1. Trends of Formal and Informal
Livestock Marketing in Ethiopia
By Tadesse Kuma
Paper presented on the ESSP-II/ EDRI Workshop on the theme:
Taking Stock of the Economy of the Livestock Sector in Ethiopia
Jupiter International Hotel, Addis Ababa
November 4, 2011

2. outline
 Background
 Trends of formal and informal livestock
trade
 Routs of cross-border livestock trade
 Why informal trade?
 What need to be done?

3. Background
 Livestock continues to be a significant contributor to economic
and social development in Ethiopia at the household and
national level;
 On a national level, livestock contributes a significant amount to
export earnings in the formal market (250mln USD), and the
informal market (~300mln USD), 10-13% export earning;
 Livestock have multiple uses aside from income generation:
sources of food (meat and milk), services (transport and
traction), manure (for soil fertility management and fuel), and
serve as store of wealth;
 Livestock for pastoral community …

4. Trends of formal and informal LSM
(1)
(a). Formal livestock marketing
 For many years the export of livestock and livestock
products has been Ethiopia’s second most valuable
source of foreign exchange, after coffee;
 Hides and skins have been by far the most important
formal livestock product (account for about 70%),
 Live animal and meat export remained small until very
recent.

5. Trends of formal and informal LSM (2)
Fig. 1: Trends of Livestock Export (000' USD)
140,000
by major group
Live Animals
120,000
Animal Products
100,000
Leather & Leather Products
Value (000' USD)
80,000
60,000
40,000
20,000
- 20…
19…
19…
19…
20…
20…
20…
20…
20…
20…
20…
20…
20…
20…
2011
Source: Ethiopian Custom

6. Trends of formal & informal LSM (3)
2250000
Fig. 2: Trends of formal livestock export (000
2000000
USD)
1750000
Coffee
Value (000' USD)
1500000
Livestock
1250000
1000000 Total Export
750000
500000
250000
0
2003
1997
1998
1999
2000
2001
2002
2004
2005
2006
2007
2008
2009
2010
 Despite a radical growth in the total national export value in the recent years, the relative
growth in
the earning from livestock products remained virtually stagnant

7. Trends of formal & informal LSM (4)
(b) Informal livestock marketing
 there is significant informal cross-border trade in live
animals, which substantially increases livestock’s export
importance.;
 Although the statistics on volume of informal livestock trade is
shaky, it has considerable volume
Table 1. Estimates of informal livestock exports
Source of data Reference Cattle (head) Sheep
period (head)
FAO 1993 1987/88 150,000 300,000
World Bank 1987 1987 225,000 750,000
MEDaC 1988 1998 260,000 1,200,000
Belachew and Jemberu 2002 2001 325,000 1,150,000
GebreMariam, Amare, Baker & 2010 375,000
Solomon, 2010

8. Routs of cross-border trade
Little (1996), identified 4 routs
1. Eastern Ethiopian via
Somaliland (port of
Berbera),
2. Southeastern Ethiopia or
northeastern Kenya,
- The average daily castrated bulls
cross the Ethiopian border
estimated to be 250, 150, 400, 450,
200, and 450 (year 2004 _ 2009)
(Sintayehu, 2010).
3. Eastern Ethiopian or via
Somali
4. Ethiopia-Djibouti cross-
border trade;
5. Ethio-Sudan cross-border
livestock trade (Metema)

10. Why informal trade?
Key factors contributing to large volumes of
informal trade:
 Requirement for export licenses,
 Quarantine, banking clearance for remitting foreign
exchange,
 Minimum weight restrictions,
 Better prices across the border;
 High transportation and transaction costs;
 readily availability of consumer goods
 prohibition on Ethiopian livestock and meat export to ME;
 Financial and non-financial advantages to informality (,
tax evasion, black market foreign exchange rates).

11. Why informal trade? Cont…
Challenges
 There is only limited understanding of the nature,
magnitude, and value of the range of cross-border
livestock and livelihood activities in the border
regions of the country;
 Ethiopiais not generating adequate benefits from its
livestock sector;

12. What has to be done?
 The first and most important action is to
understand the sector through conducting an
in-depth analysis of the existing marketing chain;
 Designing an alternative marketing system
which would benefit all actors in the chain,
particularly the livestock producers;
 Indeed, farmers have no reason to trek their
animals for days, if they have efficient and
reliable livestock market with low transaction
costs at their nearest location;

13. What has to be done? Cont…
 Improving rural road networks, market
information system, and other related
infrastructures and services are indispensable;
 The establishment of linkages between
producers’ and traders’ cooperatives;
 Strengthening meat processing plants, and private
abattoirs
 The power imbalance at market sites between
producers and traders and brokers needs also
target efforts