Determinants of Beef Cattle Commercialization in Southwest Ethiopia

Abstract Background Ethiopia ranked first in Africa in the number of livestock production. However, the sector's potential contribution to the national economy has been hampered by the lack of a market-oriented livestock production system .In this study, the beef cattle markets in Southwest Ethiopia are analyzed based on a survey of 172 producers. The first part emphasized the characterization and commercialization of the beef cattle market in the study area. The second part is dedicated to identifying the factors affecting households’ participation in the beef cattle market using the Heckman two-step selection model. Results In the findings, the beef cattle market is characterized by the dominance of few traders, asymmetric information, lack of contract enforcement, lack of transparency among market actors, and poorly developed market infrastructure. There is very low net commercial off-take rate of cattle for smallholder farmers in the study area. The result from the Heckman two-step selection model revealed that having positive stock of cattle, better access to extension service & feed, and a better level of literacy enhanced market participation and sales volume. On the contrary, market participation and sales volume were negatively affected by cattle keeper’s age, non-livestock income, and poor road and health infrastructure. Conclusions The market structure is characterized by imperfect competition implying that under the current production and marketing conditions, small-holder farmers and pastoral livestock production systems do not provide regular and adequate market supply of beef cattle at competitive price. The study suggested that improving the market and health infrastructure, providing capacity building for producers, and improving access to feed could enhance the intensity of smallholder beef cattle market participation.