Performance Efficiency Analysis of Livestock Marketing in Afar region, Ethiopia

Abstract

This research examines the performance of livestock marketing in Afar region. Afar region is the least developed region characterized by recurrent drought, inadequate basic livestock market infrastructure and accessibility. The pastoralists are not benefited from the large livestock population they hold. The research is indebted to evaluate the livestock marketing system in identifying and measuring the livestock market structure, conduct and performance efficiency in order to support the livestock development intervention and policy decision. Primary and secondary data were used to the analysis. Data from primary source were collected by means of both traders’ survey and market survey. Traders’ survey was conducted in seven (Abaala, Ayssita, Chifra, Gewane, Sabure, Werer, and Yallo) markets of the region using structured interview schedule. The quantitative market data was also collected through intensive price monitoring at the four largest markets of the region (Ayssita, Chifra, Sabure, and Yallo) in the major trading days for two months. Market data collected by LINKS and ACDI/VOCA for the Year 2007 are the secondary sources. Sample markets were evaluated using market concentration ratio on the subject of the market structure; and the level of performance efficiency at all links of market chains are also analyzed with statistical analysis of multivariate correlation and marketing margin. Multiple regression technique was used in determining livestock price in relation to livestock breed, sex, age group, grade, number of buyers, number of sellers, number of intermediaries, and market places. The study result shows that the majority of the markets in the region are primary markets except Ayssita, Chifra, and Yallo. Both primary and secondary markets of the region have market chains with the border markets of Djibouti and terminal markets of the neighboring regions. Marketing facilities in the region is very poor characterized by inadequate basic market infrastructures and information system. Lack of demand, price instability, lack of working capital, and drought are the main problems of livestock trading in the region. The sample markets have an oligopsony market structure with higher wholesale buyers’ concentration; and they are also inefficient with higher marketing margins except Yallo market. Livestock price is significantly influenced by breeds, gender, age group, and grades of animals and the multivariate correlation result shows that markets are not integrated at all levels of livestock price movements. Livestock development projects are indispensable to solve the main marketing problems. Improving basic marketing facilities would improve the marketing system; and expansion of large and medium scale livestock product processing units also would create more livestock demand for pastoralists. For the most part, pastoralists association in the form of livestock marketing cooperatives would improve the pastoralists bargaining power and market efficiency by large.