Policy Options for Improving Market Participation and Sales of Smallholder Livestock Producers: A case study of Ethiopia

Market access plays an essential role in assuring better income and welfare levels for smallholder livestock producers, and thus contributes to poverty alleviation. This is even more so in the Ethiopian context where livestock play an essential role in the economy. Making use of the Heckman estimation procedure, this paper identifies policy and technology options to increase participation and sales of smallholder producers in livestock markets in Ethiopia, based on data from 934 household surveys conducted between 1999 and 2001 in the highlands of Tigray and Amhara regions in northern Ethiopia. The analysis demonstrates that physical capital (ownership of different species of livestock and landholding) and financial capital (crop income and non-farm income) are the main factors influencing market participation and sales. Education was also found to positively affect value of sales of dairy products. Distance to markets and towns were not found to be significant. We conclude that in the case of Ethiopia, constraints to production of livestock and livestock products (e.g. capital to purchase animals, feed, and processing equipment) are the main factors limiting participation and sales in livestock markets.