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Production objectives and market forces

Addis Anteneh


Production from small ruminants
Individual objective
National objectives
Prospects for increased supply of meat from small ruminants
Marketing
Accessible markets with short supply: two examples


Small is beautiful! "... Smallholder, Juan Batista, maintained a herd of 38 mature females of mixed Criollo-Nubian breeding. The goats were exposed for breeding year-round so that 3-5 females were always in lactation. The herd grazed freely on unfenced pastures and brush lands in and around Batiste's house. The next morning the lactating females were driven from door-to-door and milked to each customer's order. This was the example of a small entrepreneur adopting to a definite but limited, market niche. Feed costs for the herd were essentially nil" (Win rock, 1977).

Production from small ruminants

Throughout the world, sheep and goats are raised for several purposes. The first things that come to mind are meat, milk and fibre. In many developed countries, the production of sheep meat is a specialized undertaking where large flocks are kept and managed under commercial ranching conditions. Milk production from dairy goats is an established industry in western Europe. Wool production is a major activity in Australia, New Zealand, the United Kingdom and the USSR. Sheep and goat skins are major non-food products accounting for almost 20% of world production of hides and skins. Sheep and goat production in developed countries is mainly a commercial undertaking emphasizing these products.

In the developing countries too, farmers raise sheep and goats for meat, milk and fibre production. Africa excluding South Africa has about 22% of the world's sheep and goats, and produces about 14% of total sheep and goat meat. About 13% of sheep and goat skins are produced in developing Africa. In some countries such as Ethiopia hides and skins are major export items (17% of value of total merchandise trade in 1979). Goat and sheep milk production in Africa accounts for approximately 14% of world production (FAO 1981a). In some African countries sheep and goat milk is a major source of milk supply for consumption. Gall (1975) reported that as a percentage of total milk production sheep and goat milk accounted for 57% in both Morocco and Niger, 56% in Mauritania and over 30% in Mali, Algeria and the Sudan. Developing countries in Africa are not major producers of wool or goat hair. Excluding South Africa again, Africa produces about 37, 000 tonnes of greasy wool per year (FAO, 1981a); this represents only about 1% of world production.

So meat and milk production from sheep and goats are major objectives in Africa as in many developed regions. There are, however, two important differences to note between production objectives in the majority of the producers under these two categories. Firstly, in developed countries the objectives are commercial whereas most production in the developing countries takes place on holdings mainly geared towards subsistence food production. Secondly, sheep and goat keeping in Africa serves other purposes which, though difficult to quantify may be as important as food production per se.

For the small farmer or agropastoralist in Africa, sheep and goats as well as cattle provide security of continued food supply in times of crop failure; their meat or milk is directly consumed or the animals are sold for cash to purchase grain or are exchanged for grain products. Sheep and goats have special advantages over cattle in this and other respects. For the small subsistence farmer or pastoralist who considers his livestock as a kind of investment or "money in the bank", sheep and goats represent a current account or working capital in relation to large stock which can be considered as equity investment (McDowell and Hildebrand, 1980).

Skins are an important byproduct to meat production. Goat skins of the Red Sokoto in West Africa and Bati goat skins in Ethiopia fetch premium prices in world market, but there is no evidence of these or other similar breeds being produced for their skins as a primary production objective. Sheep skins are used for clothing in the highland area of Ethiopia, and skins with their hair kept intact serve as sitting rugs in many rural households in Ethiopia. Goat skins are specially suitable for use as water carriers and grain sacks. In some parts of Africa manure from tethered sheep and goats is collected and spread on crop fields as fertilizer (ILCA, 1979a).

In most developing countries, these production objectives are inseparable from meat and milk production. The general picture given by production statistics indicates that in Africa sheep are preferred for meat and goats for milk, and both meat and milk are mainly used for local consumption.

Individual objective

The subsistence producer keeps livestock to meet his family's immediate requirements for food, fuel and fertiliser, to give him cash for off-farm expenditure, and he aims to minimize production and investment risk. Small ruminants therefore have several advantages. They provide meat and milk in quantities suitable for immediate family consumption, they are easier than cattle to buy and sell so that they are better suited to meeting relatively small and frequent cash requirements, and their low individual value means low initial investment and low risk of total flock loss from individual deaths. Small ruminants can thrive in extremely dry areas and in tsetse-infested areas where large stock cannot survive.

There are also certain disadvantages of small ruminants. Particularly in extensive systems sheep and goats are more susceptible than large stock to predation and theft. In cultivated areas, sheep and goats may damage crops; a survey in the derived savanna zone of Nigeria (ILCA 1979c) showed that 95% of the people who did not keep small ruminants gave crop damage as the reason.

National objectives

National production objectives for agriculture in sub-Saharan Africa, as in other developing countries, include increasing food production, increasing employment, increasing foreign exchange, more equitable income and wealth distribution, and more efficient utilization or conservation of resources. In sub-Saharan Africa livestock products (meat, milk, eggs, wool, hides and skins) account for approximately $5, 000 million or 17% of agricultural GDP (Jahnke, 1982), and of this about 17% is produced by small ruminants. Export of live animals accounts for about 1% of the total stock of small ruminants compared with only about 0.6% for cattle (FAO, 1981a; b). Small ruminants are particularly important in the economy of arid zones where the milk production from sheep and goats is 220 kg per livestock unit, more than twice that from cows. In areas of high population density where farms are small and a farmer's fields may be scattered, small ruminants are more easy to keep than large livestock.

Livestock provide opportunities for landless families to obtain both employment and income (McDowell and Hildebrand, 1980). Small ruminants are particularly important because of their low initial cost. Goats are frequently condemned as destroyers of vegetation and a major cause of desertification. Gall (1975) and Rice (1976) conclude that it is mismanagement which destroys vegetation, but nevertheless one of the factors limiting their productivity may be the negative attitude of planners towards development projects including small ruminants.

Public policy can be a serious constraint to the productivity of small ruminants. For instance genetic improvement programmes to introduce exotic breeds may be undertaken without giving attention to exploiting the potential for production of the indigenous breeds. As an example, the growth rates of indigenous Malaysian goats (Devendra, 1980) can be increased substantially by improved feeding, so that the edible weight of carcasses at slaughter increases by 37%. E even 50% of the small ruminants slaughtered annually in sub-Saharan Africa were to achieve half this weight increase, then the increased meat production would reduce the meat deficit by about 5%.

Prospects for increased supply of meat from small ruminants

Based on recent trends, the demand for meat from both ruminants and non-ruminants in sub-Saharan Africa is projected to increase at 4. 2% per year until 2000, whereas supply will increase at only 2.4%, and supply from ruminants will increase at a mere 1. 2% per year (de Montgolfier-Kouevi and Viavonou, 1981). The rate of growth of sheep and goat meat production will be lower than that of beef, indicating the need for a greater effort to increase supply from the former. The possibilities for increasing production by expanding low input-low output extensive systems are limited because of the decreasing availability of grazing land in both small holder and pastoral areas. Also, most small holders tend to regard sheep and goats as secondary to crop production and as a means of raising occasional cash to meet immediate family requirements. On the other hand, small holders have been known to exploit favourable market conditions to maximize this cash income. Many small farmers sell animals at times of peak demand (such as religious festivals), some fatten sheep or goats to take advantage of consumer preference, and some farmers are part-time sheep and goat traders.

Such situations could be exploited to increase marketed supply from small holders. However, sustained growth in meat supply from small holders could he achieved only if the animals could be integrated into the small holder's overall production activities to achieve higher farm productivity. One way of making small farmers respond to increased demands and higher prices by producing more, is to demonstrate that they could achieve increased crop production by using their cash income from livestock to buy inputs such as fertilizer. Small ruminants for meat appear to have special advantages in making an important contribution to this, if the appropriate technical solutions and economic incentives could be provided.

Marketing

Small ruminants may be sold directly to a consumer, sold to a trader, sold in an auction or sold to a marketing organisation. In many parts of Africa most farmers sell to a trader or middleman and animals may pass through the hands of many traders before reaching the consumer. The middleman is much maligned; he is accused of giving a low price to the farmer and making large profits. In fact, unless there are limits to the number of traders (either by law or by tradition) then the trader must earn his income. He provides a selling service to the farmer who may not be able to go to market, and he may move animals over long distances from areas of supply to areas of demand, However, the market is generally unregulated, peasant farmers have only limited access to market information and there is little incentive for export.

Marketing cooperatives, such as operate in Botswana and Ethiopia can help to bypass the middleman. In countries such as Kenya and Zimbabwe there are commercial organizations which have grading schemes and buy meat at advertised prices. However, even in these countries the majority of meat from small ruminants does not pass through these official channels. To accommodate small ruminants in slaughter-houses special lines are required, and organisations are understandably reluctant to provide for sheep and goats when the supply is not assured.

Inter-African trade is encouraged by the OAU, yet political decisions limit the trade between east and west Africa. For instance, Nigeria has import restrictions, and the Kenyan government discourages the export of live animals because it employs few people compared with the canning and skinning industries. In addition, governments may be reluctant to encourage the sale of meat in urban areas and for export because this results in higher meat prices and consequently lower meat consumption by the rural population and the poorer sector of the community.

Accessible markets with short supply: two examples

East African sheep and goats for the Middle East. Public policy may be partly responsible for failure to take full advantage of quite favourable trading conditions even where markets are ready to absorb sheep and goats. A case in point is sheep and goat exports from some East African countries to the Arabian Peninsula and the Gulf States. According to a report prepared by AOAD and FAO (1979), Arab countries on the Red Sea and in the Gulf imported from East

African countries live cattle, sheep and goats equivalent to the 56,000 tonnes carcass weight. This accounted for slightly over 20% of the total fresh meat consumption in the importing countries. Of the imported animals Somalia's share was about 75%, Sudan's share was about 20% with only 5% being taken by Ethiopia. About 60% of the live animals exported were sheep and goats or approximately 1.6 million for Somalia, 400,000 for the Sudan and about 100,000 for Ethiopia. These numbers are inversely proportional to the small ruminant populations of these countries: Ethiopia with approximately 40 million, Sudan with 30 Million and Somalia with about 25 million sheep and goats (FAO, 1981a). Even if one were to assume that about one-third of Somalia exports were unofficially transferred from Ethiopian flocks, the Somali export offtake rate is still about 4 times that of Ethiopia. While government interventions in price setting have an effect on both supply and demand for live sheep and goat exports to the importing countries (such as Sudan's export duty and taxes which accounted for 21% of export value as against 4% for Somalia), the very poor performance for Ethiopia and the relatively poor performance for the Sudan must be attributed to internal price structures and poor marketing support services.

What is even more interesting is the share distant producers such as India and Australia take in the live animal export trade of the "doorstep" markets for East African livestock. Despite very real consumer preference for fresh meat from East African fat-tailed or fat-rumped sheep and the enormous advantage East African countries enjoy in cheaper sea freight costs (610 times lower than the Sidney-Jeddah rates for live sheep), Australia's share of the large Saudi Arabian import market was approximately 15% in 1978 (AOAD and FAO, 1979), Ethiopia's share was only 1% while that of the Sudan was approximately equal to Australia' s. The higher unsubsidized prices for fresh meat from African live sheep and goats prevailing in the markets (20-30% higher than Australian prices) are believed to be reflection of consumer preference and do not seem to act as a deterrent to the growth of future demand in these markets. A 100% increase is projected in the consumption of fresh meat from African stock as opposed to a 30% increase in the supply from Indian and Australian sources by 1983/1984.

Of the total requirement of 113, 000 tonnes carcass weight equivalent from East African sources, Somalia and Sudan are expected to supply about 80% while about 22, 000 tonnes will have to come from other East African sources (AOAD and FAO, 1979). If Ethiopia were to capture the market for about 5, 000 tonnes carcass weight equivalent of fresh sheep meat, it would mean foreign exchange earnings of about US$ 20-25 million. This is about 5 times the total value of live animals and animal products (excluding hides and skins) exported in 1979 and over 30% of that of hides and skins. The export of about 400, 000 sheep and goats from the 24, 000 exported in 1980 is a phenomenal increase. However, even under the present relatively unrealiable supply pattern from the Ethiopian smallholder and pastoralist, a little more agressive marketing strategy and internal reorganization should make this possible.

The East African and Ethiopian situation is used for illustrative purposes. The "fallout" from such externally induced trading activity in terms of the cash benefits to the smallholder or pastoralist should not be underestimated.

Not enough white the wool: the Ethiopian carpet industry. Only about 10% (3500 - 4000 tonnes) of the wool produced in sub-Saharan Africa is exported, which implies that 90% of the domestic production of greasy wool is traded domestically. In value terms, exports of greasy wool in 1980 represented only about 3% of the value of live sheep and goats plus fresh sheep meat exports (FAO, 1981b). This would still be smaller if the value of skins were included as part of the export of livestock products. Import figures for greasy wool (FAO, 1981b) are reported for only Ethiopia and Kenya with 79 tonnes and 24 tonnes worth about US$ 71, 000 and US$ 75, 000 respectively.

There is scant information as to what use domestically produced wool is put in many parts of the region. Some information on production from indigenous flocks and use of carpet wool has been available for the central highlands of Ethiopia (Cossins and Bekele, 1974; Technical Committee, 1975; Weiner, 1972; 1975; Livestock and Meat Board, 1974). Coarse wool is used to make hand-woven carpets and blankets. Making runner carpets is a thriving activity in western Wollo, and also uses wool purchased from farmers in eastern Gondar and northern Shoal Cossins and Bekele (1974) estimated a monthly demand of 5 to 7 tonnes in only one locality renowned for carpet making.

Small-scale "industrial" production of woollen carpets is concentrated in Addis Ababa. Most of the carpet wool required by these handicraft centres is obtained from rural production in northern Shoa and western Wollo. The Livestock and Meat Board (1974) reported that the major carpet making centres in Addis Ababa had an estimated annual demand of 65-70 tonnes in the form of coarse wool, cleaned yarn from Debre Birhan Wool Factory and scoured wool from some tanneries as well crossbred wool from Debre Birhan sheep station. The industry has been characterized by irregularity and overall shortage of supply (Technical Committee, 1975). The current situation is no better. The Handicraft and Small-scale Industries Development Agency (HASIDA) has confirmed that this problem still persists particularly for white carpet wool and is further exacerbated by the high prices being asked by trader suppliers. Prices have about doubled in the last 3 to 4 years from Birr 3.50 - 4.00 per kg to Birr 7.00 for white wool. Prices paid to farmers are estimated to be quite low, less than half the prices charged by traders supplying the pile carpet making industry. Farmers give shortage of sheep types producing white wool as the main reason for the inadequate production and supply although the low prices paid to them must clearly be a disincentive. HASIDA considers the lack of farmer organization and support services as part of the problem.

Hand-made carpets are in great demand as export items from Ethiopia. If supply of the raw material could be better assured there is an indication that carpet making could be a robust activity with backward linkages to increasing the cash income of small off-the-road farmers in the remote parts of western Wollo, northern Shoa and estern Gondar.

Again, the Ethiopian situation was discussed for illustrative purposes. Although for Africa as a whole the role of wool in generating cash income may be limited, there are possibilities for increasing producer cash income from wool in areas where there is an already established and unsatisfied market for the product.


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