Determinants of choice of market-oriented indigenous Horo cattle production in Dano district of western Showa, Ethiopia

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1 Trop Anim Health Prod (2010) 42: DOI /s x ORIGINAL RESEARCH Determinants of choice of market-oriented indigenous Horo cattle production in Dano district of western Showa, Ethiopia Befikadu Alemayehu & Ayalneh Bogale & Clemens Wollny & Girma Tesfahun Accepted: 13 June 2010 / Published online: 25 June 2010 # Springer Science+Business Media B.V Abstract Based on a survey data collected from150 farming households in Dano district of western Showa of Ethiopia, this paper analyzes determinants of smallholders choice for market oriented indigenous Horo cattle production and tries to suggest policy alternatives for sustainable use of animal genetic resource in the study area. Descriptive statistics and binary logistic model were employed to analyze the data. Eight explanatory variables including age of the household head, size of the grazing land, total size of cultivated land, farmer s experience in indigenous cattle production, farmer s attitude towards productivity of local breed, off-farm income, fattening practice, and availability of information and training of the head of the household regarding conservation, management and sustainable use indigenous cattle were found to be statistically significant variables to explain farmers' choice for market oriented indigenous cattle production activities. Besides, possible policy implications were made in order to improve B. Alemayehu Christian Relief & Development Association (CRDA), Addis Ababa, Ethiopia A. Bogale (*) Humboldt University of Berlin, Berlin, Germany ayalnehb@yahoo.com C. Wollny Applied University of Bingen, Bingen, Germany G. Tesfahun Agricultural Economist, CIMMYT, Addis Ababa, Ethiopia conservation, management and sustainable use of market oriented indigenous cattle genetic resources. Keywords Binary logit model. Indigenous Horo cattle. Market-oriented production Introduction Ethiopia s economy is largely dominated by agriculture, which provides a means of living for more than 83 percent of the population and employs 70.4 percent of the economically active population (CSA 2009). The contribution of agriculture to the GDP, at constant factor cost, is estimated to be 44.5% in 2007/08 fiscal year (NBE 2008 Livestock are essential component of Ethiopian agriculture and the country is reported to have the largest livestock resource than any other African country with about 49 million heads of cattle (CSA 2009). In different parts of the country, livestock and livestock products account for percent of the total household cash income (Solomon et al. 2003). However, its maximum contribution to the total GDP is about 16 percent and to the agricultural GDP is around 30 percent (EEA 2005; CSA 2009). The performance of this resource has been poor compared with other African countries due to inadequate feed and nutrition, widespread disease and poor health, and inappropriate livestock polices with respect to credit, extension, marketing and infrastructure (Degefe and Nega 2000). Livestock perform multiple functions in the Ethiopian economy by providing food, input for crop production and soil fertility management, raw material for industry, cash income as well as in promoting saving, fuel, social functions, and employment. This sub-sector primarily relies on indigenous animal genetic resources that are threatened by the pressure of economic development.

2 1724 Trop Anim Health Prod (2010) 42: Despite the potential growing markets for livestock and livestock products, there are concerns that the smallholder producers might not benefit from it unless policy makers consider improving access to markets. The potentially offsetting effects of transactions costs, opportunities for off-farm employment and the competing impact that physical, labour mobility, financial and intellectual capital accumulation complicate its consideration. Similarly arguments exist in the context of examining increases in income from alternative sources, such as remittances and other farm activities. In other words, alternative employment prospects complicate policy analysis about market participation and supply decisions (Lapar et al. 2002). Hence, examining factors that affect market participation and sales by households is a necessary means to formulate appropriate policy options that improve the livelihood of poor livestock keepers. With this background, this research is aimed at analyzing factors that affect smallholders choice for market oriented indigenous Horo cattle production and to suggest policy alternatives for sustainable use of animal genetic resource in the study area. Methodology Sampling technique A multi-stage sampling technique was used to select the sample respondent farmers. In the first stage, five peasant associations (PAs) were selected using random sampling procedure. In the second stage, the Gottes or villages were selected using random sampling procedure. In the third stage, the sample farmers were selected from each Gottes or villages using systematic random sampling procedure. The list of farmers was obtained from the offices of peasant associations and a total of 150 farmers were selected. Data and information were collected from primary and secondary sources. Primary data was collected using structured questionnaire. Before starting the actual data collection, the questionnaire was pre-tested to modify some of the questions that were either irrelevant or redundant. Analytical method: the binary logit model The main aim of this study is to analyze which of the hypothesized independent variables are related to the smallholders choice for market oriented indigenous Horo cattle production. The dependent variable in this case is a dummy variable (binary), which takes a value zero or one depending on whether or not a farmer is engaged in market oriented indigenous Horo cattle production. The logit model was selected for analytical purpose due to the binary nature of the dependent variable. Although logit and probit yield similar parameter estimates, the logistic distribution (logit) has an advantage over others in the analysis of dichotomous outcome variable in that it is extremely flexible and easily used function from mathematical point of view and subjects itself to meaningful interpretation (Hosmer and Lemeshew 1989). Pindyck and Rubinfeld (1981) also indicated that the logit model has advantages in that it transforms the problem of predicting probabilities within (0, 1) interval. Following Gujarati (2004), the cumulative logistic probability function can be specified as: " # " # P i ¼ FðZ i Þ ¼ F a þ Xm 1 b i X i ¼ P ð1þ i¼1 1 þ e ½aþ b i X i Š Where e X i P i represents the base of natural logarithms (2.718 ) represents the ith explanatory variable the probability that an individual makes a certain choice (in this study saying yes or no to the market oriented indigenous Horo cattle production activity) given X i α and β i are parameters to be estimated. Definitions of variables and working hypothesis Dependent variable The dependent variable for this study has dichotomous nature representing the preferred status of the smallholders choice for market oriented indigenous Horo cattle production (HHENGCTL). It takes the value 1 if the farmer is engaged in market oriented indigenous cattle production and 0 otherwise. It has been noted that one of the choises of smallholders involves to practice indeginus catte production activity and deliver his/her product in a given market purposely in order to earn cash (Ehui et al. 2003). Thus, in this study a farmer is said to be engaged in market oriented indigenous cattle production if he/she intentionally involved in indigenous cattle production as a means of livelihood or engaged in indigenous cattle production for the intention of income generation. The independent variables Different researchers found out different results as to what factors can influence farmers' choice for market oriented indigenous cattle production. Some noted the socioeconomic factors as the leading and the others pointed out demographic and institutional factors as the most important. Delgado et al. (1999) identified a marked association between socio-economic characteristics of the household

3 Trop Anim Health Prod (2010) 42: and the market oriented cattle production. Lapar et al. (2002) found out that transaction costs, opportunities for off-farm employment and the competing impact that physical, labour mobility, financial and intellectual capital accumulation were some of the factors that affect smallholder s cattle production activities. Moreover, Ehui and Pender (2003) showed 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, not the distance to markets and towns. Constraints to production of livestock and livestock products (e.g. capital to purchase animals, feed and processing equipment) may also be the main factors limiting market participation and sales. To mention some age, education level, farming experience, sex, labour availability, farm size, land tenure, frequency of development agent contact, availability and adequacy of credit facility are to be considered. Based on theoretical background and empirical results of different studies on smallholders choice for market oriented indigenous cattle production and other related cattle marketing findings else where as well as considering the information from the informal survey, the following variables are hypothesized to influence smallholders choice for market oriented indigenous cattle production practices (Table 1). Results and discussion It is obvious that examining factors that affect market participation and sales by households would provide information to decision makers in order to improve the livelihood of poor livestock keepers. This implies that, there are profitable opportunities in the livestock product markets that might lead to increase and sustained wealth and income, so there are possibilities that poor livestock keepers can take part in these opportunities (Ehui et al. 2003; William et al. 2007). In this study, 49 farmers or percent of the total respondent were considered to be market-oriented indigenous cattle producers. On the other hand, the remaining 101 or percent of the total farmers were non-market oriented indigenous cattle producers. As discussed earlier, the logit model was used to analyze factors that were hypothesized to affect smallholders choice for market oriented cattle production. Before running the logistic regression model, the explanatory variables were checked for existence of multicollinearity and the degree of association. Accordingly, a technique of Variance Inflation Factor (VIF) was employed to detect the problem of multicollinearity among the continuous variables. Similarly, contingency coefficients were used to check the degree of association among the dummy variables. The values of the VIF for continuous variables were found to be small (i.e. VIF values less than 10). That means, the data have no serious problem of multicollinearity. Similarly, the contingency coefficients, which measure the association between various discrete variables based on the Chi-square, were computed in order to check the degree of association among the discrete variables. The results of the computation revealed that there was no serious problem of association among the discrete explanatory variables. Therefore, nine explanatory variables (six continuous and three dummy) were included in the model. The summary of the descriptive statistics of the variables hypothesized to influence the smallholders choice for market oriented indigenous cattle production is presented in Table 2. Once the decision is made about the variables to be included in the model, the maximum likelihood method of estimation was used to obtain the parameter estimates of the Table 1 Code, definition and hypothesized sign of explanatory variables Code Definition Type of variable Hypothesized sign AGE Age of the household head in years Continuous ( - ) SIZEOWLD Size of own cultivated land in hectares Continuous ( + ) EXPERIENCE Farmer s experience in indigenous cattle Continuous ( + ) production in years OFFARM Off-farm income in Birr Continuous ( - ) GRAZLAND Size of grazing land owned in hectares continuous ( - ) TLUCATTLE Herdsize in tropical livestock unit continuous ( + ) LOCALBREED Preference to keep local breeds Dummy, 1 if the respondent (+) prefers to keep local breeds, 0 otherwise TRAININGS Information, training and visit by Dummy, 1 if the respondent (+) development workers acquired information through training or visits, 0 otherwise FATTENING Practice fattening Dummy, 1 if the respondent practices fattening, 0 otherwise (+)

4 1726 Trop Anim Health Prod (2010) 42: Table 2 Summary of explanatory variables included in the logistic regression model Variable code Total Sample Market Oriented Non-market oriented t-statistic Significance (N=150) (N=49) (N=101) Mean Std. Dev. Mean Std. of Mean Mean Std. of Mean AGE SIZEOWLD EXPERIENCE OFFARM GRAZLAND TLUCATTLE Variable code Percentage with yes Total Sample Market oriented Non-market oriented LOCALBREED TRAININGNS FATTENING Source: Survey data binomial logistic regression model. The binomial logistic regression required eight iterations to generate the parameter estimates. Eight of the nine explanatory variables hypothesized to explain the smallholders choice for market oriented indigenous cattle production in the study area, were found to be significant at less than or equal to 5% probability level. Table 3 presents the signs, magnitudes, and statistical significance of the estimated parameters and how much the observed values were correctly predicted by the logistic regression model. The chi-square test shows the over all goodness of fit of the model at less than 1% probability level. Another goodness of fit measure used was the count R 2. The count R 2 is based on the principle that if the estimated probability of the event is less than 0.5, the event will not occur and if it is grater than 0.5 the event will occur (Maddala 1989). In this study, the ith observation was grouped as smallholder engaged in market oriented indigenous cattle production if the computed probability to be market-oriented was found to be grater than or equal to 0.5 and as a non-market-oriented otherwise. It is apparent from the results that the fitted model correctly predicted about 87% of the observed values. The sensitivity (the number of market-oriented farmers correctly predicted by the model as market oriented) was about 90%, while the specificity (the number of non-market oriented farmers correctly predicted by the model as non- market oriented) was 99%. Therefore, the model predicted both groups accurately. Eight explanatory variables included in the analysis were found to have statistically significant impact on farmers market-oriented indigenous cattle production choice with less than 5% probability level. These variables include age of the household head (AGE), size of the grazing land (GRAZLAND), total size of cultivated land (SIZEOWLD), farmer s experience of indigenous cattle production (EXPRIENCE), farmer s attitude towards productivity of local breed (LOCALBREED), off-farm income (OFFARM), fattening practice (FATTENING), and availability of information, training and visit of the head of the household about conservation, management and sustainable use (TRAININGS). A brief discussion on the statistically significant explanatory variables is provided below. Age of the household head (AGE) The age of the farmer can generate or erode confidence. That is, with more age, farmer can become risk averse to engaged in market oriented indigenous cattle production (Ehui et al. 2003). This variable was found to have a negative effect on farmers choice for market oriented indigenous cattle production. The odds ratio tells us that, keeping the influences of other factors constant, as the age of the household head increases by a year, then his/her choice for market oriented indigenous cattle production would decrease by a factor of Size of own cultivated land (SIZEOWLD) This variable is significant at (P<0.01) and has positive association with the respondent s practice of undertaking market oriented indigenous cattle production. This variable as hypothesized earlier affected the likelihood of the respondent s market oriented indigenous cattle production positively in such a way that as the household s cultivated land owned gets larger, they might be more inclined to be market-oriented indigenous cattle producer. The positive effect of this variable indicates the

5 Trop Anim Health Prod (2010) 42: Table 3 Parameter estimates for binary logit model Explanatory Variables Estimated Coefficients Odds Ratio Wald Statistics Significance Level AGE *** SIZEOWLD *** EXPERIENCE *** OFFARM *** GRAZLAND ** TLUCATTLE LOCALBREED *** TRAININGS ** FATTENING *** CONSTANT ** -2 log Likelihood Ratio Pearsons Chi-Square (X 2 ) a Correctly predicted (count R 2 ) b Sensitivity 89.8% c Specificity 99.0% Sample size 150 *** and ** significant at α=1% and 5%, respectively. a Based on a probability classification scheme, b Correctly predicted market-oriented households, c Correctly predicted non-market oriented households importance of cultivated land ownership in influencing farmers choice to practice market oriented cattle production (ECA 2004).Theoddsratiotellsusthatkeeping the influences of other factors constant, an increase in cultivated land ownership by one hectare increases the choice to be market-oriented indigenous cattle producer by a factor of Farmer s experience in indigenous cattle production (EXPRIENCE) Experience and knowledge of farmer s indigenous cattle production would generate or erode confidence of farmers to be market oriented indigenous cattle producer. More precisely, with more experience and knowledge, farmer could become risk taker to engaged in market oriented indigenous cattle production activity (Simon et al. 2001). The coefficient is found to be statistically significant at (P< 0.01) and affects the choice to practice indigenous cattle production positively. This means that as farmers get more experience and knowledge on indigenous cattle production, the chance of engaging in market oriented indigenous cattle production tends to increase. Off-farm income (OFFARM) Access to off-farm income might relax the financial constraints of farmers, and in some cases, access to offfarm income is discouraging farmers to participate in market-oriented indigenous cattle production activity (Benin et al. 2002). In this study, as it was expected, access to off-farm income would decrease the probability of engaging in market oriented indigenous cattle production activity. It occurred due to the fact that as farmers engaged in off-farm income activity such as daily laborer, employed in town and carpenter then they would give less attention towards cattle production. The odds ratio tells us that keeping the influences of other factors constant, as the household engage in off-farm activities, then his/her choice to be market-oriented indigenous cattle producer decrease by a factor of Size of grazing land owned (GRAZLAND) It is found significant at (P<0.05) and affects the choice to undertake market-oriented indigenous cattle production negatively. This means that as farmers increase the size of own grazing land, the chance of engaging in indigenous cattle production for market tends to decrease. This is due to the fact that, as the size of grazing land owned increases farmers prefer to keep cattle more for their social values such as wealth indicator. Moreover, farmers may rent part of the grazing land owned for others as the size of the grazing land increase to generate additional income. Further more, the results indicates, ceteris paribus, the probability to be market oriented indigenous cattle producer decreases by a factor of as the size of the grazing land increases by 1 unit.

6 1728 Trop Anim Health Prod (2010) 42: Preference to keep local breeds (LOCALBREED) For conservation, management and sustainable use of indigenous animal genetic resource, it is important to understand farmers preference and attitude towards local breeds. This also influences farmers decision to engage in market-oriented indigenous cattle production. Farmers prefer to keep the local breeds due to different reasons such as accessibility, low cost of production, management, interest to keep the native breeds, availability of local barn construction materials, ease of barn maintenance and construction, and so on. The preference and attitude of farmer towards keeping the local breeds is an important variable that influences farmers choice of market-oriented indigenous cattle production activity. It is found to be statistically significant at (P<0.01) and positively related with farmers choice of market oriented indigenous cattle production practice. The odds ratio indicates that, keeping the effects of other factors constant, the likelihood of market-oriented indigenous cattle production of a farmer increases by a factor of 40.5 than those who could not develop positive preference or attitude towards keeping local breeds. Information, training and visit (TRAININGS) The model result indicates that this variable affects the choice of farmers to practice market-oriented indigenous cattle production practices positively. This means that as the head of the household get information, participate in training and other related indigenous cattle genetic resources conservation programs, he/she may become aware and can acquire sufficient knowledge about the conservation, management and sustainable use of indigenous cattle breeds. This may lead to engagement in market oriented indigenous cattle production activity. The result obtained in this study coincides with other research results obtained in this particular subject. Burton et al. (2001) and Joyce (2001) also reported that awareness and sensitization to be highly and positively correlated with the farmers participation. The odds ratio of the variable implies that, the effects of other factors kept aside, the odds ratio in favor of being market-oriented increases by factor of as compared to those who did not get information and participated in different conservation, management and sustainable use of indigenous breed related programs. Fattening (FATTENING) The variable is found to be significant at (P<0.01) and has positive association with the response to undertake market oriented indigenous cattle production. This variable as hypothesized earlier affects the respondent market oriented indigenous cattle production practice in such a way that as the households engage in fattening activity, they might be more inclined to be market-oriented indigenous cattle producer. The positive effect of this variable indicates the importance of fattening in influencing farmers choice to practice market oriented cattle production (Otuzbirov and Georgiev 2005). The odds ratio tells us that, keeping the influences of other factors constant, as the household head practice fattening, then the probability of his/her choice to be market-oriented indigenous cattle producer increase by a factor of Conclusions and policy implications The results of this study showed that among hypothesized variables, age of the household head, size of the grazing land, land ownership, farmer s experience of indigenous cattle production, farmer s attitude towards productivity of local breed, off-farm income, fattening practice, and access to information, training/visit about conservation, management and sustainable use were found to be statistically significant. Based on the findings of the study, the following points need to be considered by policy makers in order to improve the conservation, management and sustainable use of indigenous animal genetic resources: (i) there is a need to increase farmers recognition of the productiveness of indigenous cattle breeds; as it would be very difficult to implement effectively sustainable indigenous cattle breeds conservation activities, otherwise; (ii) the longer the farmer is involved in fattening practice, the better his/her engages in market oriented indigenous cattle production and conservation. Thus, emphasis need to be given to encourage farmers who practice fattening; (iii) participating farmers in training, farmer's field day, field visits, visits to other villages is an essential element to promote the conservation, management and sustainable market oriented indigenous cattle production. To achieve this responsibility, pertinent experts who are working specially at Peasant Associations, district, and regional levels need to be equipped with the necessary knowledge about conservation, management and sustainable use of indigenous cattle breeds; (iv) and finally, in order to avoid indigenous cattle breeds erosions, in addition to training and extension work, government and others should provide systems appropriate to the specific socio-economic, cultural and biophysical circumstances. References Benin, S., Ehui, S. and Pender, J., Policies for livestock development in the Ethiopian highlands. Socio-economics and Policy Research Working Paper 41, (International Livestock Research Institute, Addis Ababa).

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