1. International Livestock Research institute
Agricultural market development in Ethiopia: problems and issues
Mohammad Jabbar
International Livestock Research institute

2. Project objective and requirements
To alleviate poverty through technology transfer
Requirements
Needs based assessment of best-bet options
Innovative approaches for transfer
An appropriate extension service
An input supply system
Appropriate marketing arrangements
Finance and credit
Appropriate institutions (rules, regulations, organisations)

3. Characteristics of Pilot Learning Sites
Diversity
Ecology and resource endowments
Physical, financial, human and social capital
Production systems and enterprises
Market infrastructure and access
Possibilities and constraints
Participatory diagnosis for common and different market problems and possibilities

4. Grain marketing problems and issues
Price instability
Finance and credit
Post production losses
Transportation and communication
Grades and standards
Storage
Processing
Information
Transactions costs

5. Price instability: problems
Constraint as it affect producers and consumers
Public sector withdrawal from marketing
Production efforts not matched by marketing
Rigid credit repayment schedules
Weather and production risks
Adverse effect on livestock prices

6. Price instability: possible actions
Direct public sector involvement not desirable
Facilitate private, cooperative thru finance, credit, stock regulations for buffer stocks
Maintain investor profit without public subsidy
Stabilise price partially to reduce risk, keep incentive for investment using market price as guide
Price stabilisation, buffer stocks, supply management, food aid need to be integrated without major public sector involvement in direct handling of commodities

7. Finance and credit: problems
Limited input credit supply
Rigid repayment schedules
Marketing credit inaccessible
Credit for poverty alleviation and for production not complementary
Inadequate institutional arrangements for savings mobilisation

8. Finance and credit: possible actions
Recognise multiplicity of roles of credit for production, marketing, trading, storage
Supplier credit for inputs
Warehouse receipts for products not easy to establish for smallholder conditions
Private sector investment in marketing infrastructure rather than commercial production
Donor and public fund combined with private sector capital to supply low interest loans

9. Post-production losses
Problems
No reliable estimate (20% assumed)
Source of problem: production to marketing chain
Possible actions
Extension recommendation on method and techniques
Appropriate technology, location, finance for off-farm investment in storage and processing
Define and test role of private sector, cooperatives, public sector

10. Transport and communication
Problems
Inadequate road network, limited access to input and output markets, high transactions costs
Disincentive to invest in new technology
Possible actions
Investment in roads and agriculture need to be complementary
Investment to improve rural markets to link with larger markets

11. Grades and standards Problems Possible actions
Exist for export, not suitable for rural environment
Traditional trading based on local standards and grades
Diversity means more local grades, improved technology will lead to fewer grades
Possible actions
Several options for definition: minimum reference, different for different quality, export quality
All approaches difficult to enforce
Uniform prices not rational due to differing distance
Use local to gradually upgrade and move towards fewer grades

12. Storage Problems Possible actions On-farm methods poor, inadequate
Bulk storage not adequate in private sector
Existing capacities not optimally located, serve food aid ore than domestic production
Possible actions
Extension recommendation on storage methods
Facilitate private and coop sector investment in storage combined with credit and finance

13. Processing Problems Possible actions
On-farm methods poor for new crops
Limited rural electrification limits expansion
Large scale processing inefficient due to poor management, inadequate supply
Possible actions
Extension recommendation on processing
Increased private sector investment in processing

14. Information Problems Possible actions
Inadequate access to market information
Information on production technology, costs and prices not integrated
Possible actions
Extension material need to include technology, production and marketing practices
Information on cost and prices be updated regularly and delivered with technology information

15. Transaction costs
Various problems contribute to high transaction costs leading to either no or low participation in market and also low returns where some participation is prevalent
Institutional mechanisms needed to overcome problems that will lead to reduced transaction costs
Cooperatives are being promoted, need to evaluate farmer participation, farmer control in management for success.

16. Issues in livestock marketing
Efficiency in livestock marketing
Livestock marketing and crop sector risk management
Product safety and quality
Disease control strategy for trade
Cross-border trade
Tenancy, draft power and land management
Non-draft services of livestock and role of credit

17. Efficiency of marketing system
Is the chain functioning efficiently?
Are consumer preferences and prices transmitted properly to producers? Are they responding to market?
How are quality requirements met and responded to?
What are requirements for market oriented production? And for better quality?
How can transactions cost along the chain be reduced
Opportunities for investment in small stock and apiculture?

18. Livestock marketing and crop sector risk management
Livestock role role in crop sector risk management
Crop failure may lead to reduced livestock prices
Bumper crop may do the same
Need better understanding of linkages between crop sector performance, crop price and livestock price movements to address price instability

19. Disease control strategy for trade
Investment in health and sanitary regulations highly inadequate
Export limitations create loss for all stakeholders
High benefits expected from investment
Options available to recoup cost from traders and producers provided they can be convinced of the benefits

20. Non-draft services, tenancy and draft power market
Inadequate draft power a cause of tenancy
Market for draft services or private sector investment in small scale mechanisation may alleviate problem
Saving and storage functions of livestock may reduce with expansion of financial institutions, access to credit, leading to investment in more productive livestock.

21. Conclusions
The scope of this project is limited so not all problems can be addressed here but need to recognise the macro-environment within which the project will operate
Several options directly relevant to address farm level problems may be identified and tested
These options need to be designed keeping in view the diversity of production and market conditions of the pilot sites