The livestock is an important sub-sector within Ethiopia’s economy in terms of its contributions to both agricultural value-added and national GDP. Between 1995/96 and 2005/06, the livestock sub-sector’s share averaged 24 percent of agricultural GDP and 11 percent of national GDP, with the highest shares recorded at 27 percent and 13 percent, respectively, at its peak (NBE 2005/06). The contribution of livestock and livestock product exports to foreign exchange earnings is also large. The annual average revenue from livestock and livestock product exports was estimated to be 13 percent of the annual national foreign exchange earnings during the period 2000/01 to 2007/08 (NBE 2007/08). Given the large porous border, a large amount of cross-border exports also go un-recorded. Therefore, the official estimates of foreign exchange earnings do not necessarily reflect the actual volume of exports.
At the household level, livestock plays a critical economic and social role in the lives of pastoralists, agro-pastoralists, and smallholder farm households. Livestock fulfills an important function in coping with shocks, accumulating wealth, and serving as a store of value in the absence of formal financial institutions and other missing markets. In the case of smallholder mixed farming systems, livestock provides nutritious food, additional emergency and cash income, transportation, farm outputs and inputs, and fuels for cooking food. In the case of pastoralists, livestock represents a sole means to support and sustain their livelihoods. Furthermore, available research suggests that with economic growth, consumption patterns tend to change towards high value and high protein foods, such as those derived from livestock (Delgado et al. 1999). This implies that, given the economic growth in Ethiopia and the region, the market demand for livestock and livestock products is likely to continue growing in the future. The government recognizes the importance of livestock in poverty alleviation and has increased its emphasis on modernizing and commercializing the livestock sub-sector in recent years (SPS-LMM 2008).
Focusing on four key livestock classes—cattle, sheep, goats, and chicken—this chapter undertakes three tasks: (1) it provides a characterization of the livestock subsector, (2) it assesses livestock and livestock product value chains based on primary data, and (3) analyzes the trends in marketing and trade of live animals and animal products. Carrying out these tasks relies on the critical review of existing literature and policy documents, as well as extensive use of both secondary and primary data, including household and traders’ surveys. The paper is organized following the sequence of these major tasks and concludes with a summary and policy implications.