In the highlands of Ethiopia, livestock as an important component of the mixed farming system perform multiple functions providing high quality food, draft power and manure for crop production, and cash income. Field studies in different parts of the country in the 1980s showed that livestock account for 37-87% of total farm cash income of farmers, indicating the importance of livestock in rural livelihood, especially as one moves from mixed farming in the highlands to agropastoral systems on the highland-lowland margins (Gryseels, 1988).
Hedonic price models were fitted to a sample of 1397 sheep and 1293 goats respectively for which data were collected from nine markets in Ethiopia over a 12 month period. The objective was to determine seasonal and inter-market differences in prices after controlling for the effects of different attributes of the animals, the buyers and the sellers. Results indicate that, controlling for attributes of the animals and of the buyers and sellers, there were significant differences in prices between seasons and markets. Seasons in which farmers faced severe cash shortages exhibited the lowest adjusted prices for animals they sold, indicating that although livestock may provide a fall back position for cash in times of crisis, terms of trade may be worst when farmers need cash the most. In general, there was no clear progression in price of sheep along the primary to terminal market chain ending in Addis Ababa as would be normally expected except that the farthest market had the lowest price. The reason for higher prices in some intermediate terminal markets could be partly explained by the fact that exporters and processors buy animals in these markets and they pay premium prices for best quality animals, and left over second or third grade animals may end up in Addis Ababa market, which then virtually becomes a sink market. In case of goats, price differences between markets followed to some extent the expected differences between primary, secondary and terminal markets. One possible reason is that in general highland is not a major production or consumption area for goats, so supplies come mainly from the lowlands, so the price movement followed the market chain from primary markets in pastoral areas to the terminal market in Addis Ababa.
Key words: sheep goats, hedonic price, Ethiopia, Africa
