**Community-- Based Animal Health and Participatory Epidemiology Unit
(CAPE)**

**PACE Programme**

### 

### OAU-IBAR

# An Audit of the Livestock Marketing Status in Kenya, Ethiopia and Sudan

(Volume I)

![](media/image1.jpeg){width="4.929861111111111in"
height="3.798611111111111in"}

### 

### 

### Prepared by Yacob Aklilu

In collaboration With Patrick Irungu (in Kenya) and Alemayehu Reda (in
Ethiopia)

## 

## **Nairobi, Kenya**

**April 2002**

**Objectives of this Document**

# This study was initiated and financed by the CAPE unit of OAU-IBAR's PACE Programme on the assumption that market development is key to the success of other development programs in pastoral areas. The study focuses on Kenya, Ethiopia and Sudan, where livestock marketing constraints and recurring droughts are adversely impacting the livelihoods of pastoralists. The objectives of this study are: (i) to gain a better understanding of how the existing livestock marketing systems function in these three countries; (ii) identify key constraints and potentials in the systems, and (iii) develop a regional livestock marketing program, to be implemented by OAU-IBAR and its partners, to redress some of the key constraints to livestock trade.

The study is presented in two volumes. The first volume (this paper)
provides a simple descriptive account of how livestock, meat and hides
and skins are marketed in the three countries. The second volume will
focus on analyzing the major issues involved with the resultant
recommendations being incorporated into the Marketing Program mentioned
above.

An attempt has been made, in this paper, to focus on similar marketing
issues in each country. The findings of such issues, where possible, are
also presented in the same order for each country so that comparisons
can be made between the countries. Where there are variations in the
order, this was because either the information was not available in the
particular country or because the particular country operates in a
different system than the other/s.

**Methodology**

Information was gathered from key informants in the three countries.
These include: pastoralists, livestock and meat traders/exporters; skin
and hides traders/exporters; livestock traders/exporters associations,
slaughter houses and butchery owners;

Key members in relevant government institutions such as Ministries of
Agriculture (Department of Veterinary services, Livestock Marketing
Departments/ Authorities), Customs, Ministries of Industries, private or
Government owned Commercial Banks, Insurance Companies, Ministries of
Foreign Affairs/ Foreign Trade, Airline Companies, Transitors etc; and,
staff in selected NGOs and other bilateral/international organizations.

This was followed by data collection from relevant institutions such as
Customs, National banks, Departments of Veterinary Services etc.,
through two local consultants (one in Kenya and another in Ethiopia).
Finally, a literature review of relevant materials was used for putting
this paper together. Certain information may be lacking for Sudan due to
the author's field trip coinciding with the Id holiday, resulting in the
unavailability of some key informants (such as the livestock exporters
association) at the time.

*Note: The views and opinions expressed in this paper are those of the
authors.*

Currency Equivalents

\(2002\)

US\$1 = 77 Kenyan Shillings (Ksh)

= 8.65 Ethiopian Birr (Br)

= 260 Sudanese Dinar (SD)

(Notes:

1\) Though the Sudanese Dinar (SD) is the official currency, the old
Sudanese Pound (SP) is still universally referred to in everyday
transaction. Please note that 1 SD has been calculated as the equivalent
of 10 SP (or US\$1 = 2,600 SP) in this report.

2\) The Ethiopian calendar year overlaps into two European calendar
years. Accordingly, data from Ethiopia are provided in two European
years.

Abbreviations

[Kenya]{.underline} [General]{.underline}

ADC Agricultural Development Corporation CAD Cash Against Document

AFC Agricultural Finance Corporation CBPP Contagious Bovine
Pleuroneumoni

ALMO African Livestock Marketing Organisation CIF Cost, Insurance,
Freight

ALRMP Arid Lands Resources Management Project FAO Food and Agriculture
Organisation

ASAL Arid and Semi Arid Lands FOB Free on Board

DVS Department of Veterinary Services LC Letter of Credit

KMC Kenya Meat Commission OIE Office International des Epizootics

KLMC Kenya Livestock Marketing Council WTO World Trade Organisation

MoARD Ministry of Agriculture and Rural Development

LMD Livestock Marketing Division

[Ethiopia]{.underline}

EARO Ethiopian Agricultural Research Organisation

EIA Ethiopian Investment Agency

LMA Livestock Marketing Authority

MOA Ministry of Agriculture

MEDAC Ministry of Economic Development and Cooperation

SNNP Southern Nations, Nationalities and People

[Sudan]{.underline}

ARB Animal Resources Bank

ARSC Animal Resources Services Company

LMMC Livestock and Agricultural Development Company

MoAR Ministry of Animal Resources

MoFT Ministry of Foreign Trade

MII Ministry of Industries and Investment

## Table of Contents

Page

Objectives of this
document................................................................ii

Currency Equivalents and
Abbreviations.................................................iii

Executive
Summary...........................................................................1

### [I Kenya]{.underline}

Livestock Resources and
Off-take................................................................
4

The Domestic
Markets............................................................................
5

The Terminal
Markets...............................................................................
8

Nairobi....................................................................................
8

Classes of Butcheries in
Nairobi............................................. 8

Type, Number and Prices of Animals sold...............................
12

Mombassa..............................................................................
14

The Export
Market.................................................................................
15

Operational Slaughterhouses, Abattoirs/Industrial Abattoirs in
Kenya...................... 17

Reasons for Slaughterhouses Operating Below
Capacity...................................... 18

Ownership and Status of Ranches in
Kenya.................................................... 18

Viability of Some of these
Ranches...................................................... 20

##### Hides and Skins...................................................................................... 22

Exports of Hides, Skins and Leather
Products.....................\..................... 24

Trends in Hides, Skins and Leather
Exports............................................ 25

Export
Requirements...............................................................................
26

Customs and Excise
Department...........................\............................\...
26

MoARD...............................................................................
27

Policies and Institutional
Issues...................................................................
29

Planned and On-going
Programmes..............................................................
32

### [II Ethiopia]{.underline}

Livestock Resources and
Off-take................................................................
36

The Domestic Livestock
Markets.................................................................
37

The Addis Terminal
Market.............................................................. 38

Butcheries...................................................................................
41

Producer's Share of the Retail
Price..................................................... 42

Exports.............................................................................................\...
43

Output Potential Vs Actual
Performance.............................................\... 46

Ownership and Status of Ranches in
Ethiopia................................................\... 47

Skins and
Hides......................................................................................
47

The Cost of Livestock Trading in
Ethiopia...................................................... 50

Market Service
Fees........................................................................
50

Transit
Fees.................................................................................
50

Sales
Tax....................................................................................
51

Export
Procedures...................................................................................
53

(1^st^, 2^nd^ and 3^rd^
stages).....................................................................
54

Costs Associated With
Exports....................................................................
55

Policies and Institutional
Issues...................................................................
57

Planned and On-going
Programmes..............................................................
59

### [III Sudan]{.underline}

Livestock Resources and
Off-take................................................................
62

The Domestic Markets

The Terminal
Markets.....................................................................
62

##### The Export Trade.................................................................................\... 66

Live
Animals...............................................................................
68

Meat Exports.
................................................................................
70

Hides and
Skins......................................................................................
72

Taxation..............................................................................................
75

Sheep........................................................................................
76

Camels......................................................................................
77

Policies and Institutional
Issues...................................................................
77

Planned and on-going
Programmes............................................................\...
79

Annex 1 Export Requirements in
Kenya......................................................... 80

Annex 2 Export Procedures in
Ethiopia.......................................................... 83

##### References............................................................................................ 84

######## ![](media/image2.wmf){width="6.75in" height="6.620138888888889in"}Figure 1 Domestic, Cross-border and Official Export Trade Routes

# Executive Summary 

Annual red meat production is estimated at 362,815 MT in Kenya of which
beef constitutes about 286,000MT. Pastoral areas supply two-thirds of
the national beef demand with 46% coming from within Kenya and 26%
supplied through cross-border trade. Ethiopia's annual red meat
production is estimated at 444,500MT, of which beef accounts for 65%,
mutton around 19%, chevron (goat meat) 13% and camel meat 2.5%. Sudan
estimated its red meat production at 1,578,000 MT[^1] for 2001 with an
estimated off-take rate of 19.9% for cattle, 44.4% for sheep, 38.5% for
goats and 16.4% for camels in the same year

Livestock prices drop down during droughts and peak up during holidays
(Christian, Muslim or other public). Yet, the price of meat has remained
more or less constant in the major cities of Sudan, Kenya and Ethiopia
in the last five years. This implies that butchery owners control the
meat market. In fact, they are the most powerful group in the livestock
marketing chain followed by Middlemen, who act as the interface between
livestock traders and butchery owners. The two groups control the price
of livestock at major domestic markets and by extension the volume of
the national red meat consumption in the three countries.

The producer's share of the retail price shows a declining trend over
time particularly for cattle. In Sudan, due to a convoluted livestock
marketing chain that involves too many middlemen in the system,
livestock prices in the terminal markets end up 2 to 4 times higher than
that of the producer's price. In Kenya, the producer's share varies
between 47 and 52% depending on the butchery outlet. In Ethiopia, the
producer's share has declined from 76% in 1983/84 to 55% in 1995 and to
below 50% at present. Factors attributed for this state of affairs
include the followings: i) the consumption level of red meat has not
increased per capita or proportionally to the human and livestock
population growth at the prevailing price of meat due to the
stagnation/decline of the economy; and ii) the domestic livestock
markets have become increasingly supply driven due to the decline in
live animals and meat exports for various reasons.

# Transport constitutes a major cost factor in livestock trading. In Kenya, 25 to 40% of the total cost of livestock brought to terminal markets from the Northern pastoral areas is accounted to transport, since truck owners charge more for livestock than consumer goods. As a result, transport costs determine the level of profits accrued by livestock traders. Those traders with their own means of transport accrue the highest profit margin from high turn over volume and savings in transport costs. Traders who trek their animals either by choice (to save on transport costs) or by default (due to inaccessibility) tie their working capital for far too long on 'inventory on hoof' and may not be able to do more than few transactions in a year due to the long turn around time[^2]. In many cases, it is not certain whether the perceived benefits from trekking would outweigh the costs of trucking particularly if the trekking involves more than two weeks of journey[^3]. For example, in Ethiopia, an average weight loss of 8.9% was recorded for cattle over a 7-8 day trek in the highland areas. 

Livestock are the most repeatedly (and perhaps the most highly) taxed
agricultural commodity in the region. In Sudan, livestock traders pay
taxes and transit fees in about 20 places en route to the terminal
markets / final destinations. In Ethiopia, livestock are taxed a number
of times as transit commodities within the country, the amount paid per
head varying from place to place. In both Sudan and Ethiopia, transit
fees and taxes are collected in a bid to enrich the coffers of regional
governments, despite regulations that livestock should only be taxed at
the point of origin. Livestock are less repeatedly taxed in Kenya.
Nevertheless, the amount paid in one go could be as high as 600
shillings per head of cattle. Ironically, in all the three countries,
livestock taxes and transit fees collected by the respective councils
are not used to improve the physical structure or the efficiency of the
livestock markets.

Available evidences do not support the perception that cross-border
livestock trade takes place as a result of better price offers than the
home markets. The fact is cross-border markets occur (i) because of the
excess number of livestock in the source country more than what its
domestic markets can absorb and/or (ii) because of proximity to the
cross-border rather than to the domestic markets. Otherwise, the price
of beef is more or less similar in Nairobi and Addis Ababa (except in
isolated cases lasting short durations) to justify that cross-border
markets occur for reasons of better price offers. Cross-border trade
thrive if the source country is not involved in large-scale live animals
and meat exports despite having significant livestock resources (such as
Ethiopia) or if the existing export markets are disrupted for some
reasons (such as Somalia). In the first case, the cross-border trade
from Ethiopia is directed towards Kenya and Somalia for the simple fact
that livestock from the highland areas of Ethiopia dominate the major
secondary and terminal markets. Livestock from pastoral areas, by and
large squeezed out of the domestic markets, have to be sold at
cross-border markets. The second case (disruptions of export trade) is
signified by the flow of livestock from Somalia into Kenya and in the
reverse direction when the export trade resumes in Somalia. Cross-border
markets between South Sudan and Kenya and between South Sudan and Uganda
take place because of proximity, among other things.

The gradual integration into the cash economy and the recurrence of
droughts at short intervals are increasingly pushing pastoralists to
sell more animals than before. However, the intent to sell more animals
has not been matched by a corresponding growth in per capita consumption
of meat due to the stagnation of the economy. Domestic market
saturation, at the prevailing price of meat, and more importantly
Kenya's and Ethiopia's near exclusion from the export markets has
effectively limited the pastoralists' ability to sell more livestock
than is currently the case. Sudan, on the other hand, is actively
engaged in the export market generating some \$170 million annually from
livestock and meat exports.

The closure of the KMC has effectively curtailed the export of
canned/frozen meat from Kenya. Private attempts to set up small export
standard abattoirs have not also materialized for various reasons.
Despite the privatization of formerly state-owned industrial abattoirs,
Ethiopia has not exported canned meat for some time perhaps due to high
production costs as compared to international market prices. Ethiopia's
on-going chilled beef/mutton and live animals exports is minimal when
compared to its livestock resources. The poor export performance of
Ethiopia and Kenya has in turn led to the deterioration of holding
grounds, stock routes, watering points, quarantine stations and market
yards built at considerable expense in the past. The state of such
infrastructure is such that both countries would require substantial
amount of funds to rehabilitate them for export services. This is also
true for Sudan particularly between the primary and the terminal
markets, though the Kadero and Port Sudan quarantine stations are in
good conditions.

Tannery and leather industries find themselves in precarious situations
in all the three countries. Firstly, there are more tanneries than the
locally available volume of raw hides and skins. Supply shortage is
exacerbated in Kenya and Sudan due to the export of raw hides and skins.
Yet, semi-processed skins and hides bring in nearly three times as much
in foreign exchange compared to raw hides and skins, for example, in
Sudan. Cheap and subsidized imports of leather products and articles are
also out-competing the local leather processing industries and forcing
them to close down in Kenya, Ethiopia and Sudan. The tannery industry is
fraught with cash-flow problem. It is difficult to envisage how these
industries can survive for long unless the respective governments take
some critical measures to safeguard them from total collapse.

The livestock sector contributes about 3.3% of the total GDP in Kenya;
20% of the total GDP in Ethiopia and 20% of the agricultural GDP in
Sudan (including \$170 million in foreign exchange). Despite such
significant contributions to the national economies of each country, the
sector has received less than 3% of the recurrent agricultural
expenditures in Ethiopia and only between 1.3 to 2% of the total
recurrent agricultural budget in Kenya for the years 1993/94 and
97/98[^4]. Sudan comparatively allocates a higher proportion of its
recurrent budget to the animal health sector but still falls far below
satisfactory. In all cases, resource allocations for livestock and
animal health services do not commensurate at all with the revenues
generated by the sector.

The present status of the livestock markets in each of the three
countries necessitates a complete review of the situation in order to
formulate goal-oriented strategies. The roles and responsibilities of
governments, trade and producers associations, the private sector and
other civic associations need to be reassessed with a view to hand over
most of trade related activities to the private sector for
sustainability while maintaining the regulatory and supervisory roles of
governments. Governments should also take the courage to admit that the
livestock sub-sector has been ignored for far too long and take new
initiatives to promote the productivity of the livestock industry.

**I Kenya**

### 1.1 Livestock Resources and Off-take

Kenya's livestock population is estimated at 12 million head of cattle
(of which 3.2 million are in dairy herds), close to 20 million shoats
and 1 million camels[^5]. Figures compiled by LMD[^6] indicate slight
yearly increases of the beef cattle population between 1997 and 1999,
i.e., -- 8,772,000 in 1997, 8,795,000 in 1998, and 8,953,000 in 1999 but
in 2000, the figure was 8,058,000. It is presumed that the drop in the
year 2000 was as a result of the drought.

LMD estimates red meat production at approximately 362,815 metric tons
(MT). The bulk of this is beef mainly from ASAL areas. A small
proportion of beef supply also comes from the dairy herds. The value of
annual red meat production is estimated at Ksh 43.2 billion. Within this
the value of beef is estimated at Ksh 34.4 billion, combined goat meat
and mutton at Ksh 8.2 billion and camel meat at Ksh 0.66 million.[^7]
Beef production was estimated at 286,000 MT in 2000, with 30% coming
from the dairy herd. Trends show an increase for the overall slaughter
figures (estimated at 10-14%), from some 877,000 head in 1997 to 967,000
head in 2000. However, beef production trends from pastoral herds in
Kenya indicate a decline from 131,580 MT in 1997 to 127,597 MT in 1998
and 125,542 MT in 1999 before peaking up at 130,540 MT in 2000
(presumably due to increased distress disposal). Beef production from
dairy herds, commercial and group ranches show a similar pattern of
decline for the first three years from 78,948 Mt in '97 to 76,378 in '98
and 75,480 MT in '99 before peaking up to 81,141 MT in 2000.

However, according to the LMD, nearly all the increase in beef
production for the period amounting to some 18,167 MT (from 268,278 in
'97 to 286,305 MT in 2000) comes mainly from the cross-border trade.
Yearly increases in cross-border beef supplies indicate a progressive
trend from 57,750 MT in '97 to 66,025 MT in '98, 72,628 MT in 99 and
74,624 MT in 2000. According to these figures, combined outputs of beef
from pastoral areas (from within Kenya and through cross-border trade)
supply a little over two-thirds of the domestic beef requirement. Within
these, some 46% of the beef production came from pastoral areas of Kenya
while about 26% was supplied through the cross-border market. Beef
production from dairy herds supply a little less than one-third of the
national demand. The figures emphasize the growing importance of the
cross-border trade, without which, the domestic beef demand may not be
met at the prevailing off-take rate from Kenyan herds.

The LMD estimates the off-take rate for shoats at 25%[^8] from an
estimated 21.08 million shoats in the country (comprising 6.9 million
hair sheep, 1.1 million wool sheep, 12.95 million meat and 0.04 million
dairy goats). Estimates of mutton and goat meat production indicate a
declining trend from 79,080 MT in '97 to 75,709 MT in 98, 68,786 MT in
99 and 68,269 MT in 2000. This figure is based on an assumption of 15 Kg
Cold Dressed Weight (CDW), which could be a bit exaggerated. Figures for
the thriving cross-border trade in shoats (particularly through the
Northeastern districts) were not available.[^9] Demand for red meat is
expected to grow by 15,000 MT every year for the next five years.[^10]

### 1.2 The Domestic Markets

### 

### The domestic market consists of primary, secondary and the terminal markets. The main suppliers of stocks to Nairobi, Mombassa, Malindi and other terminal markets are as follows:

### 

  -------------- --------------------------------------------------------
  **Species**    **Source districts**

  Cattle         Marsabit, Moyale, Laikipia, Garissa, Kuria, Kajiado,
                 Narok, Machakos, Isiolo, Nakuru, Migori, Mandera

  Shoats         Marsabit, Moyale, Isiolo, Wajir, Garissa, Kajiado,
                 Turkana, Machakos, Mandera

  Camels         Marsabit, Garissa, Isiolo, Moyale
  -------------- --------------------------------------------------------

### 

### However, the market sheds for livestock supplies are increasingly expanding across the border. Nearly all the cattle sourced at Moyale and some of the cattle and shoats purchased at Mandera market originate from the Borana and Somali regions of Ethiopia. Small numbers of cattle originating from Eastern Equatoria of South Sudan and the Southwestern part of Ethiopia are routed to Eldoret and Nairobi through Lokichogio and Lodwar, albeit intermittently. A significant proportion of the cattle in Garissa market come from Somalia. Similarly livestock from Tanzania are routed through Kuria to Migori and Bisil in Kajiado and then to the terminal markets in Nairobi. Supplies from Machakos and Laikipia consist of mainly finished animals from the ranches in these areas.

### 

The slaughter stock is transported to slaughterhouses by either truck or
on hoof. Veterinary permits are necessary for the movement of animals in
all cases and the DVS encourages transportation by truck as a means of
disease control since the Northern, Eastern and North-Eastern provinces
are considered high risk areas for CBPP. However, the effectiveness of
the movement permits in controlling disease is questionable. For
example, despite veterinary officials claims of higher CBPP prevalence
in Ethiopia (than in Kenya) permits are given for as many as 20
truckloads of cattle (between 360 and 400 head) per day from Moyale to
Nairobi. Cattle from Tanzania are sometimes smuggled during the night
into Kenya.

Trekking is the favourite mode of transport particularly for livestock
from pastoral areas due to high transport costs. Trucking from such
areas occurs more as a security measure than free choice. Even then
livestock are trucked over long distances from the North and Northeast
in a way that entails considerable weight loss. For instance, livestock
from Moyale are not fed or watered despite two overnight stops (at
Marsabit and Makutano) en-route to Nairobi. Occasionally, hay may be
thrown on the truck when it is available for purchase on the roadside.
Idrisi, a former live animals exporter, estimates the weight loss to be
between 5 and 7 Kgs/head when cattle are trekked from the boma to the
market by the producer and a further 15-20 Kgs/head between the point of
purchase and the terminal market. He adds, "Sadly, this loss is borne by
the producer as traders take this loss into consideration when
negotiating the price.[^11]"

Transport has always been a major cost factor in livestock trading
varying for example, between 10,000 and 30,000 shillings per lorry-load
from Naivasha, Garissa or Namanga to Nairobi, irrespective of the number
of animals on the truck. The hiring cost for a 10-ton truck from Nairobi
to Moyale is about 35,000 shillings. However, the same capacity truck
from Moyale to Nairobi would cost between 50 and 70,000 shillings
(depending on the livestock market price in Nairobi). This means a cost
of between 2,500 and 3,500 shillings/head or between 357 and 500
shillings per shoat for animals trucked from Moyale.

Thus, the ratio of transport costs to total costs of operation
determines the margin realized by livestock traders. For example, there
are livestock traders in the North and Northeast who own commodity shops
plus a truck or two. The trucks are used for transporting commodities
and livestock in the opposite directions. Such traders save a lot in
transport costs. At the same time, many of the livestock traders do not
own trucks (though some may have shops). Such traders incur considerable
transportation costs and realize lesser margin on a truckload basis than
those with their own means of transportation. Findings from a study
undertaken by Tufts University[^12] on the cross-border livestock trade
between South Sudan (Narus and Natinga) and Nairobi indicate that the
ratio of transportation cost in the marketing margin of 12 livestock
traders varied between .07 and .48 per kilogram live weight for cattle
(the higher the ratio, the lesser the margin).

Stocks change hands either once or twice before reaching the terminal
markets. In the former case, stocks bought at primary markets are taken
directly to the terminal markets (example, Moyale to Nairobi). In the
latter case, stocks are sold in secondary markets before they reach the
terminal markets (example, from Mandera/Elwak to Garissa and then to
Nairobi or from Turkana to Eldoret and Nairobi). In few cases, stocks
may change hands three times (example, from Mandera/Elwak to Wajir to
Garissa and then to Nairobi or Mombassa). Livestock traders in pastoral
areas operate in a variety of ways. Some buy young cattle for 1,500 -
3,000 shillings, keep them for about two years and sell them for 9
--12,000 Ksh in Garissa or Isiolo markets. Stock traders based in
Garissa may also buy animals from Wajir, Elwak or Mandera and trek them
to Garissa market. Butchers / middlemen from Nairobi buy cattle from
Garissa or Isiolo markets and truck them to Nairobi. At the same time,
Somali traders from Garissa or Mandera (considered as tycoons) trek
large number of cattle to Mombassa and Malindi through Bodhai allowing
the animals to graze and put on weight in the process (for a grazing and
watering fee of 50 shillings/head). These traders may also rent ranches
for a certain period to fatten the animals before disposing of them
(there are about 35 ranches between Nairobi and Mombassa alone[^13]) in
the terminal markets. Despite the proximity of the Orma and Mucamba
livestock traders to the coastal markets, the Somali traders remain the
major suppliers.

Traders in general complain of taxes they have to pay at source and
en-route to the terminal markets. For example, customs charges and
county council taxes in Moyale add up to 600 Ksh/head. With the 'extras'
on the roadblocks, the total may come to 700 Ksh/head (usually, such
'extras' are taken care of by the transporters). Orma traders from
Garsen pay a total of 200 Ksh/head (100 Ksh for the county and another
100 Ksh for auction fee) and an additional grazing fee of 100
shillings/head if the livestock were sourced outside of the county.
Traders also complain about the many roadblocks especially in the North
and Northeast. There are about 18 roadblocks between Moyale and Nairobi.

Livestock trading has been the domain of the private sector following
the liquidation of the Kenya Meat Commission (KMC) and the exit of the
Livestock Marketing Division (LMD) from the markets. This has led to the
abandonment, underutilization and disrepair of the infrastructure
developed by ALMO and LMD. The counties have also repossessed some of
these infrastructures. Thus, of the 112 holding grounds and outspans, 52
are possessed by local county councils. The remaining 60 are in a state
of disrepair. Of the 34 stock routes, only 16 are active (80% of which
are in the Northern Rangelands). Stock routes below the Sanitary
Corridor[^14] are no longer used because of human settlements,
preference for trekking and encroachment by squatters. Of the 34 water
pans, 46 boreholes and 4 storage tanks in the holding grounds, less than
20% are currently functional due to lack of sufficient maintenance
funds, change of use of holding grounds, etc[^15]. However, some of the
infrastructure such as holding grounds and livestock multiplication
centers (in Isiolo, Marsabit, Wajir, Mandera, Samburu and Koibatek) have
been recently rehabilitated and handed over to Management Boards or
Users Associations.

Pastoralists and livestock traders are nostalgic about KMC and LMD,
which provided them with guaranteed market for surplus stocks in the
past. Many would like to see KMC in operation again but this remains
unlikely. The loss of the export market for both live animals and
chilled/canned meat has greatly reduced the total volume of off-take
from pastoral areas. The domestic markets have become supply-driven and
increasingly competitive to the disadvantage of the producer. Yet, meat
prices have remained static in the last few years perhaps as a result of
the control of the butcheries by a cartel group. This situation has
undermined the pastoralists' ability to sell stocks in normal times or
as a coping mechanism in the advent of drought. Moreover, the share of
cross-border livestock supplies to the domestic markets is increasing
significantly. LMD estimates that the domestic markets absorb about
400,000 head of cattle/year originating from cross-border sources. This
has led to some pastoralist groups being squeezed out of the domestic
markets -- for example, the Turkana.

**1.3 The Terminal Markets**

A number of terminal markets are located close to large urban areas.
Kariuki's (2000) list of the terminal markets in Kenya include Nairobi,
Nyahururu, Isiolo, Meru and Nyeri for the North-central axis; Kisumu,
Kisii, Eldoret, Nakuru, Naivasha and Nairobi for the North- western
axis; and Nairobi and Machakos on the Southern axis. The coastal
terminal markets on the Northwestern and North-central axis and to a
minor extent on the Southern axis (Kajiado). The largest of these
terminal markets, Nairobi and Mombasa, are discussed below.

**1.3.1 Nairobi**

The following 11 slaughterhouses supply meat to Nairobi[^16].

  ------------------------- ---------------------------- ----------------
  **Slaughterhouse**        **Location**                 **Main Species**

  Dandora                   Njiru, Nairobi               Cattle

  Nyonjoro                  Dagoretti, Nairobi           Cattle

  Hurlingham                Njiru/Ruai, Nairobi          Cattle

  Kiamaiko                  Kariobangi, Nairobi          Shoats

  Dagoretti                 Dagoretti, Kiambu            Cattle

  Kayole                    Kayole, Nairobi              Cattle

  Kiserian                  Kiserian, Kajiado            Shoats

  Ngong                     Ongata Rongai, Kajiado       Cattle

  Olekesasi                 Ongata Rongai, Kajiado       Cattle

  Keekonyokie               Kiserian, Kajiado            Cattle

  Mlolongo                  Athi River, Machakos         Camels
  ------------------------- ---------------------------- ----------------

On arrival at the slaughterhouse, the meat inspector (from the DVS)
checks on both the movement permit and the condition of the animals
before they are off-loaded into a terminal sale yard or *boma*. The
average fees charged at various slaughterhouses are shown below.
Middlemen/women (invariably referred to as butchers despite having no
butcheries of their own) buy the animals and take them to a
slaughterhouse of their choice (if there are many close by - e.g.
Dagoretti has four). The service of these middlemen/women, in many
cases, is limited to buying the animals from livestock traders,
slaughtering the animals and selling the meat to butcheries thereby
adding another loop in the marketing chain between the producer and the
consumer. The middlemen might be described as wholesalers, though this
may be a misnomer. There are 200 of them operating in Dagoretti market
alone.

Table 1-1 Terminal Market Charges in Nairobi

  ----------- ----------- ---------------- ----------------- ----------------
  *Species*   *Charges                                       
              (Kshs) per                                     
              animal*                                        

              Landing fee Local council    Meat inspection   Slaughterhouse
                          cess\*           fee               fee\*

  Cattle      40          40               100               188 (130-250)

  Shoats      15          16 (10-25)       25                63 (45-80)

  Camel       40          40               100               100
  ----------- ----------- ---------------- ----------------- ----------------

\*Indicates average charge; range is given in parentheses

The price of live animals at the terminal sale yard varies marginally
depending on demand. Prices generally increase during Christmas, Easter
and Ramadan, weekends that coincide with paydays, and when supply
decreases due to the availability of green pasture in production areas.
Prices fall during droughts because of excess supply.

There are three categories of butchers operating in the slaughterhouses
in Nairobi. These are (a) butchers who operate their own butcheries, (b)
butchers who slaughter stock on order, and (c) butchers who slaughter
and wait for a buyer. The latter two groups act as middlemen /
wholesalers. About 100-120 of them may operate on a given day in
Dagoretti alone, each slaughtering between 1-3 head of cattle. Their
sheer number makes them a powerful group and as there are no facilities
for livestock to stay overnight in the markets, they play a lead role in
determining the price of the day. With slow deliberations and the
advantage of time on their side they make the best deals for themselves
as the day progresses since livestock traders have no choice but to sell
their animals. In fact, these groups are critical for the prevailing
price of meat at any given time in most of the butcheries in Nairobi
since the margins they make when selling meat to the butcheries will
eventually determine the price at which butcheries sell meat to
consumers. The groups operate in a cohesive manner and apply a more or
less uniform margin rate depending on the type of meat and the class of
butchery they sell the meat to. This mode of operation has kept the
price of meat more or less constant in Nairobi for the last few years
despite fluctuations in supplies. The groups benefit from a law
(probably dating from the colonial period) mandating that livestock from
high-risk areas (read pastoral areas) have to be slaughtered
immediately.

The carcasses are usually transported from the slaughterhouse to the
butchery shop by either a meat van or a bicycle. Meat vans usually serve
the high and middle class butcheries while bicycles mainly serve the
slum areas. Meat vans charge Kshs 500 per carcass while bicycles charge
between Kshs 100 and 150 per 50kgs of meat. Every meat transporter must
obtain a meat transportation license from the DVS after paying Kshs 20
per license.

The meat trade is both vertically and horizontally integrated. For
example, some livestock traders sell directly to butchers, while some
livestock traders and butchers also own butcheries. The margins vary
with the level of transaction as indicated in the table below.

Table 1-2 Average gross margins at different levels of transaction in
Kshs

+---------+------------------------+----------+-------------+---------+
| *       | **Buying price**[^17]  | *        | ##          | **      |
| *Change |                        | *Selling | ##### Costs | Average |
| of      |                        | price**  |  per animal | gross   |
| title   |                        |          |             | margin  |
| from:** |                        |          |             | **[^18] |
+---------+------------------------+----------+-------------+---------+
| **Pr    | Kshs 9,000-11,000      | 11,00    | Cess -- 40  | 2,500   |
| oducers |                        | 0-13,500 |             | per     |
| to      | (300-450kg live        |          | Transport   | animal  |
| li      | weight)                |          | --1,000     |         |
| vestock |                        |          |             |         |
| t       |                        |          | Feed --100  |         |
| rader** |                        |          |             |         |
|         |                        |          | Labour      |         |
|         |                        |          | --100       |         |
|         |                        |          |             |         |
|         |                        |          | Landing     |         |
|         |                        |          | fee - 40    |         |
+---------+------------------------+----------+-------------+---------+
| **Li    | Kshs 11,000-13,500     | High     | Inspection  | 51/kg   |
| vestock |                        | grade    | fee--100    |         |
| trader  | Or Kshs 63.0-74.9/kg   | beef:    |             |         |
| to      | DW for a carcass of    |          | Sla         |         |
| mi      | 150-220kg              | Av.=     | ughterhouse |         |
| ddleman |                        | 120/kg   | fee --      |         |
| (but    | Live wt: 300-450kg     |          | 130-250     |         |
| cher)** |                        |          |             |         |
+---------+------------------------+----------+-------------+---------+
|         | Kshs 7,500-9,500       | Standard | "           | 40/kg   |
|         |                        | grade:   |             |         |
|         | Or Kshs 65.4-84.1/kg   |          |             |         |
|         | DW for a carcass of    | Av.      |             |         |
|         | 90-120kg               | =110/kg  |             |         |
|         |                        |          |             |         |
|         | Live wt: 180-290kg     |          |             |         |
+---------+------------------------+----------+-------------+---------+
|         | Kshs 4,500-6,000       | Co       | "           | 39.5/kg |
|         |                        | mmercial |             |         |
|         | Or Kshs 52.5-69.3/kg   | grade:   |             |         |
|         | DW for a carcass of    |          |             |         |
|         | 70-120kg               | Av = 100 |             |         |
|         |                        | Kg       |             |         |
|         | Live wt: 150-250kg     |          |             |         |
+---------+------------------------+----------+-------------+---------+
|         | Kshs 3,500, -5,000     | Co       | "           | 24.1/kg |
|         |                        | mmercial |             |         |
|         | Or Kshs 48.6-62.2/kg   | grade:   |             |         |
|         | DW for a carcass of    |          |             |         |
|         | 60-110kg carcass       | Av.=     |             |         |
|         |                        | 80/kg    |             |         |
|         | Live wt: 130-230kg     |          |             |         |
+---------+------------------------+----------+-------------+---------+

The high, standard and commercial grades of beef sold through the
various butcheries of Nairobi have the following common characteristics.

[High Grade]{.underline}: Uniform fat cover; mainly of exotic breeds
less than 5 years old. Served I high-class butcheries such as Gilianis,
Springchoice, Westend, Meat Masters etc.

[Standard grade]{.underline}: Medium fat cover; aged 5-6 years local
breeds. Served in middle and lower class butcheries e.g. Yamugwe,
Thoora, Good Times, Kawangware and Kariobangi

[Commercial grade]{.underline}: No fat, very lean to body; local breeds
of over 6 years of age. Served in extra low class butcheries in slums
and institutions (schools and hospitals).

[Offal]{.underline} is sold in extra low class butcheries for an average
price of 800 shillings per entire offal.

### 1.3.11 Classes of butcheries in Nairobi

Generally, one can categorise butcheries in Nairobi into four major
classes based on the income class of the clientele. These are high,
middle, low and extra low classes. This classification is however not
rigid and neither is it recognised by the licensing agent, the Nairobi
City Council.

High-class butcheries serve high-income estates such as Muthaiga, Karen
and parts of Westlands. They are distinguishable from the other classes
in that they sell meat in special cuts. Examples include Gilani, Meat
Masters and Westend butcheries in Westlands and Meezan Enterprises at
Adams Arcade along Ngong road. These butcheries mainly obtain carcasses
from Hurlingham, Kiserian and Cooperative (in Dagoretti)
slaughterhouses. The animals slaughtered in these slaughterhouses are
usually well-bred indigenous or exotic stock, from commercial ranches
such as Kisima, Ol Pejeta, Marula and Maranya. These animals usually
have an average live weight range of between 300 and 450kgs. High-class
butcheries serve a small portion of the red meat market, mainly
high-class hotels and restaurants in the city, and wealthy individuals.
Some of these butcheries also sell game meat. They mainly buy the high
grade of beef, which they sell in special cuts such as T. Bone, Fillet,
Sirloin, etc at an average price of Kshs 308 per kg. . The gross margin
made by this category of butcheries is Kshs 188 per kg.

Middle class butcheries serve middle-income estates such as Buruburu,
Kayole, South B/C, Nairobi West, Komarock, Ngumo, Parklands and Umoja. A
few of these butcheries sell meat in special cuts but these are not as
diverse as those sold in high class butcheries. Examples include Yamugwe
and Thoora Meat Supply in City Market and Good Times Butchery in
Buruburu. Their main sources of carcasses include Dagoretti, Dandora
(Njiru) and Mlolongo (for camel meat). They mainly buy the standard
grade of beef, which they sell at an average price of Kshs 202. per kg.
On average, this category of butcheries makes a gross margin of between
Kshs 92.8 per kg.

The low class butcheries serve the lower income estates such as
Kawangware, Kangemi and Kariobangi. This class of butcheries mainly buys
the standard grade of beef with a small proportion of the commercial
grade. They sell it at an average price of Kshs 170 per kg. Their main
sources of carcass include Dandora, Nyonjoro (in Dagoretti), Kayole,
Kiserian and Ngong slaughterhouses. The gross margin made is Kshs 70 per
Kg..

The extra low class of butcheries services the slums of Kibera, Mathare,
Korogocho and Majengo. This class specialises in offal and commercial
grade of beef. Sale of uninspected carcases and meat from animals which
people would consider inedible if they knew what it was, is not
uncommon. Most of these butcheries are not licensed and, strictly
speaking, they are merely meat kiosks. A kg of beef sells at an average
price of Kshs 120. Their gross margin is rather low at Kshs 40 per kg on
average.

Table 1-3 Estimates of margins for different classes of butcheries in
Nairobi (Kshs/kg)

+--------+---------+---------+---------+------------------------------+
| *      | **      | *       | **      | ######## Estate Served       |
| *Class | Selling | *Buying | Average |                              |
| of**   | price** | price** | m       |                              |
|        |         |         | argin** |                              |
| **Butc |         |         | [^19]   |                              |
| hery** |         |         |         |                              |
+--------+---------+---------+---------+------------------------------+
| **     | 308     | 120     | 188     | Muthaiga, Loresho,           |
| High** |         |         |         | Westlands, Lavington,        |
|        |         |         |         | Kileleshewa, Karen,          |
|        |         |         |         | Hurlinghum                   |
+--------+---------+---------+---------+------------------------------+
| **Mi   | 202     | 110     | 92      | Buruburu, Kayole, South B/C, |
| ddle** |         |         |         | Nairobi West, Komarock,      |
|        |         |         |         | Ngumo, Prklands, Umoja       |
+--------+---------+---------+---------+------------------------------+
| *      | 170     | 100     | 70      | Kangemi, Kawangware,         |
| *Low** |         |         |         | Kariobangi, Eastleigh,       |
|        |         |         |         | Dandora                      |
+--------+---------+---------+---------+------------------------------+
| *      | 120     | 80      | 40      | Slums- Kibera, Mathare,      |
| *Extra |         |         |         | Korogocho, Majengo           |
| low**  |         |         |         |                              |
+--------+---------+---------+---------+------------------------------+

By December 2001, records at the Nairobi City Council Licensing
Department indicated that there were 483 licensed butcheries in Nairobi.
About 226 of these were categorised as "Butcheries", i.e., butcheries
licensed to sell meat only. The other 257 were categorised as
"Butcheries and Supplementary", meaning that they could also serve as
bars, restaurants or other eating places besides selling meat. According
to the City Council officials, the 483 butcheries represent one-eighth
of the total number of butcheries in Nairobi. This gives a figure of
3,864 butcheries operating in Nairobi, of which 3,381 are estimated to
be unlicensed. According to the Mombasa Provincial DVS, Mombasa has
approximately 200 butcheries. This figure is inclusive of both licensed
and unlicensed butcheries.

### 

### 1.3.13 Type, number and prices of animals sold (1996-2000)

These data was derived from the number of animals slaughtered in various
slaughterhouses in Nairobi and Mombasa. It is worth noting that the city
of Mombasa does not have its own slaughterhouses save for two that
slaughter poultry. It relies on slaughterhouses in neighbouring Kwale
and Kilifi districts. The figures are derived from the meat inspection
reports of the DVS.

Table 1-4 Number of livestock slaughtered in Nairobi (1996-2000)

  ----------- -------- ----------- ---------- --------- ---------- ---------
  *Species*   *Year*                                               *TOTAL*

              1996     1997        1998       1999      2000       

  Cattle      28,641   30,053      32,801     35,120    38,998     165,613

  Goats       28,923   22,741      14,279     15,600    29,378     110,921

  Sheep       5,859    9,033       4,805      6,790     15,622     42,109

  Camels      72       72          199        16        33         392

  TOTAL       63,495   61,899      52,084     57,526    84,031     319,035
  ----------- -------- ----------- ---------- --------- ---------- ---------

[Source]{.underline}: Nairobi PDVS Meat Inspection Reports (1996-2000)

The above table indicates that there has been a steady rise in the
number of cattle slaughtered in Nairobi with yearly increments of 5% in
'97, 9% in '98, 7% in '99 and 11% in 2000. The increase in 2000 is more
pronounced because of the drought that led to a significant decline in
cattle prices. The numbers of shoats slaughtered show a marked decline
for the years '97, '98 and '99 (except for sheep in '97) indicating an
increasing supply-driven shift in consumption patterns to beef for the
period. The figures for 2000, however, show a reverse trend in which the
numbers of goats equaled the 1996 level while that of sheep increased
three fold. This indicates that the shift towards beef consumption was
only a temporary affair dictated by shortage of supplies rather than
attitudinal changes. The increase in the supplies of shoats in 2000 is
attributable to transport subsidies that were made available to
livestock traders through drought mitigation activities. In general, the
total numbers of animals slaughtered show a declining trend for 97-99
before the trend was reversed for the better in 2000. The number of
camels slaughtered remains insignificant for the whole period. It should
be noted here that the above figures do not include meat supplied from
other slaughterhouses outside of Nairobi.

The prices of livestock marketed in Nairobi fluctuated widely across the
four species over the 1996-2000 period (Table 1-5). Cattle prices
increased significantly reaching twice the level of 1996 in 1999
followed by a sharp drop to that of 1996 level in 2000. Yet, there was a
parallel increase in the numbers of cattle slaughtered in Nairobi for
the period. A significant increase in the price of goats is observed in
98 and 99 with a downward trend in 2000. A similar, though
proportionally less, pattern is also observed in the price of sheep for
the same period. Price and supply level fluctuations for sheep and goats
in the period show an understandable pattern unlike the cattle[^20].

Table 1-5 Average yearly prices (Kshs) of livestock sold in Nairobi
(1996-2000)

  ----------- ----------- ----------- ----------- ----------- -----------
  *Species*   *Year*                                          

              1996        1997        1998        1999        2000

  Cattle      11,500      15,500      20,000      22,500      12,000

  Goats       1,350       1,100       ??          ??          2,500

  Sheep       900         900         2,150       2,500       1,000

  Camels      11,000      14,000      16,000      20,000      17,000
  ----------- ----------- ----------- ----------- ----------- -----------

[Source]{.underline}: Nairobi Province Livestock Marketing Division
Report (2001)

**1.3.2 Mombassa**

Three types of butcheries operate in Mombassa and the vicinity - retail
butcheries serving the local population; big butcheries which stock
between 200-2,000 head of cattle at a time serving the tourist hotels;
and, butcheries with their own ranches who also supply the tourist
hotels.

Small-scale Orma and Mucamba livestock traders from the nearby areas
supply retail butcheries serving the local population whereas
large-scale Somali traders supply the ranches and the big butcheries.
The small-scale traders emphasise that trade was somewhat good until the
early 90s, when young steers mainly from the Northeastern province,
Somalia and possibly from Ethiopia flooded the Mombasa and the Malindi
markets (which are usually trekked). The increase in supplies created a
glut in the local markets. Consequently, the Somalis introduced selling
to large-scale butchers and ranch owners on credit[^21]. This precedent
set up the situation, which is now the norm in Mombassa and Malindi.

Unlike in Nairobi, retail butcheries in Mombasa and Malindi get their
meat supplies directly from the small-scale livestock traders (Ormas,
Mucambas etc.,) whose additional role includes slaughtering the animals
and delivering the meat to local butcheries besides purchasing and
transporting the cattle from primary/secondary markets. Traders agree in
general that they make a gross margin of between 1,000 and 3,000
shillings/head. For example, a 350 Kg live weight bull may cost between
11and 13,000 shillings in Garsen. Taxes and transport may cost up to
1,000 shillings to Mombasa plus a slaughtering fee of 300
shillings/head. The carcass from such animal may be sold for 15-17,000
shillings to butcheries. The offal may fetch an additional 1,000
shillings. Both the meat and the offal are sold on credit and it may
take livestock traders a week or two before they receive payments.
Livestock traders complain about the tying up of their capital due to
this system and strongly suggest that credit sales should be scrapped.
On the other hand, livestock trades can keep their animals in Mombassa
for as long as they require and as such are not under pressure to
dispose their animals before dark. Four slaughterhouses serve
small-scale livestock traders in Mombassa.

Ten privately owned big slaughterhouses in the vicinity of Mombassa
cater for large-scale butcheries serving the tourist hotels and vessels
that call on the port. Average daily consumption for Mombasa and the
vicinity is estimated at 300 cattle, 400 shoats and 40,000
chickens[^22]. However, figures from the provincial DVS meat inspection
reports show a significantly lower consumption level, perhaps as a
result of differences in classifying what constitutes the geographical
spread of Mombassa. Yet still, Mombassa recorded more slaughters than
Nairobi over the 1996-2000 period (420,132 against 319,035
animals)[^23].

Table 1-6 Number of livestock slaughtered in Mombassa (1996-2000)

  ----------- ---------- ---------- ---------- ---------- ---------- ----------
  *Species*   *Year*                                                 *TOTAL*

              1996       1997       1998       1999       2000       

  Cattle      54,374     43,129     33,596     26,463     28,975     186,537

  Goats       46,364     45,280     29,719     21,851     16,996     160,210

  Sheep       19,738     18,170     13,234     9,682      8,646      69,470

  Camels      1,404      1,058      603        495        355        3,915

  TOTAL       121,880    107,637    77,152     58,491     54,972     420,132
  ----------- ---------- ---------- ---------- ---------- ---------- ----------

[Source]{.underline}: Mombassa PDVS Meat Inspection Reports (1996-2000)

Mombassa also recorded a continuous decline in the number of animals
slaughtered over the same period. Of particular significance is the
decrease by 30,485 animals in 1998. This decrease followed the serious
ethnic clashes of 1997 that rocked Likoni and adversely affected the
tourism industry. Tourism is the major economic activity in Mombasa and
it contributes significantly to household incomes and thus to people's
ability to purchase meat. In any case, the numbers of animals
slaughtered in 2000 amounted to less than half the volume in 1996
(unless the DVS has changed its reporting system). Similarly, prices in
2,000 show an increase of at least 50% for all species compared to 1996.

Table 1-7 Average yearly prices (Kshs) of livestock sold in Mombassa
(1996-2000)

  ----------- ----------- ----------- ----------- ----------- -----------
  *Species*   *Year*                                          

              1996        1997        1998        1999        2000

  Cattle      7,000       9,000       12,000      14,000      18,000

  Goats       1,000       1,200       1,800       2,000       2,500

  Sheep       700         1,000       1,200       1,600       2,000

  Camels      10,000      13,000      15,000      20,000      25,000
  ----------- ----------- ----------- ----------- ----------- -----------

[Source]{.underline}: Mombassa Province Livestock Marketing Division
Report (2001)

**1.4 The Export Market**

Past exports of live animals to the Middle East took place from late 70s
to late 80s.

These exports at the time were single-handedly carried out by an
individual named Idrisi, who withdrew from the business for reasons
unconnected with the trade. Idrisi now believes that the time for live
animal exports is over and that the focus should be on chilled meat
exports. Another export attempt by Andrew Wilson (in 93/94) was not
successful either as a result of the high price of local meat. Since
then Kenya has not exported any significant quantities of live animals
save for occasional dairy stocks to neighbouring countries (Ethiopia and
Uganda). The demise of the KMC also saw the end of canned meat exports
and a significant reduction in the volume of chilled beef exports from
Kenya. Between 1996 and 2000 Kenya exported less than 800 tons of
chilled beef, goat meat and mutton combined (including liver, kidneys,
tongues and offal).

There were no data on exports of live camels and camel meat, though
there are indications that live camels may have been exported to Egypt
on one or two occasions in the last 5 years. In fact, Kenya has been
exporting more of pork products than beef, mutton and goat meat combined
in the last few years. Farmers Choice (FC), the leading pork products
processor and distributor in Kenya, exports about 1,500 tons/year (20%
of its total production) to UAE (for expatriate communities). Closer to
home, FC used to export pork to Uganda until a ban was imposed by the
latter claiming that Kenya imported meat contaminated with BSE and
re-exported it to neighbouring countries[^24]. Although it is possible
that pork contaminated by BSE infected beef could onwardly transmit the
infection, to date, this route has not been isolated as a source of
infection. FC's beef exports to tourist hotels and the mining industry
in Tanzania was also halted following a ban on fresh meat, hides, skins
and horns imports from Kenya on the grounds of Rinderpest outbreak in
wild animals at the Meru National Park last August. With the RVF ban
still in place, Kenya's export access is severely limited.

### Table 1-8 Livestock and livestock products exported from Kenya (1996-2000)

  ---------- ---------------- -------------------- ------------ --------------
  *Year*     *Animal species* *Product*            *Quantity*   *Value (Kshs)*

  **1996**   Cattle           Live animals (No)    325          4,758,373

                              Meat (Kg)            38,309       4,086,766

                              Other (Kg)           1,100        196,384

             Goats            Live animals (No)    205          510,000

                              Meat (Kg)            2,938        433,790

                              Other (Kg)           430          96,525

             Sheep            Meat (Kg)            16,208       1,328,306

  **1997**   Cattle           Live animals (No)    320          2,670,875

                              Meat (Kg)            118,042      11,536,419

                              Other                914          161,927

             Goats            Live animals (No)    530          615,000

                              Meat (Kg)            894          98,920

                              Other                567          30,768

             Sheep            Carcass              8,423        1,680,172

  **1998**   Cattle           Live animals (No)    70           86,156

                              Meat (Kg)            229,370      27,000,840

                              Other                3,755        140,081

             Goats            Meat (Kg)            14           1,960

             Sheep            Live animals (No)    15           101,237

                              Meat (Kg)            9,263        1,331,240

                              Other                271          25,633

  **1999**   Cattle           Live animals (No)    20           244,000

                              Meat (kg)            297,597      39,845,656

                              Other                2,076        895,541

             Goats            Live animals (No)    15           1,289,540

                              Meat (Kg)            60           11,600

             Sheep            Meat (Kg)            16,817       2,114,519

  **2000**   Cattle           Meat (Kg)            60,215       6,812,867

             Goats            Live animals (No)    450          481,005

                              Meat (Kg)            1,946        668,376

                              Other                846          157,268

             Sheep            Meat (Kg)            25,341       3,585,520
  ---------- ---------------- -------------------- ------------ --------------

[Source]{.underline}: Derived from Customs and Excise Department Export
Statistics (1996-2000)

\*Other = Livers, kidneys, tongues and offal

On the other hand, Kenya has imported 1,622 tons of mainly mutton and
beef, twice the amount it exported for the same period, from Australia,
New Zealand, the Netherlands and also Mauritius (Mauritius probably
exports mutton imported from Australia). Information was not available
on whether the imported beef and mutton in Kenya were destined for local
markets or re-exports to the region.

Table 1-9 Volume, type and value of imports of live animals and meat
products

+-----+---------+--------------+--------+-----------+-----------------+
| *Ye | *Animal | *Product*    | *Qua   | *Value    | *Source         |
| ar* | s       |              | ntity* | (Kshs)*   | countries       |
|     | pecies* |              |        |           | (Main)*         |
+-----+---------+--------------+--------+-----------+-----------------+
| **  | Cattle  | Live animals | 5      | 187,505   | -   Australia   |
| 199 |         | (No)         |        |           |                 |
| 6** |         |              |        |           | -   New Zealand |
+-----+---------+--------------+--------+-----------+-----------------+
|     |         | Meat (Kg)    | 17     | 87,313    |                 |
+-----+---------+--------------+--------+-----------+-----------------+
|     | Goats   | Live animals | 44     | 1,044,875 |                 |
|     |         | (No)         |        |           |                 |
+-----+---------+--------------+--------+-----------+-----------------+
|     | Sheep   | Live animals | 2      | 169,238   |                 |
|     |         | (No)         |        |           |                 |
+-----+---------+--------------+--------+-----------+-----------------+
|     |         | Meat (Kg)    | 4      | 3         |                 |
|     |         |              | 43,581 | 1,729,230 |                 |
+-----+---------+--------------+--------+-----------+-----------------+
| **  | Cattle  | Live animals | 524    | 2,505,318 | -   New Zealand |
| 199 |         | (No)         |        |           |                 |
| 7** |         |              |        |           | -   Netherlands |
+-----+---------+--------------+--------+-----------+-----------------+
|     |         | Meat (Kg)    | 17,402 | 3,991,123 |                 |
+-----+---------+--------------+--------+-----------+-----------------+
|     | Sheep   | Meat (Kg)    | 1      | 1         |                 |
|     |         |              | 83,476 | 2,933,776 |                 |
+-----+---------+--------------+--------+-----------+-----------------+
| **  | Cattle  | Meat (Kg)    | 1,677  | 426,469   | -   New Zealand |
| 199 |         |              |        |           |                 |
| 8** |         |              |        |           | ```{=html}      |
|     |         |              |        |           | <!-- -->        |
|     |         |              |        |           | ```             |
|     |         |              |        |           | -   Netherlands |
+-----+---------+--------------+--------+-----------+-----------------+
|     | Goats   | Live animals | 170    | 98,185    |                 |
|     |         | (No)         |        |           |                 |
+-----+---------+--------------+--------+-----------+-----------------+
|     | Sheep   | Meat (Kg)    | 2      | 1         |                 |
|     |         |              | 40,567 | 5,463,815 |                 |
+-----+---------+--------------+--------+-----------+-----------------+
| **  | Cattle  | Meat (Kg)    | 17,096 | 3,315,281 | -   New Zealand |
| 199 |         |              |        |           |                 |
| 9** |         |              |        |           | ```{=html}      |
|     |         |              |        |           | <!-- -->        |
|     |         |              |        |           | ```             |
|     |         |              |        |           | -   Netherlands |
+-----+---------+--------------+--------+-----------+-----------------+
|     | Goats   | Live animals | 35     | 2,253,061 |                 |
|     |         | (No)         |        |           |                 |
+-----+---------+--------------+--------+-----------+-----------------+
|     | Sheep   | Meat (Kg)    | 5      | 1         |                 |
|     |         |              | 02,201 | 8,203,826 |                 |
+-----+---------+--------------+--------+-----------+-----------------+
| **  | Cattle  | Meat (Kg)    | 12,648 | 2,581,073 | -   New Zealand |
| 200 |         |              |        |           |                 |
| 0** |         |              |        |           | -   Mauritius   |
+-----+---------+--------------+--------+-----------+-----------------+
|     | Sheep   | Meat (Kg)    | 2      | 1         |                 |
|     |         |              | 03,551 | 4,198,623 |                 |
+-----+---------+--------------+--------+-----------+-----------------+

[Source]{.underline}: Derived from Customs and Excise Department Import
Statistics (1996-2000)

### 1.5 Operational slaughterhouses, abattoirs/industrial abattoirs in Kenya

There were 65 operational slaughterhouses in Kenya in the year 2000.
Sixty-three of these slaughterhouses dealt with red meat. The other two,
namely, Farmer's Choice and Kenchic, slaughtered pigs and poultry
respectively. Kiamaiko and Mlolongo dealt exclusively with shoats and
camels respectively. Only two out of the 65 slaughterhouses, i.e.,
Hurlingham and Farmer's Choice, are export standard slaughterhouses; the
rest serve the local meat market. The annual output capacity of
Hurlingham and Farmer's Choice is 10,000 cattle and 20,000 pigs
respectively. Both are privately owned.

Since the collapse of the Kenya Meat Commission in 1985, there has not
been any other industrial abattoir in Kenya. Although plans have been
made to revive it, the crippling debt of about US\$ 20 million has
discouraged many of the would-be investors from purchasing it.
Elsewhere, plans are underway to start an abattoir in Laikipia (Leete,
2001) through the Laikipia Farmers Association and at Atti or Garissa
through a private individual initiative. As it is Kenya, when compared
with Sudan, Somalia or Ethiopia, has the least number of export standard
abattoirs (for beef, mutton and goat meat) in the region.

Table 1-10Average size and annual capacity of operational
slaughterhouses in Kenya (2000)

+-------------+----------+----------------------------+---------------+
| *Ownership* | *Number* | *Average annual capacity   | *Range (No)*  |
|             |          | (No)*                      |               |
+-------------+----------+----------------------------+---------------+
| ##          | 32       | 18,343.75                  | 5,000-120,000 |
| **Private** |          |                            |               |
+-------------+----------+----------------------------+---------------+
| **Public**  | 31       | 9,774.19                   | 4,000-120,000 |
+-------------+----------+----------------------------+---------------+
| **TOTAL**   | 63\*     | 14,126.98                  | 4,000-120,000 |
+-------------+----------+----------------------------+---------------+

[Source]{.underline}: compiled by the authors

\*Includes only those slaughterhouses that deal with red meat.

### 1.5.1 Reasons for slaughterhouses operating below capacity

All the 63 red meat slaughterhouses in Kenya were operating below
capacity in 2000. The main reasons for this include:

-   Reduced local demand for meat as a result of low purchasing power of
    consumers. This has arisen from the country's poor economic
    performance, especially in the 1999/2000 period. The prices of meat
    have not responded to the depressed purchasing power. It has been
    observed that the demand for meat in Kenya is price inelastic
    (Kibunja, 1976). This was confirmed during the inflation of 1992/93
    associated with the 1992 General Elections. Although the prices of
    most of the other goods went down thereafter, the prices of meat
    remained unchanged and have been high ever since.

-   Lack of enough animals for slaughter especially during high meat
    demand seasons such as Christmas, New Year, Easter and Ramadan. This
    is a seasonal problem, which is mainly caused by adverse weather
    conditions and insecurity in livestock producing areas, particularly
    in pastoral areas. Another factor that has reduced animal supply to
    slaughterhouses is the sub-division of ranches (see the section
    below). Reduced local production has led to the influx of illegal
    imports of livestock into the country from neighbouring countries.
    For example, conservative estimates indicate that about 50,000 head
    of cattle enter Kenya from Somalia, 100,000 from Ethiopia and
    250,000 from Tanzania every year (LMD, 2001).

-   Reduced access to export markets for various reasons.

**1.6 Ownership and Status of Ranches in Kenya (as at December 2000)**

Kenya has a number of large ranches compared to Ethiopia or Sudan. The
ranches were performing well in the 60s and 70s and were considered as
potential sources of supply for quality cattle for both the domestic
demand and the export markets. Given proper management and enabling
environment, the ranches could still support the livestock industry of
Kenya in a variety of ways -- as disease free zones, quarantine centers,
holding, fattening and conditioning grounds, for raising high quality
studs and as strategic reserve in times of drought. However, many of the
ranches have been performing below expectations for a variety of
reasons.

According to the Range Management Division of the MoARD, there were 454
ranches in Kenya as at December 2000. Of these, 321 were Group ranches,
84 were Private Company ranches, 27 were District Agricultural Company
ranches, 17 were Cooperative ranches, while 3 and 2 were Agricultural
Development Corporation (ADC) and Public Company ranches respectively.

Table 1-11 Ownership and status of ranches in Kenya as at December 2000

  -------------- ---------- ------------- ---------- ------------- ------------- ----------- ---------
  *Ownership*    *Status*                                                                    *Total*

                 Dormant    Operational   Proposed   Sub-divided   To be         Undefined   
                                                                   sub-divided   status      

  Group          17         39            0          104           109           52          321

  Private        28         33            1          0             0             22          84

  DAC            23         3             0          0             0             1           27

  Co-operative   6          9             1          0             0             1           17

  ADC            1          0             0          2             0             0           3

  Public Company 2          0             0          0             0             0           2

  Total          77         84            2          106           109           76          454
  -------------- ---------- ------------- ---------- ------------- ------------- ----------- ---------

Source: Derived from Range Management Division Annual Reports (1995,
2000)

From the above table, 215 out of 454 ranches in Kenya were either
subdivided or destined for subdivision. Another 77 were dormant, while
76 did not have a clear indication as to whether they were operational
or not. Only 84 out of 454 ranches were operational by 2000, comprising
46.4%, 39.3%, 10.7% and 3.6% group, private company, DAC and cooperative
ranches respectively. Although group ranches comprise the majority of
ranches in Kenya, 213 (66.4%) of them face the threat of subdivision,
while 69 (63.9%) of the remainder are either dormant or have no defined
operational status. The land area of twenty-one of the 454 ranches is
not determined. The total land size for the remaining 433 ranches is
estimated to be in the region of plus or minus 7.5 million hectares.

Table 1-12 Total Land Area Under Ranch

  --------------------------- ----------------- -------------------------
  *Ownership*                 *Number\**        *Total area (ha)*

  Group                       307               4,848,696

  Private                     81                1,516,903

  Cooperative                 16                261,225

  Public Company              2                 41,202

  ADC                         3                 908,354

  Total                       433               7,575,570
  --------------------------- ----------------- -------------------------

[Source]{.underline}: compiled from Range Management Division Annual
Reports (1995, 2000)

### 

### 

### 1.6.1 Viability of some of these ranches

A close examination of 10 major ranches[^25] in Kenya reveals that, as
at December 2000, only three were operational; the rest were either
dormant or had been subdivided.

Table 1-13 Status of 10 major ranches in Kenya as at December 2000

  ------------------- ------------ ---------- -------------- --------------
  *Ranch*             *District*   *Size      *Ownership*    *Status*
                                   (ha)*                     

  Galana              Malindi      877,064    ADC            Dormant

  Eselenkei Emotor    Kajiado      194,565    Group          To be
                                                             subdivided

  Olgulului Lolara    Kajiado      147,060    Group          To be
                                                             subdivided

  Mbirikani           Kajiado      126,657    Group          To be
                                                             subdivided

  Siana               Narok        98,210     Group          Operational

  Koyaki              Narok        87,675     Group          Operational

  Kenya Triangle      Kwale        81,750     Private Co.    Dormant

  Olkinyei            Narok        78,785     Group          Operational

  Ewaso Kedong        Kajiado      71,304     Group          To be
                                                             subdivided

  Oldonyo Onyokie     Kajiado      68,566     Group          Subdivided
  ------------------- ------------ ---------- -------------- --------------

Source: Compiled from Range Management Division Annual Reports (1995,
2000)

Of particular note is the collapse of Galana ADC ranch. Measuring
877,064ha (6,000km^2^) and with a capacity to accommodate 30,000 head of
cattle at a time, the ranch is rated the largest in Africa. It was in
Galana that the Kenya Trypanosomiasis Research Institute (KETRI)
discovered the trypanotolerant Orma Boran cattle breed in the early
1980s. Administratively, the ranch falls in three coastal districts of
Tana River, Malindi and Kilifi. The ranch started in 1967 as a limited
company, Galana Game and Ranching Company, until it was acquisitioned in
1978 by the Government converting it into a parastatal ADC ranch. The
new management inherited about 22,000 head of cattle, 200km of water
pipeline and 2,000km of roads and trucks from Galana Game and Ranching
Company (Bourn and Wilson, 1997). This number of cattle was maintained
for the next two years, until a progressive destocking in 1991/92. By
early October 1996, there were only 8,832 cattle remaining decreasing to
less than 3,000 head by 1998. Mismanagement was the main cause of this
decline. Other problems include reduced cash flow as a result of reduced
cattle population, influx of illegal grazers, especially Orma
pastoralists from Tana River district, and banditry. In 2001, the ranch
was operating at a minimum level, with some 3,500 head of cattle.[^26]
The management is also trying to diversify income by leasing land for
tourist lodges.

The next category of major ranches in Kenya is the group ranches. These
were established in 1940s and 1960s and were mainly concentrated in the
pastoral areas, particularly Masai land (Kajiado, Narok and Transmara
districts). Group ranches are made of several families collectively
holding title to the land but maintaining individual ownership of
livestock. The objectives of starting group ranches were (a) to increase
productivity of the rangelands by bringing them to commercial
production, (b) to maintain production by keeping stocking rates within
the limits determined by the carrying capacity of the land, (c) to
conserve the natural resource in the rangelands by controlling their
exploitation, (d) to provide pastoralists with adequate standard of
living, and (e) to avoid landless adults at the time of demarcation
since all members have equal shares regardless of wealth.

The general performance of group ranches has been poor due to
mismanagement, lack of strong incentives to institute proper range
management practices such as de-stocking, improvement of pasture and
water resources, lack of finances and subdivision. For instance, out of
the eight major group ranches shown in Table 20, five are earmarked for
subdivision. In some cases, subdivision is allowed for political
expediency, regardless of the economic viability of the resultant unit.
The future of this category of ranches is bleak if subdivision is not
stopped.

Private ranches are production enterprises in which an individual member
either leases land from the government or, with the consent of the
community, registers communal land as private property. In other cases,
the individual owns the land privately on a freehold tenure. Examples of
these kind of ranches include Malinda and Machakos in Machakos district,
Mackinon Road Dokata and Kenya Triangle in Kwale district. The major
problems affecting the performance of individual ranches include
mismanagement, lack of funds for operation and development, high
interest rate, poor ranch infrastructure, disease incidence,
Agricultural Finance Corporation (AFC) loan arrears and lack of adequate
and stable markets for livestock.

Company ranches, on the other hand, are production enterprises in which
land is leased from the government and prospective shareholders put up
livestock or cash as shares in the company. These were established in
the late 1940s by the colonial government mainly in Nakuru, Laikipia,
Machakos and Kwale and Taita Taveta districts. They represent the most
advanced form of ranch management and are usually the main sources of
high quality beef. Profits are shared according to established
arrangements. Management operates under a policy making board of
directors. The future of this category of ranches is threatened by (a)
lack of credit given the high interest on bank loans, (b) increasingly
unserviceable AFC loans, (c) lack of market outlets for livestock now
that KMC has collapsed and Kenya has lost its share of the export
market, (d) unqualified and inexperienced ranch managers who often
mismanage ranch resources, and (e) inadequate diversification programs.
Most of these ranches, e.g. Lewa Down and Kisima in Laikipia district
are now venturing into tourism and irrigated cropping as a way of
diversifying their sources of income.

Cooperative ranches are made up of several individual shareholders and
qualify as cooperatives as defined by the Cooperative Societies Act CAP
490. Profits are shared according to established arrangements. Members
maintain individual livestock ownership in one portion of the ranch
while the other is managed commercially. Most of these ranches are still
operational although some of them are beset by a number of problems
including (a) mismanagement, (b) lack of credit for water and
infrastructure development, and working capital, (c) influx of illegal
grazers and squatters, (d) lack of livestock market outlets, and (e)
subdivision.

In summary, ranches in Kenya performed well in the 1960s and 1970s. But
in the 1980s and 1990s, their performance declined so drastically that
some have virtually wound up.

### 1.7 Hides and skins

Hides and skins are generally obtained from two major sources. One is
pastoral area, mainly North Eastern Province (for camel hides) and Masai
land, while the other source is slaughterhouses in major towns.
Middlemen collect hides and skins from the two sources and sell them in
bulk to either local traders or tanneries. Hides/skins from pastoral
areas are collected when they are already air-dried while those from
slaughterhouses are collected wet green. On average, middlemen buy hides
from pastoral areas at between Kshs 5-20 and skins at Kshs 10-20. This
is a flat rate because grading is not done at the farm level. The
middlemen sell to the local trader or tanneries at between Kshs 50-100
per kg of hide and Kshs 60-75 per skin. Transportation cost varies from
Kshs 300 to 400 per ton of hides or skins. At this level, the middlemen
make between Kshs 5-15 per kg of hide/skin on average.

Middlemen buy green hides/skins from slaughterhouses at a rate of Kshs
30-60 per kg and sell to local traders and/or tanneries at Kshs 100, 90,
80 and 50 for grades 1-IV respectively for hides and Kshs 75 per skin.
The margin at this level is between Kshs 5-10 and Kshs 12 per kg of
hides and skins respectively. Some middlemen treat the green hides/skins
before they sell them. Two types of treatment commonly undertaken are
(i) Air drying - usually done in structures called *bandas.* The
*bandas* are privately owned and charge the hides and skins traders a
fee of between Kshs 10 and 15 per hide/skin for using the facility. The
price for air-dried hides/skins varies between Kshs 120-140 per kg. They
fetch a margin of between Kshs 20-22.50 per kg. (ii) Salting. This is
where fresh hides/skins are impregnated with Magadi soda. Up to 5kg of
Magadi soda is used for each hide. The salted hides/skins are kept for
about two weeks after which they are marketed at an average price of
between Kshs 50-100 per kg, fetching a margin of between Kshs 5-10 per
kg. Local traders also treat wet/green hides/skins in their warehouses
at the Industrial Area before exporting or selling to local tanneries.
Hides are usually exported when raw (dried) or wet salted. The main
buyers are Pakistan, Italy, India and China. Selling price varies
between Kshs 50 and 120 per kg of hide/skin with a margin of between
Kshs 10 and 15 per kg.

At the tanneries, the raw hides/skins are tanned into pickled, wet blue
and then into finished leather. Some of the products (mainly pickled and
wet blue) are exported in a semi-processed form. Most of the finished
leather is marketed locally to leather industries including the *Jua
Kali* sector, which usually buys upper leather, sole leather and splits.

Generally, poor animal nutrition, branding, external parasites, thorns,
improper flaying and storage and putrefaction affect the price of hides
and skins in Kenya. Transport problems are not uncommon, as well. Most
affected are skins and hides originating from pastoral areas. For
example, pastoralists are required by Government to brand their animals
to deter livestock raiding. The impact of this measure is questionable
as there is no inspection of ownership of the herds.

### The Market Chain for Hides and Skins

### 

### 

### 

### 

### 

### 

### Dry hides and skins Green hides & Skins

### 

### 

### 

### 

Dry & salted hides

and skins

###  

Finished leather

Dry & salted Finished and semi hides/skins finished leather

### 

### 1.7.1 Exports of hides, skins and leather products

In year 2000, Kenya had only 11 operational tanneries, seven tanneries
below the 18 operational in 1992. Many of these tanneries closed after
1990 when the 22% export compensation was abolished and the country
opened its markets to international competition. The following table
provides a list of the tanneries and their status in the year 2000.

Table 1-14 Operational tanneries in Kenya (2000)

  ------------------------- ----------- --------------- ------------------
  *Tannery*                 *Annual                     *Status*
                            output                      
                            capacity*                   

                            Hides       Skins           

  **Bata**                  200,000     10,000          Operational

  **Nakuru Tanners**        15,000      1,200,000       "

  **Bulleys Tanners**       840,000     1,800,000       "

  **Leather Industries**    300,000     NA              "

  **Sagana**                150,000     NA              "

  **Njoka**                 10,000      300,000         "

  **Aziz Din**              10,000      25,000          "

  **Rwambuzi**              NA          NA              "

  **Sammimpex**             \-          150,000         "

  **East African**          15,000      140,000         "

  **New Market**            NA          200,000         "

  **Nova Skins**            NA          400,000         Closed

  **Babar Tannery**         480,000     NA              "

  **Alpha Rama**            250,000     1,000,000       "

  **Lake Tanners**          150,000     500,000         "

  **Kamiti Tanneries**      150,000     1,800,000       "

  **Kitale Tanneries**      60,000      NA              "

  **Garissa**               \-          200,000         "
  ------------------------- ----------- --------------- ------------------

Source: Department of Veterinary Services

### Available evidence indicates that many of the active tanneries are operating below capacity as the leather industry has continued to decline in spite of its growth potential. For instance, the leather and footwear industry quantum index decreased steadily from 83.5 in 1987 to 48.6 points in 1999. A number of factors are attributed to this state of affairs:

-   Shortage of hides and skins to tan from increased exportation of
    rawhides and skins in recent years. It has been reported that local
    tanneries process only 15% of the hides and skins produced in the
    country, the rest 85% is mainly exported raw to Italy, China, India
    and Pakistan (DVS, 2000). Traditional tanneries also use a small
    proportion of this.

```{=html}
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```
-   Depressed demand for locally finished leather and leather goods
    because of cheap imports. This has arisen from (i) availability of
    cheap synthetic leather (ii), reduced capacity of the *Jua Kali*
    leather sub-sector, (iii) high production costs of manufactured
    goods (because of high taxes on raw materials such as chemicals,
    machinery and spare parts and expensive power, among other things.
    Other taxes include 2% Presumptive Income Tax on hides and skins and
    18% VAT on locally finished leather goods).

-   Stiff competition at the world market for locally produced leather
    and leather products. In addition, locally produced leather is
    wrongly perceived to be of low quality.

-   Lack of export support. Following trade liberalisation in 1990, the
    22% export compensation was scrapped, which made tanning for export
    unprofitable.

-   Lack of credit/finance. Tanning is a capital-intensive venture and
    requires availability of inexpensive credit.

Table 1-15 Quantity of hides, skins, leather and leather products
exports (1996- 2000)

  ----------- ------------ ----------- ----------------- ----------------------
  *Year*      *Quantity of                               
              exports in                                 
              MT*                                        

              *Raw Hides*  *Raw Skins* *Semi-processed   *Leather products
                                       hides and skins*  (Units)*

  1996        60.3         26.6        62.1              622

  1997        47.2         37.5        64.4              820

  1998        94.1         40.4        73.9              690

  1999        162.8        25.1        52.9              1178

  2000        139.9        22.3        74.2              1350
  ----------- ------------ ----------- ----------------- ----------------------

[Source]{.underline}: Compiled from Customs and Excise Department Export
Statistics (1996-2000)

**1.7.2 Trends in Hides, Skins and Leather exports (1996-2000)**

Compared to Sudan and Ethiopia, Kenya exports smaller quantity of hides,
skins, leather and leather products on annual basis. Yet, between 1996
and 2000, Kenya's' volume of exports has doubled for raw hides and
leather products. A marginal growth rate was also recorded for
semi-processed hides and skins with slight decline in the volume of raw
skins exported in the period.

However, the increase in the export volume of hides has not been matched
by a corresponding growth in value. This is because Kenya has been
exporting more of raw hides, which attract lower world market prices
than semi-processed or finished leather. In the period under review, the
value of skins exported has remained more or less proportional to
volume. The overall value generated from leather products in 2000 was
much less than that of 1996 in proportional terms. This depends much on
the quality and types of leather garments / articles exported and the
prevailing market price at the time of export.

Table 1-16 Value of exports of hides, skins and their products
(1996-2000)

  ------------- ------------ ------------ ------------ -------------------
  *Year*        *Value of                              
                exports                                
                (Millions                              
                Kshs)*                                 

                *Hides*      *Skins*      *Leather*    *Leather products*

  1996          5.9          3.1          7.5          0.11

  1997          2.0          3.7          6.6          0.11

  1998          3.3          2.7          7.6          0.06

  1999          6.6          1.6          4.8          0.10

  2000          8.7          2.7          6.0          0.15
  ------------- ------------ ------------ ------------ -------------------

[Source]{.underline}: compiled from Customs and Excise Department Export
Statistics (1996-2000)

**1.8 Polices and Institutional issues**

[Relevant Acts]{.underline}

A number of Government Acts impact livestock marketing in one-way or
another. These include: the Animal Diseases Act; the Hides and Skins
Act; the Stock and Produce Theft Act; the Stock Traders Licensing Act;
the Pig Industry Act; the Dairy Industry Act; the Co-operatives Act;
Hatchery Rules, the Kenya Meat Commission (in receivership) Act, etc.
Two of these are summarized below.

### *Kenya Stock Traders Licensing Act of 1962, revised 1983*

The Stock Traders Licensing Act, CAP 498 implies that 'No persons shall
carry on the trade or business of a stock trader without a license,
whether as a principal, partner or agent.' The exceptions are farmers
who buy, sell or barter stock in the course of their business as farmers
and residents in special areas set apart for the use of the tribe to
which they belong. The Act empowers Provincial and District
Commissioners to issue stock traders licenses for a year or half a year
and the police, administrative, veterinary officers or inspectors to
inspect the license on demand. Contraventions of this act may result in
a fine of 2,000 shillings or imprisonment for a term not exceeding 6
months or both'.

-   *The Animal Diseases Act, CAP 364, 1972 (revised 1989)*

> This act provides the veterinary director with 'the power to declare
> areas infected, provisions affecting infected areas (isolation,
> disinfections and movement of animals), power to prohibit importation
> of animals (incorporating Rules L.N.106/1965), slaughter and disposal
> of carcass of infected animals, indemnity and payment of compensation
> (incorporating Rules L.N. 106/1965), power to search for infected
> animals, power to prescribe fees for drugs and vaccines, power to
> prohibit use of vaccine or drugs along with the power to search and
> detain suspects and the disposal of forfeited animals'. The Act also
> incorporates the Subsidiary Legislation of The Animal Disease Rules
> related to: Importation of Animals; Movement of Animals; Infected
> Areas; Further provisions to prevent spread of disease; and,
> Miscellaneous Provisions. Animal Disease rules for Birds, FMD,
> Compulsory Rinderpest vaccination, control of Pig diseases are also
> incorporated. A Subsidiary Legislation also includes the requirement
> of a license for importation through Mombassa or Lamu ports or through
> Kisumu, Nairobi and Mombasa airports only. The legislation also
> stipulates on the examination of imported animals, certificates
> required for imported animals, tests to be carried out, quarantine
> procedures and the requirements of other certificates if necessary.
> However, the Rule makes exceptions to Tanzania and Uganda from where
> animals may be imported 'subject to such restrictions and requirements
> as the Director may from time to time direct.' The Act doesn't specify
> provisions for live animal or animal products exports.

The issuance of 'movement permits' is the most widely practiced aspect
of this Act without which livestock are not permitted to travel from
high-risk areas to the terminal markets. The application of other
aspects of the Act is subject to the available means. As things are now,
funds, equipment and materials and trained personnel are in short
supply. Disease Free Zones that were maintained in central parts of the
country and from which livestock and livestock products were exported in
the past no longer retain that status. The eight quarantine
facilities[^27], run jointly by the DVS and the LMD are not providing
the same level of service as in the past. In view of market
liberalization and the changes that has taken place since then (for good
or worse), some sectors feel that the laws governing livestock diseases
are outdated and need to be reviewed. For example, the Act doesn't cover
cross-border livestock imports. Livestock originating from such sources
are in reality treated in the same manner as those from high-risk areas
within. Exports of livestock and livestock products, when it happens,
takes place through established veterinary procedures (which are not
included in the Act) and the requirements of the importing country. The
provision governing the inspection of livestock for 100 days (for three
CBPP tests) prior to exports could be unrealistic in today's highly
competitive world market. **The question is why keep the rule on paper
when reality dictates otherwise?**

These days there is a growing keenness amongst interested parties (civic
associations, government agencies, donors, NGOs, regional organization
etc) to promote livestock marketing in quality and quantity to alleviate
the predicaments of the primary producer and also the livestock trader.
However, following the exit of LMD and KMC from the market, no specific
policy has been formulated to date aimed at supporting and facilitating
the livestock trade *per se.* Livestock marketing whether for the
domestic or the export markets has been left to the rules of
globalisation. In the process, Kenya has ended up in importing twice the
volume of red meat and offal it has exported between 1996-2000.

Government policy on livestock marketing (or the lack of it) comes from
policy changes imposed through structural adjustment programs and to a
little extent through its own initiatives. A shift in Government policy
in mid 1980s focused on agriculture in providing food security, the
absorption of the labour force, boosting export earnings and rural
industrialization.[^28] Specific policies included liberalization of
markets and removal of government subsidies on investments and services
effectively sidelining the LMD (of the MoARD) from operating in the
markets.

[The LMD and KMC]{.underline}

LMD and KMC's exit from the market has affected the status and ownership
of the infrastructure developed in ASAL areas. These include 112 holding
grounds, 34 stock routes, 34 water pans, 46 boreholes and 4 storage
tanks. The LMD has maintained a few of these facilities some of which
were handed over to Users Association and Management Boards under a
memorandum of understanding to guarantee some sort of sustainability.
However, the fact that many of the facilities are no longer used by LMD
has led to 'repossession by local authorities, allotment to private
developers and vandalism.' Moreover, 'insufficient budgetary allocation
for maintenance, confusion over title deeds, political interference,
insecurity, lack of clear sustainability policies and the closure of
KMC'[^29] has made the future of the facilities uncertain. Insecurity
has become a major concern following the closure of some of the markets
in ASAL areas. The refurbishment of the Isiolo holding ground complex,
for example, has led to a futile rivalry between the Borans and the
Somalis tribes over the question of ownership[^30]. South of the
Sanitary Corridor, some of the land was de-located to other uses such as
schools and for growing crops (though the LMD still retains some land).

In its operational days, the LMD functioned under different hats -- as a
supplier of immatures to the Agricultural Finance Corporation (AFC)
which then on-lent the animals in kind to ranch owners; or directly to
its own ranches or the KMC (after one CBPP test); or as a 'buyer of last
resort', in times of drought, in which case, what ever was salvaged by
LMD had to be slaughtered by the KMC. In a way, both the KMC and the LMD
doubled as service providers, roles that included drought management,
provision of facilities and disease control. Yet both agencies were
allocated budget from the Government's 'Trading Account' rather than
from the 'Contingency Account.'[^31] LMD incurred heavy losses in the 78
and 79 drought and was forced to exit from the market around 1982. KMC
followed suit in 1987 for widely known reasons - failing to maintain the
high export standards, mismanagement and heavy processing losses among
others. Despite its rehabilitation in 1995 with a capacity of a daily
throughput of 750 head of cattle (or 1,000 head on a double shift) it
has not been operational for various reasons. Despite the liberalization
of the markets, the private sector has not been able to replace either
the LMD or the KMC.

**1.9 Planned and On-going programmes**

**1.9.1 The LMD**

Following the Structural Adjustment Programme, the subsequent role of
the LMD was revised to[^32]:

-   Supervision and maintenance of about 8 strategic quarantine holding
    grounds;

-   Commercialisation of strategic outspans and night stops;

-   Establishment of livestock information network;

-   Carrying out limited livestock offloading activities during times of
    distress together with other stakeholders for ruminants and cattle
    in ASAL areas while 'the marketing of other livestock species have
    been left with the private sector and the NGOs with occasional
    intervention through Government micro-projects.'

At the national level, the LMD collects info on livestock prices through
the District Officers on monthly and quarterly basis. However, the
information arrives late at the Head office rendering it unusable for
making decisions based on current market information (though it may be
used for assessing past trends). There is also a need to improve the
accuracy and quality of the information.

Accordingly, the LMD suggests that a concerted effort is required by all
stakeholders to work on three critical areas to improve the livestock
marketing system in the future. These are:

-   Developing market information system at the national level;

-   Operationalization of the quarantine corridor, and

-   Conflict management.

In addition, the LMD has prepared a 6 year \$27 million Livestock
Development Program Proposal covering 30 districts in ASAL areas which
has been submitted to the African Development Bank. Programme components
include:

-   Promotion of sustainable livestock production in ASAL areas

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-   Support to community-based livestock development and drought
    mitigation initiatives

-   Strengthening of the animal health delivery services, livestock and
    livestock products marketing and quality control and regulatory
    services;

-   Promotion of processing and value adding of livestock products;

-   Enhancing the capacities of both the public and private sector
    service providers[^33]

The project is designed to operate through existing Government
structures focusing on 'community priorities to ensure sustainability
through cost-sharing and commercialization.' In addition, the project is
aimed at promoting the private sector, by developing close operational
linkage with livestock traders, pastoralists, butchers, private sector
service providers, credit institutions, transporters etc. The project
aims to increase the off-take rate for cattle from 12 to 16% in pastoral
areas and from 8 to 10% in the agro pastoral system, increase Cold
Dressed Weights for beef stock from 130 to 150 kg, decrease mortality
rate in beef cattle from 5 to less than 3% and increase overall beef
production by over 3% by the end of the project. The Off-take rate for
small stock is anticipated to increase from 14 to 28% with increases in
Cold Dressed Weight from 15 to 20 Kg in goats and from 20 to 25 Kg in
mutton sheep. Other perceived benefits of the project include decreased
calf mortality in camels, promotion of bee keeping, quality assurance
and quality control of 'safe utilization of animal food origin' and
establishing maximum residue levels along with improving the quality of
hides and skins through appropriate interventions. The proposal is
currently under negotiation.

**1.9.2 Arid Lands Resource Management Project (ALRMP)**

##### As a key player in pastoral areas, the IDF funded project (with a \$3.4 million budget for the livestock marketing component) has made a contribution in areas of improving livestock marketing infrastructure (sale yards, water points and access roads) and establishing market information system. Its key achievement includes the promotion of community-based initiatives, which included establishing pastoral and livestock marketing associations at the grass-root and the district level culminating into the registration of the Kenya Livestock Marketing Council. 

### 1.9.3 Kenya Livestock Marketing Council

The Council regards itself as a private entity. ALRMP has played a
critical role in the formation of the KLMC. ALRMP also provided office
to the KLMC until a long-term arrangement was made recently with the MOA
to provide a base for the latter.

The Council is run by a board and an executive committee. The structure
of the Council begins at community levels reporting to the District
Councils. The Districts report to the National Council. Membership is
open to all livestock traders upon payment of 500 shillings annual
membership fees. Though there are only 500 members at the moment, the
Council is striving hard to recruit more, as this will provide the
financial basis on which the Council will sustain itself. Income from
subscription fees is divided equally between the district and the
national Council. So far, 10 district Councils have been formed in
predominantly pastoral areas.

The Council emphasizes that the demise of the KMC and LMD has seriously
undermined the potential livestock off-take from pastoral areas. It also
underlines that this has led to deteriorating market infrastructures,
lack of market information, insecurity and banditry, disease outbreaks
and quarantine restrictions, inadequate credit and insurance facilities,
distance to terminal markets, lack of organized market outlets and
stockholding facilities and lack of export quality abattoirs near the
sources of livestock.

The council makes a point that the prevailing terms of trade at terminal
markets disadvantage small livestock traders and the producers. The
facilities in Dagoretti and Kariobangi terminal markets in Nairobi are
such that traders are forced to sell all their stocks on the day of
arrival regardless of the prevailing price of the day. Any trader coming
to the terminal markets, therefore, operates on a wild guess whether he
would make a profit or a loss from the stocks to be sold. This
arrangement has led to the proliferation of a powerful cartel group
consisting of middlemen and butchery owners who have the final say in
the market. Small livestock traders in Mombassa are particularly
inconvenienced as they have to i) bear the costs of slaughtering and
skinning the animals and ii) sell on cold dressed weight basis to
butcheries on credit minus the offal and the skin. It is not uncommon
for small traders to wait for a month or more before they get paid.

The Council, as a result, has set itself a number of ambitious
objectives to redress the situation. These include:

-   Advocacy for the rights of traders;

-   Promoting livestock and livestock products marketing from pastoral
    areas;

-   Identifying market gaps locally, regionally and internationally;

-   Enhancing the dissemination of market information to both producers
    and traders;

-   Liaison with pastoralists at grass root level; Support the
    exportation of live animals to alleviate poverty;

-   Support to entrepreneurs investing in slaughterhouses, cold
    storages, and other premises for improved livestock marketing;

-   Undertake extension services in liaison with the government;

-   Fund solicitation for credit facilities and offering group
    guarantees;

-   Revitalize traditional drought coping mechanisms including
    appropriate modern technologies along with a role in conflict
    resolution for better management and utilization of resources.

In addition, the Council, subject to the availability of funds and
technical know how, has contingency plans to rehabilitate the
dilapidated infrastructures along the stock routes previously owned by
the KMC and LDP. These include watering points, sale yards, the
management of holding grounds through users associations, crushes etc.
There is also a plan to lease the holding grounds of Kibiko and Athi
River and develop these sites into holding grounds and terminal sale
yards with all the necessary facilities including security in a bid to
alleviate the current predicaments livestock traders face at Kariobangi
and Dagoretti. If and when these objectives are met, the Council intends
to provide the services of these facilities to its members at a fee both
for the upkeep and maintenance of the facilities and for generating
additional revenue for the Council. Given time, capital and a consensus
among its members, the Council would also like to set up its own
butchery outlets in the major terminal markets to curb the power of the
cartel and to pass the additional margins to livestock traders and
producers eventually. The KLMC reckons that managing the sale yards and
having own butcheries will in the longer-term help them to regulate the
flow of livestock to the terminal markets in a coordinated manner and
thus achieve market stability.

The KLMC is a nascent organization and the tasks it has set itself are
enormous. Whether they can achieve even a reasonable proportion of the
objectives and contingency plans depends on how the organization evolves
in the coming years. At this stage, the KLMC needs to make distinction
between its immediate, short-term and long-term objectives. The
immediate objectives should focus on consolidating the Council,
recruiting more members, lobbying with donors, NGOs and Government,
advocacy, capacity building and so on. The dissemination of market
information, training, trade missions, the rehabilitation of
infrastructures, support to livestock exporters, etc., depending on the
institutional evolvement, should be set as medium and long-term
objectives.

**1.9.4 Southern Rangelands (Rural Services Design Project) -** This was
a World Bank funded pilot project on livestock marketing information for
Kajiado and Narok districts. The outcome of the project was less than
the expectations.

**1.9.5 GTZ -** GTZ is involved in the collection of livestock price
information in Moyale, Isiolo, Marsabit and Nairobi with the objective
of disseminating the info in local languages to pastoralists and traders
(apparently, GTZ is funding a similar undertaking on the other side of
the border).

**1.9.6 NGOs -** A number of NGOs with particular interest in livestock
marketing include OXFAM (UK), SNV, Action Aid, World Concern and CIFA.

**1.9.7 GL-CRSP/PARIMA of ILRI --** runs a USAID funded project focusing
on pastoral risk management systems (including livestock trade as a risk
factor), the harmonization of cross-border issues and experience sharing
and technology transfer on economic diversification among women groups
along the Ethiopian and Kenyan border.

###### II Ethiopia

### 

### 2.1 Livestock Resources and Off-take

## FAO (FAO, 1999) estimates the livestock population of Ethiopia at 35 million cattle, 39 million shoats and 1 million camels. Sandford (Sandford *et al, 1999),* on the other hand, estimates the camel population at 2.4 million and the livestock population in pastoral areas at 9,291,181 head of cattle (or 30% of the total), 12,424,204 sheep (or 51.7% of the total) and 8,061,072 goats (45% of the total) and 100% of the camel population[^34]. FAO estimates a 1.1% growth rate for cattle and --0.2% for small ruminants against a backdrop of 2.5% human population growth per annum. In other words, the livestock population growth has been lagging behind the human population.

Off-take rate is estimated at about 8% (FAO 1998) for cattle, one of the
lowest in Africa in terms of proportion to the livestock population.
This amounts to between 2.2 and 2.8 million head of cattle/year.
Off-take for sheep and goats is estimated at 40.5% and 34% respectively
or a total of about 14.5 million shoats annually. Nevertheless, there is
a possibility that the FAO estimate may not include the off-take that
takes place through the cross-border trade to Somalia, Djibouti and
Kenya. Various estimates (Gebresellasie *et al* 1998, Ministry of
Foreign Trade, 1987) put the volume of the cross-border trade to these
three countries at about 260,000 head of cattle, 1.2 million shoats and
(Dirbaba, 2001) 16,000 camels. Thus the off-take level of livestock
particularly for shoats and to some extent cattle could be relatively
higher than both estimates.

According to FAO, domestic meat production has been increasing annually
at a rate of about 2% for beef and 0.7% for mutton while goat meat and
camel meat production has remained static in the last five years.[^35]
Within these, beef accounted for 65% of the total red meat production,
mutton around 19% and goat meat 13%. Camel meat accounted for 2.5% of
the annual red meat production.[^36] The FAO consumption figures remain
the same for the years 2000 and 2001 for some inexplicable reasons.

Table 2-1 Type and Volume of Meat Produced (in MT)

+--------------+----------+----------+----------+----------+----------+
| #########    | ######## | ######## | ######## | ######## | ######## |
|              | # *1997* | # *1998* | # *1999* | # *2000* | # *2001* |
+--------------+----------+----------+----------+----------+----------+
| ######       | #        | #        | #        | #        | #        |
| ### **Beef** | ######## | ######## | ######## | ######## | ######## |
|              |  270,000 |  274,000 |  290,000 |  298,000 |  298,000 |
+--------------+----------+----------+----------+----------+----------+
| ########     | ######## | ######## | ######## | ######## | ######## |
| # **Mutton** | # 80,800 | # 81,000 | # 81,400 | # 83,000 | # 83,000 |
+--------------+----------+----------+----------+----------+----------+
| ######### *  | ######## | ######## | ######## | ######## | ######## |
| *Goat meat** | # 63,100 | # 63,200 | # 63,400 | # 63,500 | # 63,500 |
+--------------+----------+----------+----------+----------+----------+
| ######### ** | ######## | ######## | ######## | ######## | ######## |
| Camel meat** | # 10,656 | # 10,680 | # 10,704 | # 10,812 | # 10,812 |
+--------------+----------+----------+----------+----------+----------+
| #######      | #        | #        | #        | #        | #        |
| ## **Total** | ######## | ######## | ######## | ######## | ######## |
|              |  424,556 |  428,880 |  445,504 |  455,312 |  455,312 |
+--------------+----------+----------+----------+----------+----------+

######### Source: FAOSTAT

######## 2.2 The Domestic Livestock Markets

Livestock markets in Ethiopia function at three levels consisting of
primary, secondary; and terminal markets[^37]. Some (Solomon *et al,*
2000) also include a nominal forth tier at the farm gate level, which
could hardly be considered to function as a market. Primary markets have
been identified as village level markets with a supply of less than 500
head of cattle/week where primary producers (farmers and pastoralists)
sell small number of animals to small traders, other farmers
(replacement animals), farmer or pastoralist-traders and in some cases
to consumers and local butchers. Such markets are not fenced, have no
scales, and no feeds and watering facilities. Purchasing is done through
'eye ball' negotiations. A good majority of the livestock markets in
Ethiopia belong to this group.

Secondary markets are trader and to some extent butcher dominated
markets, with an average volume of 500 -- 1,000 head per week consisting
of finished, breeding and draught stocks and located mainly in regional
capitals. Secondary markets serve the local consumers to some extent but
mainly feed the terminal markets. These markets also supply live animal
exporters and meat processors.

The terminal markets are located in large urban centers consisting of
Addis Ababa, Dire Dawa, Dessie, Nazreth and the coffee growing regions
of Sidama and Gideo. Medium to large-scale traders and butchers dominate
these markets. Average volume of cattle brought to these markets may
exceed over 1,000 head/week.

Supply of livestock to the primary and secondary markets including to
the terminal markets is mostly done through trekking. Traders/producers
use traditional stock routes to trek their animals to the markets. **In
Ethiopia, there is no requirement for livestock movement permits as in
Kenya** (though this is being discussed in the parliament now) and
producers or traders are free to take their livestock wherever they want
to. Cattle are walked about 35-40 kms and shoats 15-25 kms/ a day on
average. Staging points are chosen on customary practice but may change
depending on the season and security. A 1995 study[^38] showed that a
100 km trekking costs Birr 1.15 per cattle and Birr 0.16 per shoat.
Though trekking could be inexpensive relative to trucking, whether the
costs saved from trucking would outweigh the weight loss incurred
through trekking at the eventual point of sale would be an interesting
point to look at. For example, an average weight loss of 8.9% (18-40
kg/head/trip) was reported over a 7-8 days trek from the highlands of
Gasera (Bale) to Dera (Arsi) of cattle weighing between 200 and 450 Kgs
according to a study conducted by Arsi Rural Development Project over a
period of 12 months. The loss could be higher for animals originating
from lowland areas.

Distance, security, the condition of the animals and timing determine
the decision to trek or truck. Trucking is usually limited to medium and
large-scale traders who purchase from distant primary and secondary
markets to supply the terminal markets and the meat processing plants in
bulk, large scale butchery owners who buy from the secondary markets and
to some extent feed lot operators buying from primary or secondary
markets. In some cases, the latter have been reported to trek animals
ranging from 2 to 15 days to the feedlot centers depending on the point
of purchase[^39].

The decision to sell animals by the primary producers (both farmers and
pastoralists) is usually based on urgent cash requirements. Producers
come to the markets with no information beforehand on the going price of
the day and farmers may take back their animal(s) if the price offered
is too low to try their luck next time in the same or in another market
nearby. Pastoralists take the same measure if the market happens to be
close to where they graze their animals. But, if the market is of some
considerable distance from where they reside (such as the Bati market
attracting pastoralists from as far as a four day round trip distance),
then they will be persuaded to sell their animals, however low the price
is on the day, as they can't afford to return empty handed without
buying grain and other necessities for their families. Profit becomes a
motive for sale only at farmer-trader level and above.

Borana is the main supplier of livestock to the terminal markets of
Sidama and Gedeo, a coffee growing region, where per capita meat
consumption is high. Numerous primary markets that converge into
secondary markets within a radius of some 300 Kms from the capital
supply the Addis terminal markets. Animals from such distant places as
Borana, Wolaita and Harar are also brought direct to Addis. Most
butchery owners also buy livestock from private feedlot centers around
Nazareth and Modjo and from small-scale fatteners elsewhere and
transport the animals directly to the abattoir bypassing the terminal
markets in Addis. As a result, the numbers of animals sold in the
terminal markets of Addis are far below the total amount consumed in the
city at any given time.

The last fifteen years have seen the proliferation of private feedlots
around Nazareth, Mojo and Debrezeit towns in close proximity to the
terminal markets in Addis. In 1995, there were about 51 of them with
capacities to fatten between 100-250 head at a time. The feedlots buy
cattle from primary and secondary markets and feed them on concentrates
consisting of wheat bran, oil seed cake, molasses, salt and essential
minerals. Finished animals are sold direct to butchery owners and
traders. In addition, several households in these towns are also engaged
in small-scale fattening activities, consisting of 1-3 head of cattle.
Small-scale fattening is also a common practice among the highland
farmers of Hararghe and Wolayta, where 1-2 head of cattle are tethered
and hand fed. While the small-scale fattening activities are still going
on, the initial success of the commercial feedlots has been severely
affected by increasing costs/ unavailability of concentrate feeds. In
addition the butcheries offer low price for fattened animal on the
grounds of lower shelf life of the meat, relatively lower dressing
weight and consumers' preferences for pasture-fed cattle. As a result,
many of the commercial feedlots that were set to dominate the terminal
markets at one time have been closed.

1.  **The Addis Terminal Market**

Addis Ababa has six livestock market centers that are managed and owned
by the City Administration Agricultural Bureau.

Kéra is the largest of these markets for cattle and is served by the
Kéra abattoir nearby. Kara Alo and Akaki (a suburb) also deal mainly
with cattle. Most of the shoats slaughtered in Addis are bought outside
of the designated markets. All purchases are done through negotiations.
The specifics of these markets are provided in the following table.

Table 2-2 Terminal Market Centers in Addis

  -------------- --------- ---------- ------------ ---------------------------
  *Market*       *Area in  *Animals   *Market fees *Major suppliers*
                 m^2^*     sold*      and sales    
                                      tax*         

  **Kéra**       20,500    Cattle     10 Br/head   Eastern, S.Eastern and
                                                   southern parts of the
                                                   country. Consisting of
                                                   traders (65%) and stocker
                                                   feeders (35%)

  **Kara Alo**   800       Cattle     10 Br/head   Northern and western parts
                                                   of the country. Major
                                                   suppliers traders and to
                                                   some extent stocker feeders

  **Semen        8,000     Mainly     10 Br head   Western part of the country
  Gebeya**                 cattle but for cattle   
                           also       and 1 Br     
                           shoats     /shoat       

  **Akaki**      8,000     Mainly     4 Br/head    Local producers and stocker
                           cattle but for cattle   feeders. This market is
                           also       and          considered as a secondary
                           shoats     1Br/shoat    market to Addis. Major
                                                   buyers are traders

  **Birchiko**   Unknown   Shoats     1 Br/shoat   Western parts of the
                                                   country. Major transaction
                                                   between wholesalers and
                                                   retailers

  **Aware**      Unknown   Shoats     Possibly 1   Not yet known as it was
                                      Br/shoat     constructed recently
  -------------- --------- ---------- ------------ ---------------------------

It is difficult to find accurate data on the number of livestock
slaughtered in Addis as available data suggest that only one-third to
one-half of the cattle slaughtered at the Kéra abattoir are supplied
through the terminal markets of Addis. Furthermore, according to some
estimates[^40], an almost equal number of cattle are slaughtered outside
of the designated abattoirs, which are not recorded. In addition, bound
by traditional norms and lack of effective legislation, most Addis
Ababans slaughter sheep in their backyards (this is also true for
chickens). The number of sheep slaughtered in the abattoirs is almost
negligible despite mutton being as equally, if not more, preferred as
beef in Addis. What emerge from the available data is that the market
share of the terminal markets for cattle is declining and that the
designated sheep markets (Aware, Birchiko and Semen Gebeya) are almost
rendered non-functional as sheep are sold and bought in any corner of
the city.

Available data for the period 1996/97 -- 99/00[^41] indicate that some
35-60,000 head of cattle are sold annually through the terminal markets
of Addis. According to the same source, 65% of the cattle supplied to
Addis terminal markets constitute fattened steers while the balance is
composed of bullocks / oxen and to a limited extent barren cows. A
1999/2001 data indicates that Bale has been the major supplier of
fattened steers to these terminal markets (about 38%) followed by
Hararghe (29%), Borana (8.4%), Arsi (6.2%) and Wolayta (3.8%). For
bullocks/oxen, Arsi was the highest supplier (28%) followed by North
Shewa (20%), Hararghe (19%), West Shewa (9.6%) and then Bale (6%).
Estimates based on the quantities of skins collected in Addis indicate
that some 600,000 sheep and 90,000 goats are slaughtered on annual
basis. Cattle and sheep supplies to Addis come predominantly from the
highland areas. The above data signifies that pastoral areas are
squeezed out of the local markets with the relative exception of Borana
in the south. Notwithstanding the factors of proximity and the
availability of exchange goods, this scenario explains why pastoral
areas rely more on the cross-border trade than on internal markets. This
dominant position of the highland areas is likely to continue in the
foreseeable future with the current level of the national off-take.
Similarly, the cross-border trade is likely to expand and grow with all
its implications if the current off-take level is not augmented through
the export market or increased national per capita consumption rate.

**Table 2-3, Proportion of cattle sold through terminal markets Vs the
total**

Slaughtered at Kera

  ------- --------------------- --------------------- -------------------
          *No.of cattle sold in *No. of cattle        *% Supplied through
          Addis terminal        inspected at Kéra     the terminal
          markets^1^*           abattoir^2^*          markets*

  96/97   54,592                125,595               43%

  97/98   55,589                131,996               42%

  98/99   38,037                168,180               23%

  99/00   44,650                155,459               29%
  ------- --------------------- --------------------- -------------------

Source: 1 Addis Ababa City Administration Bureau of Agriculture

2 Addis Ababa Abattoir Enterprise

Middlemen are prominent particularly at Kéra and Semen Gebeya and in
some of the undesignated sheep markets. Middlemen have no license or do
not pay tax and operate as syndicates. On arrival, traders are persuaded
to tell brokers the price they look for and hand over the cattle to
them. If brokers think that the price a trader is asking for is too
high, then they pressure the trader to bring his price down and thereby
maximize their margins. Brokers also add their own margin on top of the
trader's price when negotiating with buyers. Anything above what the
trader has asked for goes to the broker in addition to an average
commission rate of about Br 250/head. Brokers justify their existence
through sheer intimidation and in the process play a critical role in
determining the price of the day.

There are three abattoirs in Addis of which two are public owned - Kéra
and Akaki. These are managed by the Addis Ababa Abattoir Enterprise.
Akaki slaughterhouse is located in the outskirts of the city and serves
both Akaki town and Addis. Kara Alo, a share company, serves the Eastern
peripheral areas of Addis and supplies meat to some 35 butcheries.
Usually, cattle of lower quality are slaughtered in Kara Alo.

Kéra is the oldest and the biggest of all with an average daily intake
of some 500 head of cattle (up to 2,000 head/day during holidays). Kéra
also slaughters about 150 shoats a day mainly for some hotels and
restaurants. This low figure signifies that most of the small ruminants
are slaughtered at home. The Kéra abattoir is busy on Wednesdays and
Fridays as demand for meat peaks up on Thursdays and Saturdays. The
abattoir also provides transport services for meat and offal to the
butcheries.

Transaction costs, market and abattoir service fees are applied at flat
rate regardless of the value of the cattle purchased in all the terminal
markets (though transport costs are less for Kara Alo). The City
agricultural and Finance Bureaux and the abattoirs collect these fees.
The service fees and transaction costs add up to Br 87/head at Kara Alo
and Br 104 at Akaki and Kéra markets. At Kéra, there is also an
additional brokerage fee of about Br 250 on average, bringing the total
paid for service and transaction fees to Br 354/head. Based on a three
year cattle price data (1998-2001) collected by the City Bureau of
Agriculture, the proportion of transaction costs and service fees at
Kéra market (including broker fees) is equivalent to an astounding 17%
of the purchase price of a steer, 29% of a Bullock/oxen and 27% of a
barren cow.

**Table 2-4 Costs incurred for Market Transaction and Service fees per
cattle in Addis**

In Birr

  ------------------------ ------------------ ----------- --------- --------
  *Particulars*            *Collected by*     *Kara       *Akaki*   *Kéra*
                                              --Alo*                

  Market service charge    Agriculture Bureau 5.00        5.00      5.00

  Sales Tax                Finance Bureau     5.00        5.00      5.00

  Meat inspection          Agriculture Bureau 2.00        2.00      2.00

  Slaughtering and         Abattoirs          40.00       57.00     57.00
  transport                                                         

  Income Tax               Finance Bureau     35.00       35.00     35,00

  Brokerage fee            Brokers            \-          \-        250.00

  Total                                       87.00       104.00    354.00
  ------------------------ ------------------ ----------- --------- --------

Source: Compiled from data provided by the City Agricultural Bureau

2.  **Butcheries**

An estimated 1,085 butcheries operate in Addis, of which 835 are
licensed. All butcheries serve traditional cuts to customers. Some of
these butcheries also double as 'beef restaurants' serving raw and fried
meat to customers. Such services may cost additional 2-5 Br/kg of meat.
Almost all butcheries operate as 'meat kiosks' with no cold chain
facilities on the pretext of customers' preference for fresh meat (with
the exceptions of few groceries where European cuts are served).

According to Data from the City Agricultural Bureau, the proportion of
animals bought in the terminal markets compared to the numbers offered
is declining. For example, 68% of the steers and 57% of the
bullocks/oxen offered for sale were bought in 1998/99. In 2000/01, only
58% of the steers and 33% of the bullocks/oxen were purchased. The
decline may be attributed to a growing trend of butchery owners sourcing
animals outside Addis to cut costs on brokerage and market service fees
that offset the additional transport costs incurred. At the same time,
marginal decreases in live weight prices have been observed over the
last three years - from Br 6.10/Kg for steers in 98/99 to Br 5.72 in
2000/01; from Br 4.2 to Br 3.98 for oxen/bullocks; and from Br 5.23 to
Br 5.17 for cows. With increasing trends of butcheries sourcing animals
outside Addis, the number of cattle sold through the terminal markets
may even decrease further. This should serve as a signal for the city
administration (i) to review the service fees and transaction costs to
an equitable level of the services provided, and (ii) to minimize or
stop unnecessary brokerage fees paid by butchers at Kéra to attract
potential buyers. Already, the city administration is loosing so much
money from sheep sold outside of its designated markets.

In spite of declining livestock prices, the price of beef has remained
constant in Addis within the existing range over the last few years.
Variations in meat prices in Addis mainly reflect the location of the
butchery, the quality of meat on offer and also the reputation of the
particular butchery through word of mouth. Butcheries that double as
'beef restaurants' selling both raw and fried meat charge higher for
both the take away and meat consumed in the premises. Such butcheries
operate on large capital base with a high turn over rate and source
their animals directly from secondary markets and feedlots. Similarly,
there are also restaurants that are licensed to run 'meat kiosks' on the
side serving both take away and dining customers. Such places may charge
even higher than all the other butcheries.

Current meat prices in Addis range from Br 8/Kg in Kara, where low
quality cattle are slaughtered, to Br 25/kg in Bole area for prime cuts.
In some places like Kazanchis, the range varies between Br 14 and 16,
and in Piazza, between Br 20 and 22. In Mercato, the price is usually
around Br 13/kg. A survey by the City Agricultural Bureau in six zones
of Addis puts the average price at Br 14.58/Kg. However, the survey
didn't take into account the quality of meat served in the different
butcheries. A more recent survey[^42] suggests an average meat price of
Br 18 and Br 16/Kg from fattened steer and fattened oxen respectively.

######## 

######## 2.2.3 Producer's share of the Retail price

Trends indicate that the share of the producer from the retail price is
declining. A 1983/84 Livestock Sub Sector Review[^43] put the share of
the producer at 76% of the retail price, the balance 24% being retained
by the butcher. A 1995 study[^44] indicated that the producer's share
has gone down to 55% of the retail price in Addis Ababa. It was 56% in
Nazareth and 72% in Chancho (a small town north of Addis). There are no
indications, in both cases, if the retailers' overheads were included in
the calculation. Nevertheless, the figures provided a general picture.

The following table is based on data collected by the City Agricultural
Bureau for three years on live weight, price and the associated service
fees and transaction costs at the Kéra terminal market. Other overheads
such as license fees, taxes, utilities, labour and income from offal and
skins are not included in the calculation.

Table 2-5 Estimated Gross profit of butcheries per cattle (in Birr)

  --------------------------------------- ---------------- ---------------
  *Particulars*                           *Fattened steer* *Fattened oxen*

  Average purchase price in Addis         2,096.00         1323.00

  Service fees, taxes and transaction     354.00           354.00
  costs                                                    

  Total cost                              2,450.00         1,586.00

  Average live weight in Kgs              346              296

  Dressing percentage                     50%              50%

  Carcass weight in Kgs                   173              148

  Average selling price of meat/Kg        18               16

  Gross income                            3,114.00         2,368

  Gross margin                            664.00           782.00
  --------------------------------------- ---------------- ---------------

Source: Compiled from City Agriculture Bureau data

It should be noted that the purchase price of cattle in Addis includes a
mark up of one-fourth to one-third over that of the producer's price.
Moreover, butchery owners accrue significant savings from brokerage fees
and lower purchase prices (that offset additional transport costs) when
they source livestock from outside of Addis. Traders operating in this
manner could easily realize a gross profit margin of over Br 1,000/head.
However, the increase in the profit margin is not transferred to the
producer. In fact, the price of live animals has gone down considerably
in recent days due to decreasing purchasing power of the population. The
local daily, Addis Zemen, reported[^45] that cattle sold as much as Br
2,500 are now offered for as low as Br 1,500 (March 2001). Yet, the
Daily cited complaints from customers that the price of beef has
remained the same, demonstrating the power of the meat cartel.

######## 

######## 2.3 Exports

The share of animal and animal products from total export earnings has
been declining steadily over the last five years from 12.4% in 95/96 to
8.4% in 98/99. This was not because exports in other types of
commodities have increased. It was rather due to the underperformance of
the livestock sector for a variety or reasons.

######## Table 2-6 Share of Livestock and Livestock Products on Foreign Exchange Earnings

+--------+--------+--------+--------+--------+--------+--------+--------+
| *      | *Of    |        |        |        | *Of    |        |        |
| Years* | the    |        |        |        | animal |        |        |
|        | total  |        |        |        | and    |        |        |
|        | e      |        |        |        | animal |        |        |
|        | xport* |        |        |        | pro    |        |        |
|        |        |        |        |        | ducts* |        |        |
+--------+--------+--------+--------+--------+--------+--------+--------+
|        | A      | Hides  | #      | Live   | Hides  | Meat   | Live   |
|        | nimals | and    | # Meat | a      | &      |        | a      |
|        | &      | skins  |        | nimals | skins  |        | nimals |
|        | animal |        |        |        |        |        |        |
|        | pr     |        |        |        |        |        |        |
|        | oducts |        |        |        |        |        |        |
+--------+--------+--------+--------+--------+--------+--------+--------+
| 1      | 12.38  | 11.88  | 0.47   | 0.03   | 95.9   | 3.77   | 0.23   |
| 995/96 |        |        |        |        |        |        |        |
+--------+--------+--------+--------+--------+--------+--------+--------+
| 1      | 10.47  | 9.57   | 0.62   | 0.29   | 91.3   | 5.93   | 2.74   |
| 996/97 |        |        |        |        |        |        |        |
+--------+--------+--------+--------+--------+--------+--------+--------+
| 1      | 9.36   | 8.40   | 0.71   | 0.25   | 89.7   | 7.56   | 2.72   |
| 997/98 |        |        |        |        |        |        |        |
+--------+--------+--------+--------+--------+--------+--------+--------+
| 1      | 8.43   | 6.68   | 0.87   | 0.16   | 86.7   | 11.28  | 2.04   |
| 998/99 |        |        |        |        |        |        |        |
+--------+--------+--------+--------+--------+--------+--------+--------+
| 1      | 8.43   | 7.24   | 0.83   | 0.36   | 85.9   | 9.81   | 4.24   |
| 999/00 |        |        |        |        |        |        |        |
+--------+--------+--------+--------+--------+--------+--------+--------+

Source: Adapted from National Bank of Ethiopia data

Compared to its livestock resources, the volume of Ethiopia's livestock
and red meat exports has been low for a long time. In addition to the
usual constraints (livestock disease, poor infrastructure, inefficiency
etc), the export potential has been severely hampered by inconsistent
and at times self-defeating government policies over the past 30 years.
The promising initiatives made in live animal, canned and chilled meet
exports in the late 60s and early 70s through the private sector were
prematurely curtailed following the nationalization process that took
place in the mid 70s during the socialist phase. It took the substitute
government agency, Livestock and Meat Development Enterprise (LMDE),
some 7-8 years to initiate the export of live animals and chilled meat
to the Gulf state and canned meat to Europe/Asia. The critical time lost
until the LMDE established itself as an exporting agency saw the
emergence of new suppliers to the Gulf States such as Australia, New
Zealand and some European countries with which the LMDE couldn't
compete. At the best of times, LMDE was capable of exporting about half
a million shoats per year to the Gulf States. The canned meat export to
Europe and Asia during this period was erratic in nature because of high
overhead costs and supply problems.

To sum it up, the nationalization of the livestock export trade impacted
the livestock- sector in a number of ways. Firstly, in a significant
drop in the volume of live animals export to the Middle east and
canned/chilled meat to other destinations. This provided a critical
lead-time for other suppliers such as Australia and New Zealand in the
Middle East market against which it is nearly impossible to compete
today. Secondly, in the proliferation of the cross-border trade in
unprecedented manner that continues to this day with all its
implications (such as losses in tax revenues and the smuggling of goods
on the reverse side). Thirdly, in significantly affecting the outputs of
pastoral development projects (SORDU, NERDU and JIRDU) that were
designed in mind with the private sector playing a lead role in the
marketing of livestock - a crucial fact missed by so many consultants
including the World Bank that financed and has since reviewed the
outputs of these projects.

Nevertheless, prior to its sale the LMDE (like the LMD in Kenya before
the mid-80s) was making a progress at its own pace by setting up
purchasing offices in pastoral areas for both the export market and its
own meat canning facilities. Following the change of Government in early
90s, LMDE's activities came to an end when its five meat processing
facilities and holding grounds along with other facilities were sold to
a single buyer. Since the privatization, the meat canning facilities
have relied mainly on a captive domestic market of supplying canned meat
and other canned products to the defense sector, albeit intermittently,
depending on the available government budget. So far, the processing
plants have not exported any quantity of canned/chilled meat. Whether
they can export canned meat profitably, if and when they export, is
doubtful given their current overheads, such as the use of imported tins
for packing.

The impact of privatization is perhaps felt more on live animals exports
following the demise of the LMDE. The nascent private sector (excluding
ELFORA) lacks the huge financial capital required for live animal
exports. Ethiopia's' export output has, therefore, been limited to
chilled/mutton/beef in the last 5-7 years. This comes mainly from small
private slaughterhouses established not long ago. Many of these small
slaughterhouses are located within a radius of some 100 kms from the
capital for close proximity to the airport. Though the volume of exports
remains small in relation to the livestock potential of the country, a
steady growth was maintained until the Gulf States applied the RVF ban
in the year 2000. The ban has critically affected almost all of these
small private exporters both in terms of limiting their output capacity
and stalling their plans for expansion.

**Table 2-7 Value and Quantity of chilled mutton/meat meat exported
during**

96/97-00/01

  --------------- ------------------------- -----------------------------
  *Year*          *Quantity in MT*          *Value in '000 Br*

  1996/97         1,716                     24,175

  1997/98         1,910                     29,340

  1998/99         2,078                     31,644

  1999/00         1,977                     32,708

  2000/01         NA                        8,204 (3 quarters)
  --------------- ------------------------- -----------------------------

Source: National Bank of Ethiopia[^46]

Trends of increasing volume of exports since 1994/5 have been reversed
since 99/00 as a result of the RVF ban. This is particularly true for
the year 00/01 as evidenced by the revenue earned for the first three
quarters of the year 00/01.

Live animal exports in the last five years were minimal following the
demise of the LMDE. This is attributed to a series of factors - shortage
of capital, poor infrastructure lack of enabling policy and legislation,
and the landlocked status of the country being the main hurdles in
addition to the poor financing of veterinary services. ELFORA, the
company that bought LMDE's facilities and operating on a substantial
capital base, has not managed to export live despite their potential. As
a result, Ethiopia's' live animal exports remain significantly low.
Thus, only a total of 69,189 head (inclusive of cattle, shoats and
camels) were exported in 96/97, 66,808 head in 97/98, 11,832 head in
98/99, 65,443 head in 99/00 and 3,509 head in 00/01[^47]

######## 

######## 2.3.1 Output potential Vs actual performance

The liberalization process in Ethiopia has nevertheless encouraged the
establishment of private businesses in addition to the privatization of
public owned enterprises. In the livestock sector, these include
tanneries, leather manufacturing enterprises, meat processing plants,
export standard slaughterhouses and poultry farms among other things.
Ideally, this should have resulted in a corresponding growth in exports.
But that is not the case.

######### Table 2-8 Output capacity of meat processing plants and export standard abattoirs

+-------------+--------------+-------+-------+-----------+-----------+
| *Company    | *As of year* | *Live |       | *Chilled  | *Canned   |
| name*       |              | ani   |       | meat,     | meat*     |
|             |              | mals* |       | mutton    |           |
|             |              |       |       | (MT)*     |           |
+-------------+--------------+-------+-------+-----------+-----------+
|             |              | ## S  | C     |           |           |
|             |              | hoats | attle |           |           |
+-------------+--------------+-------+-------+-----------+-----------+
| HELIMEX     | 1995         | \-    | \-    | 6,480     | \-        |
+-------------+--------------+-------+-------+-----------+-----------+
| Dr T.Hailu  | 1996         | 2     | \-    | 500       | \-        |
|             |              | 0,000 |       |           |           |
+-------------+--------------+-------+-------+-----------+-----------+
| ELFORA      | 1997         | 47    | 3     | 16,160    | or 68.4   |
|             |              | 0,000 | 0,000 |           | million   |
|             |              |       |       |           | tins      |
+-------------+--------------+-------+-------+-----------+-----------+
| SAAFI       | 1998         | 5     | \-    | 400       |           |
|             |              | 4,000 |       |           |           |
+-------------+--------------+-------+-------+-----------+-----------+
| ALFOZ       | 2000         | \-    | \-    | 720       |           |
+-------------+--------------+-------+-------+-----------+-----------+
|             | Total (as of | 54    | 3     | 24,260    | 6         |
|             | '00)         | 4,000 | 0,000 |           | 8,400,000 |
+-------------+--------------+-------+-------+-----------+-----------+

Source: Ethiopian Export Promotion Agency. Please note that the list may
not be exhaustive.

In the table below, a comparison is made between the theoretical
capacity of the meat industry and the volume of exports from Ethiopia.
The figures relate to the capacity of the private sector since 95/96.
The data may lack some accuracy because of a gap between the time in
which the individual facilities claim to be established and when they
actually started operation. Furthermore, ELFORA has been focusing
largely on the domestic canned meat market for the armed forces in the
first two years of its operation during this period and this is not
included in the table as the focus of this exercise is on the export
market.

#########  Table 2-9 Output capacity Vs volume of exports

  ------- ---------- -------- ---------- ---------- -------- ---------- ---------- -------- ----------
  *As of  *Live                          *Chilled                       *Canned             
  year*   animals                        meat (MT)*                     meat*               
          (head)*                                                                           

          Capacity   Actual   Perform.   Capacity   Actual   Perform.   Capacity   Actual   Perform.

  95/96   20,000     11,554   57%        6,980      949      13%        \-         \-       \-

  96/97   490,000    69,189   14%        23,540     1,716    7%         68.4 mil.  NA       NA
                                                                        tins                

  97/98   490,000    66,808   13.6%      23,540     1,910    8%         "          NA       NA

  98/99   544,000    11,832   2%         23,540     2,078    9%         "          NA       NA

  99/00   544,000    65,480   12%        24,240     1,977    8%         "          NA       NA
  ------- ---------- -------- ---------- ---------- -------- ---------- ---------- -------- ----------

Compiled from Ethiopian Export Promotion Agency, National Bank of
Ethiopia and MOA data

##### 

##### The factors that have led to this poor performance include (but not limited to):

-   Lack of capital;

-   High operational costs due to long inland transportation to the
    ports, high freight rates and high port charges;

-   Lack of well maintained quarantine, holding grounds and stock route
    facilities;

-   Government bureaucracy with LC procedures, clearing houses,
    transport arrangements etc;

-   Shortage of cold storages, lack of standard materials such as
    packaging;

-   High internal service charges, fees and taxes;

-   Lack of information on export markets;

-   Shortage of trained manpower etc.

######## 

######## 2.4 Ownership and Status of Ranches in Ethiopia

Ranching is not that common in Ethiopia due to the land tenure policy
that prohibited private ownership of land for the last 30 years. Even in
these days of so-called liberalized markets, the Government policy
states that land can be leased but not owned. As a result, the ranches
that exist in Ethiopia are either leased or owned by cooperatives. Total
leased private ranches, holding areas and feedlots add up to 58,060
hectares, a big proportion of which is owned by ELFORA. Cooperative
ranches own about 51,000 hectares[^48]. Most of these ranches are
underutilized.

In addition, regional governments (Bureau of Agriculture) own some
15,000 hectares. In the past, many of these government owned ranches,
when they were under the Ministry of Agriculture, were used for
producing crossbred heifers and bulls. Even then the total number of
heifers and bulls produced over the years was far less than the
potential capacity of the ranches. The current status of these ranches
is even worse due to shortage of budget, deterioration of grazing land
(bush encroachment), lack of qualified personnel, shortage of inputs,
reallocation of land for other uses, illegal grazing/charcoal production
by farmers and more importantly lack of clear purpose. Furthermore, a
significant proportion of the land area of some of the ranches (about
7,000 hectares) has been reallocated for other uses. The ranches are
grossly underutilized at the moment.

**2.5 Skins and Hides**

######## 

######## Ethiopia has been exporting more of hides and skins relative to its meat and live animals export. The channels for the collection of hides and skins to the tanneries are relatively well established but need significant improvements to reduce damages caused by thorns, ectoparasitic diseases, poor flaying and storage methods. Whereas achieving significant improvements on the former two may not be easy given the country's under developed animal health delivery system and livestock grazing habits, technical improvements on the latter two are within reach given some commitment.

######## There has been a marked growth in the establishment of new private tanneries in Ethiopia since 1992, though many of them don't operate at full capacity due to shortages in raw skins and hides supplies. Most of the skins and hides exported are semi-processed (as pickled, wet blue or crest). Finished leather goods and articles are produced mainly for the domestic market and to some extent for the export markets. Hides and skins generate the second foreign exchange earnings after coffee. The export performance for the three quarters of the year 2000/2001 show a significant growth in the export trade over the previous years (see value for the three quarters of 00/01).

Table 2-10 Volume and Value of Skins and Hides Export for the Years
96/97 --00/01

+---------------+--------+--------+--------+--------+----------------+
| *Year*        | *19    | *19    | *19    | *19    | *2000/01*      |
|               | 96/97* | 97/98* | 98/99* | 99/00* |                |
+---------------+--------+--------+--------+--------+----------------+
| ##### Qua     | 8,637  | 7,892  | 8,824  | 8,604  | NA             |
| ntity in tons |        |        |        |        |                |
+---------------+--------+--------+--------+--------+----------------+
| Value in '000 | 3      | 3      | 2      | 2      | 480,758 (3     |
| Br            | 72,253 | 47,699 | 43,052 | 86,459 | Quarters)      |
+---------------+--------+--------+--------+--------+----------------+

Source: National Bank of Ethiopia

There are some 19 tanneries in Ethiopia, 4 of which are public and 15
private. Ten of the tanneries were built since 1992 and two just
recently. An additional 2 tanneries are under construction. Of the
tanneries which are fully operational, 17 require some 18.4 million raw
skins and 1.8 million hides for 275 working days/year at 85% capacity.
Together with the two under construction, the 19 tanneries would require
some 25.5 million skins and 2 million hides if they operate at 85%
efficiency for 275 working days/year. When the two under construction
are completed, the demand for raw skins and hides is going to be higher.
On the other hand, informed estimates put the country's annual
production of raw skins and hides at 16.2 and 2.4 million
respectively[^49]. Assuming that the estimated off-take rate is close to
the true picture and given the fact that not all the raw skins and hides
produced in the country are likely to reach the tanneries, it is likely
that the tanneries will face a critical supply shortage of hides and
particularly raw skins in the future.

The tanneries total daily output (including those under construction) is
estimated at 9,955 pieces of hides and 133,450 skins per day. Current
performance rate of the 17 tanneries that are fully operational varies
between 50 -- 83% for hides and 33-85% for skins.

Table 2-11 Daily Output Capacity Vs Actual Production of Selected
Tanneries

+---------+-------+---------+----------+-------+---------+----------+
| *T      | #     |         |          | #     |         |          |
| annery* | ##### |         |          | ##### |         |          |
|         | ### * |         |          | ### * |         |          |
|         | Hides |         |          | Skins |         |          |
|         |  (in  |         |          |  (in  |         |          |
|         | pcs)* |         |          | pcs)* |         |          |
+---------+-------+---------+----------+-------+---------+----------+
|         | Cap   | Pro     | Per      | Cap   | Pro     | Per      |
|         | acity | duction | formance | acity | duction | formance |
+---------+-------+---------+----------+-------+---------+----------+
| Mojo    | \-    | \-      | \-       | 9,250 | 5,000   | 54%      |
+---------+-------+---------+----------+-------+---------+----------+
| A.Ababa | 5,000 | 4,000   | 80%      | \-    | \-      | \-       |
+---------+-------+---------+----------+-------+---------+----------+
| D       | \-    | \-      | \-       | 6,000 | 2,000   | 33%      |
| .Berhan |       |         |          |       |         |          |
+---------+-------+---------+----------+-------+---------+----------+
| ELICO   | 650   | 540     | 83%      | 1     | 13,406  | 72%      |
|         |       |         |          | 8,650 |         |          |
+---------+-------+---------+----------+-------+---------+----------+
| Hora    | \-    | \-      | \-       | 4,500 | 2,250   | 50%      |
+---------+-------+---------+----------+-------+---------+----------+
| Dire    | 500   | 425     | 85%      | 6,000 | 5,185   | 85%      |
+---------+-------+---------+----------+-------+---------+----------+
| Bale    | 300   | 150     | 50%      | 2,000 | NA      | NA       |
+---------+-------+---------+----------+-------+---------+----------+

Source: Ethiopian Export Promotion Agency

While existing tanneries are operating below capacity, the proliferation
of new ones will further reduce the output per tannery to the extent
where some may cease operation altogether (49 hides and skins processing
investment projects were submitted to the Ethiopian Investment Agency
between 1992-1999). Put simply, the current national production of hides
and particularly skins is not sufficient enough for the existing
tanneries let alone for new ones.

Most of the fully operational 17 tanneries produce semi-processed skins
and hides. Only 6 of them (3 public and 3 private ones) produce finished
leather -- such as linings, leather garments, upper covers for shoes
etc. Within these, only Awash Tannery produces the finished leather into
leather articles and products. The other five supply the finished
leather to domestic and foreign leather products manufacturing
enterprises. The performance rate for these tanneries range from as low
as 10 to 92%.

Between 1992 and 1999 alone, the Investment Promotion Authority awarded
certificates to 106 leather industries. Of these, 14 had plans to export
but only 3 are involved in the export business. The main product lines
of these industries are shoes, but also other leather goods and
articles, which are exported in small quantities to other African
countries and Europe. The industry is trying hard to enter the highly
competitive export market the success of which will depend on the price,
quality and design of products and a tailored marketing strategy for
each specific importing region/country. Similarly, the industry needs to
safe guard its domestic market, as mass produced cheap imports could
easily tip them out of business. Recently, the shoe manufacturing
industry was in critical situation as a result of cheap imports of shoes
from Turkey and China prompting the Ethiopian Tanners Association to
lobby the government. Fortunately, the general public has come to know
about the inferior quality of imported leather shoes from China and
Turkey. Obviously, such public perception may help the survival of the
industry more than a reluctant government intervention.

**The Marketing Channel for Hides and Skins**

Hides & Skins traders

Hides & Skins wholesalers

######## 

######## 

######## 

######## 

######## 2.6 The Cost of Livestock Trading in Ethiopia[^50]

A study by LMA (Mekonen and Yimam*, 2001*) indicates a wide variation in
the amounts of service charges, fees and taxes incurred by livestock
traders depending on the source of supplies. These variations emanate
mainly from the different levels of service charges and fees applied by
the various Regional States and also from a convenient misunderstanding
of the Federal Acts to enrich the State's coffer. Surprisingly,
variations in service fees and charges are also observed within a given
Regional State between different market centers. For example, of the 19
market centers surveyed by LMA in the Oromia Regional State:

-   *5 centers charge market service fees only from the buyer;*

-   *13 centers charge service fees from the seller (whether he has sold
    any animals or not) and from the buyer for animals purchased;*

-   *1center charges service fees from the buyer and the seller either
    individually or jointly.*

Basically, charges and fees at the local level include market service
fees, transit fees and sales tax. Traders are subjected to pay all of
these while producers/sellers may be charged to pay market service fees
only depending on the center.

1.  ***Market Service Fees***

Local councils charge market service fees for providing space where
buyers and sellers meet to conduct their transactions. Most of these
market centers do not provide other facilities (such as watering and
feeding troughs) except a fenced/walled area. In some cases, they may
not be fenced at all. Yet, wide variations are observed in the service
fees charged by different regions.

Table 2-12 Variations in Market Service Fees charged by the Regional
States

+------------+------------------+------------------+------------------+
| ####       | *Cattle*         | *Shoats*         | *Camel*          |
| # *Region* |                  |                  |                  |
+------------+------------------+------------------+------------------+
|            | Range in Birr    | Range in Birr    | Range in Birr    |
+------------+------------------+------------------+------------------+
| Somali     | 3.00 -- 10.00    | 1.00 -- 2.00     | 3.00 -- 10.00    |
+------------+------------------+------------------+------------------+
| Oromia     | 1.00 -- 20.00    | 0.40 -- 5.00     | 4.00 -- 10.00    |
+------------+------------------+------------------+------------------+
| Afar       | 3.00 -- 5.00     | 1.00             | \-               |
+------------+------------------+------------------+------------------+
| SNNP       | 2.00-10.00       | 1.00-3.00        | \-               |
+------------+------------------+------------------+------------------+
| Amhara     | 1.00-2.00        | 0.50-1.00        | 2.00-3.00        |
+------------+------------------+------------------+------------------+

Source: LMA

2.  ***Transit Fees***

There is inconsistency in the definition of the term transit fee. In
some cases, transit fees are paid when animals enter the market. This
could be translated as 'market entrance fee', the cost of which is borne
by the producer/seller. Transit fees are also charged from the trader
for animals purchased in the same market and trucked or trekked to other
destinations, as a sort of export tax. This arrangement enables local
councils to collect transit fees twice. Traders are also charged transit
fees a number of times [^51] en route to their final destinations,
despite a regulation stating that transit fees are to be paid only at
the point of origin from which the animals are to be exported. Local
councils en route claim to charge transit fees on the pretext of
maintaining the cleanliness of the towns but the fees are applied
indiscriminately on both trekked and trucked animals. Moreover, the
state of many of such towns is hardly convincing that the transit fees
are used for the intended purpose.

Of the five Regional States listed below, transit fees are exempted in
the Afar region only, since there are no well-developed livestock
markets in the region. Afars rely on the neighboring states of Amhara
and Oromia to sell their cattle where they are liable to pay transit
fees. The Somali Regional State also does not charge transit fees on
cattle perhaps because of the low volume of trade in this species. The
following table illustrates the range of applicable transit fees in each
region. However, the total amount paid is subject to the number of
regions and the specific towns that apply transit fees the livestock
pass through[^52].

Table 2-13 Range of Transit Fees Charged by Regional States

+-----------------------+-----------------------+-----------------------+
| ######## Region       | ######                | ######## Per Shoat    |
|                       | ## Per head of cattle |                       |
+-----------------------+-----------------------+-----------------------+
|                       | #                     | #                     |
|                       | ####### Range in Birr | ####### Range in Birr |
+-----------------------+-----------------------+-----------------------+
| ######## Somali       | ######## -            | ######## 2.00-3.00    |
+-----------------------+-----------------------+-----------------------+
| ######## Oromia       | ######## 1.00-7.00    | ######## 0.75-1.00    |
+-----------------------+-----------------------+-----------------------+
| ######## Afar         | ######## -            | ######## -            |
+-----------------------+-----------------------+-----------------------+
| ######## SNNP         | ######## 2.00-10.00   | ######## 1.00-2.00    |
+-----------------------+-----------------------+-----------------------+
| ######## Amhara       | ######## 1.50         | ######## 0.50-1.00    |
+-----------------------+-----------------------+-----------------------+

######## Source: LMA

######## 

######## *2.6.3 Sales Tax*

The Sales and Excise Act of 68/85 is confusing in nature. The Act
stipulates that a 5% sales tax should be levied on the seller/producer
and if this cannot be achieved for some reasons the tax should be
collected from the buyer or the retailer (butcheries). This has led to a
standard practice of collecting sales tax mainly from the traders and
butchery owners for animals they have purchased. In some cases,
sellers/producers are forced to pay sales tax for animals they have
brought to the market but not sold[^53].

The same Act also exempts exporters from paying the sales tax if the
animals bought are to be exported either live or in the form of
beef/mutton. Yet, exporters are persuaded to pay the sales tax either at
the point of purchase or checkpoints, on the pretext of reimbursing them
when they produce documentary evidences. However, exporters are
discouraged from lodging return claims as the process of getting
reimbursements takes up to a year[^54].

Transaction is done in almost all markets through negotiations involving
no receipts for animals sold or purchased. This loophole has led to a
system by which the tax collector determines the proportion in sales tax
a trader has to pay by making his/her own price estimate of the animals
purchased. Needless to say, this system is open for corruption.

The sales tax varies according to the Regional States. For example,
traders pay between 40-50 Br/cattle and 4-5 Br/shoat in the Somali
Regional State. The Oromia Region Finance Bureau bases its sales tax at
an average price rate of Br 450/cattle and camel and Br 60/shoat. This
translates into a sales tax of Br 23/cattle and camel and Br 3/shoat
irrespective of the actual purchase price. Yet, the Borana Zone of the
Oromia Region charges only Br 10/cattle and Br 2/shoat. At the same time
traders are forced to pay transit fees for passing through such towns as
'Bordede, Boreda, Negele, Kibremengist and Bore within the Oromia
region'. Sales tax is charged in the Afar Region at three checkpoints
for livestock originating either from within the region or from outside.
The Region doesn't take into account whether traders have already paid
sales tax at the point of purchase or somewhere else. According to the
LMA study, the amount to be paid is determined through negotiations
between the tax collector and the trader and if they fail to reach an
agreement, the tax collector has the final say. Accordingly, the region
charges the highest sales tax ranging between Br 50 and 75/cattle and
between Br 6.50 and 15/shoat. The SNNP Region charges sales tax at its
Tikur- waha checkpoint (at the rate of Br 2/cattle and Br 1/shoat) and
at Karat (at the rate of Br 10/cattle and Br 2/shoat), whether traders
have paid sales tax elsewhere or not.

In some cases, both sellers (for animals brought to the market but not
sold) and buyers (for animals purchased) are subjected to pay sales tax,
for example, in Hula and Sodo markets of the SNNP region. Yet, these two
markets are prime examples of the inconsistencies surrounding the
application of sales tax. In Hula traders are charged a sales tax of
between Br 45-65/head whereas it is only Br 2/head at Sodo. Similarly
Hula collects a sales tax of Br 5-12.50/sheep and Br 4-10/goat whereas,
Sodo charges a minimal Br1/shoat. To add to the confusion, the study
states that the Amhara region doesn't charge sales tax at all, except
once in a year.

**Table 2-14 Average Level of Sales Tax Levied by the Regional States**

  --------------------------- --------------- -------------- -------------
  *Region*                    *Average Sales                 
                              Tax in Br*                     

                              Cattle          Sheep          Goats

  Afar                        62.50           10.75          12.00

  SNNP                        45.00           10.85          11.65

  Oromia                      16.50           2.50           2.50

  Somali                      45.00           4.00           4.00

  Amhara                      \-              \-             \-
  --------------------------- --------------- -------------- -------------

> Source: LMA

######## 

######## A summary of the costs incurred by traders from points of purchase to exit points for the export market show significant variations. The table below indicates the fees and taxes paid en-route to Debrezeit abattoirs (for chilled beef/mutton exports) from supply sources of various locations. The data indicates that the highest cost per species is paid for livestock originating from the Somali region.

Table 2-15 Total Fees and Taxes incurred en-route to Debrezeit
slaughterhouses (in Br)

+-----------------------+--------------+---------------+--------------+
| ######                | *Cost per    | *Cost per     | *Cost per    |
| # *To Debrezeit from* | head         | sheep*        | goat*        |
|                       | (cattle)*    |               |              |
+-----------------------+--------------+---------------+--------------+
| Dolo Odo              | 57.25        | 34.37         | 35.12        |
+-----------------------+--------------+---------------+--------------+
| Mega -- Yabelo        | 59.25        | 16.88         | 17.60        |
+-----------------------+--------------+---------------+--------------+
| Jinka                 | 15.00        | 6.00          | 6.00         |
+-----------------------+--------------+---------------+--------------+
| Jijiga -- Metehara    | 121.50       | 20.13         | 21.33        |
+-----------------------+--------------+---------------+--------------+
| Asaita -- Mile --     | 70.50        | 14.63         | 15.88        |
| Awash                 |              |               |              |
+-----------------------+--------------+---------------+--------------+

Source: LMA

A similar study on costs incurred for live animals exports indicates
that higher costs are incurred the further the point of purchase is from
Galafi such as Eastern and Southern Ethiopia.

Table 2-16 Total fees and taxes for live animal exports through Galafi
(in Br)

  --------------------------- -------------- --------------- --------------
  *To Galafi from*            *Cost per      *Cost per       *Cost per
                              head*          sheep*          goat*

  Hartisheik -- Awash         124.50         26.75           40

  Dolo Odo -- Nazreth --      64.50          11.25           12.50
  Awash                                                      

  Bati -- Mille               65.50          11.75           13.00

  Asaita -- Logia             3.00           1.00            1.00

  Mega -- Yabello -- Awash    126.75         28.51           29.48

  Jinka -- Galafi             82.50          17.63           18.88
  --------------------------- -------------- --------------- --------------

Source: LMA

A summary of the costs, inclusive of all the taxes and fees borne by the
exporter for exporting live animals, meat, hides and skins have been
computed by LMA. Please note that the unit costs are averaged and actual
costs may vary depending on the distance where the livestock/skins and
hides were purchased from terminal points.

**Table 2-17 Summary of service charges, fees and taxes for exporting
live animals, meat**

**skins and hides**

  ------------------ --------------------------- -------------------------
  *Commodity*        *Unit*                      *Total Fees and
                                                 Taxes/unit*

  Live shoats        1 Sheep/goat                Br 28.10

  Live cattle        Head                        Br 100.94

  Skins and hides    1 container (or 2,750       Br 9837.90
                     dozen)                      

  Mutton/goat meat   Ton                         Br 2,931

  Beef               Ton                         Br 884
  ------------------ --------------------------- -------------------------

Source: LMA

######## The two most important issues exporters complain about are government bureaucracy and the amount of money they have to pay, which does not equate with the services provided. In particular, exporters single out the Ministries of Agriculture, Foreign Affairs and Health as being unnecessarily bureaucratic where lack of commitment, absenteeism and preoccupations with workshops and meetings delay the provision of services on time. Part of the problem arises from each Ministry assigning only one individual to sign the documents. The absence of one signature means that the necessary document would be incomplete. Exporters also add that 'putting stamps and signatures on documents should not be that expensive[^55].'

######## 

######## In addition, government offices don't provide services after 5:30 PM and on weekends during which time their services would be unavailable. As a result, there are instances in which exporters have been forced to take back chilled meat/mutton back to their cold stores particularly when the following days were weekends (In Kenya, the process for exporting perishable products takes few hours). 

######## Cargo space on passenger flights is used for exporting meat either using Ethiopian Airlines or one of those airlines with scheduled flights to the country. Normal cargo rates are expensive and exporters prefer to utilize special freight rates. Chartered flights are uncommon and could also be expensive. Booking is required 3-4 days in advance for direct flights and 5 days ahead for connection flights. Cargo space limitations dictate the quantity to be exported at any given time. Meat exporters bring their cargo to the airport on the day of the flight due to shortage of cold storage facilities at the airport.

######## 

######## 2.7 Policies and Institutional Issues

Following the structural adjustment program a slow market liberalization
process has been taking place in Ethiopia. Formerly Government-owned
industrial abattoirs and tanneries (except three of the latter) have
been fully privatized. The Government owned Livestock and Meat
Development Enterprise has been dissolved. Livestock and livestock
products marketing are carried out entirely by the private sector.

One private company -- ELFORA, now owns all the industrial abattoirs
including associated facilities such as holding grounds for live animal
exports. However, despite its large capital base and a promising start,
the company has not been involved in export activities and recent
newspaper reports indicate that the company's finances are in red.
ELFORA's low performance will deprive the country of its export
potentials since it owns all the industrial abattoirs. On the other
hand, small export abattoirs established since the privatization have
been successfully exporting meat from Ethiopia, though in small
quantities (particularly after the RVF ban). In summary, the country's
export level, in canned/chilled red meat or live animals, has decreased
significantly since privatization.

The Government didn't have any specific policy on livestock marketing
until the establishment of the Livestock Marketing Authority (LMA) in
1998 (currently under the Ministry of Trade). The LMA was set up with
the objectives of promoting domestic and export markets by initiating
policies, laws and regulations, issuing quality control directives on
exportable and importable materials, encouraging and establishing
staging points and quarantine stations for domestic and export trade,
promoting the organization of livestock markets, abattoirs, skins and
hides sheds, encourage the condition of research on the marketing of
animal and animal bi-products etc[^56].

Nevertheless, the LMAs' potential role is limited by a structural
constraint that defines the roles and relationships between the Federal
and Regional administrative structures in Ethiopia. As a federal
structure, the LMA is not represented at Regional levels, and in the
absence of this linkage, its visions, strategic plans and programs can't
be shared or implemented at the grass-root level, by the appropriate
agencies, where it matters most. In fact, when the LMA was established,
Regional Bureaux of Agriculture had bigger expectations[^57], and when
this was not coming, the potentials for cooperation between the Regional
Agricultural Bureaus and the LMA had gone sour. This attitude was
recently demonstrated by the absence of regional representatives from
attending an important situation analysis workshop held by the LMA
despite invitations.

The relationships between the LMA and the Veterinary department of the
Federal Ministry of Agriculture are not cozy either due to overlapping
roles (in the areas of quality control and licensing) of the two
institutions open for interpretations. Apparent differences are already
emerging over the issue of health certificates, designs of
slaughterhouses and payment modalities for meat inspectors made
ambiguous by the Act that established the LMA. Such inter-institutional
problems are likely to damage the export business if left unchecked.

Similarly, the role of the DVS at the Ministry of Agriculture is
undermined by the Federal structure, as regional veterinary departments
do not need to report to the national DVS. Regional veterinary
laboratories are also region focused and reporting relationships between
the regions and the DVS at the Federal Ministry of Agriculture are
minimal. The Ethiopian Agricultural Research Organisation runs the
national referral laboratory.

Some regional Bureaux of Agriculture collect data on livestock markets
(for example the Oromia Region). However, the purpose of this exercise
is not clear[^58]. First, the information from the field arrives too
late for any timely use. Second, the collected data are simply kept in
the files. Third, the data are not available at the national level since
they are kept at the regional offices. Unfortunately, structural
constraints will not also allow the LMA to collect regular market data
from the field since it has no representations. Other issues of concern
as expressed by exporters include, but not limited to, the
following[^59]:

[Live Animals exporters]{.underline}

-   The National Banks' requirement that all legal exports be conducted
    through Letter of Credit in spite of traders exporting their animals
    against limited cash advances in most cases. Under this arrangement,
    the exporter is liable to pay the hard currency to the Bank if the
    importing country rejects the animals for any reasons. The Bank is
    probably unaware that most of the animals originating from the
    region are sold at a cash market in Jizan, Saudi Arabia.

-   Distance of Customs Office from holding grounds -- for example, the
    holding ground at Logia is some 200 Kms away from the nearest
    Customs office at Kombolcha.

[Meat Exporters]{.underline}

-   Cargo space problems;

-   Flight cancellations despite the expenses incurred in processing
    export formalities;

-   Takes a year to get sales tax reimbursements;

[Hides and Skins exporters]{.underline}

-   Transport problems;

-   Occasional delays in obtaining customs certificate;

####### 

####### 2.9 Planned and Ongoing Programmes

####### 

### 2.9.1 *Livestock Marketing Authority*

The LMA has two technical departments - Quality Control and Market
Research and Promotion.

LMA Plans include interventions in three major areas.

*Market Research and Information*: The LMA has conducted a number of
interesting studies and developed a set of guidelines in a move to
initiate policy changes and determine the types of support services
required to enhance the export of livestock and livestock by-products.
These include: a study tour to explore the market potentials in the Gulf
and some African countries; a study on the nature, volume, and impact of
the cross-border livestock trade from Ethiopia; a document to initiate
the collection and the dissemination of market price information for
hides and skins; a detailed study on costs and procedures of live
animals, chilled beef/mutton and skins and hides exports; guidelines on
the construction of rural and urban slaughterhouses and processing sheds
for skins and hides; LMA's findings have been used extensively in this
report.

*Infrastructure:* There are plans, in the near future, to undertake
feasibility studies for the construction of urban and rural
slaughterhouses, livestock sale yards, staging points and primary
processing sheds for skins and hides in strategic centers. It is planned
to manage and maintain such facilities through service fees collected by
the appropriate councils or the LMA itself.

*Supplies:* The LMA plans to improve the type, quality and health of
animals. The strategy for achieving this objective is not clear yet.

In addition, the LMA played a pivotal role in initiating and seeing
through the formation of the Live Animal and Meat Exporters' Association
of Ethiopia.

### 2.9.2 *Live Animals and Meat Exporters Association*

The objectives of the Association include the provision of trade
information (rules and regulations of importing countries, directory of
importers, market trends and prices) to its members, facilitation of the
trade environment (lobbying, pressure group), provision of forum for its
members and organizing and participating in trade promotion exhibitions
in country and abroad.

So far, the Association has been acting as a bridge between members and
relevant government institutions, either through representation or
distributing relevant information, has enabled members to gather and
discuss critical issues such as import bans or customs procedures, has
initiated and facilitated the participation of members at the Sharja
trade exhibition in Dubai where contacts were made with potential
importers from different countries.

Members only contribute 200 Br/year at the moment and an idea is being
floated to charge members on their export volume in the future.

The ban has limited the roles the Association can play curtailing any
incentive for members to pay more in contribution. Of the original 30
members listed with the Association, only 12 remain after the ban. Of
these, 4 have their own abattoirs of various sizes and are active in the
export market at the moment.

####### 

The Livestock and Meat Exporters Association operates at the national
level. Here again, the structure of the Association is such that it is
not capable of providing services for internal livestock traders, the
main suppliers of livestock to the exporters. In fact, the domestic
livestock traders, to whom the exporters are vertically integrated, have
no association at all at regional or national level. Members contribute
a minimal 200 Br per year. An idea is being floated to charge members
proportional fees on the value of their exports. The Association was
established with the support of the LMA.

**2.9.3** ***Department of Veterinary Services**:* plans to build new
quarantine stations/staging points in Moyale, Dewele and Teferiber in
addition to the ones existing in Diredawa, Nazreth and Galafi. This
program is funded by the *National Livestock Development Project,* (of
the African Development Bank), which is focused on animal breeding and
forage program including the control of CCPP and PPR in pastoral areas.

***2.9.4 Southern Tier Initiative*** -- A USAID funded pastoral program
focused on income diversification, the provision of basic health and
education and peace building.

**2.9.5** ***GTZ*** runs the Borana Lowland Pastoral Development Program
which includes market information collection and rural finance among its
seven other components.

**2.9.6** ***World Bank/FAO***- have prepared a Pastoral Community
Development Project for the Pastoral Extension Team of the Ministry of
Agricuture. The project focuses on[^60] a) the development of an
institutional framework to empower pastoral communities b) provide
social and economic investment fund with components for demand-driven
micro-investments, and c) a component for research and development for a
various social and economic issues.

**2.9.7** ***The African Development Bank*** has approved a grant of
\$920,000 for the establishment of a management information system in
the Ministry of Agriculture including an updated database on pastoral
areas, and a diagnostic analysis of potentials and constraints to
pastoral areas.

**2.9.8** ***The Ethiopian Agricultural Research Organisation*** (EARO)
in collaboration with the USAID funded GL-CRSP is involved in Livestock
Early Warning System (LEWS).

**2.9.9 *ILRI (GL-CRSP)/ PARIMA*** is working in pastoral areas on asset
diversification for risk management in the Borana area.

**2.9.10** ***NGOs***

SCF/USA and UK, COOPI, FARM AFRICA, CARE, LVIA, GOAL, PCAE, Gudina
Foundation, AFD and EPARDA are involved mainly livestock health programs
and other activities in pastoral areas. SOS/Sahel focuses on
understanding the intricacies of the pastoral system to 'reinstate and
strengthen the traditional common property management system.'

######## III Sudan

**3.1 Livestock Resources and Off-take**

The last livestock census took place in Sudan in 1976. Current official
estimates of the livestock population are as follows:[^61]

Table 3-1 Livestock population in '000

  -------------- -------------- -------------- -------------- --------------
  *Year*         *Cattle*       *Sheep*        *Goats*        *Camels*

  1997           33,102         39,835         36,037         2,936

  1998           34,584         42,363         36,498         2.974

  1999           35,825         44,802         37,346         3,031

  2000           37,093         46,095         38,548         3,108

  2001           38,325         47,043         39,952         3,203
  -------------- -------------- -------------- -------------- --------------

Source: MoAR/ FAO

Livestock production in Sudan is predominantly pastoral. Ninety percent
of the livestock population is owned and managed by this sector.
Livestock production provides livelihoods for some 20% of the population
and livestock exports generate 25% of the national foreign exchange
earnings[^62].

Off-take rate for 2001 was estimated at 19.9% for cattle, 44.4% for
sheep, 38.5% for goats and 16.4% for camels in 2001[^63]. These figures
imply a dramatic increase in the off-take rate of nearly 5 times for
cattle, twice for sheep and 27 % for goats when compared to the official
estimate in 1995[^64]. On the other hand, MoAR figures indicate a
marginal annual off-take growth level of 0.3% for cattle, 0.75% for
goats 0.18% for camels and -0.3% for sheep for the period 1999-2001.
Total red meat production was estimated at 1,578,000 MT for 2001. In all
probability, the figures for the off-take rates seem highly inflated.
Even at a higher consumption rate of 14 Kgs of red meat per capita, a
population of 30 million would consume around 420,000 tons of red meat.
At an average carcass weight of 150 Kgs for Sudanese cattle (Arab
Agricultural Statistics Yearbook, 2000) this would translate into close
to 3 million head of cattle or an equivalent livestock population in
shoats, cattle and camels. Based on this fact, the actual off-take rate
may be closer to the annual production estimates of hides and skins for
Sudan, which are 2.5 million hides and 11 million skins [^65] (this
figure excludes skins and hides from live animal exports).

**3.2 The Domestic Markets**

Sudan extends over 2.5 million km^2^. Major livestock production areas
are scattered in the range of some 600-1,200 kms from the terminal
markets. Migration patterns alternate in South-North and North-South
directions bringing the herders close to the primary markets during the
wet season and vice versa during the dry season. The efficiency of the
marketing system is co-related to the distance of production areas and
the seasonality of supplies (due to migrations), which in turn have led
to the development of a unique internal livestock market system in
Sudan.

The livestock markets of Sudan are highly broker-dominated and without
any parallel in the region (there are 550 licensed livestock
traders/brokers operating in the secondary market of Kosti alone in the
small White Nile State). Some of these brokers may work as independent
small-scale traders (*Jelaba)* and some as agents (*wakils)* or
sub-agents for the big traders. The brokers collect cattle and shoats
from the scattered villages and sell them to another broker in the
primary markets. The second broker may sell to a third broker in the
same market or in a secondary market and this process goes on until the
livestock are bulked into larger lots and reach the terminal markets.
The final transaction in the terminal markets is also processed through
brokers. Agents or sub-agents also organize the trekking of cattle to
the terminal markets for the big traders. Livestock are said to change
hands a minimum of two and a maximum of six times between points of
purchase and the final point of sale. Stock may change hands, if not
actual ownership, a number of times until they reach the final point of
sale. Terminal market prices may end up at least twice and in extreme
cases four times as much as that of the producer's price[^66].

The industry is fraught with shortage of working capital (cash flow)
from bottom to the top. This is the result of both too many
traders/brokers operating in a confined market and the rather too long
turn-around time it takes to complete a transaction between the points
of purchase and the terminal markets due to long distances. Informed
sources suggest that it may take between 2 days to 2 months to collect
200 sheep from production areas. A livestock trader[^67] in Muwele
cattle market said that it has taken him one month to buy 100 head of
cattle in West Darfur. As most livestock traders including exporters do
not appear to have the financial means to tie up their capital for such
a length of time, business is usually transacted through 'trust' and
payment is effected long after the deal has been completed (1-3 months
or even longer in export cases). This system also allows
traders/exporters to pass the risks mainly to producers and to some
extent to small-scale traders. The 'trust' system is built on personal
relationships spanning for 2-3 generations. Needless to say, the
producer is the last person to be paid under this system. Occasionally,
the money may not come at all for various reasons.

The seasonality of livestock supplies has led to the purchasing of
cattle in bulk (mostly under trust transaction) and keeping them in
feedlots (April to June) around major market centers for the lean
seasons. Livestock traders and wholesale butchery owners close to the
terminal markets own many of these feedlots but increasing numbers of
grain farmers are becoming involved particularly in sugarcane producing
areas for additional income. Livestock supplies in Sudan peak September
-- February following the rainy seasons. Supplies drop during the hot
months of March to May or June as trekking becomes difficult due to the
deteriorating body conditions and the scarcity of pasture en-route. The
feedlots fill the supply gap in the market (marked by price increases
during this time) mainly with fattened cattle and to some extent sheep.
The feedlots operate in 60 days cycles with average weight gains of
between 1-2 Kgs per day per head of cattle. Feedlot operators complain
about the increasing price of feeds (sorghum, oil cakes, groundnuts
etc).

Sudan's major livestock markets (except Kosti market) including the
terminal markets operate in a bizarre fashion called 'the Silent Auction
System', in a manner that defies transparency. Under this system, buyers
and sellers communicate only through third parties - brokers. A seller
tells a broker his price range for the cattle or flock of sheep he
intends to sale. The broker sits with the buyer and negotiates the price
in secret. A deal is closed when the broker manages to negotiate
successfully with the seller within the price range offered by the
buyer. The purchase price will only be known to the buyer, the seller
and the broker and kept secret from other parties. In El Muwalih market
of Omdurman, the broker collects a fee of 10,000SP/cattle and
2,000SP/sheep from each party after closing a deal.

This system has outlived the ex-Livestock and Meat Marketing
Corporation's (LMMC) attempts of introducing an open auction system
through the provision of weight scales in the 11 major market centers it
constructed. Statistics provided on market prices are approximate
guesses and should therefore be treated with caution. The only exception
is Kosti market where transaction takes place through an open auction,
though scales are not used. This may appear as anomaly but the practice
has been in use since the colonial days when the first meat processing
plant in Sudan was built in Kosti in 1954.

Transport problems in major livestock producing areas of West Sudan
(South Darfur, South Kordofan) have led to the use of trekking mainly
for cattle but also of sheep to the terminal markets. In the past, LLMC
had partially reduced the problem through subsidies and by using block
trains for livestock transport, which were imported for this purpose.
The dissolution of LLMC in 1992 led to the abrupt end of this service
and the block wagons are used for general cargo by Sudan Railways,
though the Animal Resources Services co (a subsidiary of the Livestock
Resources Bank) is putting a claim on the wagons. Trekking along
well-defined traditional routes, which were partially improved through
the provision of holding areas and boreholes by the ex-LLMC is the only
means of moving stock from Western supply areas to the terminal markets.

Road transport can be expensive for cattle and unreliable. Livestock
traders pay 3,000 SP/sheep for a distance of 600 KMs. However, it will
be interesting to make a comparative analysis between trucking and
trekking. Such a study should not be limited to comparing transport
related costs only. It needs to incorporate costs of opportunity, the
risks involved, the tying up of capital, the turn over rate, interest
rates and other parameters. In the final analysis it should be measured
in terms of marketing efficiency. For example, a trader from West
Kordofan said that it has taken him a month to buy 100 cattle and a
further 75 days for four employees to trek the cattle to El Muwelih
market in Omdurman. If it takes him another 10 days for selling the
cattle, it means he requires 115 days to do one transaction. At this
rate he cannot do more than two transactions in a year. In addition, he
paid 1,200,000 SP for the leader of the trekking group and 600,000 SP
each for the rest of the drovers bringing the total to 4,000,000 SP or
\$15/ head of cattle.

A network of agents, traders and brokers that have been established over
a long time dominate the livestock marketing chain in Sudan. This
apparently simple chain is characterized by many intermediate costs,
which include commissions/margins/salaries and furthermore, costs of
trekking, watering, feeding, and numerous types of taxes.

**The Livestock Marketing Chain in Sudan**[^68]

ddDD

The main livestock supply areas for both the terminal and the export
markets are Northern Darfur (camels), Southern Darfur (cattle), Northern
and Southern Kordofan (sheep) and the Eastern areas of the Nile States
(sheep). Local breeds of sheep for export mainly constitute Hameri,
Ashger (whose numbers are declining), Kabassi, Zagawi, Dubasi (few in
numbers) and Watish from the Blue and white Nile area. Garej breeds are
used for local consumption.

In the past, attempts to improve the efficiency of the livestock markets
in Sudan consisted of establishing 11 major market centers with weighing
scale facilities and auction yards, holding grounds and boreholes along
traditional trekking routes and the provision of bulk trains (with 40
wagons) for livestock transport (subsidized heavily by the government).
The LMMC, which was in charge of this operation, also tried to introduce
open auction systems in the markets along with collecting weekly price
information. The open auction system could not succeed due to the
sabotage of brokers and because livestock purchases are based on the
trust (credit) system[^69] (open auction entails immediate cash
payment). Fixed Government domestic meat prices and fixed exchange rates
at the time were also barriers to the LMMC achieving its objectives.

LMMC was dissolved in 1992 and the States took control of the 11 market
centers, raising a dispute between them and the Animal Resources Service
Co (ARSC), the latter claiming to be the apparent heir of the LLMC. The
States Municipal Councils still run the markets as the dispute is not
yet resolved and charge on average some 3,000 SP/sheep and up to 10,000
SP/cattle for market and related services. A 1997 FAO/AAARD study
indicated that the Nyala Municipal Council was charging a consolidated
tax rate of 7,200 SP/cattle, 2,100 SP/sheep, 1,100 SP/goat, 8,400
SP/camel, 7,300 SP/horse and 5,150 SP/donkey under a variety of names -
*service tax, local council tax, education tax, Nomads Union fees,
Kenana canal fee, Animal Resources tax and market fees.* The ARSC,
perhaps justifiably, points out that none of these taxes and fees is
used for improving the marketing efficiency. In fact, nearly all the
weighing scales installed by the ex-LLMC in the markets are buried under
sand.

**3.2.1 The Terminal Markets**

Sudan is expanding the number of its terminal markets. Currently,
livestock are exported directly from El Muwelih in Omdurman and Elobeid
in Darfur through Port Sudan. Soon Kosti and El Gedarif will be upgraded
as terminal markets for export when the quarantine stations under
construction in these areas begin operations. Elobeid, Kosti and El
Gedarif also double as secondary markets since they supply the El
Muwelih market in Omdurman. The Omdurman markets, which include Abo
Zaid, El Sheikh and Alamira also double as terminal markets for local
consumptions. In Sudan, animals delivered to the terminal markets need
to be accompanied with vaccination certificates for anthrax, BQ, CBPP,
CCPP and sheep pox. Livestock without vaccination certificates are
vaccinated before entering the terminal markets. Vaccination is carried
out at a subsidized rate of 1000 SP/cattle.

El Muwelih is the largest terminal market in Khartoum (located in
Omdurman) operating on Wednesdays and Saturdays serving both the
domestic and the export markets (the MoFT is planning a separate market
for export at the moment). A number of other smaller sheep markets also
operate in Omdurman. The ARSC has also put up recently a new sheep
market in the Dar Es Salam area of Omdurman in agreement with the
Khartoum State, where market fees will be shared at a proportion of 75
and 25% respectively.[^70]

Fees and taxes per cattle at El Muwelih include a market entrance fee of
1,500 SP, a tax of 3,000 SP and a market service charge of 12,000 SP. In
addition, a brokerage fee of 10,000/cattle has to be paid if a deal is
made. If not and the owner has to bring his cattle on another market
day, an entrance fee has to be paid again.

The El Muwelih market operates under the 'silent auction' system. The
market has watering provisions for humans and livestock. Feed is brought
on trucks for sale. Unsold animals can be kept in the nearby feedlots
for a fee until they are sold. This provision allows traders to keep
their animals until they obtain the right price.

Available statistics on the number of animals offered in the in the
Omdurman markets are unreliable since, for inexplicable reasons, there
are significant annual variations. Part of the problem could be that
mistakes are made in transcribing Arabic numerals into Western script.
Whatever the reason, the figures provided should not be relied upon. The
general guess is that up to 250,000 sheep, 100,000 head of cattle, up to
20,000 goats and a few hundred camels may be brought to the market
annually. Major buyers in these markets are exporters and wholesale
butchers.

Wholesale butchers buy cattle and sheep in bulk and take them for
slaughter either to the Ganawa slaughterhouse (privately owned) or to
one of the 9 Government owned slaughterhouses (2 big slaughterhouses and
7 slabs) and managed by Khartoum Animal Resources Services Export Co
Ltd. The slaughterhouses generate about 50 million SP/month to the
treasury from service fees charged at the rate of 15,000 SP/cattle and
5,000 SP/sheep. The wholesale butchers specialize either in cattle or
sheep and keep up to 200 cattle or 4 - 500 sheep in feedlots for
finishing. They slaughter about 30-50 cattle or 50-80 sheep at a time
and sell the meat to retail butchers either directly or through
intermediary wholesalers. The retail butchers pay one-third of the price
upon collecting the meat and pay the rest after selling the meat (an
extension of the trust system). Some of the wholesalers also run their
own butcheries on the side. Small butcheries lack the necessary capital
to run their own feedlots and have to rely for their supplies on
wholesalers.

Wholesalers distribute beef at 4000 SP and mutton between 5000 and 5,500
SP/Kg. Prices may go down slightly between October and November and up
between June and August. Nevertheless, the slaughterhouse managers said
that meat prices have remained constant in Khartoum in the last five
years. Retailer prices have been constant at 5-6000 SP/Kg for beef and
7-8,000 SP/Kg for mutton. Beef without bones may sell for 8,000SP/Kg.
Figures provided on annual numbers of animals slaughtered in Khartoum
were not reliable once again.

Apart from the butcheries, there are three small private meat processing
plants in Khartoum specializing in beef sausages, burgers, ground meat,
pastrami, kufta (a local version of meat balls) and mortadella (either
meat or chicken). These plants seem to have a significant market share
as their products are served in many small restaurants and sold in food
groceries for home use. These food companies have played a big role in
creating a fast food culture in Sudan while providing an added value
market for meat and poultry in Khartoum, Port Sudan and other major
towns connected by tarmac roads. Among the problems they mentioned were
high bank interest rates and power shortages during the hot season that
affects both their production and outlet points.

**3.3** **The Export Trade**

**3.3.1 Live Animals**

Prior to the RVF ban and the discovery of oil, Sudan generated 20-25% of
its foreign exchange earnings from live animals, meat, skins and hides
exports. In 1999, the year before the RVF ban, the total number of
animals exported from Sudan was about 1.8 million of which sheep
constituted 88% followed by camels (9%) and goats (2%). The 1999 export
figures indicated a significant growth in the volume of exports for
sheep (172%), goats (171%) and camels (247%) compared to 1995. Live
cattle exports has always remained low and declined further from 2,419
head in 1995 to 435 head in 1999.

Sheep are by far the largest live animal export from Sudan, with most
going to Saudi Arabia. Only small numbers of cattle are exported to
Yemen and Gulf states. Live goat exports are also limited in number and
restricted to few countries. The live camel trade is gradually
increasing in number with most going on hoof to Egypt and Libya. Sudan
also exports limited number of live animals/chilled meat to Emirates,
Qatar, Kuwait, Oman, Jordan and Abudhabi. Among these, Jordan is
becoming a significant market for chilled beef (rumored as being
re-exported to Israel) while Saudi Arabia remains the major destination
for chilled mutton and to some extent camel meat.

######## Table 3-2 Live Animals Exports from Sudan

  -------------- -------------- -------------- -------------- --------------
  *Year*         *Sheep*        *Cattle*       *Goats*        *Camels*

  1995           617,004        2,419          14,952         45,593

  1996           1,001,705      9,609          30,940         72,021

  1997           1,074,576      3,595          16,891         77,714

  1998           1,584,858      3,236          48,187         133,426

  1999           1,616,363      435            40,501         159,483
  -------------- -------------- -------------- -------------- --------------

Source: General Administration for Quarantines and Meat (Ministry of
Animal Resources)

Live exports declined significantly following the RVF ban in 2000 and
particularly in 2001. However, Sudan is determined to make up for the
lost time and increase its market share in Saudi Arabia following the
lifting of the ban (on the grounds of anticipated shortage of supplies
from other sources for the Haji season among other things) at the end of
2001. The authorities hope to reach a target export level of 2 million
sheep and in unprecedented move have exempted live animal and chilled
meat exports from Federal taxes for a period of three months.

However, increases in the numbers of live animals (and chilled meat for
that matter) have not been matched by a corresponding growth in foreign
exchange earnings despite Sudanese sheep attracting premiums[^71] in
some importing countries like Saudi Arabia (bolstered by a Sudanese
community of about 1 million strong). Among the reasons given for
declining foreign exchange earnings are increased competition from other
supply sources (notably Somalia) and declining income in importing
countries. However, Sudanese authorities also suspect exporters
underselling live animals and keeping part of the foreign exchange
abroad. This has prompted them to introduce minimum export price
ceilings.

Table 3-3 Export Earnings in '000 US

  --------------------------- -------------------------------------------
  *Year*                      *Amount*

  1995                        103,058

  1996                        135,600

  1997                        128,442

  1998                        128,442
  --------------------------- -------------------------------------------

Source: Animal Resources Services Company

The pastoral production method in Sudan, like else where in the region,
is not stratified for the domestic and the export markets. Better
quality animals are selected for the export market among the common lot
entering the overall market chain. The same companies that deal with
local markets handle the export marketing. Animals of exportable quality
are usually old, cattle being between 4-6 years and sheep between 2-5
years old. These are usually fattened near the terminal market for a
period of 60-120 days for mature cattle and 1-3 months for sheep. Daily
weight gains may go up to 2kg / cow and 200 grams/sheep but about 1.25
kg and 125-150 grams are more usual.

There are about 25 live animals exporters in Sudan, of which only about
12 are active[^72]. The decline in the numbers of exporters has been
partly due to some of the exporters inability to pay back bank loans
leading to their arrest in the last few years (on the assumption of the
exporters keeping part of their money abroad). Sudan has been shipping
live animals to Saudi Arabia for nearly half a century resulting in
long-standing business relationships between exporters in Sudan and
importers in Saudi Arabia spanning 2-3 generations. This has enabled the
parties to come up with a special arrangement whereby Sudanese exporters
sell their animals directly in the open markets in Saudi. The Saudi
importers collect their commission for facilitating the importation of
the livestock into Saudi Arabia. The final price/sheep, obviously, could
therefore be different than stated in the transaction documents (L/Cs,
etc) -- the initiative for the government to come up with minimum export
price ceilings. On the other hand, many Sudanese exporters are said to
run their business in traditional ways without giving due thought for
regional or global market trends. Apart from not doing much to improve
production they are also said not to know the actual costs involved when
exporting livestock[^73].

Most animals are commonly transported by road or rail to Port Sudan.
Traders complain about transport costs, especially of the railways Co.
charging for empty returns on urgent shipments. The Railways Co has
appropriated the 40 wagons purchased by the ex-LLMC for transporting
livestock and this problem is likely to continue until the right
ownership of the wagons is sorted out. Meanwhile, the Ministry of
Foreign Trade is negotiating with the Railways Co, in a bid to get the
tariff reduced. Congestion is common during the Haj season as the
capacity of Port Sudan is limited to handling 35,000 shoats only at a
time.

Livestock have to undergo a 21 days quarantine period for export
certification. At times, the quarantine may take place simultaneously
with fattening. In any case, the quarantine takes place in stages
allowing the transportation of livestock in the meantime. For example,
livestock bought in Omdurman are kept at the quarantine station there
for 10 days while being fattened. Then they are moved to Kadero
quarantine station (which is linked to the railway) for 5 days where
further observations and Brucellosis tests takes place. Livestock are
then transported for two days to Port Sudan where veterinary staff check
them for a further 4-5 days before shipment. Soon, similar quarantine
services will be provided at Elobeid, El Gedaref and Kosti markets
allowing exporters to save time and money by shipping their animals
direct to Port Sudan. The exporter pays all quarantine, vaccination
(1,650 SP/sheep), feed and shipping costs.

Exporters are keen to help in the inspection of their animals as early
detection prior to reaching Port Sudan permits the disposal of rejected
animals in the local markets. However in spite of these procedures,
5-10% of the sheep and 3-5% of the cattle are rejected on health grounds
at Port Sudan[^74]. About 6% of the sheep may be rejected at Kadero due
to nasal discharge, emaciation, broken legs and Brucellosis (the latter
accounts for 2% of the sheep). Saudi Arabia also invariably rejects more
animals (13-25% of sheep in 1994-1996). Of the 936,415 sheep returned
from Saudi Arabia between 1990-1998, 77% were rejected on the grounds of
sheep abscess or Morel's disease. This has initiated a discussion about
producing vaccine for Morel's disease in Sudan. At times, the Saudis may
reject the whole shipment because of 1 or 2 abscess cases. The same
shipment may be allowed to enter on a second attempt.

The Sudanese authorities have been trying to forge a technical agreement
with the Saudis in order to avoid such problems. Sudan has such
technical agreements with Lebanon, Jordan (for meat) Egypt and Kuwait,
which allows veterinary officers of importing countries to come and
select the animals before they are shipped to eliminate rejection at the
port of entry. Although there is a protocol between the Sudan and Saudi,
for reasons which are unclear, the latter have remained reluctant to
enter into such a technical agreement.

**3.3.2 Meat Exports**

A marked improvement was made in exports of chilled beef, mutton, goat
meat and camel meat in the period 1995-99. A 172% growth in mutton, 282%
in beef, 100% in goat meat and 50% in camel meat exports were recorded
during this period. In fact, a higher growth rate was achieved in 1996
and 1997 than in 1999.

##### Table 3-4 Meat Exports in Tons

  -------------- -------------- -------------- -------------- --------------
  *Year*         *Mutton*       *Beef*         *Goat meat*    *Camel meat*

  1995           2,143          939            134            8

  1996           7,897.9        2290\.         466            32

  1997           7,943.4        4,136          500            12

  1998           9,324.6        5,596          441            53

  1999           5,826.6        3,585          361            16
  -------------- -------------- -------------- -------------- --------------

Source: General Administration for Quarantines and Meat (MoAR)

There are about seven export quality abattoirs in Sudan of which four
are operational (Port Sudan and Omdurman are closed). The operational
four have a combined capacity of processing 14,500 shoats and 1,875
cattle/camel per day. Meat exports are entirely in the form of chilled
whole sheep and beef carcasses and to some extent chilled goat and camel
meat. Main export destinations are Saudi Arabia for mutton[^75] and
Jordan for beef. Chilled meat is also exported to Oman and Dubai in
small quantities.

##### 

##### Table 3-5 Export Slaughterhouses processing capacity Per day

+------------------------------+-----------------+--------------------+
| *Slaughter house*            | #               |                    |
|                              | ######## *Proce |                    |
|                              | ssing capacity* |                    |
+------------------------------+-----------------+--------------------+
|                              | Shoats          | Cattle             |
+------------------------------+-----------------+--------------------+
| El Kadaro                    | 4,500           | 775                |
+------------------------------+-----------------+--------------------+
| JIMCO                        | 4,000           | 200                |
+------------------------------+-----------------+--------------------+
| Nyala                        | 3,000           | 500                |
+------------------------------+-----------------+--------------------+
| Ghanawah                     | 3,000           | 400                |
+------------------------------+-----------------+--------------------+
| Total                        | 14,500          | 1,875              |
+------------------------------+-----------------+--------------------+

Source: General Administration for Quarantine and Meat (MoAR)

Three of the above are privately owned. The government owned El Kadaro
is to be privatized soon bringing the ownership of export standard
slaughterhouses out of the public domain in Sudan.

Apart from own exports, the abattoirs provide slaughtering and chilling
services for other exporters and local meat traders at a fee (375
SD/sheep and 600 SD/cattle). In either case, the slaughterhouses operate
at 50% capacity or below for most of the year except during the Ramadan
season when demand peaks. The level of operations is dictated by a
number of factors, the market demand in the importing countries being
the primary reason. For example, according to the Marketing Manager of
the Ganawa slaughterhouse[^76], the daily demand for Sudanese lamb and
mutton in Saudi Arabia does not exceed 10 tons. This is because Sudanese
lamb and mutton are expensive compared with that originating in
Australia or New Zealand. Furthermore, the big importers and
distributors give greater promotion to the latter since these realize
better margins (margin levels are said to be double the level of
Sudanese lamb and mutton).

Chilled meat is exported using extra cargo space on regular passenger
flights. Charges of cargo services are high costing 1,400 SR (\$373)/ton
to Jeddah, 1,500 SR (\$400)/ton to Riyadh, \$350/ton to Oman and
\$500/ton to Amman. Exporters choices are limited to either using Sudan
Airways or the national carrier of the importing country (if it is
flying to Sudan). Chartered flights are more expensive since they demand
payments for the back-load as was experienced by Nyala slaughterhouse,
which was forced to close down, as a result of escalating air freight
costs.[^77] The use of available cold chain facilities by other goods at
the airport also imposes a constraint to meat exporters.

At the moment (March 2002) in a bid to promote exports until the end of
the Haj season, the Ministry of Finance (MOF) has exempted meat
exporters from paying all federal taxes for a period of 3 months. Such
Federal taxes and other fees, which the exporters have to pay at other
times include but not limited to the followings:

-   5-10,000 SP for Chamber of commerce -- certificate of origin;

-   60-70,000 SP for Saudi Embassy

-   VAT 500 Sp/cattle and 300 SP/sheep ministry of finance but returned
    immediately after exports;

-   Quarantine 1,000 SP/sheep, 2,000 SP/cattle;

-   Customs and duties free (for 3 months), but 30,000 SP for using
    refrigeration facility at the airport;

-   Bank charges of up to 80,000 SP/ton; however, traders export through
    Cash Against Document (CAD) to cut on bank charges.

**3.4 Hides and skins**

The skins and hides business in Sudan is dominated by the powerful
traditional Raw Hides and Skins Exporters Association based in Omdurman.
These exporters have agents all over Sudan who collect raw hides and
skins on behalf of them. At times, they also provide butcheries with
credit lines in order to secure the supply of hides and skins from them.
Many of these exporters inherited the businesses from their fathers and
grand fathers and enjoy long-established business connections with
importers in a number of countries. Some of these exporting companies
have been in the business for over half a century.

The industry was severely affected when the government prohibited the
export of raw hides and skins from Sudan some seven years ago to promote
the export of semi-processed skins and hides. However, the powerful
association successfully lobbied with the government and managed to get
the ban lifted leading to the resumption of raw hides and skins exports
in the last three years. Sudan, like Kenya, is currently exporting both
raw and semi-processed skins and hides.

This scenario has led to a continuous rivalry between the raw hides and
skins traders on one hand and the tannery owners on the other despite
their interdependence. In fact, all the tanneries in Sudan get their
supplies of wet hides and skins from the traditional exporters since the
latter control all the raw supplies in Sudan through their agents in the
major towns including the slaughterhouses. The traditional exporters opt
to export raw hides and skins for the simplicity of it. As the owner of
Yassin Trading Company put it "we only put salt. We do not have to worry
about importing chemicals, disease problems (since the hair in raw hides
and skins makes it difficult to detect), power shortage, labor
management, sophisticated accounting system and so on." In fact, few
traditional exporters who out of choice had to set up tanneries during
the ban have now closed the tanneries preferring to export raw hides and
skins.

The crux of the rivalry between the two parties is a conflict of
interest. Traditional exporters realize better margins from the export
of raw hides and skins despite a 15% export tax they have to pay
compared to the tanneries paying a nominal 2-3% export tax on
semi-processed hides and skins. The current FOB price for raw hides at
Port Sudan is \$1,400 per ton. The tanneries price for wet hides is
about 12,000 SP per ton; or the equivalent of 24,000 SP per ton for
salted and dried raw hides (about \$9.25). Exporters emphasize that they
realize a profit margin of up to 20% from raw hides and skins exports
despite payments of 1,750 SP for grading and 240,000 SP/container for
certification to the MoAR. They say the margin from the tanneries does
not exceed 2% at most.

This coupled with the inability of many of the tanneries to pay in cash
on delivery (due to liquidity problem) provides them with justifiable
motives to maximize the export of raw hides and skins at the expense of
the tanneries. Subsequently, what the tanneries receive is what the
traditional traders cannot export either because of low demand or other
reasons. In other words, the tanneries provide the traders with a second
alternative market for any given quantity they cannot export. At the
moment, the traders supply the tanneries mainly with wet skins as the
demand for salted and dried skins is low in the world market. In
summary, the balance of Sudans' raw and semi-processed hides and skins
exports will depend largely on the international demand for raw skins
and hides among other things. While raw hides and skins constitute 20%
of the total exported from Sudan in the last one and half years, this
balance is subject to change depending on the demand for raw hides and
skins at any given time in the future.

The Ministry of Industry and Investment (MII) estimates the annual
national production at 2.5 million hides and some 11 million skins.[^78]
The MII also suggests that, of this volume, some 300,000 hides and 1.2
million skins are used by traditional tanneries (estimated at 600)
locally. Such traditional tanneries use low quality reagents and produce
linings for foot wears, upholsteries, saddleries, knife sheaths etc.

There are 17 tanneries in Sudan. They consist of 5 large (with two lines
of production for hides and skins), 8 of medium size and 4 pickling
plants. All these tanneries are privately owned (some were privatized
few years ago) except the Jezira tannery where the government still
holds a minor share. These tanneries have a total output capacity of
about 1.25 million pieces of hides and 10 million skins per year. The
MII puts the performance rate of the tanneries at 75% for skins and 45
to 50% for hides. Factors attributed for the low performance of the
tanneries include: the resumption in raw hides and skins exports
depriving the tanneries of supplies both in quantity and quality;
liquidity problems of the tanneries and difficulties to arrange credit
lines with the banks and that many of these tanneries are old and
require renovations[^79]

Sudans' exports of raw hides and skins have been lagging far behind the
export of live animals and meat both in terms of volume and value. But,
trends in the year 2000 and the first half of 2001 show a significant
increase in exports. Exports for the 1^st^ six months of 2001 were
almost equal in both volume and value to that of the total for 2001 for
raw hides and skins while exceeding in both volume and value terms for
semi processed skins and hides in the same period. Many attribute this
progress to liberalization and reduced intervention including access and
repatriation of foreign exchange proceeds and the lifting of all taxes
for a 3-month period currently at the federal level.

Table 3-6 Volume and value of raw and semi-processed hides and skins
exports

  --------------- -------------- -------------- ------------- -------------
  *Year*          *Volume of Raw *Value in      *Volume -Semi *Value in
                  hides and      US\$*          processed*    US\$*
                  skins*                                      

  2000            1,821 tons     1,326,000      8,504 tons    15, 576,000

  2001 (6 months) 1,710 tons     1, 227,000     10,372 tons   21,151,000
  --------------- -------------- -------------- ------------- -------------

Source: Ministry of Industry and Investment

Yet, many tanneries operate under financial liquidity problems to the
extent of purchasing raw hides and skins from their suppliers on credit.
Loan applications take long to process. The Islamic banking policy of
Sudan operates in profit sharing or equity participation (*mubaraka).*
Coupled with the high inflation rate the equivalent interest rate of
this banking system was 48% two years ago though it has come down to 24%
currently. Despite attempts at the federal level to promote exports
through such incentives as the reduction of taxes and access to foreign
exchange earnings, the States still levy various forms of taxes on hides
and skins en route to the terminal markets.

Sudans' leather manufacturing industries have installed capacities for
producing some 18 million leather shoes per year[^80]. However, actual
production of shoes has been limited to half of the estimated annual
national demand of some 10 million pairs. As in Kenya and Ethiopia, the
footwear industry has been severely affected by cheap imports brought in
by *shanta* (suitcase) traders from China and Turkey, which are widely
suspected to dump export goods at prices below the cost of
production[^81].

In light of the growth in hides and skins exports, Sudan needs to review
the numerous taxes and levies being imposed by the State governments.
Despite the Federal Governments' initiatives to lower taxes raised at
the central level, traders are still subjected to pay around 20 types of
taxes by state governments. The authorities also need to review whether
exporting raw hides and skins is still in the best interest of the
country. FOB prices for 2001 indicate that semi processed skins and
hides bring in 2.8 times per ton in foreign exchange compared to raw
hides and skins. While the current preferential tax level may discourage
the export of raw hides and skins to some extent, the government needs
to take further steps to discourage the uneconomical exports of raw
hides and skins altogether.

The authorities also need to take a critical assessment of the country's
annual production volume in light of the existing capacities of the
tanneries. The low supply of hides to the tanneries (45-50%) could
possibly indicate that the tanneries may have double the capacity of the
country's annual production level or the quantity available in the
market minus the amount used by local tanneries. The installation of new
tanneries, if any, should be abated until the performance rate of the
existing tanneries is maximized to their full capacity.

The resumption of the Leather Technology Institute (established under a
joint arrangement of UNIDO/FAO) for training purposes should be
considered. However, investments in capacity building (staffing etc) and
replacement of machinery will only be justified if plans are in place to
run the institute as a profit making center or at least on
self-sustaining basis. The incorporation of the needs of traditional and
industrial tanneries into the curricula will also ensure their
involvement on continuous basis for sustenance. Given the right
direction, the Institute may serve as a training centre for the regional
countries. The same modalities may be extended to the Raw Hides and
Skins Institute in Omdurman.

**3.5 Taxation**

Sudan probably applies the most excessive and complex fees and taxation
system on livestock trading in the region. Different sources vary but
some studies[^82] suggest that taxes and fees constitute up to 27% of
the cost of the exported animal and may go up to 40% if fodder is
included[^83]. A good proportion of the taxes and fees go to Khartoum
State (as a terminal point) though many of the 23 Federal States in
Sudan rely heavily on livestock taxes as their primary source of revenue
given the chance. Most agree that there are over 20 types of taxes and
fees between points of purchase and Port Sudan.

Recently, the Federal Government (Ministry of Finance) exempted live
animal and meat exporters from paying federal taxes and fees for a
period of three months. This is unprecedented and needs to be
encouraged. Whether the Federal States will follow suit is highly
doubtable. Taxation begins at the livestock market centers and
progresses as livestock move en-route to their final destinations. The
burden of livestock traders was aptly described by Babiker Omar El Agib,
ex Chairman of the Livestock and Meat Export Council at an Economic
Conference in Khartoum.[^84] The speech lists the various taxes levied
from the point of purchase in Darfur en-route to Port Sudan.

**3.5.1 *Sheep***

Taxes at the point of purchase in Darfur include:

1)  Product tax per head

2)  Livestock Market Charges

Passing through North kordofan:

3)  Sodiri Local Council Tax

After reaching Omdurman:

1)  Ombada Local Council tax

2)  Animal Resources Bank Service Charges

From Omdurman to the Kadero quarantine area:

3)  Kenana and El Rashed Scheme

Before reaching Kadero:

4)  Halfaiya Council tax

Before entering Kadero quarantine the MoAR collects:

5)  Quarantine entrance fees\*

6)  Vaccination fees\*

7)  Costs of blood tests\*

On loading for transfer to the exporting port the charge to be paid is:

8)  Kenana and El Rashed scheme (2^nd^ time)

Where the main road to Port Sudan crosses the Hantoob Bridge yet again
has to be paid:

9)  Kenana and El Rashad scheme (3^rd^ time)

Now in Gezira State and payments to be made are:

10) Political work support

11) Jihad tax

12) Gezira State support

When crossing the FAO supported El Rahad scheme yet again we have to
pay:

13) Kenana and El Rashad scheme (4^th^ time)

Arriving at Port Sudan:

14) Public litter collection fee

15) Quarantine entrance fees

Other taxes include:

16) Finance tax -- 2%\*

17) Transport tax -- 3%

18) Tax for the new port at Suakin

19) Export tax\*[^85]

20) Business profit tax

21) Occasional other unspecified taxes

**3.5.2 *Camels***

Exports across the desert to Egypt include the following:

1)  Livestock market charge at the point of purchase

Unless camels are bought at El Fasher in North Darfur the additional
charges are:

2)  El Fasher Veterinary Service charges

3)  El Fasher security charges

4)  El Fasher transport charges

5)  Transit fees to bandits either in kind (including ransom of
    yourself) or very large sums of money

Arriving at Dongola, the charges to be paid are:

6)  Ministry of Finance

7)  Dongola Province taxes

8)  Dongola Veterinary Service charges

9)  Dongola Customs fees

10) Quarantine entrance fees

11) Vaccination costs

12) Dongola Quarantine administration charges

13) MoAR charges

14) Fee for certification

15) Abri province support fees

16) Abu Hamad veterinary service charges

17) Abu Hamad customs fees

**3.6 Policies and Institutional Issues**

Market liberalization in Sudan is going at full swing. Nearly all the
slaughterhouses and tanneries have been privatized. New policies that
encourage the export of livestock are being developed at least at the
Federal level. One such encouraging initiative includes allowing traders
to have unrestricted access to their foreign exchange earnings whether
they want to use it for importation of goods, sell it to the bank or to
a third party. This is an example which other countries, particularly
Ethiopia and Kenya could well follow. Other initiatives include the
exemption of livestock and meat exports from federal taxes for a period
of three months and the preferential application of export taxes for raw
and semi-processed skins and hides. Trade regulations involving such
documents as Letter of Credit and Cash Against Document are relaxed. The
Government imposes a minimum export price to thwart under pricing by
exporters.

The MoFT sees its role as a moderator between the private business and
the government. It issues export licenses and puts minimum ceilings
(called minimum indicative prices) on the export price (claimed to be in
consultation with exporters). Current minimum export price ceilings are
\$1,400/ton for beef, \$700/ton for live cattle \$1,665/ton for live
sheep and \$175/live camel. Sudan's famous racing camels are ceiled at
\$2,000/head.

The MOFT has formed Export Promotion Councils for major export commodity
groups. The Live Animals and Meat Export Promotion Council consists of
mainly exporters, members of other relevant institutions, randomly
selected pastoralists and is chaired by the MoFT. Obviously, the
exporters in this council are more influential than pastoralists due to
wealth and proximity to the authorities than the latter. Meanwhile, the
Councils were useful in easing some government restrictions, the most
important of which was enabling exporters to make use of their foreign
exchange earnings to import commodities or selling their hard currencies
to third parties.

Still, exporters complain of the MoFT's minimum export price ceilings,
high margin rate of the banks, transport costs of railways (11-18
SD/sheep from Khartoum to Port Sudan) and shipping vessels and limited
holding facilities at Port Sudan (about 35,000 sheep/at a time). The
MoFT in turn insists that the need for the minimum export price was
borne out of the need to ensure that the business remains profitable
since most exporters are traditional and not good enough in calculating
their returns against their export costs. In fact, in the past few
years, many exporters were put in jail on account of not being able to
pay their bank loans (possibly due to high margin rates of the banks)
and since then the number of active exporters has gone down from about
25 to around 12. Some suggest that the impetus for the current increase
in export volume is borne out of the relatively higher profits earned
from imported commodities (since the lifting of foreign exchange
restrictions) than the profits made from live animals and meat exports
*per se*.

The MoFT appoints commercial attachées in important foreign trade
missions such as in Riyadh, Jeddah and Cairo to create market
opportunities for Sudanese exports.

The liberalization, on the other hand, has left a vacuum after the
demise of the LMMC. At present no single entity is in charge of the
domestic livestock markets despite the involvement of the Federal
States, the Animal Resources Bank, the MoFT and the MoAR in one way or
another. Unfortunately, traders have to deal with all these entities in
addition to the Ministry of Finance, customs, transport, aviation, banks
etc. It will be difficult to envisage the formulation and development of
pro-trade policies in the absence of one entity with overall
responsibility to look after the improvement of livestock marketing. In
fact, the current situation has led to the physical deterioration of the
livestock markets and staging points built by the ex-LLMC and the
acquisition of the livestock wagons by the Railways Co.

This has led to ownership contests of such infrastructure amongst the
Animal Resources Bank (through its subsidiaries the Animal Resource
Services and the Animal Transport Companies), Sudan Railways and the
Federal states. The former puts its claim on the grounds of being the
heir apparent of the ex-LLMC. Unlike the ex-LLMC however, the Animal
Resources Bank and its subsidiary companies are designed to operate for
profit. These include making profits from market fees, fees for staging
points and hire of the rail wagons. This is a commendable idea provided
the Bank maintains the market infrastructure and the wagons (including
replacements) from its income and provided they reach an agreement with
the federal states on how to share the income from market centers. At
the same time, the Bank should also consider buying the properties from
the MoAR, the previous owner, rather than planning to have them for free
(as a share company, with only 23% government share, the Bank may not be
in a position to take over a public property free of charge).

In another development, the MoFT, in collaboration with the Khartoum
Federal State, has put up a separate livestock market for export only in
Omdurman. The Animal Resources Company (of the Livestock Bank) has also
put a new small market for sheep in Omdurman, under an arrangement where
market fees will be shared by the Company (75%) and the Federal State
(25%). The MoAR, on its part, has successfully negotiated with the Saudi
Arabian Government to get the ban lifted and was on a mission in Libya
in March for accessing the Libyan market. It has also hosted a Malaysian
delegate in connection with possibilities for exporting cattle to that
country. The separate initiatives are supporting the export trade as a
whole. At the same time, they manifest the undercurrent that runs
between these complementary and yet rival institutions as who is in
charge livestock marketing overall.

Obviously, the Bank can't have a policy-making or regulatory role.
Similarly, the MoFT, can't take over this role as it doesn't have
representations at the grass-root level and has no mandate to improve
animal production or health -- a critical link required for developing
appropriate policies. The MoFT is better suited to identifying new
foreign markets, designing strategies to penetrate such markets and
providing the necessary support to exporters. In addition, it can help
in expediting the export process once animals have reached the terminal
markets in Sudan but not before that. The Federal States, by design,
focus on state-specific policies. Under the current scenario, this means
raising fees and taxes from livestock markets to meet budgetary
requirements for their respective states rather than trying to promote
exports. The MoAR is naturally the appropriate ministry to house a
Livestock Marketing Unit focused on developing pro-trade policies,
enabling environments, the collection and management of market
information, monitoring the observation of appropriate regulations etc.
The Unit, in fact, can draw on its expertise on livestock production,
animal health and quarantine to come up with appropriate and
far-reaching policies.

**3.7 Planned and On-going Programmes**

***3.7.1 Animal Health and Disease Control General Directorate***

The Directorate runs three departments consisting of Animal Health,
Epizootic Disease Control and Veterinary Public Health. Field operations
are carried out through 10 mobile units attached to centers consisting
of dispensaries, offices and storages. The mobile units (land rovers)
function as field diagnostic laboratories, carry out vaccinations and
provide AI services, treatments and surveillance. Furthermore, there are
62 mobile truck units, containing refrigeration units, mobile crushes
and camp equipment provide vaccination services. Despite the costliness
of these operations, additional 68 trucks have been ordered at a cost of
some 750,000,000 SP to reinforce the unit and cover the whole country.

The Directorate has established a rinderpest Disease Free Zone
stretching from The Red Sea and Kassala states in the Southeast to West
Kordofan and the Northern State embracing 15 of Sudan's 23 states.
Recognition of this zone by the OIE will obviously boost Sudans' export
potentials. The Quarantine directorate administers the DFZ.

The Directorate receives an annual budget of some 15,631,000 SD
(\$60,000) from the MoAR. However, the bulk of its operational budget
comes direct from the Ministry of Finance for project implementation.
The operational budget of such projects currently include:

PACE/PARC - 23.5 million SD (\$90,385)

Rehab. Of animal health - 45.5 million SD (\$175,000)

Vaccination of national herd- 36.5 million SD (\$140,385)

Disease free zone - 7 million SD (\$26,923)

Mobile units (68 trucks)- 750,000,000 SD (\$2,884,615)

Compared to its neighbors, Sudan has a formidable force of trained
manpower in the animal health discipline, consisting of some 1,350 vets
working in the public sector, about 750 in institutions and
universities, some 1,075 private practitioners and 663 vets in various
occupations. The distribution of veterinary drugs is privatized in
Sudan.

In spite of the limitations imposed by the federal structure, the
regional veterinary offices report simultaneously to the Federal
Directorate and the relevant state bureau. The MoAR appoints staff in
the regional vet offices. However, regional and referral veterinary
laboratories are run by the Ministry of Science and Technology. There
are 11 regional labs and one central reference lab in Sudan. The central
referral lab provides staff, technical equipment and technical support
to the regional laboratories.

**3.7.2 *Quarantine Directorate***

The Quarantine Directorate provides quarantine services through its
three departments -- Vet quarantine, Meat Hygiene and Disease Free
Zones. The department runs four quarantine stations in the country with
the following capacities.

Table 3-7 Capacity of Quarantine Facilities

  ------------------------ -------------------------- -------------------
  *Location*               *Cattle/camel*             *Shoats*

  Port Sudan               4,000                      71,000

  Alkadaro                 4,000                      96,000

  Wadi Halfa               4,000                      46,000

  Alrahad                  \-                         10,000

  Total                    12,000                     223,000
  ------------------------ -------------------------- -------------------

Source: MoAR

Quarantine operations are arranged on a rolling system. Export sheep are
vaccinated and quarantined close to Omdurman market for 10 days. Further
visual inspection is taken before entering the Alkadaro quarantine
station (connected to a rail track) where they stay for 5 days and
undergo brucelossis tests carried at the rate of about 20,000 tests a
day (about 2% positive on average). The sheep are then taken to Port
Sudan either by trucks or rail for a further quarantine period of 5-6
days before shipment begins. In one month alone (11 Jan-11 Feb), the
quarantine department has processed 300,000 sheep to Saudi Arabia, of
which 3,080 (or 1%) were rejected at alkadero station excluding some 370
sheep that died of various causes (emaciation, nasal discharge, broken
legs etc). Exporters are keen to help with the quarantine process since
early detection at al kadero enables them to sell the rejected sheep for
the local market before reaching Port Sudan.

The Meat hygiene department assigns about 3 vets in each meat processing
plant to undertake both pre-mortem and post-mortem examinations. The DFZ
covers 14 Checkpoints along the west Nile, parallel to the Khartoum
state.

**3.7.3** ***Meat Inspection, Hygiene and Grading Center***

The Center was established with the financial contribution of the
Governments of Sudan and the Netherlands and with technical assistance
from FAO. The Center trains students on Meat Hygiene and Inspection,
Meat Processing and Grading, Slaughtering techniques and utilization of
bi-products for a duration of some 45 days. So far, the Center has
trained local and foreign students from Egypt, Jordan, Iraq, and Syria.
Courses cost about 7 million SP for local and about 10 million SP for
foreign students including full accommodation. The center has a small
production unit for processing beef mortadella, beef sausages, burgers
and smoked beef. This could serve as an ideal training center for the
region to promote value-added and diversified meat products.

The Ministry of Animal Resources has played a major role in convincing
the Saudi authorities to get the ban lifted. In March, the Ministry
officials were in Libya for a new export initiative to that country. The
Ministry's role in portraying the animal health status in potential
importing countries is critical for the export trade.

**3.7.4** ***Animal Resources Bank (ARB)***

The Bank was established in 1993 with a capital of 5 Billion SP, which
has now grown into 20 Billion SP (about \$8 million)[^86]. The bank is a
public company with a 22% Government share and has some 21 branches
throughout the country. The main objective of the bank is to support the
livestock sector with a view to facilitate and promote livestock exports
(other similar banks in Sudan include Farmers Bank and Agriculture
Bank). Sudan Bank regulation limits ARB to operate a current account
system only.

The banks' main activities are focused on assisting livestock traders
overcome their liquidity problems by providing them with trade finance
on short-term basis for transport, customs, LCs and LGs. Repayments for
such trade finances have to be met within 2-4 months. The maximum
short-term trade financing provided by the bank to an individual was in
the region of \$1.6 million. Total trade finance during the Haj season
may peak up to \$4 million.

The Bank also doubles as a trading house whereby it buys livestock from
secondary and terminal markets and sell them at cost plus profit to
exporters under a system called *Muharaba*. In addition, the Bank
sometimes goes into a short-term partnership with exporter/s, whereby
the profit is shared between the parties according to the contributions
made. The Ghanawa abattoir was built and sold to a private company by
the Bank (through PTA financing for the equipment).

The Bank operates two subsidiary companies - the Animal Resources
Company and the Animal Roads Company. The former plans to rehabilitate
and manage the 11 major livestock markets built by the LMMC (currently
run by the federal states) and maintain them through service fees. It
also plans to equip these markets with weigh scales and introduce an
open auction system gradually in the livestock markets. It supplies
veterinary drugs and relevant veterinary equipment, which are
distributed through the branches of the bank and through dispensaries
affiliated to the company in the states. The company also supplies
facilities for AI, provision of spare parts for research equipment,
equipment for slaughterhouses including ink for stamping. The company
also manufactures molasses and distributes to the market. The Animal
Roads Company plans to manage watering and staging points on stock
routes plus administering the livestock wagons currently under the Sudan
Railways Company.

5.  **Associations of Exporters**

Sudan's exporters associations consist of Meat Exporters, Live Animals
Exporters and Skins and Hides exporters. These Associations work closely
with the Chamber of Commerce and are influential in the formulation of
export-friendly policies. Regrettably, it was not possible to meet them
due to the busy export season during the field study.

### 

### Annex 1 

### Export Requirements in Kenya

### 

### 1. Customs and Excise Department

Customs and Excise requirements for livestock and livestock products
exports are similar to the general requirements for other export
commodities as follows.

-   Either one is registered with the Customs and Excise Department as
    an exporter whereby he is given an export code number

-   Or he is licensed as a Customs Clearing and Forwarding Agent

-   In either case, one must have a PIN (Personal Identification Number)

An alternative is to seek the services of a registered Customs Agent who
is familiar with the documentation at Customs Department.

The exporter fills in Form C63, which specifies the following:

-   What is being exported

-   The clearing agent

-   Means of exportation (air, sea, road)

-   Point of exit

-   Tariff classification

-   Whether the goods are produced in Kenya or elsewhere

-   Proportion of imported component (if any)

There are no duties paid on exports.

The following are the general payments made at the Customs Department:

-   Kshs 250,000 Security is deposited with the clearing agent. For
    transit goods, the security is up to Kshs 1 million.

-   Kshs 25,000 agent license.

```{=html}
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```
-   However, Customs and Excise require a specific authorization from
    MoARD, certified by the DVS that the livestock and livestock
    products (meat, hides and skins) are free from disease.

Normally, processing for exports at the Customs and Excise Department
takes two days. However, they give priority to perishable goods e.g. the
processing of meat and meat products take only a few hours.

### 

### MoARD

The Department of Agriculture does not have specific conditions for the
export of livestock and livestock products. The main conditions are
given by the DVS as indicated below.

(a) Live animals

-   They must have a no objection permit from the point of origin that
    they are being transported/marketed. The 'no objection' permit
    certifies that the animals are from areas that are free from
    contagious disease, particularly, FMD, rinderpest and CBPP.

-   They must also have a movement permit indicating the number of
    animals being transported, their origin as well as destination.
    Transportation is usually done using lorries for disease control.

(b) Meat and meat derivatives

-   The animals destined for export must be slaughtered in designated
    export slaughterhouses. The specifications for construction and
    operation of these slaughterhouses are described in the Meat Control
    Act Cap 356 (Republic of Kenya, 1977) and detailed in the following
    Schedules:

```{=html}
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```
-   Schedule A - gives the conditions and facilities for inspection of
    meat for export

-   Schedule B - gives the sanitation requirements

-   Schedule C - provides guidelines for inspection carcasses

-   Schedule D -- gives instructions for disposal of condemned carcasses
    and parts

-   Schedule E -- gives instructions for re-inspection of products and
    processes to be supervised

-   Schedule F -- regulates the use of food additives and injurious
    substances in meat

-   Schedule G -- gives instructions on canning of meat

-   Schedule H -- gives instructions for marking or labeling of meat and
    meat containers

-   Schedule I -- gives conditions for export stamps and certificates.
    In this Schedule, the Act specifically provides that:

-   

(i) Upon application of the exporter, the inspecting officer in charge
    is authorised to issue certificates for shipments of inspected and
    passed meat to any foreign country. Certificates should be issued at
    the time the articles leave the export slaughterhouse, but if not
    issued at that time, they may be issued later only after
    identification and re-inspection of the meat.

(ii) Export certificates are issued in serial numbers and in triplicate
     form. Each certificate should show the names of the exporter and
     the consignee, the destination, the number of the stamps, if any,
     attached to the articles to be exported, the number and type of
     packages, the shipping marks, the kind of product, the weight and
     any such information the consignee requires.

-   Schedule J -- gives instructions on recording keeping at the export
    slaughterhouse.

```{=html}
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```
-   The meat products should be free from diseases described in
    Schedule C. The main diseases that are currently of a major concern
    in European and American markets are BSE and FMD. CBPP is not a
    major problem as far as red meat is concerned because its survival
    rate in chilled meat is very short (Leete, 2001).

-   Since every country has its own conditions for export, the exporter
    should enquire from the relevant Embassy for their export
    requirements and take those conditions to the DVS who assesses
    whether they can meet them or not.

\(c\) Hides and skins

Again, the major conditions for export of hides and skins are given by
the DVS. An exporter is required to:

-   Have a hides and skins movement permit. This certifies that the
    hides/skins are obtained from disease free areas. The main disease
    of concern is anthrax. The permit also shows the destination of the
    hides/skins. As long as the exporter has fulfilled this condition,
    he is given clearance to export.

**Necessary costs to fulfill export requirements in Kenya**

+---------+--------------+------------------+------------------------+
| *       | **I          | **Main export    | **Associated costs     |
| *Export | nstitution** | requirements**   | (Kshs)**               |
| item**  |              |                  |                        |
+---------+--------------+------------------+------------------------+
| Live    | DVS          | -   Movement     | -   100 per copy       |
| animals |              |     permit       |                        |
|         |              |                  | ```{=html}             |
|         |              | -   Export       | <!-- -->               |
|         |              |     permit       | ```                    |
|         |              |                  | -   0.5 per ton        |
|         |              | -   Inspection   |                        |
|         |              |     fee          | ```{=html}             |
|         |              |                  | <!-- -->               |
|         |              | -   Inspection   | ```                    |
|         |              |     time: 100    | -   100 per cow; 25    |
|         |              |     days for 3   |     per shoat          |
|         |              |     consecutive  |                        |
|         |              |     negative     | -   1,000 per cow      |
|         |              |     CBPP tests   |     (feed)             |
+---------+--------------+------------------+------------------------+
|         | Customs      | -   Customs      | -   Free               |
|         | Department   |     declaration  |                        |
|         |              |     form         | ```{=html}             |
|         |              |                  | <!-- -->               |
|         |              | -                | ```                    |
|         |              |    Documentation | -   1,000              |
+---------+--------------+------------------+------------------------+
|         | Insurance    | -   Insurance    | -   10 per ton         |
|         | companies    |     policy       |                        |
+---------+--------------+------------------+------------------------+
|         | Ports        | -   Handling     | -   2 per ton          |
|         |              |     charges by   |                        |
|         |              |     the Kenya    |                        |
|         |              |     Ports        |                        |
|         |              |     Authority    |                        |
+---------+--------------+------------------+------------------------+
|         | Income Tax   | -   Personal     | -   Free               |
|         |              |                  |                        |
|         |              |   Identification |                        |
|         |              |     No (PIN)     |                        |
+---------+--------------+------------------+------------------------+
|         | Banks        | -   Current      | -   100,000 per        |
|         |              |     account      |     account            |
+---------+--------------+------------------+------------------------+
| Meat    | DVS          | -   Export       | -   0.5 per ton        |
| and     |              |     permit       |                        |
| meat    |              |                  | -   100 per cow; 25    |
| deri    |              | -   Inspection   |     per shoat          |
| vatives |              |     fee          |                        |
+---------+--------------+------------------+------------------------+
|         | Customs      | -   Customs      | -   Free               |
|         | Department   |     declaration  |                        |
|         |              |     form         | ```{=html}             |
|         |              |                  | <!-- -->               |
|         |              | -                | ```                    |
|         |              |    Documentation | -   1,000              |
+---------+--------------+------------------+------------------------+
|         | Banks        | -   Current      | -   100,000 per        |
|         |              |     account      |     account            |
+---------+--------------+------------------+------------------------+
|         | Insurance    | -   Insurance    | -   10 per ton         |
|         | companies    |     Policy       |                        |
+---------+--------------+------------------+------------------------+
|         | Ports        | -   Handling     | -   2 per ton          |
|         |              |     charges by   |                        |
|         |              |     Kenya Ports  |                        |
|         |              |     Authority    |                        |
+---------+--------------+------------------+------------------------+
|         | Income Tax   | -   PIN          | -   Free               |
+---------+--------------+------------------+------------------------+
| Hides   | DVS          | -   Export       | -   150,000 per year   |
| and     |              |     license      |                        |
| skins   |              |                  | -   2% export value of |
|         |              | -   Vet Dept     |     raw hides/skins    |
|         |              |     Levy         |                        |
|         |              |                  | -   1% export value of |
|         |              |                  |     wet blue           |
|         |              |                  |                        |
|         |              |                  | -   0.5% export value  |
|         |              |                  |     of processed       |
|         |              |                  |     leather            |
+---------+--------------+------------------+------------------------+
|         | Customs      | -   Customs      | -   Free               |
|         | Department   |     declaration  |                        |
|         |              |     form         | ```{=html}             |
|         |              |                  | <!-- -->               |
|         |              | -                | ```                    |
|         |              |    Documentation | -   1,000              |
+---------+--------------+------------------+------------------------+
|         | Ministry of  | -   Movement     | -   5,000 per year     |
|         | Agriculture  |     permit if    |                        |
|         |              |     collecting   |                        |
|         |              |     from farmers |                        |
+---------+--------------+------------------+------------------------+
|         | Banks        | -   Current      | -   100,000 per        |
|         |              |     account      |     account            |
+---------+--------------+------------------+------------------------+
|         | Insurance    | -   Insurance    | -   10 per ton         |
|         | companies    |     Policy       |                        |
+---------+--------------+------------------+------------------------+
|         | Ports        | -   Handling     | -   2 per ton          |
|         |              |     charges by   |                        |
|         |              |     Kenya Ports  |                        |
|         |              |     Authority    |                        |
+---------+--------------+------------------+------------------------+
|         | Income Tax   | -   (PIN)        | -   Free               |
+---------+--------------+------------------+------------------------+
|         | Other        | -   Railage      | -   2.5 per ton        |
+---------+--------------+------------------+------------------------+

# 

######## Annex 2

######## 

######## 2.7 Export Procedures in Ethiopia

## 

-   An export license has to be obtained from the Ministry of Trade upon
    fulfilling the following requirements:

> ♦Duly completed application form in two copies;

## ♦Principal registration certificate;

## ♦An investment permit and residence permit if there is foreign partnership;

## ♦Memorandum and article of association or contract of partnership if private limited and share company; and

## ♦Payment of license fee - A minimum fee of Birr 25.00, which progressively increases with the amount of capital registered in the license.

The license is renewable on a yearly basis.

The export process then passes through the following stages:

## ***FIRST STAGE***

1\) Application and Registration of Export order - The export sales
contract should stipulate the method of payment (letter of credit,
advance payment, cash against documents, consignment note) for the
exporters consignment.

2\. Complete the Customs Declaration and submit to the
International/Foreign business department of the bank.

3.Quality testing and certification -- Goods need to be certified by the
Quality and Standard Authority of Ethiopia (QSAE) to obtain Export
Authorization Certificate. However, The QSAE delegates other
institutions (with the expertise for certain types of goods) to
undertake the task of inspection and certification. For instance the
inspection of meat, and meat products and live animals (quarantine) is
carried out by the Veterinary Department of the Ministry of Agriculture
instead of QSAE. Also, the Islamic Affairs Office carries out Halal
certification.

4\. Documentation - The regulations of the importing country require
certain documentation to accompany the export consignment, for example a
certificate of origin to qualify for preferential treatment (or EUR I
movement certificate for Europe or form A of the GSP for other
countries).

All the above documents must be submitted to the Customs Authority.

## 

## ***2.7.2 SECOND STAGE***

5\. Request for delivery instruction from the buyer.

6\. Book space through forwarder or directly with the carrier.

7\. At this stage the exporter should decide about the package details
including weights, measurements and cube.

## 

## ***2.7.3 THIRD STAGE***

Upon knowing the name of vessel, cargo receiving dates, berth and
destination port:

8\. Confirmation of booking with forwarder/carrier;

9\. Instructions on the movement of cargo from premises/ factory to port
of discharge

10\. Advice on freight booking;

11\. Shipping note with precise shipping instructions to ensure that the
main carrier or forwarding agent is aware of cargo handling and
documentary requirements/disposal (issuance of the bill of lading);

12\. Customs Declaration through the Customs Clearing Agents (CCA)-To
avoid costly delays the exporter declares, all facts about the export
consignment and supporting original documents should be supplied to the
agents to enable customs formalities and authorization of the dispatch
of the export goods. The exporter must hand over the following documents
to the agents;

a\) Export permit;

b\) Copy of the Customs Declaration stamped with serial number of the
bank;

c\) Ethiopian Customs Declaration form;

d\) Certificate of Origin signed by the Ethiopian Chamber of Commerce;

e\) EUR I Movement certificate when exporting to the European Union
markets;

f\) GSP from A when exporting to countries offering the generalized
system of preferences;

14\. Insurance of export cargo; issuance of insurance certificate or
policy document;

15\. Transport documents;

## 16. Consignment note;

17\. Advice of distribution of documents;

18\. Banking instructions and payments;

######## 2.7.4 Costs Associated with Exports

In addition to municipal councils, an array of government agencies and
professional associations collect service charges and fees from
exporters at the Federal level. The organizations, the level of
charges/fees they collect and the type of services they provide are
listed below (the list is incomplete).

1.  Chamber of Commerce charges Br 40 for authenticating Certificate of
    Origin.

2.  Ministry of Agriculture -- provides health certificate for a fee of
    Br 10/head for up to 50 head of animals or a bale of hides/skins. Br
    5 for every additional 50 head of animals or bale of skins/hides.
    District agricultural offices charge Br2/cattle and Br 1/sheep or
    goat for meat inspection services.

3.  Maritime and Transit Service Organisation -- Br 4/head for the first
    50 head of cattle and thereafter Br 1/head; Br 1/shoat for the first
    500 shoats and Br 0.55/shoat for the next 500 shoats etc; Br 35 per
    shipment of meat and Br 3,300 per container of hides and skins.
    Services include authorizing export documents, processing Customs
    and Quality and Standard Control Authority requirements and
    supervising the loading of cargo on vessels/planes.

4.  Ministry of Health -- Br 20 for the first ton of meat and thereafter
    Br 10 for every additional ton. Services provided include
    authenticating the product, approval of packaging material,
    verifying that the meat has been inspected by the MOA, checking the
    temperature of the cargo and the health status of the personnel
    involved in meat inspection.

5.  Ministry of Foreign Affairs -- Br 162/shipment of live animals and
    Br 486/shipment of meat for authenticating the Certificate of
    Country of Origin, Export Invoice, Health and Halal Certificates.
    This service is not required for hides and skins.

6.  Customs -- Br 50/ shipment to USA and Br/60 shipment to Europe for
    Certificate of Origin; Br 2/shipment for stamps.

7.  National Bank / Commercial Bank -- Br 20 for advisory services,
    service charge at 0.25% of sales value and sales tax, at 5% of
    service charge. This payment is for hides and skins only.

8.  Quality and Standard Authority - Br 2,765 per container of hides and
    skins for providing laboratory services to ensure quality.

9.  Municipalities charge BR 2 cattle and Br 1/sheep or goat where
    export abattoirs are located.

10. Islam Affairs Office -- Br 50/shipment for Halal certificate

11. Embassies of Importing countries -- Br 270 for entry visa

12. Civil Aviation -- Br 10 for loading rumps

# 

# 

# [References]{.underline}

[Kenya]{.underline}

Aklilu Y, 1999. Privatisation of Community-Based Animal Health
Programmes: SPLA-Held Areas of Sudan, FIFC, Tufts University

Bourn, D. and Wilson, C.J. (1997). Galana ranch. In: Trypanosomiasis
control in Kenya. Kenya Trypanosomiasis Research Institute (KETRI),
Muguga.

CBS (Central Bureau of Statistics) (2001). Human population census. Vol
I, Nairobi.

Department of Veterinary Services (2000). Hides and skins improvement
and leather development status report for the last ten years.

FAOStat,1990-1998

Irungu, P. (2001). Formalisation of Village Peace Committees in the
Karamoja Cluster. A Consultancy Report for the CAPE Unit of OAU-IBAR,
August 2001.

Leete, D. (2001). A feasibility study for an abattoir in Laikipia. The
Laikipia Farmers Committee.

LMD. Undated. Marketing of Livestock and Livestock Products in the ASAL
areas, unpublished.

Kibunja, C.D. (1976). Meat retailing system in Nairobi. MSc thesis,
University of Nairobi.

Kariuki, Richard. 2000. Livestock Marketing From Pastoral Areas of
Kenya, A strategy for Pastoral Development, ALRMP, SNV, OXFAM (GB),
World Concern

Ministry of Agriculture (MoA) (1996). Animal Production Division Annual
Report, Hill Plaza, Nairobi.

Ministry of Agriculture and Rural Development (MoARD) (2001). Range
Management Division Annual Report, Hill Plaza, Nairobi.

Ndii, D. (2001). Economic Imperatives in the context of Kenya's
political transition (2001-2003).

Omiti, J. (2001). The status and policy options of the meat sector. An
invited public address at a public forum organised by the Institute of
Economic Affairs on Livestock Production Potential of Kenya's Dry Lands,
Norfolk Hotel, 17^th^ October, Nairobi.

Omiti, J. and Irungu, P. (2002). Institutional and policy issues
relevant to pastoral development in Kenya. Discussion Paper No.
031/2001. Institute of Policy Analysis and Research (IPAR), Nairobi.

OAU-IBAR (2001). Pastoralist harmonisation initiative second
international meeting. Mbale, Uganda.

Range Management Division Annual reports (1995 and 2000). Hill Plaza,
Nairobi.

Republic of Kenya (1977). Meat Control Act Chapter 356. Government
Printer, Nairobi.

Republic of Kenya (1972). The Animal Diseases Act, Chapter 364, Revised
Edition 1989, Government Printer

Republic of Kenya (1962). The Stock Traders Licensing Act, Chapter 498,
Revised Edition 1983, Government Printer

Republic of Kenya (1963). The Stock and Produce Theft Act, Chapter 355,
Revised Edition 1982, Government Printer

The East African (2002). 'Ban on beef is unfair, Kenya tells Tanzania'.
January 21-27, p. 25.

Wario A , 2001. Background Information, Kenya Livestock Marketing
Council

World Bank, Review Mission. 2001. Aide Memoire, Arid Lands Resource
Management Project

[Ethiopia]{.underline}

Addis Ababa City Council Agricultural Bureau. 1996/1997. 1996 Annual
Report. Addis Ababa

Ibid, 1997/1998. 1997 Annual Report. Addis Ababa

Ibid, 1998/1999. 1998 Annual Report. Addis Ababa

Ibid, 1999/2000. 1999 Annual Report. Addis Ababa

Ibid, 2000/2001. 2000 Annual Report. Addis Ababa

Ethiopian Agricultural research organization. 1998. Cattle meat (Beef)
research program Strategy. Animal Sciences Research Directorate. Addis
Ababa. Ethiopia.

Ethiopian Customs Authority. 1996. Annual External Trade Statistics.
Issued by Statistics Department of Custom Authority. Addis Ababa.
Ethiopia.

Ibid, 1997.

Ibid, 1998.

Ibid, 1999.

Ibid, 2000

Ethiopian Export Promotion Agency. 2001. Profile of The Meat Sub-Sector.
Product Development and Market Research Directorate. February, 2001.

Ethiopian Export Promotion Agency. 2001. Study on raw hides and skin and
leather products. Production promotion and market study Directorate.
First draft. November, 2001.Addis Ababa, Ethiopia.

FAO. 1998. Yearbook. Production. Volume 52, 1998. Rome, Italy.

FAO/Giles Stockton, 2001. Support to Livestock Exports-Northern Somalia
and the Sub-Region (EXCELLEX)

Federal Democratic Republic of Ethiopia. 1998. Proclamation No 117/1998,
Animal, Animal Products and By-products Marketing Development Authority
Establishment, Negarit Gazeta

Livestock Market Authority. 2000 . Problems and suggested solution of
livestock markets. November, 2000.

Livestock Market Authority . 2001. Study on different payments on live
animals, meat and hides and skins export trade. Market Research and
Promotion Department. May, 2001. Addis Ababa, Ethiopia.

Livestock Marketing Authority.2001. Brief Baseline Information on
Ethiopian Livestock Resource and Trade, Addis Ababa

Ministry of Agriculture. 2000. Assessment Report on Livestock
Improvement and Multiplication Ranches in the country. Animal, Fishery
and Animal Health Technology and Regulatory Department. October, 2000.

Ministry of Agriculture. 2001. Draft Agricultural policy. Ethiopia
Federal democratic republic, Ministry of Agriculture, February 2001,
Addis Ababa, Ethiopia.

Ministry of Agriculture. 1995. Livestock Marketing Study, Orangewoud
International in association with RDP Livestock Services

National Bank of Ethiopia. 2001. Annual Report 1999/2000 (Ethiopian
Fiscal Year 1992). NBE Addis Ababa, Ethiopia.

National Bank of Ethiopia. 2001. Quarterly Bulletin. Fiscal Year Series.
Volume 16,No.3. NBE, Addis Ababa. Ethiopia.

World Bank/FAO, 2001. Pastoral Area Development in Ethiopia

[Sudan]{.underline}

Animal Resources Services Company, 2000. Statistics for Livestock
Markets in Sudan 4^th^ Edition, 1999

Animal Resources Services Company, 2001. Statistics for Livestock
Markets in Sudan, 5th Edition, 2000

Animal Resources Services Company, 2002. Statistics for Livestock
Markets in Sudan 6th Edition, 2001

Arab Organisation for Agricultural Development, 2000. Arab Agricultural
Statistics Yearbook, Volume 20, December 2000, Khartoum

FAO/Arab Authority for Agricultural Investment and Development, 1997.
Livestock and Red Meat Export Marketing Study, Vol I

FAO/Arab Authority for Agricultural Investment and Development, 1997.
Livestock and Red Meat Export Marketing Study, Vol II

FAOStat, 1990-1998

[^1]: Many suggest that this figure is highly inflated.

[^2]: It takes 75 days to trek cattle from West Darfur to Khartoum; Most
    cattle are also trekked to Mombassa from the Northern and N. Eastern
    districts.

[^3]: This could vary with the seasons.

[^4]: Tambi and Maina, OAU-IBAR, 2000.

[^5]: Ministry of Agriculture and Rural Development, January 2001

[^6]: Marketing of Livestock and Livestock Production in ASAL areas,
    Livestock Marketing Division, unpublished

[^7]: Ibid

[^8]: In another paper it is stated as 14%.

[^9]: However, Richard Kariuki provides a slightly different picture. He
    estimates the annual meat demand for Kenya at 304,150 tons and a
    wider off-take range of between 6-14% for cattle and 4-10% for
    shoats from pastoral areas. He also estimates a significantly lower
    beef contribution from pastoral areas at 19%.

[^10]: Development Proposal for the Arid and Semi Arid Lands, LMD,
    Unpublished

[^11]: Personal communication with Idrisi

[^12]: Guvele C and Lautze S: Unofficial Cross-Border Livestock Exports
    from Southern Sudan to Kenya, Feinstein International Famine Center,
    1998

[^13]: Interview with Dr Fazil, a private Veterinarian in Mombasa

[^14]: South of Turkana, Marsabit, Mandera, Wajir, West Pokot, Isiolo,
    Garissa, Tana River and Samburu districts.

[^15]: LMD, Marketing of Livestock and Livestock Products in the ASAL
    areas (unpublished)

[^16]: In addition, numerous slaughterhouses dotted between Nairobi and
    Namanga supply Nairobi butcheries. Usually butchery owners of
    Nairobi pick the meat from these slaughterhouses using hired
    vans/pickups. This saves them a lot in costs.

[^17]: Livestock prices were depressed at Nairobi at the time the data
    was taken.

[^18]: Gross margins are averaged and indicative. They shouldn't be
    considered as the standard margin.

[^19]: These margins are averaged and indicative. They should not be
    taken as the standard margin made by butcheries all the time.

[^20]: The authors suggest that these price records should be treated
    with caution.

[^21]: Interview with local livestock traders - Jele Osman, Said Golo,
    Mohamed Dame, Guracho Abawata and Boru Dela.

[^22]: Interview with Dr Fazil, a private Veterinary practitioner

[^23]: Note that these figures only give number of animals slaughtered
    in Nairobi slaughterhouses. A lot of meat also comes from other
    slaughterhouses outside Nairobi, e.g. in Machakos, Kiambu and
    Kajiado districts.

[^24]: The East African, January 2002, pp 25

[^25]: On the basis of hectarage

[^26]: Interview with Dr Maurice, Manager of Galana Ranch

[^27]: Kacheliba, Marigat, Marmar, Isiolo (with Kina), Bangale, Kurawa
    and Wenje.

[^28]: Sessional Paper No. 1 of 1986, Economic Management for Renewed
    Growth

[^29]: Marketing of Livestock and Livestock Products in the ASAL areas,
    LMD (unpublished)

[^30]: Interview with Mr Marete, LMD

[^31]: Ibid. Mr Marete added that 'It is difficult to do business when
    you are told what to do.'

[^32]: Marketing of Livestock and Livestock Products in the ASAL areas,
    LMD (unpublished)

[^33]: Development Proposal for the Arid and Semi Arid Lands, LMD
    (unpublished)

[^34]: The MOA, after readjusting the figure by subtracting the
    livestock population in Eritrea, estimates that pastoral areas,
    covering some 60% of the total landmass, account for 73% of the
    goats, 25% of the sheep, 20% of the cattle and the entire camel
    population.

[^35]: FAO's figures differ from the Ministry of Economic Development
    Cooperation (MEDAC). The latter projects annual production growth of
    1.8% for goat meat and 2.2% for camel. FAO's annual production
    figure for camel meat is nearly five times the estimate of MEDAC.

[^36]: Cattle and in most cases -- shoats are slaughtered in Ethiopia in
    the backyards. Data on meat production should therefore be treated
    with caution.

[^37]: Orangewoud International in association with RDP Livestock
    Services, 1995

[^38]: Ibid

[^39]: Ibid

[^40]: Estimates of officials of City Agricultural Administration Bureau
    and Quarantine and Meat Inspection section.

[^41]: From City Administration Bureau of Agriculture

[^42]: Taken by Alemayehu Reda

[^43]: Livestock Sub Sector Review,Vol 3, Annex 3, 1984

[^44]: Orangewoud International, July 1995

[^45]: Addis Zemen, February 3, 2001

[^46]: These figures are comparatively less than the one provided by the
    MOA's Health Certificate Unit.

[^47]: These figures were compiled from the MOA's Health Certificate
    Unit and differ slightly from Customs records.

[^48]: LMA, Brief Baseline Information on Ethiopian Livestock Resource
    Base and Trade, 2001.

[^49]: This is based on the annual off-take rate

[^50]: This section draws heavily from a recent LMA Report (Mekonen and
    Yimam, 2001).

[^51]: Interview with Mr A. Wosenyeleh, Marketing Manager, ELFORA

[^52]: In the Oromia region alone, transit fees are charged at Alemaya,
    Metehara, Nazreth. Kibremengist, Yabelo and Debrezeit. The fees
    range from Br 1 to Br 7/cattle and from Br 0.75 to Br 1/shoat.

[^53]: Mekonnen et al, A study report on the associated costs of live
    animals, meat, hides and skins export trade (Amharic version), LMA,
    2001, Addis Ababa

[^54]: Ibid

[^55]: Interview with meat exporters (names withheld)

[^56]: Negarit Gazeta, Proclamation No 117/1998

[^57]: This view was repeatedly raised during an interview with the
    Oromia Agriculture Bureau, Livestock Marketing Team Members

[^58]: A staff in the Oromia Bureau joked that the data are useful for
    PhD candidates.

[^59]: These views were expressed by the exporters in a LMA study

[^60]: FAO/World Bank, A Pastoral Community Development Project for
    Ethiopia, Project Proposal, Discussion draft, December 5,2001

[^61]: Various parties contest the above estimates. The figures suggest
    a population growth of 45% for cattle, 55% for sheep, 62% for goats
    and 14% for camels between 1991 and 2001 alone. The MoAR concedes
    that an immediate census is required to establish the number of the
    livestock population for planning and development purposes.

[^62]: Statistics for Livestock Markets in Sudan, Animal Resource
    Services Company, 1999

[^63]: This translates into a colossal figure of 7.6 million cattle,
    20.8 million sheep, 15.3 million goats and half a million camels
    being slaughtered in 2001.

[^64]: Official estimates for 1995 indicated an off-take rate of 1.5
    million cattle, 10 million sheep and 12 million goats. Livestock and
    Red Meat Export Marketing Study, FAO/AAAid, 1997

[^65]: Ministry of Industry and Investment estimates

[^66]: Interview with Omar Hassan Eldirami, Marketing Manager, Ghanawa
    Meat Trading company

[^67]: Interview with Adam Nur, Livestock Trader from Nyala

[^68]: Adapted and modified from Sudan Livestock and Red Meat Export
    Marketing Study, FAO/AAADC, February 1997

[^69]: Interview with Dr Isam Siddig Abdel Salam, General Manager,
    Animal Resources Services Co

[^70]: However, the State is proposing to introduce additional tax for
    its coffer to the dismay of the ARSC.

[^71]: Sudanese sheep were said to command a price of up to 1,000 SD
    (\$265) during the ban in Saudi Arabia. Current price levels have
    dropped down to 300 SD (\$80).

[^72]: Ministry of Foreign Trade

[^73]: Chamber of Commerce

[^74]: Livestock and Red Meat Export Marketing Study, FAO/AAADC, 1997

[^75]: Despite importing live sheep, the Saudis require the removal of
    spinal cord from chilled/frozen carcasses.

[^76]: Interview with Omar Hassan Eldirani, Marketing Manager, Ganawa
    Slaughterhouse

[^77]: The slaughterhouse is closed at the moment due to high costs of
    chartered flights and lack of markets for disposing offal

[^78]: This estimate of the Ministry of Trade and Industry may be closer
    to the national livestock off-take volume than all other estimates
    provided.

[^79]: Interview with Mohammed Wid Attala, Director of External
    Relations/Leather Industries Coordinator, Ministry of Industry and
    Investment

[^80]: Ministry of Trade and Investment

[^81]: Beware the Bugaboo, Newsweek, 10 December 1992

[^82]: Abdu-el-Aziz Zuber, Deputy General Manager, Animal Resources
    Services Bank

[^83]: Ibid

[^84]: FAO/AAAID, Sudan -- Livestock and Meat Export Marketing Study,
    Volume 1, 1997

[^85]: ^\*^ Currently, the Ministry of Finance has exempted traders from
    these taxes for a period of 3 months to promote export

[^86]: Interview with Abd El Aziz Al Zuber, Deputy General Manager,
    Animal Resources Bank