The market chain analysis of live cattle in South Omo Zone, Southern Ethiopia

This study focus on market chain actors and their functions they play in the market, to analyze the S-C-P of live cattle in the study area. Few traders dominated the market structure of live cattle in the study area. Degree of competition between traders varies and the live cattle market structure varies from loose oligopoly to tight oligopoly. This shows that in the study area few traders dominated market shares and earns abnormal profit. Entry barriers of the market are high market distant, characterize the market of live cattle and high transportation cost. In addition, market the structure varies for each cattle type. market chain analysis of live in


Introduction
Ethiopia is a home for livestock population in Africa, but excluding some non-sedentary area of country such as agro-pastoral and pastoral areas of Afar and Somali regions, having approximately 56.87 million of chickens, 56.71 million of cattle, 29.33 million of sheep, 29.11 million of goats, 7.43 million donkeys, 2.03 million of horses, 1.16 million of camels and 0.40 million of mules populations (CSA, 2015).
In Ethiopia, the livestock production sector has been contributed about 19% to the total Gross Domestic product (GDP) of the country and earnings 16-19% of foreign exchange to the country, in which the agricultural share of the GDP ranging 35-49% (IGAD, 2013). Moreover, the livestock production sector serve as source of food, transportation, production of manure, raw materials, investment, generating cash income and mainly serve as social and cultural identity for the society. Despite of these roles played by livestock, the production and productivity of livestock is in general is very low (Duguma et al., 2012).
The supply of livestock originates pastoralists and agro-pastoralists in small numbers because they are highly dispersed and supply nonhomogenous products to the local markets. Due to the low production and productivity of livestock and the absence of market-oriented livestock production systems in the areas, the volume supplied to the market is very low. In addition, the live animals supplied by different producers such as pastoralist, agro-pastoralists and farmers to the market do not meet the quality standards and attributes required by diverse market actors. This is due to poor interlink age of livestock producers and other actors in the production as well as marketing chainto the critical support services. Among the problems that are related to the support services includes: absence of commercial animal health services, lack of appropriate transportation system, lack of sufficient air-cargo capacity, lack of proper feeding system, and lack of improved and highly organized fattening systems (Adina and Elizabeth, 2006). However, in Ethiopia there are various alternative options initiated by different governmental and non-governmental organizations. These initiatives undertaken by governmental and non-governmental organizations are often regional and encompassing more than one country in east Africa and attempt to find sound solutions to overcome production-marketing barriers. East African countries like Ethiopia and others could effectively use their rich livestock resources to improve the livelihood of their populations living in poverty (MOI, 2005).
Int. J. Agril. Res. Innov. Tech. 12(1): 56-66, June 2022 The marketing system and its information provided in the pastoral and agro-pastoral areas is out dated, unreliable and it cannot provide the real figure of the economic contribution sector for the national economy of the country and the community who engaged in the sector. More over the main problem for live cattle marketing sector is formulation of appropriate policies and procedures to increasing production and marketing efficiency in the sector. To conduct research on market chain analysis of live cattle for the pastoralist and agro-pastoralist community believed to enhance its production and productivity by locating economical live cattle marketing routes. Evidence also shows that limited numbers of investigations have been made on local and regional cattle markets in pastoralist and agro-pastoral areas and the market chain is mainly dominated by brokers at primary, secondary and terminal markets level (Ayele et al., 2003). Most studies of live cattle market chain tend to focus on the market chain of the live cattle at aggregate level than dealing the market chain of live cattle at an individual cattle type. Some studies have tried to link this gap by disaggregating the live cattle into various types and have tried to see the market chain opportunities and problems for each type of live cattle separately. Therefore, this study mainly focus on market chain analysis of live cattle and provide relevant information with respect to the market chain of various live cattle types based on the following general and specific objectives.

General Objective
To assess the market chain analysis of live cattle in south omo zone of Southern Ethiopia.

Specific Objectives
 To overview structure, conduct and performance of cattle trade.  To sort out the major market chain actors and their function in the market.  To identify the major market channels of live cattle trade in the study area.  (Bizuayehu et al., 2016).

Source and method of data collection
This study was conducted in two districts of AGP II supporting such as South Ari and Bena-tsemay of South Omo Zone. The study both secondary and primary type of data sources. The major data collection methods used during the study periods includes individual household interview, FGD and KII. Before starting household survey preliminary assessment was held to collect basic information about the study districts in order to select representative kebeles and the major live cattle marketing centers. First, the market chain actors of live cattle operating at district level were identified in consultation with each district Trade, Industry Office, undertaking pre survey field visit, and assessments. The household level survey questionnaire was prepared and pretested for each chain actors operating in each district starting from production up to exporting.

Sampling methods and sample size
Multistage sampling techniques were employed, at the first stage and the study districts were selected purposively based on AGP-2 mandated districts of South Omo Zone. At the second stage, the study kebeles from each district were selected purposively in relation to their number of live  (Yount, 2006). Finally, each respondent household was selected by a simple random sampling method. During the study time a total of 120 sample producer households and 27 traders were covered. In this study, the number of traders was based on their availability.

Data analysis
This study uses simple descriptive statistics such as mean and percentage and Std. deviation to analyze data. Data was analyzed using Statistical Software (SPSS Verstion.16). KII interviews and observations were also used to support the primary data gathered during the survey. In the table above data were collected based on the demographic characteristics of sample households' to provide information about the key variables included in this study. The main variables examined in this section were the household heads' sex, education level and marital status. The results shows about 96.7% of sample households were male-headed households, the remaining 3.3% were female-headed households in the study area. In terms of their marital status, 98.3% of sample households were get married and only 1.7% of households were single. The education level of the sample respondents was believed to be one of the important features that determine the readiness of respondents to accept new ideas and technologies. Farmers that are more educated were expected to adopt new technologies immediately than less educated in order to improve cattle production. The education categories implies that 35.0% of the sample households were illiterate, 24.2% first cycle, 29.2% primary school, while 6.7% of the respondents were attained secondary education and the remaining 5.0% were diploma and above diploma, respectively.  -20, 4.2% between 21-30, 5% between 31-40, 0.8% were those between 41-50, while 0.8% were between 51-60 and the rest 2.5% were between 61 and above.

Production of live cattle
The study was conducted in Agro-pastoral and Agrarian areas of South Omo Zone, in which the more of the time the livelihood of Agropastoralists depends on livestock production whereas; the livelihood of Agrarians more of the time depends on crop production. The type of live cattle the respondents owned during the study time in 2010-11 E.C. were indicated in the table below.

Marketing
Marketing is selling, merchandising or the exchange of live cattle for an agreed sum of money between the seller and buyer of the live cattle supplied to the market. The type and amount of live cattle sold and bought in the year 2010-11 was indicated in the table below.

Market structure of live cattle
Market structure of cattle in Bena-tsemay and South Ari districts of South Omo Zone is characterized by different producers and marketing actors including pastoralists and agropastoralists, brokers, local collectors, medium scale traders large scale traders, butchers, exporters, local hotels and restaurants, so each market actor has its own function. Pastoralists and agro-pastoralists are the first marketing actors in the chain of live cattle. The major duties and responsibilities of live cattle producers include supplying cattle and telling initial selling price cattle. Brokers are actors in the market chain of live cattle and they play a role in facilitating of market, price-setting mechanisms, contacting traders with producers and mainly them acting as the delegates of traders. Trader's role is purchasing and providing currency, price setting, giving final market price and controlling the marketing process.
In the zone, formal and informal marketing channels of live cattle were identified in the study districts. If actors in the marketing chain pay taxation fee for legal tax collecting organizations in the market chain, the live cattle traveled to other bordering zones, central markets of Ethiopia and to outside countries are referred as formal live cattle market channels. While live cattle traders those who trek live cattle from the study area to other zones and to Kenya through Dasenech district and do not pay tax to government and transport through unknown route is defined as informal live cattle market channels. Both of the marketing channels are dominant in relation to the actors willing and the reasons why he/ she supply the cattle. Informal market channels are common in the study area.

Channel 1: Pastoralists/ Agro pastoralistsother Pastoralists/ Agro pastoralists:
In this live cattle market channel producers sell the live cattle to producers and it is usually known for restocking purpose and undertaken around farm gate. The marketing system undertaken through this channel is informal type marketing system. The main aim of this practice is for the replacement of the aged ones. In this channel, about 16.2% producers marketed their cattle through this channel. This channel mainly comprised of calves, heifer and bulls and the marketing system in this channel was undertake based on friendship, kinship and neighborhood pattern.

Collectors-Small/Big traders-Exporters:
This type of channel is formal way of marketing channel. First producers sell to collectors, then collectors to small/big traders finally traders sell to exporters, who export live cattle to central markets of Ethiopia such as Addis Ababa and Mojo. In this channel, about 19.8% of producers marketed their cattle through this channel, which comprised of calves, heifer and bulls.

Channel 3: Pastoralists/ Agro pastoralists-
Festivals: This type of marketing channel is one of the oldest and informal ways of marketing channel. The category of live cattle marketed through this channel comprised of fattened cows and ox, slaughter and culled for aged oxen and barren cows. In this channel, about 7.4% of interviewed pastoralists/agro-pastoralists marketed their cattle. The purpose of live cattle buyers in this channel is for festival consumption.

Channel 4: Pastoralists/ Agro pastoralists-Restaurants/ Hotels-Consumers:
In this channel value addition were undertaken this is due to the existence of smuggling activity and the settlement of peoples from other areas for this activity. The type of cattle marketed in this channel is similar to that of channel three, that means fattened cows and ox, slaughter and culled for aged oxen and barren cows. Among the interviewed respondent's about 10% of the sample households sell their live cattle through this channel.

Abettors-festival consumers:
This marketing channel is categorized under one of the informal channel. Here live cattle producers sell their products to abettors, and then the abettors resell to festival consumers. The main purpose of live cattle buyers in this channel is for festival consumption. In this channel, about 5.6% of sample respondents sell their live cattle.

Channel 6: Pastoralists/ Agro pastoralists-
Small/ Big traders-exporters: These cattle marketing channel was practiced formally by the actors. Here, pastoralists sell their live cattle to small/big traders, then small/big traders' resale the live cattle they bought to formal exporters that come from the central markets of Ethiopia. Through this channel, about 13% sample households sell their live cattle. A type cattle marketed in this channel was ox, bulls and also sometimes cows and heifers.

Abettors-Restaurants/ hotels-consumers:
This cattle market channel is mainly practiced by pastoralists. Here, pastoralists/ agro pastoralists sell to abettors, then abettors process it and sell meat to restaurants/hotels, finally restaurants/ hotels sell raw meat to consumers or process it, the consumers consume in the form of "Dulate, Tibse and Misto." Through this channel, about 10% pastoral/agro pastoralists sell their live cattle.

Abettors-Cooperatives-Consumers:
This is one of the market channels, where producers sell their live cattle to abettors then abettors slaughter it, sell meat to those cooperatives, finally cooperative process, and sell in the form of food to consumers. Through this marketing channel, about 8% of the households sell their live cattle.

Restaurants/Hotels-Consumers:
This one-way marketing channel practiced in the study area.
Here, pastoralists/ agro pastoralists sell to traders, traders to abettors, then abettors slaughter it and sell meat to restaurants/hotels, finally restaurants/ hotels sell raw meat to consumers or process it, the consumers consume in the form of "Dulate, Tibse and Misto." Through this marketing channel, about 12% pastoral/agro pastoral households sell their live cattle.

Small/Big trades-Abettors-Ceremonials.
In this marketing channel, pastoralists/agro pastoralists sell cattle to trades, traders sell to the abattoirs and abattoirs then to ceremonials. Through this channel, about 10% sample households sell their live cattle.

Degree of live cattle market concentration
The live cattle market concentration ratio in the study area is presented and discussed below. As indicated in table 6 below the live cattle market concentration ratio was calculated by using two usual known techniques. The two main known techniques employed for estimating live cattle market share were Concentration ratio and Herfindahl Index. The concentration ratio calculated by summing up the share of the top four traders as well as HI index is the sum up of the squares of the market share of live cattle traders.
Where, C indicates the concentration ratio, Si indicates the percent share of the top four traders. Whereas HHI is expressed as HHI = (S1) 2 + (S2) 2 + (S3) 2 +... + (Sn) 2 (where as Sn indicate the market share of the i th firm involved in the live cattle marketing). The value of HI index can also be calculated by the formula indicated as HI=sum of 1 n (percent share) 2 when the product of HHI index is less than 1,000 the market is regarded as competitive. When HHI ranges below 1000 it indicates that the market have low concentration, and when it ranges between 1000-1800, this implies a moderate concentration, when it ranges above 1800 it implies the marketing system is highly concentrated, while the value that is equal to 10000 indicates a monopoly marketing system (Iveta, 2012). The market structure was shown according to the type of cattle marketed between the market agents in the market as shown in table 4 above. The market structure for oxen and bulls in the study area is tight oligopoly and it is a loose oligopoly for cows, calves and heifers trade in the area, because heifers, cows and calves more of the time marketed among the pastoralists for restocking and sometimes by traders in the study area also pastoralists prefer to sell Ox's or bulls than cows, heifers and calves. The market structure for oxen and bulls in the marketing of cattle is tight oligopoly, because pastoralist is preferred to supply bull and oxen to get cash to fulfill their needs, which are usually more demanded by traders and exporters. This implies that tight oligopoly means there is a low competition between traders and the entire market remains a "few traders game" the profit earned do not shared at equal ratio among the Int. J. Agril. Res. Innov. Tech. 12(1): 56-66, June 2022 marketing actors. So, the concerned bodies 'intervention should be needed to overcome such kind of imbalance trade benefits and enhance productivity through the formation of strong market inter and intra linkage, focus on value adding activities, provision of timely market information and producers 'cooperative formation at local level.

Entry and exit conditions in the live cattle marketing
Low quality supply of live cattle to the market illegal and informal trading and lack of access to credit are the main entrance and exit obstacles of the live cattle trading. The amount of live cattle supplied to markets during religious holidays, festivals and wedding occasions are higher when compared to other occasion. Therefore, illegal trading system, lack of access to markets, low access to infrastructures and transportation systems, high transaction cost and high demand for capital are among the major barriers to entry and exit from live cattle trading.

The market conduct of live cattle
Market conduct or behavior refers to the way of acting or controlling the marketing systems in order to gain benefits from the market. Furthermore, market conduct includes mechanisms such as price setting systems and the terms of payment in the marketing system.

The market price setting mechanisms of live cattle
Market price setting mechanisms of live cattle in the study areas is complicated and carries out by various marketing actors. In this study about 53.4% of pastoralists/ agro-pastoralists said that the price of live cattle is set by producers then brokers and traders bargain based on the price set by the producer finally they sell to the price they have reached an agreement. The proportion of producers who recognized the price set by buyers in the market is based on central market information, brokers based on the central market information, traders by their own and sellers by their own respectively is 2.5, 10.0, 8.3 and 25.8%. This implies that, the market actors have their own level of influence in the role they played for market price setting in various levels. It was observed that producers set primarily the market prices then selling takes place upon negotiation.

Terms of payment for live cattle producers
Based on this study, the terms of payment for producers in the study area shows that the live cattle marketing system of pastoral/agro pastoral households have been undertaken in the form of direct cash payment or hand-by-hand currency. This is due to the lack of access for institutions such as commercial bank of Ethiopia serving the pastoralists or agro-pastoralists in the area. This study shows that 100% of the producers sell their cattle in the form of direct cash payment. This implies that all of the producers in the market sell their cattle in the form of direct cash payment.

The market performance of live cattle
The market performance of live cattle is mainly the impact of live cattle market structure and conduct, which was measured in terms of the variables such as market prices, marketing costs, and the volume of output. The market margin of the live cattle is the market price difference between the revenue from the final sales of live cattle and the costs that were incurred during the running of the marketing system operation. The net market margin of live cattle was calculated as the percentage over the final market price earned by the marketing actors as his/her final net income, once his/her all marketing costs are deducted. It is one of the best tools to analyze performance of live cattle marketing. Marketing margin was calculated by using the market price difference between the live cattle producers and exporters or traders prices. The producers' share can be calculated as the ratio of live cattle producers' price share to traders' price share. It is mathematically represented as: Whereas Ps is the producers 'price share, Pt is the traders' price share, and MM is the marketing margin of actors. It is also possible to calculate the live cattle gross marketing margin as follows, which is equal to the traders Price -pastoralists price/traders price*100 (Zekarias, 2017). The Gross Market Margin along the different marketing channels is different according to the participants. Ox traders in the study area get the highest gross market margin at channels such as channel 2, channel 4, channel 5, channel 7 and channel 8. They get the lowest gross market margin at channel 6, channel 9 and channel 10.

GMM = − 100
The marketing cost of live cattle traders is higher at channel 2 and channel 6 because of the involvement of intermeddlers and transportation costs. The producers share is higher at channel 6, channel 9 and channel 10 because producers directly connected with big/small traders as indicated in table 5 above. Table 8. Market Margin of Bulls across the marketing channels.

Market actors and costs
The results in the table above show that, The Gross Market Margin of different participants along different marketing channels is different. Bull traders get the highest gross marketing margin at channels such as channel 2, channel 4, channel 5, channel 6, channel 7 and channel 8. They get the lowest gross market margin at channel 9 and channel 10. The live cattle marketing cost of traders is higher at channel 2 and channel 6 because of the involvement of intermeddlers and transportation costs, which is the same as that of Ox's. The producers share is higher at channel 6, channel 9 and channel 10 because producers directly connected with big/small traders as indicated in table 6 above, which is the same as that of Ox's marketing channel.
In the study area, Cows, Heifers and Calves were traded as for a restocking purposes. Pastoralists and Agro-pastoralists in the study area supply their Cows, Heifers and Calves to market then sell them to other Pastoralists or Agro-pastoralist for the restocking, their culture also not allow to sell this cattle types. Same times aged Cows are sold for neighbors to celebrate festivals in the study area.

Conclusion
South Omo Zone was endowed with huge livestock resources in SNNPRS, especially the pastoral and agro pastoral districts of the Zone. These areas were majorly a source of live cattle for exporting to the central markets of Ethiopia and also the market needs continuous supply of quality cattle. However, pastoralists and agropastoralists in the study area cannot continuously supply live cattle of required quality due to consecutive drought and traditional means production practices due to this reasons the cattle they supply do not fetch attractive prices.
Mostly in the zone pastoralists and agropastoralists loses their animals, either by selling to purchase food for their households and lack of feed for their left animals during occurrence of droughts or due to the pastoralists, agropastoralists; poor management systems such as feeding system, watering system, housing system and health caring systems etc. in the study area.
In the restocking activities, the pastoralists/agopastoralists buy the local breeds from markets or neighboring areas and keep them for a reproduction. These problems causes' low production and productivity of live cattle in the zone. So strong intervention of governmental and non-governmental organizations were needed to improve the production, productivity and marketing practices of the pastoralists and agropastoralists, as well as the development of appropriate breeding strategies were also needed.

Recommendations
It recommended that, Pastoralists and agropastoralists can shorten the marketing chain by cutting out the intermediaries and increasing the number of value adding activities they undertake for themselves such as rearing, cattle fattening, access to transportation and trading. They also strengthen inter and intra-group formation and linkages by organizing into cooperatives rather than acting as an individual in the market, they could have greater control and bargaining power over the supply of live cattle to the markets. Introduction of improved technologies, interventions, timely delivery of veterinary service and cattle improvement through breeding and an introduction of appropriate strategies to the study area through agricultural research centers, NGOs and concerning bodies of zonal and district livestock and fisher resource offices, breeding of the local cattle with the improved once will also improve the future production and productivity of existing local livestock.