Does Fattening Pay for Smallholders?: Empirical Results of One-Limit Tobit Model for Cattle Fattening in North West Ethiopia

Does Fattening Pay for Smallholders?: Empirical Results of One-Limit Tobit Model for Cattle Fattening in North West Ethiopia

Habtamu Yesigat Ayenew (Gondar Agricultural Research Center, Ethiopia)
Copyright: © 2012 |Pages: 12
DOI: 10.4018/ijsem.2012070102
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Abstract

This research was undertaken to comprehensively evaluate the performance of the fattening enterprise and to study the economics of cattle fattening in the crop-livestock mixed production system, North Gondar, Ethiopia. Data was collected from 112 farmers from purposively selected three districts and two peasant associations. The Tobit analysis resulted labor availability in the households, duration of fattening (length of stay of oxen in the fattening period) and feed cost have found to affect the gain from fattening negatively. Experience of the farm operator, number of cattle in the fattening activity, frequency of fattening in the year and selling in the export market have significantly enhance the gain from the operation. Fattening is found seemingly paying and profitable for most of the farmers and could be considered as a farm-business which can be used as one of the strategies to achieve transformation of the subsistence agriculture to market oriented farm operation.
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Introduction

Intensification of the farm and increasing marketed surplus of the rural households are promoted by most approaches to agricultural development (Alderman, 1987). Research forums and policy issues in the area circle on the importance of value addition. Despite this fact, the sector is challenged with weak functional linkage with the input and output market (Habtamu, 2012).

Market orientation is considered as a lubricant for the wheel of transformation in agriculture to come out from the subsistence farming and widely spread poverty in the country (Habtamu, 2012). Transformation could be realized with the change from subsistence agriculture to market oriented and value addition based production system.

Despite the large number of livestock population in the country, the output from the sub-sector is low and the rate of growth has been poor, lagging far behind the population growth rates (Brokken et al., 1991). In the same passion, the income from the sector is very minimal as compared to the potential of the live animal population in the country and commercial transformation will lead to enhanced income and livelihood changes (Berhanu et al., 2006).

Dispersed and small scale farmers withhold most of the live animal population in the country and the largest share in the supply to the market. The country should emphasize on the majority small scale producers which may frequently be exposed to the hazards of food insecurity through the creation of functional link of the farming society to the input and output market (Habtamu, 2012). It is always argued that the public should focus on delivering the vital, timely and reliable information, implementing policies and developing infrastructures.

Over the past decade, the importance of cattle trade has been increasing due to high value of cattle as a response of the high demand in the domestic market, the start of export trade with Sudan and the introduction of value additive enterprises (like fattening) with the Amhara region and other parts of the country (Aklilu, 2004).

Increased productivity per animal usually involves increasing one or more inputs. However in Ethiopia and most of the developing world, farmers prefer low input systems. This could be explained as the low liquidity of the farmer’s assets to afford for the purchase of high value inputs or the risk aversion behavior of farmers.

Farmers in North Gondar, and the country at large, are practicing fattening since the last decade in a small and large scale, individually and at group bases. The public has been establishing some frameworks and institutional arrangements to promote fattening as enterprise for the farming community.

There is a popular premise that fattening contributes for enhancing farmers market participation, enlarges employment opportunities and may reduce the risks associated with climate change which pose unfavorable conditions for crop production (Tapcu & Demir, 2005). It is on the contrary argued that the gain from fattening is usually a function of the seasonal market and the seasonality in turn may enhance the economic risk associated with the enterprise.

It is timely and valuable to answer questions, whether the activity is paying and what factors could be considered crucial for the well-functioning of the activity. There was no comprehensive work done to explore the economics of fattening as an enterprise in the area and this study was initiated to fill this knowledge gap.

The general objective of the study was to analyze the economics of cattle fattening. The specific objectives of the study are:

  • To study the production system.

  • To analyze the economic feasibility of fattening in the area.

  • To assess factors which contribute for the gain from the enterprise.

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