Small Ruminant Research 96 (2011) 101–105

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Small Ruminant Research

journal homepage: www.elsevier.com/locate/smallrumres

Short communication

Marketing value-chain of smallholder sheep and goats in

crop-livestock mixed farming system of Alaba, Southern Ethiopia
Tsedeke Kocho a,∗ , Girma Abebe b , Azage Tegegne c , Berhanu Gebremedhin c
a
Areka Agricultural Research Center, P.O. Box 79, Areka, Ethiopia
b
University of Hawassa, P.O. Box 05, Awassa, Ethiopia
c
International Livestock Research Institute (ILRI), P.O. Box 5689, Addis Ababa, Ethiopia

a r t i c l e i n f o a b s t r a c t

Article history: This study was conducted in Alaba district of Southern Ethiopia to describe smallholder
Received 24 August 2010 sheep and goats marketing systems, identify marketing constraints and suggest improve-
Received in revised form 11 January 2011
ment options to enhance incomes of smallholder producers. Informal and formal study tools
Accepted 17 January 2011
of focused group discussion, key informant interview, household survey and rapid market
Available online 16 February 2011
appraisal were employed to gather information from development partners, smallholder
farmers, traders, transporters and consumers. Smallholder farmers sale sheep and goats
Key words:
to fulfill immediate household cash needs, particularly to acquire food items. Smallholder
Sheep
Goats producers, small and large traders, brokers, transporters and consumers are the major mar-
Smallholder farmers ket participant across the market channels. Mode of marketing is mainly on ‘eye-ball’ basis
Marketing system with one-on-one price negotiation. Farmers market animals of different age, sex and weight
Value chain either at farm gate or local markets, while a range of traders are involved at various stages of
Constraints markets until the animals reach final consumers. Supply, demand and price of animals have
Market innovation clear seasonal variations. Abuse by brokers, lack of price information, access to incentive
Alaba markets, poor market infrastructure and seasonality of markets are the major challenges
Southern Ethiopia
in improving benefit and livelihood of smallholder sheep and goat producers. Commercial-
ization of smallholder systems, standardizing marketing with marketing information and
infrastructures, integrated intervention of the market channels along the value chains and
market actors, formation of marketing groups and co-operatives could improve marketing
efficacy and profitability of smallholder sheep and goat system.
© 2011 Elsevier B.V. All rights reserved.

1. Introduction contributes to both subsistence and cash generation (Ehui

Ethiopia has 24,017,000 sheep and 21,884,000 goats
(CSA, 2009) which is one of the largest and most diverse in
Africa (CSA, 2009). They are owned by smallholder farmers
and are widely distributed across different agro-ecological
zones. The production system is virtually traditional and
∗ Corresponding author. Current address: Animal Breeding and
Genomics Centre, Wageningen University, P.O. Box 338, 6700 AH
Wageningen, The Netherlands. Tel.: +31 7 482335; fax: +31 7 483929.
E-mail address: tsedekek@yahoo.com (T. Kocho).
et al., 2000; Ayalew et al., 2003). Sheep and goats are con-
sidered as investment and insurance and provide income
to meet seasonal purchases of food, improved seed, fertil-
izer and medicine and during crop failure and drastic drops
in crop prices (Legesse et al., 2008).
Although Ethiopia has a large sheep and goat population
that significantly contribute to the livelihoods of small-
holder farmers (IPMS, 2005), there is lack of information
on sheep and goat and skin marketing, market constraints
and opportunities for improvement. In order to shift sheep
and goat production from subsistence to a more commer-
cial outlook, it is important to understand aspects of market

0921-4488/$ – see front matter © 2011 Elsevier B.V. All rights reserved.
doi:10.1016/j.smallrumres.2011.01.008
102 T. Kocho et al. / Small Ruminant Research 96 (2011) 101–105
and marketing (Legesse et al., 2008). Farmers need to be
aware of the preferred characteristics of animals as well as
price patterns so that they can plan breeding and fattening
programs consistent with the market demand and con-
sumers’ preferences (Andargachew and Ray, 1993). Thus,
this study is aimed at describing the smallholder sheep
and goats and skin marketing systems, identifies marketing
constraints in the context of holistic value chain approach
and to pinpoint improvement options to enhance benefits
to smallholder producers.
2. Materials and methods
The study was conducted in Alaba district of Southern Nations, Nation-
alities and People’s Regional (SNNPR) State of Ethiopia located in 7◦ 17 N
latitude and 38◦ 06 E longitude. Altitudes range from 1554 to 2149 meter
above sea level, with dry to moist agro-ecology. Annual rainfall varies from
857 to 1085 mm occurring in a bimodal pattern. Crop-livestock mixed
farming is the dominant production system with the ruminant livestock
population composed of 161,566 cattle, 43,141 goats and 34,760 sheep
(IPMS, 2005).
Informal and formal survey tools, focus group discussions and key
informants interview with producers and traders were held using check-
lists on production, marketing and consumption of sheep and goats.
Expert consultation, field visits and secondary data were used for sam-
pling the study sites and households. The district was stratified into three
sites of sheep dominating (comprising proportional households of 30),
goat dominating (60 households) and sheep-goat mixed (60 households)
based on total land holding and distribution of sheep and goat flocks. Then,
a total of 150 households owning flocks of at least one breeding female
were randomly selected for household survey. A structured questionnaire
was framed, pre-tested, translated into local language and administered
by trained Development Agents. Rapid market appraisal (Holtzman, 2004)
was employed to study the holistic marketing system. Randomly selected
traders (total of 14), agents of abattoirs (7), abattoirs (3), transporters (5)
and consumers (19) in different markets and marketing days were inter-
viewed. Twenty-five sheep and goat market channels to and from Alaba
were mapped using Geographical Information System (GIS) after readings
by Geographical Positioning System (GPS) (GARMIN® GPS72 2002–2003)
and assessed. Marketing services and infrastructure were documented.
Alaba Kulito and Adilo markets were studied to document the types
of animals, volume of supply, demand patterns, prices, major market
participants and routes of animals. Preferences and purchasing prices
of consumers in Addis Ababa were assessed. Butcher, catering service
providers in Alaba Kulito town were interviewed regarding consumption
patterns, preferences and uses of sheep and goat meat, as well as prefer-
ences of customers to mutton and goat meals. Collection, processing and
marketing of skins by legally registered business centers at Alaba Kulito
were also assessed.
The household survey data was analyzed using descriptive statistics
of SPSS (2009). A Pearson’s chi-square test (X2 ) was used to assess the
statistical significance of household responses across the study sites. Data
were fitted to a simple linear model, considering study sites as a factor.
Yij =  + i + εij
where Yij = response of marketing variables;  = population mean;
 i = 1–3 study sites; εij = residual.
The questionnaire was an open-ended and households provide sin-
gle or multiple responses for a given question and thus the column sums
often exceed 150 (Tables 1–3). Results presented in column of sheep–goat
mixed sites are total count of respondents with its corresponding per-
cent in bracket, obtained by dividing total respondents in a cell by total
households of the site [nij /30 * 100]. Column in goat dominant site is total
respondents with its percent [nij /60 * 100]. Similarly, sheep dominant site
presented with total respondents and its percent in bracket [nij /60 * 100].
The overall responses of the district are presented with sum of respon-
dents in a row with its percent in bracket [nij /150 * 100].
3. Results
The main reasons household sale sheep and goat are to
generate cash for purchasing food and farm inputs, school
and medical expenses, pay credit, purchase livestock and
build assets (Table 1). The district is prone to drought
and thus sales peak during crop failures and food short-
age. Farmers market sheep and goats of different age, sex,
weight and condition. Overall, 32% goat and 28% sheep
owners prefer to dispose intact male animals, while 22%
sheep and 27% goat owners prefer to sale castrated males
that fetch higher prices. Rural assemblers, often farmers,
buy animals at farm gates and local markets. All the sheep
and goat markets lack animal holding and measurement
facilities and marketing made without price information.
Individual consumers and catering service providers pur-
chase animals from Alaba Kulito market, larger livestock
market in the district and other small local markets. Agents
of export abattoirs purchase young male sheep and goats
weighing 13–30 kg from Alaba and other surrounding mar-
kets. Specialized and large traders from terminal markets,
especially Addis Ababa purchase animals from Alaba Kulito,
Adilo and other local markets during major holidays and
festivals.
The majority of producers (96.7%) market animals on
‘eye-ball’ basis, in which transactions are made on individ-
ual basis and agreements reached after a long one-to-one
bargaining between buyers and sellers. Local and terminal
traders are better informed about demand and prices and
fix prices, thus producers are often price takers. The rea-
son for ‘eye-ball’ marketing is due to lack of measurement
infrastructures. Only agents of export abattoirs buy ani-
mals on live weight basis. Sheep and goats are marketed at
farm gates or nearest local markets regardless of ethnic and
administrative boundaries. There are two major market
routes (Fig. 1) through which animals exit from Alaba dis-
trict. The first route is agents of export abattoirs purchase
and assemble young male animals from local markets. The
second and most important route is traders collect animals
from Alaba and Adilo and supply to secondary and termi-
nal domestic markets in large cities including Addis Ababa.
Adilo is the famous market visited by terminal traders in
the SNNPR. Besides the live animals, skins are important
marketable by-product in Alaba. Although skins are used
for various household purposes, about 60% of total pro-
duced skins are marketed. However, one-third of the total
household sale skins to illegal traders.
There is a remarkable seasonal variation of supply,
demand and price of animals. Sales peak during holi-
days, crop planting and harvesting and drought periods.
Although the supply of animals increases during major hol-
idays, prices remain high due to sky rocketing demand
within and outside the district. Demand and price for
breeding and fattening animals increase right after crop
harvest. Sales become higher during crop failure and
drought, and as a result prices become very low. Id Al Fetir,
Id Al Adha, New Year, Easter and Christmas in that order are
peak seasonal markets in the district (Table 2). Animals are
collected, assembled and transported to terminal markets
as the festival days approach. In Addis Ababa, sheep from
Adilo, Alaba, Kambata Tambaro, Dawuro, Wolaita, Gamo
 T. Kocho et al. / Small Ruminant Research 96 (2011) 101–105 103

Table 1
Purposes of selling sheep and goats.

Purposes Mixed flock site (n = 30) Goat dom. site (n = 60) Sheep dom. site (n = 60) Overall (N = 150) Test

(Percent) (Percent) (Percent) (Percent) 2 P-value

Purchase farm inputs 7 (23.3) 10 (16.7) 19 (31.7) 36 (24.0) 6.265 0.180

School expenses 7 (23.3) 6 (10.0) 13 (21.7) 26 (17.3) 2.463 0.651
Medical expenses 8 (26.7) 4 (6.7) 13 (21.7) 25 (16.7) 3.556 0.469
Escape loss risks 2 (6.7) 0 1 (1.7) 3 (2.0) 0.750 0.521
Purchase food items 19 (63.3) 22 (36.7) 30 (50.0) 71 (47.3) 4.139 0.388
Pay back credits 7 (23.3) 7 (11.7) 13 (21.7) 27 (18.0) 7.902 0.095
Purchase livestock, 10 (33.3) 2 (3.3) 8 (13.3) 20 (13.3) 0.686 0.953
cloth, assets, etc.

Table 2
Seasonal holiday and festival markets targeted by respondents in Alaba district.

Targeted holiday markets Mixed flock site (n = 30) Goat dom. site (n = 60) Sheep dom. site (n = 60) Overall (N = 150) Test

(Percent) (Percent) (Percent) (Percent) 2 P-value

New year 18 (60.0) 21 (35.0) 37 (61.7) 76 (50.7) 9.842 0.007

Easter 22 (73.3) 11 (18.3) 32 (53.3) 65 (43.3) 28.710 0.000
Christmas 9 (30.0) 17 (28.3) 21 (35.0) 47 (31.3) 0.651 0.722
Meskel 0 5 (8.3) 0 5 (3.3) 7.759 0.021
Id Al Adha 20 (66.7) 39 (65.0) 35 (58.3) 94 (62.7) 0.826 0.662
Id Al Fetir 26 (86.7) 39 (65.0) 45 (75.0) 110 (73.3) 4.943 0.084

Table 3
Constraints to sheep and goats and skin marketing.

Constraints Mixed flock site (n = 30) Goat dom. site (n = 60) Sheep dom. site (n = 60) Overall (N = 150) Test

(Percent) (Percent) (Percent) (Percent) 2 P-value

Sheep and goats

Excessive tax 12 (40.0) 5 (8.3) 24 (40.0) 41 (27.3) 18.175 0.000
Brokers/dealers 21 (70.0) 21 (35.0) 36 (60.0) 78 (52.0) 12.38 0.002
Seasonality of markets 8 (26.7) 7 (11.7) 15 (25.0) 30 (20.0) 4.375 0.112
Lack of market access 9 (30.0) 19 (31.7) 15 (25.0) 43 (28.7) 0.685 0.710
Lack of price information 19 (63.3) 20 (33.3) 22 (36.7) 61 (40.7) 8.123 0.017
Skins
Lack of price information 20 (66.7) 50 (83.3) 47 (78.3) 113 (75.3) 1.281 0.527
Lack of technical support 27 (90.0) 52 (86.7) 54 (90.0) 133 (88.7) 0.398 0.820
Poor skin quality 3 (10.0) 7 (11.7) 6 (10.0) 16 (10.7) 0.105 0.949

Gofa and Hadiya areas of the SNNP region are collectively
called ‘Wolaita sheep’. They are highly preferred and fetch
highest prices due to their pleasant flavor and tender meat,
high carcass and edible non-carcass component yields and
high aesthetic value of sheep with white, brown or mixed
coat color, big size, short and shiny hairs and good body
condition.
Smallholder farmers confront various marketing con-
straints (Table 3). ‘Eye-ball’ marketing usually involves
brokers and they interfere transactions. About 52% of total

Agents for
Export Export
Abattoirs Abattoirs

Terminal Terminal
Producers Rural Alaba Kulito
Market Domestic
Assemblers Market
Traders Market

Consumers
in Alaba

Fig. 1. Market channels of sheep and goats in Alaba district, Ethiopia.

104 T. Kocho et al. / Small Ruminant Research 96 (2011) 101–105
respondents complained the higher commission requested
by brokers and also misinform and repel of potential buy-
ers. Due to lack of standardized marketing systems with
transparent price information, 40.7% of the total respon-
dents reported they are recipient of trader prices. About
28.7% of total respondents also indicated that lack of
access to incentive domestic and export markets hinder
them from obtaining incentive benefits. Incentive markets
appear only during major festivals. Regarding skin market-
ing, about 11% of the respondents supplied poor grade skins
and received low prices. Respondents reported that skins
from their animals are of poor quality due to ectoparasite
infestation and poor nutrition. Farmers usually supply poor
quality skins to traders and processors who remove meat
leftovers, apply salt, wash, dry, pack, grade and supply to
central markets. Local processing units operate with poor
facilities and less experienced workers. Central markets are
few in number and pay lower prices. The extension system
provides little or no technical support to farmers regarding
production, preservation and marketing skin.
4. Discussion
In Ethiopia, livestock are marketed in four-tier structure
in which animal are channeled from smallholder farmers
to consumers with multiple transactions and actors at sev-
eral levels (Ehui et al., 2000; Solomon et al., 2003). Rural
assemblers, large traders and butchers transact animals
at local and secondary markets. Big traders and butcher
purchase animals in terminal markets. Consumers either
purchase of the animals from terminal markets or butch-
ers. The markets often do not have proper infrastructures,
and yet buyers and sellers are subjected to service charges
by local authorities (Solomon et al., 2003). Animals are
generally traded by ‘eye-ball’ pricing on a per-head basis
and agreements are reached after bargaining involving bro-
kers. Markets operating under such conditions offer little
benefits to producers and also increase the costs on the
final consumer (Andargachew and Ray, 1993). Supply and
demand of small ruminants reach peak during religious
holidays and festivals (Andargachew and Ray, 1993). Fac-
tors affecting market supply include high demand during
festivals, lambing season, quality and quantity of grazing,
as well as cash needs for crop inputs and, later, for food
purchase before harvesting (Ehui et al., 2000; Solomon
et al., 2003). Excess supply effectively suppresses producer
prices since the more mobile traders are better informed
on market prices, and are in a better position during price
negotiation (Solomon et al., 2003). Poor marketing infras-
tructure, lack of marketing information, high transaction
costs, lack of access to formal credit sources, poor roads
and exorbitant transport fees, lack of standardization and
grading and low purchasing power of buyers are major
constraints affecting the efficiency of livestock market-
ing (Ajala and Adesehinwa, 2007). Sheep and goat skins
are channeled to central markets and tanneries through
extensive network of traders and sub-agents. As a result,
it takes a long time along the channels and this deterio-
rates the quality and value of skins (Mahmud, 2000) and
as the result there is a total loss of 5–10% sheepskins and
30–40% goatskin in the country (Kebede, 1998).
Population growth, urbanization and income growth
increase meat and milk consumption and create a verita-
ble Livestock Revolution (Delgado et al., 1999); expanding
market opportunities for smallholder livestock producers
(Peacock and Sherman, 2010). However, productivity of
smallholder livestock has to be improved, which is pos-
sible only if the system is partly commercialized through
market outlets and pricing policy offering farmers and pas-
toralists more incentives (Beets, 1990; Musemwa et al.,
2007). To achieve improved marketing efficiency, attention
must be given to improvement in infrastructure, market
information and intelligence, formulation of new market-
ing policies and institutional reforms to ease constraints on
market involvement (Solomon et al., 2003; el Dirani et al.,
2009). Low purchasing power of traders in informal mar-
keting channels limit their capacity to increases number
and volume of trade (Musemwa et al., 2007) and provision
of credit to small and large traders overcomes their market
entry due to lack of own-capital (Ajala and Adesehinwa,
2007).
Value-chain has a vital role in the process of rural
development (Marsden et al., 2000) illustrates the inter-
actions of increasingly dynamic and complex markets and
examine the inter-relationships between diverse actors
involved in all stages of the marketing channel (Schmitz
and Knorrina, 2000). Production per se is only one of a
number of value added links and there are ranges of activ-
ities within each link of the chain (Anandajayaskeram
et al., 2008). Value chain innovation helps for understand-
ing problems of market access, distribution of gains along
the chain, nature and determinants of smallholder com-
petitiveness in market chains and find leverage points
for designing and implementing appropriate development
programs and policies that enhance market participation of
smallholder producers (Rich et al., 2009). Partnership and
networks among actors of the chain can improve the devel-
opment and delivery of innovations that directly affect
the livelihoods of smallholder sheep and goat producers
(Anandajayaskeram et al., 2008). As many factors interact,
adequate marketing innovation requires better planning
and coordination among smallholder producers, producer
organizations, small and larger traders, private sectors,
concerned governmental and non-governmental organiza-
tions and consumers (Beets, 1990).
The formation of small farmer groups and associations
has the potential to increase access to information, increase
participation in formal markets and lower transaction
costs (Musemwa et al., 2007). Identifying and establish-
ing new market niches could also help improve rural
communities to generate greater incomes (Juma et al.,
2010). Smallholders could take advantage of niches domes-
tic and export markets that could pay higher prices for
specific breeds and locations through formation of mar-
keting groups (Musemwa et al., 2007). A group of small
farmer established co-operatives for marketing beef cat-
tle (Marsden et al., 2000) and vegetables (Musemwa et al.,
2007) has improved collective strength in the supply chain
and enhanced financial returns to farmers. Trade associ-
ations like co-operatives could also build trust, promote
reputation and social capital and enhance livestock mar-
keting efficiency of smallholder farmers (el Dirani et al.,
 T. Kocho et al. / Small Ruminant Research 96 (2011) 101–105
2009) could enhance profitability, market oriented produc-
tion and sustainability of smallholder systems (Peacock and
Sherman, 2010).
5. Conclusion
Sheep and goat are an integral part of the smallholder
crop-livestock mixed farming systems of Alaba district pro-
viding multiple functions as in the other dry and mid
agro-ecologies of Ethiopia. They are kept for sale to gen-
erate immediate cash to meet household needs. A chain of
market channels and actors are involved in the marketing
of sheep and goats and their products. Animal market-
ing is explicitly made on ‘eye-ball’ basis and prices are
set by bargaining between producers and traders. Almost
all markets operate without price information and mar-
keting infrastructures and are major bottlenecks to offer
better incentives to smallholder producers. Opportunities
for export markets are limited due to food safety and qual-
ity requirements. However, there are potential domestic
markets paying higher price for animals. A value chain
intervention along market channels and possible actors,
coordinated efforts of all concerned stakeholders and inte-
grated marketing policy could alleviate the current market
barriers and empower smallholder producers to participate
in formal markets. Establishing marketing groups or co-
operatives and creating efficient marketing systems could
strengthen their capacity to supply their animals directly
to consumers in the existing or emerging incentive mar-
ket niches. This could help smallholder farmers overcome
the marketing constraints and improve their income and
livelihood through market-oriented commercialization of
subsistence smallholder production practices.
Acknowledgements
We thank the Improving Productivity and Market Suc-
cess (IPMS) of Ethiopian Farmers for financing the study
and the Southern Agricultural Research Institute (SARI) for
providing study leave for the senior author. The contribu-
tion of development agents in data collection and farmers,
traders, consumers, and transporters who provided the
necessary information is sincerely acknowledged.
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