR
INNOVATION AND UPGRADING THE LIVESTOCK
VALUE CHAIN
Innovation is the practical implementation of ideas that result
in the introduction of new goods or services or improvement in
offering goods or services.
Innovation is the process of making an idea or invention into a
good or service that creates value and/or for which customers
will pay.

2. Value chain upgrading is centrally related to innovation
 Value chain upgrading can enhance value chain productivity and
competitiveness of a firm.
Upgrading entails not only improvements in products, but also
investments in people, know-how, processes, equipment and
favorable work conditions.

3.  Upgrading concept describes how firms and sectors shift
towards making better products, making them more efficiently
or moving into more skilled activities and improving their
performance and rewards in high-value markets.
 Upgrading refers to the acquisition of technological capabilities
and market linkages that enable firms to improve their
competitiveness and move into higher-value activities .

4.  The pursuit of upgrading provides many opportunities to firms
that range from increased efficiency and output to access to
new market channels and industry knowledge.
 Types of value chain upgrading
Process upgrading
Product upgrading
Functional upgrading
Chain upgrading

5. 1. Process upgrading involves improving value chain efficiency
by increasing output volumes or reducing costs for a unit of
output.
 Increases the efficiency of production either through better
organization of the production process or the use of improved
technology.
 e.g. applying new processing technology, delivering on
schedule, reducing wastage, etc.
 Use of milking machine

6.  Livestock process upgrading example crossing two
livestock breeds for improving one of the breeds.
 For example, suppose you raise a rare breed of cattle.
 There are only a few specimens of the breed, and
importing new livestock would be too costly and
complicated for your small business.

7.  Because so few cattle are available to you, your herd is at
serious risk for inbreeding, which can create health and
reproductive weaknesses.
 One thing you could do is upgrade your cattle. You would
choose a more common breed with desirable
characteristics and incorporate it into your herd in a
controlled manner:

8. 2. Product upgrading introducing new products or improving
old products
 Improving product quality and increasing value for consumers
may be stimulated by changes in end markets, usually
stemming from changes in customer preferences, or the desire
for higher value added products.
 This involves changing new product development processes
both within individual links in the value chain

9.  Process and product upgrading are closely related because
improving product quality often involves improvements to the
production process.
E.g. assume farmer previously sell raw milk if he add value on
milk (i.e change milk in to butter or cheese ) it is product
upgrading

10. 3.Functional upgrading or intra-chain upgrading
It refers to changing the mix of functions performed by actors
in the value chain
 Increasing (upgrading) or reducing (downgrading) the number
of activities performed by individuals and firms.
 Acquiring new functions (or abandoning old ones) that
increase the skill content of activities.

11.  e.g. in addition to production activities, carrying out grading,
primary processing, bulking and storage, transporting; or
engaging in the provision of services, input or finance).
 Shortening the value chain can be achieved by excluding
intermediaries and redistributing their functions among the
partners of a newly formed vertical relationship.

12. Example of functional upgrading in livestock value chain
 Previously If the producer sell cattle product for collector ,
he/she start selling the product directly to consumer.

13. 4.Chain or inter-chain upgrading
 Farmers can also set out on a new value chain:
 They may be completely new to these activities, or they may
transfer their skills and experience from their existing
enterprise.

14. Chapter Five:
Processing and export of livestock
and livestock products

15. Processing of Livestock and livestock products
 Meat processing may include particle size reduction (mincing,
grinding),mixing with various additives, curing, smoking,
stuffing, canning or any other process that alter the freshness
of meat.
 Milk processing is the procedure that includes various steps to
start dairy farms like milk collection from cattle,
pasteurization, clarification, homogenization, packing of the
milk and finally transportation.

16.  Egg products processing includes breaking eggs, filtering,
mixing, stabilizing, blending, pasteurizing, cooling, freezing or
drying, and packaging.

17. Importance of livestock processing
 Improve their nutritional quality and also elongate their shelf
life, thereby giving room for their transportation from points of
production to any part of the world where they may be needed.
 Helps to control spoilage by inhibiting the growth of
microorganisms,
 Provide employment, income and stimulate the local, regional
or national economies.

18. Livestock Export performances
 Ethiopia is home to Africa’s largest livestock population with an
estimated 61.5 million heads of cattle, 39 million heads of sheep,
and 50.5 million heads of goats
 Ethiopia earned $68.4 million from meat export in the year
2019/20 and $32.1 million in 2020/21 for the half year
 The major export markets for Ethiopian sheep and goat
carcasses are the United Arab Emirates (52%) and the Kingdom
of Saudi Arabia (41%).

19.  The remaining 7 percent of meat is exported to Hong Kong,
Vietnam, Qatar, and other countries.
 In 2019/20, new export market destinations emerged in East
Asia.
 According to the Ethiopian Meat Producers and Exports
Association’s March 2021 data, there are 14 export abattoirs
with around 200,000 tons of sheep, goat, and beef production
per a year.

20.  However, the existing meat processing facilities are generally
operating at less than 10 percent of full capacity for two
reasons:
I. Export abattoirs are unable to procure suitable quality and
quantity of live animals for the export market, and
II. There is high demand for meat in local markets.
Hence, export abattoirs are competing with the meager domestic
supply of live cattle and sheep and goats

21.  The export market price for sheep and goat meat is
between $5,450 and $5,600 per ton.
 This is equal to $5.50 per kilogram (ETB230/kg) in Addis
Ababa, compared to the range of $5-10 per kilogram on
local markets (ETB230- 410/kg), which is significantly
higher.
 Many of the abattoirs are on the verge of collapse due to
lack of domestic supply and high illicit live animal trade
along border areas.

22. LIVE ANIMAL EXPORT
 Volume trends for the formal trade in live animal export
numbers show an 87 percent decline in volume from 416,454
heads in 2018/2019 to 51,587 in 2019/20.
 Similarly, value declined by 90 percent in the year 2019/20,.
 Comparing live animal export price with the local price, cattle
prices range from ETB 18,000 - 40,000 per head depending on
the condition of the animal, which is competitive with export
price.

23.  Similarly, goat and sheep average prices in Addis Ababa range
from ETB 3,000 - 6,000 per head, which is competitive with
the local price.
 Addis Ababa is a major end-market where slaughter animals
are brought from major supply sources.
 Current beef prices in Addis Ababa range from ETB 180 - 500
per kilogram depending on quality, such as lean meat from
young animal’s vs. meat from older animal

24.  Cattle from Gondar, Harar, Bale and Jirruu is fetching the
highest prices due to large animal size that is in high demand
by the local butchers.
 Cattle from Jimma, Wolaita, and Wolega fetch lower prices due
to the small animal size.
 Most livestock markets are supplied with animals in poor
condition.

25.  The meat and live animal export sectors are in steady decline
due to
 Shortage of live animal supply, Feed
 illegal trade, and
 Lack of implementation/enforcement of the live animal
marketing proclamation that prohibits animal smuggling.
 Weak regulatory control,
 Particularly in border areas with security issues

26. Thank you