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The mean annual price increases have ranged from about 3 to 16% for grade I, to 17% for grade Il and 10 to 26% for grade Ill (Table 2).

Table 2 The mean annual price increases have ranged from about 3 to 16% for grade I, to 17% for grade Il and 10 to 26% for grade Ill (Table 2).

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Figure |.Trends in livestock FoB volumes from Berbera Port, Somaliland. On the other hand, Negassa et al. (2008) and Mugunieri et al. (2012) have documented the informal livestock grading and pricing system as applied in Somalia. In summary, three grades of cattle, sheep and goats (i.e. |, Il and Ill) and two grades of camels (i.e. | and II) are exported to a number of countries. In order of importance these are the Kingdom of Saudi Arabia (KSA), Yemen, Oman, Egypt and the United Arab Emirates (SLCCIA 2012). Exports have shown a steady growth in the last four years (Figure 1). The grading of animals is based on levels of a number of important traits: age (adults v/s young), conformation (excellent, good, and fair), body condition (fat, normal, and thin), and sex (only male animals are exported). Grade | represent the highest quality animals and these fetch the best price. Lower grades are discounted. Both Negassa et al. (2008) and Mugunieri et al. (2012) have observed that the grading system presents an opportunity for livestock
Figure |.Trends in livestock FoB volumes from Berbera Port, Somaliland. On the other hand, Negassa et al. (2008) and Mugunieri et al. (2012) have documented the informal livestock grading and pricing system as applied in Somalia. In summary, three grades of cattle, sheep and goats (i.e. |, Il and Ill) and two grades of camels (i.e. | and II) are exported to a number of countries. In order of importance these are the Kingdom of Saudi Arabia (KSA), Yemen, Oman, Egypt and the United Arab Emirates (SLCCIA 2012). Exports have shown a steady growth in the last four years (Figure 1). The grading of animals is based on levels of a number of important traits: age (adults v/s young), conformation (excellent, good, and fair), body condition (fat, normal, and thin), and sex (only male animals are exported). Grade | represent the highest quality animals and these fetch the best price. Lower grades are discounted. Both Negassa et al. (2008) and Mugunieri et al. (2012) have observed that the grading system presents an opportunity for livestock
Features of Somaliland’s livestock export trade Figure 2. Trends of live animal exports from Australia (2007-1 2). Despite the recent growth in export volumes, livestock trade in Somaliland takes place in an environment characterized by an underdeveloped legal framework, transactional uncertainty and high information costs, among others. Trade is guided by traditional institutions, and religious practices that include kinship and ethnic groupings, clan affiliations, symbols of group identity and religious leaning; all which serve as alternatives to formal contracting (Carr and Landa 1983). Despite the recent growth in export volumes, livestock trade in Somaliland takes place in an environment
Features of Somaliland’s livestock export trade Figure 2. Trends of live animal exports from Australia (2007-1 2). Despite the recent growth in export volumes, livestock trade in Somaliland takes place in an environment characterized by an underdeveloped legal framework, transactional uncertainty and high information costs, among others. Trade is guided by traditional institutions, and religious practices that include kinship and ethnic groupings, clan affiliations, symbols of group identity and religious leaning; all which serve as alternatives to formal contracting (Carr and Landa 1983). Despite the recent growth in export volumes, livestock trade in Somaliland takes place in an environment
Table |. Trends in volumes of export-quality livestock traded in Hargeisa, Burao and Tog Wajaale markets versus total export volumes In 2012, approximately 82% of small ruminants and 55% of cattle and camels exported from Somaliland were traded through the monitored markets and thus covered by the LMIS. It is important to note that at the time of designing the LMIS, it captured data for about 84%, 67% and 57% of small ruminants, cattle and camels respectively. This implies tha the LMIS has maintained a stable degree of coverage over time, except for cattle for which the proportion covered has declined to some extent. The apparent decline in the proportion of cattle captured can be attributed to the fact that only one cattle market is monitored, and that the market has been beset by several shocks in the recent past (as discussed below).
Table |. Trends in volumes of export-quality livestock traded in Hargeisa, Burao and Tog Wajaale markets versus total export volumes In 2012, approximately 82% of small ruminants and 55% of cattle and camels exported from Somaliland were traded through the monitored markets and thus covered by the LMIS. It is important to note that at the time of designing the LMIS, it captured data for about 84%, 67% and 57% of small ruminants, cattle and camels respectively. This implies tha the LMIS has maintained a stable degree of coverage over time, except for cattle for which the proportion covered has declined to some extent. The apparent decline in the proportion of cattle captured can be attributed to the fact that only one cattle market is monitored, and that the market has been beset by several shocks in the recent past (as discussed below).
Figure 4. Three-month moving average of traded volumes of small ruminants in Burao and Hargeisa markets (2007-2). Figure 3. Monthly traded volumes of small ruminants in Burao and Hargeisa markets (2007-12). About 80% of sheep and goats exported from Somaliland are traded through Hargeisa and Burao markets (Table 1). Monthly traded volumes of export and local quality sheep and goats, and trends in these volumes in these markets, are shown in Figures 3 and 4. There is an apparent steady increase in the number of export quality small ruminants traded in these markets, ostensibly in response to increasing demand in export markets following the lifting of import trade restrictions by the major importers and easing of competition in live animal trade in the international markets. Shipment data for 2012 from the port of Berbera indicated that the major importers of sheep and goats fro! Somaliland were the KSA (88%), Yemen (11%) and other countries like Egypt and Oman accounting for less than | %. Approximately 50% of the annual export quality sheep and goats traded occur during the Hajj season, explaining the spikes in Figure 3. Overall, traded volumes of export quality small ruminants in Hargeisa and Burao have shown an increasing trend in the last five years, while volumes of domestic quality have remained the same (Figure 4).
Figure 4. Three-month moving average of traded volumes of small ruminants in Burao and Hargeisa markets (2007-2). Figure 3. Monthly traded volumes of small ruminants in Burao and Hargeisa markets (2007-12). About 80% of sheep and goats exported from Somaliland are traded through Hargeisa and Burao markets (Table 1). Monthly traded volumes of export and local quality sheep and goats, and trends in these volumes in these markets, are shown in Figures 3 and 4. There is an apparent steady increase in the number of export quality small ruminants traded in these markets, ostensibly in response to increasing demand in export markets following the lifting of import trade restrictions by the major importers and easing of competition in live animal trade in the international markets. Shipment data for 2012 from the port of Berbera indicated that the major importers of sheep and goats fro! Somaliland were the KSA (88%), Yemen (11%) and other countries like Egypt and Oman accounting for less than | %. Approximately 50% of the annual export quality sheep and goats traded occur during the Hajj season, explaining the spikes in Figure 3. Overall, traded volumes of export quality small ruminants in Hargeisa and Burao have shown an increasing trend in the last five years, while volumes of domestic quality have remained the same (Figure 4).
An analysis of Tog Wajaale market volumes compared with Berbera and Lowya Caddo exports indicates that the market transacted about 41% and 55% of export-quality cattle in 2011 and 2012 respectively. The shipment data reveal that the key destination markets were Yemen (about 62%), Oman (34%) and KSA, UAE and Kuwait jointly at about 4%. It is important to note that unlike the small ruminant case where both Somaliland and Australia compete for markets in the Middle East, the main destinations for Australian live cattle are Indonesia (45%), China (9%), Israel (8%), Turkey (8%), Russia (6%) and Egypt and Malaysia at 5% each (MLA 2013).'° It is apparent that just as for sheep and goat exports, Somaliland cattle exports rely heavily on a narrow range of markets. Figure 5. Monthly traded volumes of cattle in Tog Wajaale market (2007-1 2). The trends in cattle volumes traded in Tog Wajaale market is shown in Figure 5. about 4%. It is important to note that unlike the small ruminant case where both Somaliland and Australia compete
An analysis of Tog Wajaale market volumes compared with Berbera and Lowya Caddo exports indicates that the market transacted about 41% and 55% of export-quality cattle in 2011 and 2012 respectively. The shipment data reveal that the key destination markets were Yemen (about 62%), Oman (34%) and KSA, UAE and Kuwait jointly at about 4%. It is important to note that unlike the small ruminant case where both Somaliland and Australia compete for markets in the Middle East, the main destinations for Australian live cattle are Indonesia (45%), China (9%), Israel (8%), Turkey (8%), Russia (6%) and Egypt and Malaysia at 5% each (MLA 2013).'° It is apparent that just as for sheep and goat exports, Somaliland cattle exports rely heavily on a narrow range of markets. Figure 5. Monthly traded volumes of cattle in Tog Wajaale market (2007-1 2). The trends in cattle volumes traded in Tog Wajaale market is shown in Figure 5. about 4%. It is important to note that unlike the small ruminant case where both Somaliland and Australia compete
On the local front, flooding that occurred in Tog-Wajaale and adjacent districts during the Gu season (April— June) in both 2008 and 2010 contributed to the reduction in traded volumes in the Gu season. The floods were associated with loss of livestock as well as limited access to markets (Lemma and Sugulle 2011). The floods also led to destruction of homes and displacement of communities; the impacts of the 2010 floods were more severe than those of 2008. On the other hand, in the terminal market in Yemen, the events of the Arab Spring in the first half of 2011 disrupted trade and this in turn translated into lower than normal sales in Tog Wajaale during the same perioc However, the numbers recovered quickly in the second half of 201 1. Figure 6. Three-month moving average of traded volumes of cattle in Tog Wajaale market (2007-1 2).
On the local front, flooding that occurred in Tog-Wajaale and adjacent districts during the Gu season (April— June) in both 2008 and 2010 contributed to the reduction in traded volumes in the Gu season. The floods were associated with loss of livestock as well as limited access to markets (Lemma and Sugulle 2011). The floods also led to destruction of homes and displacement of communities; the impacts of the 2010 floods were more severe than those of 2008. On the other hand, in the terminal market in Yemen, the events of the Arab Spring in the first half of 2011 disrupted trade and this in turn translated into lower than normal sales in Tog Wajaale during the same perioc However, the numbers recovered quickly in the second half of 201 1. Figure 6. Three-month moving average of traded volumes of cattle in Tog Wajaale market (2007-1 2).
Figure 7. Monthly traded volumes of camels in Burao, Hargeisa and Tog Wajaale markets (2008-2). igure 8. Three-month moving average of camels traded in Burao, Hargeisa and Tog Wajaale markets (2008-2).
Figure 7. Monthly traded volumes of camels in Burao, Hargeisa and Tog Wajaale markets (2008-2). igure 8. Three-month moving average of camels traded in Burao, Hargeisa and Tog Wajaale markets (2008-2).
Like in the case of small ruminants, trade of camels in Burao and Hargeisa shows an increasing trend with periodic seasonal effects over the last 5 years (Figure 8).
Like in the case of small ruminants, trade of camels in Burao and Hargeisa shows an increasing trend with periodic seasonal effects over the last 5 years (Figure 8).
Figure 9. Monthly totals of export traders active in the study markets on Mondays and Thursdays (2007-12). this instance, whereas cattle are mainly exported to Yemen, small ruminants and camels are predominantly ported to KSA which has more stringent health certification requirements than Yemen. Small ruminants and camel: e thus quarantined for a period of up to 21 days prior to export putting extra costs on exporters. This does not ply to cattle exports to Yemen. Besides, the proximity of Yemen to Somaliland does not require investment in larg a vessels as is the case for the distant KSA. Cattle are loaded on smaller vessels (dhows) for a one-day voyage to 2meni ports across the Gulf of Eden, an arrangement that is disrupted only by the monsoon season.!'! The apparent gh costs faced by exporters of small ruminants and camels to KSA act as a structural characteristic of a market that otects the market power of incumbents deterring entry (see Church and Ware 1999). The larger traders have us continued to consolidate their market share, which can be observed through the declining number of traders in argeisa and Burao markets. n this instance, whereas cattle are mainly exported to Yemen, small ruminants and camels are predominantly
Figure 9. Monthly totals of export traders active in the study markets on Mondays and Thursdays (2007-12). this instance, whereas cattle are mainly exported to Yemen, small ruminants and camels are predominantly ported to KSA which has more stringent health certification requirements than Yemen. Small ruminants and camel: e thus quarantined for a period of up to 21 days prior to export putting extra costs on exporters. This does not ply to cattle exports to Yemen. Besides, the proximity of Yemen to Somaliland does not require investment in larg a vessels as is the case for the distant KSA. Cattle are loaded on smaller vessels (dhows) for a one-day voyage to 2meni ports across the Gulf of Eden, an arrangement that is disrupted only by the monsoon season.!'! The apparent gh costs faced by exporters of small ruminants and camels to KSA act as a structural characteristic of a market that otects the market power of incumbents deterring entry (see Church and Ware 1999). The larger traders have us continued to consolidate their market share, which can be observed through the declining number of traders in argeisa and Burao markets. n this instance, whereas cattle are mainly exported to Yemen, small ruminants and camels are predominantly
Figure 10.Mean monthly prices of small ruminants in Burao market (2007-12). Figure |1.Three-month moving average prices of small ruminants in Burao market, (2007-1 2)
Figure 10.Mean monthly prices of small ruminants in Burao market (2007-12). Figure |1.Three-month moving average prices of small ruminants in Burao market, (2007-1 2)
Source: LMIS data (2007-12).
Source: LMIS data (2007-12).
Figure 13. Three-month moving average prices of small ruminants in Hargeisa market (2007-12). Figure 12. Mean monthly prices of small ruminants in Hargeisa market (2007-12).
Figure 13. Three-month moving average prices of small ruminants in Hargeisa market (2007-12). Figure 12. Mean monthly prices of small ruminants in Hargeisa market (2007-12).
Table 2. Changes in prices of sheep and goats in Burao and Hargeisa markets (2008-12) The increase in local market prices may partly be attributed to drivers both within the local and international markets. On the international front, increasing demand for small ruminants has contributed to increased prices in most producer countries (CDSI 2012). For example, as in Somaliland where local market prices have risen cumulatively by up to 41% between 2008 and 2012, FOB prices for Australian live sheep have showed a similar marked increase. Australia’s FOB prices for the shipment of live sheep to Kuwait increased by 85% from about USD 60 per head in 2007 to USD I11 in 2012 while the FOB for shipments to KSA increased by 77% from USD 70 to USD 124 during the same period (MLA 2013).
Table 2. Changes in prices of sheep and goats in Burao and Hargeisa markets (2008-12) The increase in local market prices may partly be attributed to drivers both within the local and international markets. On the international front, increasing demand for small ruminants has contributed to increased prices in most producer countries (CDSI 2012). For example, as in Somaliland where local market prices have risen cumulatively by up to 41% between 2008 and 2012, FOB prices for Australian live sheep have showed a similar marked increase. Australia’s FOB prices for the shipment of live sheep to Kuwait increased by 85% from about USD 60 per head in 2007 to USD I11 in 2012 while the FOB for shipments to KSA increased by 77% from USD 70 to USD 124 during the same period (MLA 2013).
Table 3. Changes in cattle prices in Tog Wajaale market (2008-1 2) Source: LMIS data (2007-12). Jnlike the more marked increasing trend in prices of sheep and goats, cattle prices showed mixed trends, with annua srowth ranging between —1% and 4% between 2008 and 2012 for grade |, —I to 6% for grade Il, and —2 to 9 % for srade Ill (Table 3; Figures 14 and 15). Overall, the cumulative price increase was about 9% for grade | cattle, 6% for srade Il, and 13% for grade Ill.
Table 3. Changes in cattle prices in Tog Wajaale market (2008-1 2) Source: LMIS data (2007-12). Jnlike the more marked increasing trend in prices of sheep and goats, cattle prices showed mixed trends, with annua srowth ranging between —1% and 4% between 2008 and 2012 for grade |, —I to 6% for grade Il, and —2 to 9 % for srade Ill (Table 3; Figures 14 and 15). Overall, the cumulative price increase was about 9% for grade | cattle, 6% for srade Il, and 13% for grade Ill.
Figure 14. Mean monthly cattle prices in Tog Wajaale market (2007-2). Figure 15. Three-month moving average cattle prices in Tog Wajaale market (2007-2).
Figure 14. Mean monthly cattle prices in Tog Wajaale market (2007-2). Figure 15. Three-month moving average cattle prices in Tog Wajaale market (2007-2).
Source: LMIS data (2007-2).
Source: LMIS data (2007-2).
Table 4. Changes in camel prices in Burao, Hargeisa and Tog Wajaale markets (2009-2) Like in the case of sheep and goat prices, camel prices showed a sustained year-on-year increase following the lifting of the import ban by KSA in September 2009 (Table 4; Figures 16 and 17). The price increase was larger for young stock compared to that for adults, due to the higher demand for the young stock in Saudi Arabia compared to that for older animals. Similarly, as in the case of sheep and goats, there was a more marked increase in the price of camel: between 2010 and 2011 following the cessation of sole export rights that had been conferred on a single exporter in Somaliland.
Table 4. Changes in camel prices in Burao, Hargeisa and Tog Wajaale markets (2009-2) Like in the case of sheep and goat prices, camel prices showed a sustained year-on-year increase following the lifting of the import ban by KSA in September 2009 (Table 4; Figures 16 and 17). The price increase was larger for young stock compared to that for adults, due to the higher demand for the young stock in Saudi Arabia compared to that for older animals. Similarly, as in the case of sheep and goats, there was a more marked increase in the price of camel: between 2010 and 2011 following the cessation of sole export rights that had been conferred on a single exporter in Somaliland.
Source: LMIS data (2007-12). Figure 16.Mean monthly camel prices in Burao, Hargeisa and Tog Wajaale markets (2008-12).
Source: LMIS data (2007-12). Figure 16.Mean monthly camel prices in Burao, Hargeisa and Tog Wajaale markets (2008-12).
Source: LMIS data (2007-12). *Exports prior to September transited through Djibouti. Table 5.Trends in the proportion of livestock exported to different destinations
Source: LMIS data (2007-12). *Exports prior to September transited through Djibouti. Table 5.Trends in the proportion of livestock exported to different destinations
Trend in proportion of livestock exported to different countries Figure | 7. Three-month moving average camel prices in Burao, Hargeisa and Tog Wajaale markets (2008-12).
Trend in proportion of livestock exported to different countries Figure | 7. Three-month moving average camel prices in Burao, Hargeisa and Tog Wajaale markets (2008-12).
Table 6. Results of Phillips-Peron test for non-stationarity of monthly mean price of export quality livestock in Somali- land
Table 6. Results of Phillips-Peron test for non-stationarity of monthly mean price of export quality livestock in Somali- land
It is important to note that prices of small ruminants and camels exhibited similar increasing trends between 2009 and 2012. The regression results with robust standard errors for determining the trends in small ruminants and camel prices are given in Table 8.'2 The small ruminant price trend model had a good fit (F = 321.04; p = 0.00) and explained about 95% of the variation in the price, compared to 90% in the camel one (F = 126.54; p = 0.00). Prices of both small ruminants and camels exhibited an upward secular trend, but seasonal and shock factors seem to have had more effect on market prices of small ruminants than of camels. 12. Individual market level models were estimated in the first instance and tested for serial correlation and multicollinearity using the Durbin-Wat son statistic and Variance Inflation Factors, before estimating the joint model. ruminants and camels exhibited an upward secular trend, but seasonal and shock factors seem to have had more effect
It is important to note that prices of small ruminants and camels exhibited similar increasing trends between 2009 and 2012. The regression results with robust standard errors for determining the trends in small ruminants and camel prices are given in Table 8.'2 The small ruminant price trend model had a good fit (F = 321.04; p = 0.00) and explained about 95% of the variation in the price, compared to 90% in the camel one (F = 126.54; p = 0.00). Prices of both small ruminants and camels exhibited an upward secular trend, but seasonal and shock factors seem to have had more effect on market prices of small ruminants than of camels. 12. Individual market level models were estimated in the first instance and tested for serial correlation and multicollinearity using the Durbin-Wat son statistic and Variance Inflation Factors, before estimating the joint model. ruminants and camels exhibited an upward secular trend, but seasonal and shock factors seem to have had more effect
Source: LMIS data (2007-12). Key: Coefficients ***p<0.01; **p<0.05; *p<0.10 (figures in parentheses are robust standard errors) Table 8.Trends and market price determinants for small ruminants and camels in Somaliland
Source: LMIS data (2007-12). Key: Coefficients ***p<0.01; **p<0.05; *p<0.10 (figures in parentheses are robust standard errors) Table 8.Trends and market price determinants for small ruminants and camels in Somaliland
Table 9.Trends and market price determinants for cattle in Somaliland Delineating the genesis of secular and irregular trends in livestock prices
Table 9.Trends and market price determinants for cattle in Somaliland Delineating the genesis of secular and irregular trends in livestock prices
Source: LMIS data (2007-12). Key: Coefficients ***p<0.01; **p<0.05; *p<0.10 (figures in parentheses are robust standard errors) Table 10. Determinants of price trend for different grades of small ruminants in Somaliland Realizing that there were significant differences in prices of different grades of livestock within each species, and that estimation of a joint model for each species could have confounded some useful differences between grades, equation 2.5 was estimated for every grade for each species. It was observed that models estimated with mean monthly prices of individual grades as the dependent variable matched those where the dependent variable was the mean of the averages for the different grades for all livestock species, viz., small ruminants, cattle and camels. However, the differences in the factors affecting prices for different grades of small ruminants are important to highlight (Table 10).
Source: LMIS data (2007-12). Key: Coefficients ***p<0.01; **p<0.05; *p<0.10 (figures in parentheses are robust standard errors) Table 10. Determinants of price trend for different grades of small ruminants in Somaliland Realizing that there were significant differences in prices of different grades of livestock within each species, and that estimation of a joint model for each species could have confounded some useful differences between grades, equation 2.5 was estimated for every grade for each species. It was observed that models estimated with mean monthly prices of individual grades as the dependent variable matched those where the dependent variable was the mean of the averages for the different grades for all livestock species, viz., small ruminants, cattle and camels. However, the differences in the factors affecting prices for different grades of small ruminants are important to highlight (Table 10).
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