Recalculating livestock’s contribution to GDP of IGAD member states

The report “The contribution of livestock to the economies of IGAD member states: study findings, application of the methodology in Ethiopia and recommendations for further work” (2010, 45pp) appraises the contribution of livestock to Ethiopia’s agricultural gross domestic product (GDP). It was published as IGAD Livestock Policy Initiative Working Paper 02–10. It reviews the methods currently used to estimate the contribution of livestock to the Ethiopian economy and argues that the production coefficients used in Ethiopia and probably other IGAD (Intergovernmental Authority on Development) states to measure this contribution are outdated. With appropriately revised coefficients, the author (Roy Behnke) estimates the combined gross value of 12 categories of livestock product output totalled 48.095 billion Ethiopian Birr (EB) in 2008–09, an increase of about 47% over the Government’s estimate.

Moreover, although about 80% of Ethiopian farmers use animal traction to plough their fields, the Government does not estimate any monetary value of animal traction for agriculture. Draught power represents almost one third of the total gross value of livestock output as an input into cultivation, an estimated 21.500 billion EB in 2008–09. Including this brought the gross value of the agricultural output of ruminant livestock to a total of 69.595 billion EB in 2008–09. This represented an increase of about 113% over government estimates of the gross value of ruminant livestock’s contribution to agriculture. Still not taken into account in this figure are other contributions of livestock to the economy, such as through manure production, as a form of savings and for risk mitigation.

The methods used in this study to estimate the value of the informal financial services provided by livestock are generally applicable to small-scale farming and pastoral production systems. These methods could contribute to a new understanding of the regional importance of livestock and a clearer appreciation of its true economic significance in regional economic development. The author recommends that these methods be extended to evaluate the contribution of livestock to agricultural GDP and to the wider economy of the other IGAD member states.

Posted on 22 April 2017 in Value of Pastoralism