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Trop Anim Health Prod (2012) 44:133144 DOI 10.1007/s11250-011-9900-7
ORIGINAL RESEARCH
Rural livestock asset portfolio in northern Ethiopia:a microeconomic analysis of choice and accumulation
Fredu Nega Tegebu & Erik Mathijs & Jozef Deckers &
Mitiku Haile & Jan Nyssen & Eric Tollens
Accepted: 26 May 2011 /Published online: 11 June 2011 # Springer Science+Business Media B.V. 2011
Abstract Livestock fulfill different functions. Depending on their livelihood strategies, households differ in their choice of what type of animal to keep and on accumulation of the chosen animal overtime. Using a panel data of 385 rural households in a mixed farming system in northern Ethiopia, this paper investigates the dynamic behavior of rural households livestock holding to identify determinants of choice and accumulation of livestock overtime. Choice is analyzed for a principal animal, the animal that constituted the largest value of livestock assets a household possessed, using a multinomial logit model. Results indicate that rural households differ in their choice of what type of animal to keep. Agro-climatic conditions, sex and age of household
head, presence of an adult male member in a household, and liquidity are the major factors that influence the type of principal animal households keep. Conditional on the principal animal selected, we analyzed the factors that determine the accumulation of the chosen animals by correcting for selection bias. Area of land cultivated is the most significant factor that explains the number of animals households keep. Other factors include sex of household head, diversification into nonfarm self-employment, and shocks.
Keywords Livestock asset portfolio . Choice . Accumulation . Principal animal . Northern Ethiopia
Introduction
Rural households in developing countries face considerable risk of fluctuating income, an inevitable consequence of engaging in rain-fed agriculture on increasingly degraded soils. In the absence or imperfection of insurance and credit markets, rural households depend heavily on assets to maintain consumption at times of income shortfall. Livestock are the largest nonland assets in rural portfolios (World Bank 2007) that are widely owned by rural households and perform multiple functions. Livestock play a vital role in the agricultural and rural economies of the developing world. Not only do they produce food directly, they are also central to farming systems used by the poor providing draught power and manure. For many smallholder...