CHOICES
A publication of AAEA
Livestock and livestock products are crucial for nutrition and food security worldwide. In Ethiopia, high incidences of infectious diseases, exacerbated by the dry climate and tropical weather, pose a significant constraint on livestock productivity (Ayele et al., 2021; Hooper, 2016). Livestock diseases significantly reduce household income, with livestock contributing 25%–80% of income across Ethiopian districts (Mekuriaw and Harris-Coble, 2021). Livestock diseases also jeopardize primary animal protein sources to households, adversely affect human health, and distort labor markets (Rushton et al. 2018, 2021; Hennessy and Marsh, 2021). Inefficient public expenditure allocation in the animal health subsector has resulted in suboptimal infrastructure and compromised healthcare for livestock (Desta, 2015; Kebede, Melaku, and Kebede, 2014), which leads to constrained markets and inefficient outcomes (Hennessy and Marsh, 2021).
Public expenditure in Ethiopian agriculture has the potential to improve animal health outcomes and generate significant returns. Globally, despite high returns, developing economies typically allocate only 3%–5% of total public expenditure to the aggregated agricultural sector (animal, crop, fishery, and forestry) (Goyal and Nash, 2017). In Ethiopia, this allocation is incongruent with the sector’s contribution to gross domestic product (GDP), which was nearly one-third of GDP in 2020. Ethiopia only allocated approximately 3.26% of its overall public expenditure to the agriculture, fisheries, and forestry sector (FAO, 2024), with each subsector, including forestry, fish, crops, and livestock, receiving even smaller fractions. Since 2018, Ethiopia has faced challenges affecting nearly all its households, with 91% of the population affected by some combination of persistent droughts, floods, locust infestations, and conflict (World Bank).
Despite recent challenges, the Ethiopian economy has shown steady growth over the past decade. Real GDP inconstant 2020 USD has increased from $52.17 billion in 2012 to more than $99.9 billion in 2020 (see Figure 1). The agriculture, forestry, and fishery sector, a vital component of the national economy, has seen growth in real dollars but a decline in its percentage contribution to GDP, decreasing from 40% ($21 billion) in 2012 to 30% ($31 billion) in 2020. Total public expenditures averaged 13.11% of GDP from 2012 to 2020. Figure 1 displays the total public expenditure and the expenditure specifically for the agricultural, forestry, and fishery sector in Ethiopia from 2012 to 2020. Despite the sector contributing 35% of GDP during this period, its public expenditure averaged 0.91% of GDP and 7.1% of total public expenditures.
Public accounting and reporting on specific subsectors of agricultural expenditure, including animal health, is limited, leading to data gaps. Ex ante government expenditures to support the animal health subsector may include investments in biosecurity/surveillance, laboratory diagnosis and infrastructure, and preparations for disease events. Ex post expenditures to address disease outbreaks include appraisal, cleaning and disinfection, disposal, euthanasia, indemnification, quarantine, inspections, and vaccination. Unfortunately, accurate estimates of private or public costs for livestock farming are not systematically collected or reported across countries (Rushton et al., 2018, 2021). Partial exceptions include studies like Seeger et al. (2021), which report government ex post costs for the 2014–2015 highly pathogenic avian influenza (HPAI) outbreak in the United States, and the OutCost spreadsheet model, used to collect ex post costs for African swine fever (ASF) and classical swine fever (CSF) outbreaks in Colombia, the Philippines, and Vietnam (Casal et al., 2022).
To put this in a broader perspective, in Ethiopia, public expenditures fluctuated between 12% and 28% of GDP from 1980 to 2021 (IMF, 2022). In comparison, U.S. expenditures ranged from approximately 50% to above 60% over the same period. Empirically, public spending of countries with optimal public sector performance and outcomes typically falls within 30% to 40% of GDP or lower (Schuknecht, 2020). In 2021, Ethiopia allocated 13.8% of its GDP to total public expenditure, amounting to $114 per capita, covering various sectors including agriculture, health, education, defense, social protection, transportation, and others. While the United States may overspend relative to optimal levels, Ethiopia likely underspends.
The Ethiopian livestock sector significantly contributes to the national economy, accounting for nearly 20% of GDP and 40% of agricultural GDP (Dessie, 2022). Ethiopia has the largest cattle population in Africa (65 million head) and is a top regional producer of sheep (40 million head) and goats (51 million head) (Mekuriaw and Harris-Coble, 2021). Outputs include milk, meat, draft power, manure, and hides. Inputs into Ethiopian livestock production comprise capital, feed, labor, and animal health. However, there are significant data gaps, with limited or no systematic, publicly available data onlivestock inputs across countries and over time (Rushtonet al., 2018, 2021), including Ethiopia. Prices for feedcan be estimated using crop prices from sources like the Food and Agriculture Organization of the United Nations (FAO), but data on capital, labor, and animal health are largely nonexistent. A recent estimate suggests that the cost shares of health, feed, and labor in the small ruminant livestock subsector are 3%, 7%, and 90%, respectively, based on 2021 estimates (GBADS, 2024a).
With a population of 120 million, Ethiopia holds the second-highest human population in Africa, following Nigeria. Despite its large population, Ethiopia has experienced notable economic growth over the past 2 decades. Per capita GDP has increased consistently since 2000, reflecting the country’s economic development efforts. In 2020, Ethiopia’s GDP per capita reached $918.65 (Global Change Data Lab, 2024), indicating progress in improving the standard of living for its citizens. One significant aspect of Ethiopia’s agricultural landscape is its domestic consumption of ruminant meat, including meat from cattle, sheep, and goats. Unlike some countries that rely heavily on meat exports, Ethiopia primarily produces ruminant meat for its domestic market. In 2020, per capita consumption of cattle, sheep, and goat meat in Ethiopia averaged 13.29 pounds per person (Global Change Data Lab, 2024). The focus on domestic consumption underscores the importance of the livestock sector in meeting the dietary needs and food security of the Ethiopian population.
In 2020, beef exports accounted for only 0.04% of domestic production, while live cattle exports were 1.01% of total slaughtered cattle. For small ruminants, goat meat exports were 7.40% of domestic production, with live goat exports at 0.01%. Similarly, sheep meat exports were 0.33% of domestic production, and live sheep exports were 1.41%. Overall, small ruminant meat exports accounted for 4.10% of domestic production, and live animal exports were 0.61% (FAO, 2024). Several factors such as inadequate facilities meeting international standards, low livestock genetic potential, and a comparative advantage in prioritizing domestic demand over stringent export requirements hinder export growth (Eshetie et al., 2018). Moreover, the prevalence of transboundary diseases results in repeated trade bans that constrain the export market (MoA and ILRI, 2013; Hennessy and Marsh 2021). Figure 2 illustrates recent trade patterns, highlighting the small fraction of domestically produced meat that is exported.
In 2020, the primary importing countries of animal meat from Ethiopia were Saudi Arabia and United Arab Emirates (FAO, 2024). Improving animal health standards for domestic production and to export is challenging, underscoring the need for more public expenditure and enhanced strategic planning for the animal health system of Ethiopia. In 2020, Ethiopia imported only 22.22 tons ruminant meat, mainly from South Africa, United Arab Emirates, and Australia (FAO, 2024) due to the unavailability of higher-quality meat in domestic market (Gadisa Muleta, 2022).
Ethiopia’s animal health system consists of contributions from public, private, and nongovernmental development organizations. The public sector includes the federal Ministry of Agriculture (MoA) and regional livestock bureaus (MoA and ILRI, 2013; Gizaw et al., 2021). The MoA collaborates with local and international research organizations, such as the International Livestock Research Institute (ILRI), to enhance the livestock subsector (Mekuriaw and Harris-Coble, 2021). The MoA also oversees quality veterinary services and safe trading, supports the National Veterinary Institute (NVI) for the production and supply of veterinary drugs and vaccines, and ensures safe marketing and trading of veterinary drugs and animal feed through the Veterinary Drug and Feed Administration and Control Authority. The MoA’s quarantine division supervises slaughterhouse inspection to ensure public health safety and facilitate expanded export markets (Biffa, Bogale, and Skjerve, 2010; Beyi and Dahl, 2016). Ethiopia’s regional animal health system includes woreda (local government) offices and small veterinary clinics (posts). Senior staff at woreda offices oversee rural veterinary clinics and manage the distribution of vaccines, drugs, and instruments. Posts operate in rural and remote areas under the supervision of woreda offices. In 2017, Ethiopia had 710 public veterinarians in operation (WOAH, personal communication, January 15, 2024).
Ethiopia’s private animal health sector consists mainly of veterinary pharmacies, drug importers, and distributors (MoA and ILRI, 2013). Private clinicians are restricted from administering vaccines, so their role is limited to operating retail drug shops, often providing clinical services without proper licensing (Hooper, 2016). In 2017, there were 162 accredited private veterinarians and 10,311 paraprofessionals in Ethiopia’s private animal health sector. Nongovernmental organizations contribute to Ethiopia’s animal health services by employing Community Animal Health Workers (CAHWs), who raise awareness about animal health and can detect livestock diseases early (Hooper, 2016). In 2017, Ethiopia had 350 CAHWs working in the country (WOAH, personal communication, January 15, 2024).
Ethiopia is affected by a broad range of animal diseases, with significant impacts on production and the economy. Table 1 summarizes prevalence and a range of economic impacts across selected disease and species. The reported economic losses attributed to livestockdiseases are not meant to offer a conclusive evaluation of disease burden or an exhaustive literature review butto present information from the literature and set the stage for further discussion. The Ethiopia Livestock Master Plan (ELMP) (Shapiro et al., 2015) ranks livestock diseases in Ethiopia based on various factors, including their impact on household density, market dynamics, and the intensification of livestock production.
Major economic losses in the cattle sector include declines in meat and dairy production along with losses from trade bans. Jemberu et al. (2016) estimated annual costs of foot and mouth disease (FMD) outbreaks reaching up to $38.86 million (ETB 1,354 million) without control measures. A recent study by Rasmussen et al. (2024) estimates that annual FMD losses in Ethiopia are $0.93 million (ETB 32 million). Further, a trade ban imposed by Egypt during the 2005–2006 FMD outbreak resulted in an estimated loss of $14 million (ETB 488 million) for Ethiopia (Mekuriaw and Harris-Coble, 2021).
Lumpy skin disease (LSD) also causes significant financial losses at both the national and the farm level. The cost per animal is $6.43 for local breeds and $58 for crossbreeds (Gumbe, 2018). Over the 5-year period from 2012 to 2017, 62,176 LSD cases were reported, resulting in economic losses ranging from $0.4 million (ETB 14 million) to $3.61 million (ETB 126 million) (Mesfin, 2019). Additionally, LSD is a trade-limiting disease, as infected feedlot animals cannot be exported (Mekuriaw and Harris-Coble, 2021). Other diseases, such as contagious bovine pleuropneumonia (CBPP), account for economic losses beyond $5.9 million (ETB 205.6 million) annually (Molla et al., 2021). Bovine tuberculosis (BTB) and brucellosis also lead to substantial economic losses. BTB is estimated to cause losses of $131.7 million from 2015 to 2025 (Tschopp et al., 2022), while brucellosis results in both production and trade losses, with estimated losses of $12.88 million in 2021 (GBADS, 2024b).
Major diseases affecting small ruminants include contagious caprine pleuropneumonia (CCPP), peste des petits ruminants (PPR), and sheep and goat pox (SGP). The estimated yearly cost of CCPP in endemic areas is $507 million (Iqbal Yatoo et al., 2019). During the 2017–2018 PPR outbreak in northwest Ethiopia, farm-level losses were calculated at $13.4 per affected sheep and $12.9 per affected goat (Jemberu, Knight-Jones, et al., 2022a; Jemberu, Li, et al., 2022b), indicating a potential economic loss of $80.14 million considering the country’s small ruminant population and prevalence rate. SGP has an estimated animal-level prevalence of 15.36% in certain districts, with average herd-level losses of $3.00 per infected goat and $1.27 per infected sheep (Dubie et al., 2022; Tadesse et al., 2022), suggesting a potential economic loss of $32.64 million (ETB 1137 million).
Major poultry diseases in Ethiopia include Newcastle disease (ND), infectious bursal disease (IBD), avian coccidiosis, helminth infestations, ecto-parasite infestations, and salmonellosis (Shapiro et al., 2015; Asfaw et al., 2019). These diseases result in significant production losses due to mortality and morbidity, posing a substantial threat to public health through zoonoses given the widespread nature of poultry farming in the country (Asfaw et al., 2021). Ethiopia experiences an annual economic loss of $45.35 million (ETB 1,580 million) in village chicken production due to various poultry diseases, based on data from 2020–2021 (Dubale, 2021).
The efficiency and effectiveness of government investment and intervention in the livestock sector is a complex issue. Economists usually refer to key metrics such as efficiency (optimal use of resources) and effectiveness (maximum realization of policy objectives) to evaluate the performance and impact of public spending. Governments typically allocate funds across broad categories including education, health, and agriculture, and then further distribute these funds within each sector. For instance, expenditure in the agricultural sector is split across crops, livestock, fisheries, and forestry. In the case of animal diseases, there is evidence of market failure due to negative externalities (Rushton et al., 2018, 2021; Hennessy and Marsh, 2021), leading to economic losses in Ethiopia ranging from $3.86 to $4.38 per capita annually (see Table 1).
To determine whether a government policy is successful in correcting market failure, we must consider three factors (Winston, 2006):
1) Is there evidence of a serious market failure that requires government intervention?
2) Do government policies or allocations improve market performance and economic efficiency?
3) Are government policies or allocations optimal in correcting the market failure and maximizing economic welfare?
Studies show that a disease-free livestock sector in Ethiopia could lead to significant economic gains. For example, outcomes from a partial equilibrium model predict that a disease-free sheep and goat meat value chain alone could result in gains of $3.58 billion, or $30.55 per capita (Shakil et al., 2024). In terms of general economic impact, applying a general equilibrium model that considers all sectors, Ethiopia’s GDP could increase to $3.97 billion, or $33.00 per capita (Countryman et al., 2024). On the other hand, estimates from the Animal Health Loss Envelope (AHLE), which are predictions of financial losses at the farm level with fixed prices, predict that losses due to infectious and noninfectious diseases in Ethiopia can total up to $16.74 billion or $139.15 per capita (GBADS, 2024b). The predictions from the former two equilibrium studies are lower than those from the AHLE estimates because the equilibrium models incorporate market adjustments, substitution effects, and other economic interactions, whereas the AHLE approach assumes fixed prices and does not account for these relationships. Determining whether government actions or policies are optimal requires empirical evidence and can be challenging due to legal mandates and limited resources. Rushton et al., (2018, 2021) offer a systematic approach to assessing the economic burden of animal disease, including the disease burden in Ethiopia.
Some argue that optimal public expenditure in the agricultural sector should be proportional to the marginal increase in economic welfare from public spending in a nonagricultural sector (Goyal and Nash, 2017). However, completely efficient markets are rarely, if ever, observed in practice (Winston, 2006). A possible approach would be studying successful nations’ experiences to determine the appropriate level of agricultural spending. The Maputo Declaration on Agriculture and Food Security, for example, recommended that agricultural spending should be around 10% of total public spending, based on the economic analysis of 12 East and South Asian countries (Goyal and Nash, 2017).
In the livestock sector, optimal public expenditure occurs when marginal social benefits are equal to marginal social cost. Without government intervention, private firms’ efforts to combat disease may result in a suboptimal equilibrium due to their focus on their own direct production losses (Hennessy and Marsh, 2021). Public expenditure on vaccination, veterinary laboratories, and databases can shift the marginal cost down and the marginal benefit up, leading to a more efficient economic equilibrium (Alleweldt et al., 2012; Johansson et al., 2016). Without sustainable efforts such as prevention, detection and control of diseases, marginal cost of these expenses increases in the short- and intermediate-run equilibria. Continued public investment in animal health and veterinary infrastructure is necessary to reach to the efficient equilibrium, which is often not the case due to limited resources (National Research Council, 2009). Examples such as the East Coast fever vaccination in Kenya (Karanja-Lumumba, Mugambi, and Wesonga, 2015; Marsh et al. 2016), foot-and-mouth disease control in Botswana (Kabelo et al., 2023) and Tanzania (Casey-Bryars et al. 2018), and Rift Valley fever vaccination in East Africa (Kimaniet al., 2016) illustrate the critical importance of investing in animal health to improve livelihoods, to enhance food security, and to drive economic growth.
Ethiopia currently faces challenges in allocating funds efficiently to the livestock sector due to suboptimal public infrastructure, various political agendas, and debt repayment obligations. As a result, government spending on animal health and veterinary services is often insufficient and remains suboptimal (National Research Council, 2009).
Ethiopia is implementing various reforms and initiatives to enhance its food and agricultural trade system. The Ethiopian government has committed to transforming its food systems, with a focus on food safety, as part of the United Nations (UN) Food Systems Summit 2021. Additionally, Ethiopia signed the African Continental Free Trade Area (AfCFTA) agreement and resumed negotiations for accession at the World Trade Organization. In January 2021, the country launched a ten-year economic development plan (2021–2030) aimed at fostering economic growth, productivity, and competitiveness. These efforts are expected to promote the development of transparent and predictable trade policies and regulatory systems, ultimately boosting international trade.
Addressing institutional inefficiencies is crucial to optimizing productivity in the livestock production system, necessitating comprehensive assessment to determine the optimal level of public investment required for economic efficiency in a country’s animal health subsector. Inefficient resource allocation contributes to a weakened and less effective animal health subsector. Improved market efficiency and government efficiency are both necessary to move toward sustainable pathways and to attain sustainable development goals.
Optimal resource allocation in the animal health subsector faces greater challenges in the post-COVID era, compounded by factors such as internal conflicts, drought, and market disruptions stemming from the Russia–Ukraine war. For example, inflation in Ethiopia rose from 26.6% in 2021 to 34% in 2022, whereas the nonperforming loans ratio surpassed the allowed 5.0% in 2021 (African Development Bank Group, 2023). Further, international reserves declined in recent years, and the country defaulted on debt in December 2022 (Reuters, 2023). These emergent macroeconomic issues have further pushed investment in the animal health subsector down the priority list. This results in a lack of accurate accounting of public expenditure and investment in animal health services, making animal health management challenging due to limited data and information (Rushton et al., 2018, 2021).
Future efforts should focus on achieving optimal investment in the animal health sector, which occurs when the marginal benefit of animal contributions to economic welfare equals the marginal cost of diseases. This requires transparent reporting of expenditure data to enable accurate estimation of country-specific optimal public investment in animal health (Kappes et al., 2023; Marsh et al., 2024). However, it is important to recognize that what is optimal for individual producers may not always align with societal goals (Hennessy and Marsh, 2021), as the benefits of improved animal health may not be evenly distributed across the supply chain (Shakil et al., 2024).
Therefore, given the limited flexibility in national budget allocation, financial assistance from international communities is essential, especially if earmarked specifically for the animal health sector (National Research Council, 2009). Nongovernment organizations (NGOs) play a crucial role in Ethiopia’s animal health sector by collaborating with the MoA to train and integrate CAHWs. Supporting countries in developing National Agricultural Investment Programs and improving the efficiency and quality of expenditures is critical. This approach aligns with broader initiatives such as the New Partnership for Africa’s Development (NEPAD) and its Comprehensive African Agricultural Development Program (CAADP) (Goyal and Nash, 2017), ensuring a more equitable and effective allocation of resources in the animal health sector.
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