Cattle and Meat Value Chain Assessment in Ethiopia

As one of its economic objectives, the government of Ethiopia is pursuing a policy of maximizing revenues through meat and live animal exports. There is some progress in the volume of live animal and meat exports on a yearly basis, but not as much as anticipated given the huge livestock resources in the country.

Despite having the largest livestock resource base in Africa, Ethiopia’s meat and live animals export business is much lower than Somalia’s or Sudan’s. Domestic meat and live animal prices are also higher than those in its neighboring countries, including Kenya, a meat-deficient country. Although domestic price increases for meat and live animals can be partly attributed to inflation, the rates at which prices are rising in the absence of supply shortages implies inefficiency in either one or a combination of the prevailing livestock production, value adding, and marketing systems. Whereas the traditional production system is more or less fairly well understood, the rationale of this project is to assess the incremental costs at each level of transaction and processing to identify where unacceptable levels of costing are incurred, either by default or intention, in the value chain.
Through informal trade, Ethiopia is a major supplier of livestock to Somalia, Djibouti, Kenya, and Sudan. Sudan and Somalia are the major livestock and meat exporting countries in the region. Ethiopia is a distant third, although it has the largest livestock resources in Africa. Yet, domestic meat prices in Ethiopia are twice that of Kenya and Sudan. Escalating domestic livestock prices are impacting the volume that can be exported to regional export markets.
Different channels are employed for bringing livestock from production points to domestic terminal markets and to export points. In the process, livestock may change hands a minimum of three times, but this can vary depending on distance, remoteness, and other interim activities for which livestock are primarily purchased (for value adding, plowing, or breeding purposes). Almost all the cattle exported, and a good proportion of those destined for major terminal markets, go through the process of value adding.
There are speculations that unjustifiable costs are being incurred somewhere in the transaction and/or value adding process. It may prove that there are too many intermediaries in the chain; or transport, taxation, and feed costs are high; or big livestock traders and butchers in big cities are operating as cartels; or the nascent export business is encouraging speculators (including producers) to hike up livestock prices. These assumptions are made on the basis of no significant changes being observed in local consumers’ income.

While this project was in preparation, a number of agencies in Ethiopia embarked on similar initiatives. This project was, therefore, put on hold pending the final outcome of research undertaken by the other agencies to identify gaps and determine where we should focus. What we have now is three value chain outputs researched by other agencies. These outputs were useful for our project in providing secondary source materials, mainly on the marketing and, to some extent, on the value chain. Following a consensus with the funding agency, existing studies were analyzed, rather than embarking on a new research, the findings of which were discussed at “a meat value chain” meeting held at the Center’s Ethiopia office.

Given the increasing level of meat exports from the country, the government is now promoting the setting up of new export abattoirs in the eastern parts of the country (where there are none at the moment) to provide market access for pastoralists.

Impact is anticipated at three levels: it will inform those in the industry where they are incurring unjustifiable costs for appropriate action; it will inform policy makers on the necessary actions required to streamline the industry; and it will inform donors on appropriate areas of intervention for maximum impact.

The research will be conducted in collaboration with the Ministry of Agriculture and Rural Development and the Texas University SPS-LMM program in Ethiopia, which promotes meat exports from Ethiopia.