Ethiopia’s government is calling for a new system for regulating trade in livestock alongside animal hides and skins.
The new department will come under the Ministry of Trade (MoT) once it receives Parliamentary approval.People working in the livestock trade have in the past criticized the existing marketing scheme for lack of harmonization.
In a bid to accelerate the pace of development in the sector, the marketing scheme previously led by the Ministry of Agriculture will be taken over by MoT.
The Trade Ministry has also created a new office at state ministry level focusing on livestock resource development, including breeding and veterinary issues.
The office was formed seven months ago, but only began work in June.
“The marketing chain is very long. It is not led by the market, but by middlemen with five or more marketing chains,” said Kelifa Hussien, Director of the Live Animal, Hide and Skin Marketing Directorate.
To solve this problem, MoT worked with the Ethiopian Revenue and Customs Authority (ERCA) to create a marketing strategy document and new regulations to govern the new marketing scheme.
“The marketing regulation has been submitted to the Council of Ministers for approval,” said Kelifa.
“We hope the regulation will be amended by parliament immediately after it comes back from its break in early October, 2013. We are organising the structure to commence the new marketing scheme after the law amendment,” he continued.
The new marketing strategy will separate the market into two parts, recognizing that the system has been artificially inflated by brokers.
It will also regulate livestock transportation.
“The limitation will reduce illegal trading in border areas. Currently, livestock is transported from the central part of the country for illegal trading mainly undertaken via Somalia,” Kelifa told Capital.
Experts said illegal trading in the past was mainly limited to border areas, but now animals from other part of the country are being transported for illegal trading.
Research shows that illegal trade accounts for 75 per cent of overall livestock trade in Ethiopia.
“Now like coffee and sesame we will control animal smuggling,” said Kelifa.
The Ministry has also drafted a new raw hide and skin marketing strategy regulation, which has been sent to the Council of Ministers for approval.
Kelifa said this new regulation was being proposed to strengthen existing laws.
The Ethiopian Meat Exporters Association said abattoirs and meat exporters are not operating at full capacity, meaning the country is missing out on possible foreign currency earnings.
The government has put in place a target to earn one billion dollars from exports of meat and livestock by the end of the Growth and Transformation Period (GTP).
In the past fiscal year, the country earned 286 million dollar from livestock exports.
According to the draft law that was delivered for discussion with stakeholders a year ago, the regulation on hide and skin will create market centres to stop illegal trading that eventually aims to ban the slaughter of animals at home.
The draft says that Woredas or city administrations will undertake the business in a legitimate manner.
The first step will be to eliminate middlemen and make the process of selling skins more transparent.
A marketplace with quality standards, regulated by the government, will be the first stage of the new program, for those wishing to invest in hides and skins.
The draft regulation indicated that the number of the first raw hide and skin market actors will be limited by each Woreda or city administration based on their size.
Secondary market actors; suppliers, slaughter houses and associations whom the Ministry of Trade has authorized to buy and sell skins received from the first market actors (people who collect skins from homes etc…); these associations and suppliers will then sell them to the tanneries.
All trading will be held under contracts signed between the suppliers and tanneries.
All secondary market actors will need warehouses and reserve centres approved by the relevant governmental office, to be involved in the business.
In the future raw hide and skin trading will be undertaken by the Ethiopian Commodity Exchange (ECX) along with other agricultural products.
All the trading will then be done based on quality standards set by the Ethiopian Standards Agency.
The new regulation also addresses the issue of hoarding.
Hides and skins must be delivered within six hours for suppliers or tanneries, the dried hides have to be delivered in two months and the preserved ones must be delivered in three months.
The government also plans to form the third market in which tanneries will trade with each other.
“Tanneries will be divided in two sections depending on their capacity. The first section will allow them to produce the raw hide and skin up to semi finished stage and other tanneries will buy the semi finished products and will convert it to finished materials,” the new plan says.
Small slaughter houses (slabs) will be established in every corner of the town and Woreda administrations to increase the collection of products.
The new system and regulation is designed to harmonize the market chain and circulation of raw hide and skins and stop the price speculation that is constantly occurring between tanneries and suppliers.
The government has projected gross revenue of half a billion dollars from leather and leather product export by 2015; the end of the five year plan.
Earlier this month, the USAID Agriculture Growth Program (AGP) Livestock Marketing Development (LMD) launched the marketing value chain analysis for the live animal, meat, and hides and skin sectors.
Sileshi Getahun, State Minister of MoA, said that the ministry is now in the process of developing a master plan in collaboration with the regional agriculture bureau to boost the sector development.
“Most of the programs are much focused on the sector production but we undertake the marketing analysis,” Girma Kassa, acting COP of USAID AGP LMD project, told Capital.
“We work to help the market. There is no strong linkages between the producers and traders so we design a master plan to create the market linkage,” he said.
“Training, organising trade fairs, and taking people to international marketing fairs to create the market linkage, are some of the mechanisms we work on,” he added.