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Livestock Sector Policy Analysis
- 1. ETHIOPIAN DEVELOPMENT RESEARCH INSTITUTE Livestock Sector Policy Analysis Using an Economy-Wide Model for Ethiopia Authors AyeleGelan, ILRI ErmiasEngeda, IFPRI ESSP-II Stefano Caria, DRMFSS Ethiopian Economic Association Conference July 21, 2011 Addis Ababa 1
- 3. Growing demand for meat
- 4. Forward linkages: draft power, manure
- 6. Livestock products and agro-processing
- 7. How high are macro linkages from livestock sector growth?
- 8. How much income growth and poverty reduction can we generate with livestock sector growth?
- 10. Diao Pratt (08) conclude that “growth in staples is the priority for poverty reduction”
- 11. Combining growth in staples and livestock has high economic multipliers & strong poverty reduction gains in food deficit areas
- 12. Dorosh and Thurlow (09)’s poverty-growth elasticities
- 14. Coupling the herd dynamics with the economy-wide model
- 15. Nesting the biological and the economic processes
- 16. Establishing stock-flow relationships in existing economy-wide models (e.g. livestock as capital and livestock products)
- 17. Revising and improving the system of economic accounts in existing models (e.g., draft power as capital in cropping, breeding stocks as capital in livestock, etc)19/09/2011 4
- 18. SCHEMATIC REPRESENTATION OF HERDDYNAMICS AND PRODUCTIVITY Male Deaths Young male Immature male Other economic uses Mature male + Births Sale of live animals Off-takes + Sales of products Young female Immature female Mature female Yields/animal = Female deaths TR costs of keeping mature animals - costs of keeping young animals costs of keeping immature animals TC + + = = Gross margin Production and economic flows (off-take, in-takes and others) Reproduction and growth (growth, births, deaths)
- 19. Condensed and adapted SAM for Ethiopia(ETH birr million, 2005)
- 20. The model and simulations
- 23. Labour , livestock and land fully employed and mobile
- 24. Capital fully employed and activity specific
- 25. Macro closures
- 26. Marginal propensity to save is fixed, investment adjusts
- 27. Tax rate fixed, government savings adjusts
- 29. Base growth follows 98-07 trend
- 30. Additional shocks as in DoroshThurlow 2009Obtained in discussions with MoA and CAADP
- 32. Results
- 35. But comparable Ag sector and GDP growth
- 36. A 1 pct point of CEREAL sector growth impacts Ag sector (and overall GDP) less than growth in LIVESTOCK and MARKET
- 38. Livestock raises income from labor and land the most
- 40. Price effects more than compensate lower income effect of CEREALCereals about 25pct of whole consumption basket Rural poor HHs consumption thus grows faster
- 41. Conclusions
- 43. Especially when taking into account complementarities with crop production due to draft power
- 44. Livestock growth increases the incomes of the poor expanding incomes from labor and land
- 45. Livestock limited role in consumption limits its consumption poverty reduction potential
- 47. From social accounting to environmental accounting (i.e., a third level nesting: biological => economic => environment)
- 49. Livestock-demographic-economic relationships (the livestock revolution story)19/09/2011 20
Hinweis der Redaktion
- Existing micro-understanding points to the importance of livestock in HHs livelihoods (Negassa RashidDebremehdin 2011)Coping with shocksStore of value (if missing markets for credits)Food, dairy, fuel, etc.. As we have seen at the beginning of this presentation, livestock activities and products also account for a large share of macro flows But to understand livestock’s potential contribution to econ growth, we have to understand its role in productionDraft power, for example, is an essential input in production. About 80 pct of farmers use animal traction to plough their field (Benhke 2010)
- Diao Pratt give both production and consumption explanations for this result re: livestock:Production-wise, they point to smaller share of poor farmers’ income from livestock (this misses the linkages)Consumption-wise, they point to smaller share of livestock products in consumption compared to staplesDorosh and Thurlow (09) calculate poverty-growth elasticities: pct decrease in poverty reduction (headcount rate) from a one percent increase in AG GDP from different sourcesCereal has 1.27, export crops 1.13, livestock led 0.35Livestock performs a bit better in drought prone and, mainly, in pastoralist AEZs
- To answer these questions we analyse different sub-sector growth scenarios, using a dynamic CGE model for Ethiopia
- LIVESTOCK and CEREAL superior in pushing Ag GDP upDifferences though are small (same applies to overall GDP)Even if cereal had largest push and largest initial size…
- Livestock sub sector accounts for 15 pct of all export value (probably under-estimated)Yet, strongest export response under LIVESTOCK simulationReal EXR has a role in this: under LIVESTOCK it suffers the lowest real appreciation across simulation
- Livestock accounts for about 10 pct of factor ownership in 4 AEZs. The poor’s asset in hl, hc, ho and dp AEZs is predominatly labour. Land has a slightly smaller weight than livestockIn pastoralist areas, it accounts for more than 40 pctYet TFP increases stimulate economic linkages that raise income from labor and land the mostFrom a food security perspective, notice that CEREAL is still the simulation which is most effective at raising consumption of cereals of the poor. Although CEREAL has a smaller income effect, it also produces the lowest cereal prices across the simulations. The latter effect more than compensates for the formerNotice that the same dynamic would apply to income of ALL HHs as well.Also, notice that this translates in total income gains
- A dynamic general equilibrium model, adapted to better capture the livestock sector shows th