MADERA

Factors determining the price of sheep marketing

Kohl and Uhl (1985) put factors influencing farm prices into four groups. The first one is supply side factors that include production decision, weather, disease, harvested acreage, etc.

The second one is demand side factors that include income, prices, tastes and preferences, population, etc. The third one is marketing system related factors that include value addition, price and cost behavior, and procurement strategies. Finally, government may influence price through price support, supply control, trade policies or policies influencing domestic demand.

According to William and Robinson (1990), under a given demand and supply condition, the products have attributes that confer utility and the values of those attributes contribute to the price of the product Therefore, a composite of the implicit prices of the product's attributes is reflected in the observed price of a product, hence the mix of products attributes as well as attributes of the buyers and sellers determine the implicit prices (Andargachew and Brokken, 1993; Ayele et al., 2005; Girma, 2007).

In a competitive market an implicit price will be a function of the product attributes alone and not of individual consumer or supplier attributes (Ockowski, 1994). This implies that only products are differentiated, while their markets, buyers and sellers are not. However, most empirical studies found that price was also related to attributes of the buyers and sellers, implying some non-competitiveness in the market (e.g. Rodriguez et al., 1995; Andargachew and Brokken, 1993; Parker and Zilberman, 1993; Williams, 1993; Francis, 1990).

In the central highlands, as in nearly all other parts of the country, there is no regular market information on prices and supplies, nor formalized grades and standards. Agreement on price is reached by a long one-on-one bargaining between a seller and a buyer. Animals are sold on a per-head basis. Under such circumstances, prices paid will reflect buyers' preference for various animal characteristics (sex, weight, age, condition, breed, color), the purpose as to whether the animals are purchased for consumption, breeding, the season of the year and the

bargaining skills of buyers and sellers (Andargachew, 1990; Andargachew and Brokken, 1993;).

By applying multiple regression model to both quantitative and qualitative variables, Andargachew and Brokken (1993) determined factors affecting pricing of sheep in the central Ethiopian highlands. Apart from producers’ response to the increased demand for sheep during religious festivals, seasonality of supply is affected by producers need for cash, lambing pattern, and variation in quantity of grazing in relation to rainy and dry seasons. In addition to the above-mentioned factors, they have found that the major animal characteristic affecting price per kg body weight were animal weight, sex, age, and color. Price per kg varies among markets partly reflecting consumers' preferences.

In their study of small ruminant pricing, Jabbar (1998) in the southern Nigeria emphasized the importance of religious festivals promoting ceremonial animal slaughter in stimulating demand and therefore small ruminant prices. In another study, Jabbar (1998) argued that there are strong buyer preferences for specific species/breeds for specific purposes at different times of the year and the buyers are willing to pay different prices according to their preferences. He concluded so based on results on small ruminants in southern Nigeria by conducting a survey covering on traded animals for which data were collected on price, species, breed, sex, age, live weight, seller type and sex, reason for sale, and intended use of the animal after purchase.

Using hedonic price function Jabbar and Diedhiou (2001) related the price per animal to its various attributes and characteristics. In this analysis the focus was on the importance of breed relative to other attributes likely to affect the price. The maintained hypothesis of implicit price analysis is that products have attributes that confer utility and the values of those attributes contribute to the price of the product. The observed product price is therefore a composite of the implicit prices of the products attributes (Ockowski, 1994). The hypothesis tested was as follows: everything else equal, there were no differences in price per animal due solely to breed.

In addition, Jabbar and Diedhiou (2001) found that there was a preference of animal breeds by farmers of West and Central Africa. Moreover, they argued that the significant negative effect of weight in their model indicates that less premium is paid for heavier animals. Other significant results were that: (a) cows fetched significantly lower prices than males, while heifers fetched significantly higher prices than males; (b) condition of animals did not significantly influence price paid by farmers, perhaps because if other desirable characteristics were present, the condition of the animal could be improved through rearing and appropriate management.

Beneberu (2003) showed that there was a considerable week-to-week variation throughout the year in sheep live-weight prices, these variations could relate to variations in the overall supply and demand as well as in characteristics of sheep offered for sale. Sheep characteristics that affect price were weight, sex, age, body condition and color, and factors affecting the number offered for sale include high demand during festivals, lambing season, as well as cash needs for crop inputs and later for food purchases just before harvest.

After controlling the effects of different attributes of the animals, the buyers and the sellers in central highlands of Ethiopia, to determine seasonal and inter-market differences in prices, Ayele et al., (2005) reported that seasons and markets are important factors influencing prices of small ruminant. Seasons in which farmers faced severe cash shortages exhibited the lowest adjusted prices for animals they sold, indicating that although livestock may provide a fallback position for cash in times of crisis, terms of trade may be worst when farmers need cash the most.

The above review of literature on basic concepts and past works provided the basis for the development of empirical model and method of analysis for the present study.

3. METHODOLOGY