Investment costs
Annual recurrent costs
Labour requirements
Returns
Marketing and prices
The role of livestock production in the humid zone
In this section, the wider economic considerations involved in goat and sheep production in the humid zone will be discussed. First, available information on the prices of inputs and outputs will be reviewed which, together with the technical production parameters discussed in previous sections, should provide a basis for evaluating the economic efficiency of small ruminant production. This will be considered from the point of view of the individual farmer and of the national economy.
Throughout the humid zone, three types of goat and sheep production were observed: traditional production, commercial production and an intermediate type. Nearly all small ruminants in the region are kept under traditional free-ranging conditions, with very few cash inputs except for the initial purchase of stock. By contrast, investment and recurrent costs are much higher under the commercial production system. An intermediate system might be feasible which could combine the advantages of both.
No particular investments are required under the traditional management system except the initial purchase of stock. Current sheep prices quoted by respondents in West Africa were 
80 (US $ 70) in Ghana, CFA 6 000 to 8 000 (US $ 30 to 40) in Ivory Coast and N 20 to 25 (US $ 31 to 39) in Nigeria. Thus, the value of one sheep or goat may represent 15 to 20% of a farmer's entire annual cash income in Nigeria, and an even higher proportion in Ghana. These prices, however, refer to larger, consumption-oriented markets and those actually paid in small villages are likely to be lower. No information is available on village prices, however, or on the non-cash transfer or acquisition of stock at the village level.
Capital costs for commercial production at varying levels of intensity were estimated in two feasibility studies which covered three sheep farms in Ghana and Ivory Coast. These are given in Table 12.
Recurrent costs under traditional management are usually insignificant, as the animals are left to graze freely on their own. They are sometimes supplemented with household wastes, but the importance of these is not sufficiently known, either in terms of total feed intake or in terms of opportunity costs, if any. It was reported in Ivory Coast, however, that high mortality ensued in one flock when the household wastes were removed from the diet and the animals fed on forage alone (CNRZ, 1977). In those areas where a shift to more intensive, largely commercial production methods has taken place, household wastes are generally no longer fed, so an opportunity cost for this source of feed should be calculated.
In some village production systems, the animals are tethered and grass and/or leaves are cut and brought to them. The extent or value of this practice is not known, however. It may be that this occurs during the dry season to supplement the feed available to the animals, or during the wet season to prevent excessive growth of grasses or to avoid damage to crops. The most consistent reports are available from eastern Nigeria, where animals are tethered during the wet season to avoid crop damage (see Upton in Oluwasanmi et al., 1966; Lagemann, 1977).
The estimated annual recurrent costs for three commercial sheep farms in Ghana and Ivory Coast are given, along with estimated capital costs, in Table 12.
Table 12. Investment and annual recurrent costs for three commercial sheep farms in Ghana and Ivory Coast (US $, official rates)
|
|
GHANA |
IVORY COAST |
||
|
5 000 sheep, 70 ha maize, 500 ha improved pasture, 400 ha natural pasture |
100 sheep, 3.5 ha maize, 7 ha improved pasture |
100 sheep, 7 ha improved pasture |
||
|
Investment Costs |
|
|
|
|
|
|
Farm development |
77 200 |
- |
- |
|
|
Building & fencing |
123 100 |
4 200 |
3 400 |
|
|
Vehicles & equipment |
79 500 |
- |
- |
|
|
Crop & pasture development |
35 900 |
3 800 |
2 100 |
|
|
Stock purchases |
231 800 (4600 head) |
8 000 |
4 900 |
|
|
Contingencies (10%) |
54 700 |
1 600 |
- |
|
Total capital costs |
602 200 |
17 600 |
10 400 |
|
|
Annual Recurrent Costs |
|
|
|
|
|
|
Salaries & wages |
27 800 |
710 |
780 |
|
|
Maintenance & repair of buildings & equipment |
12 700 |
726 |
1 650 |
|
|
Pasture maintenance |
17 500 |
50 |
175 |
|
|
Animal management |
50 200 |
960 |
690 |
|
|
Others |
30 000 |
1 280 |
- |
|
Total annual recurrent costs |
138 200 |
3 726 |
3 295 |
|
|
Annual recurrent costs per sheep |
27.64 |
37.26 |
32.95 |
|
Sources: For Ivory Coast, SODEPRA (1976); for Ghana, Cockcroft (1977).
A comparison of the three commercial sheep farms is indicative only. The Ghanaian figures include an important crop component, and the conversion of Ghanaian cedis into US dollars is problematic. Nevertheless, it appears that recurrent costs are slightly lower in Ivory Coast, for which the data, unlike those for Ghana, include depreciation for livestock purchases. The large farm also benefits from economies of scale. Comparing recurrent costs for different management systems, it is clear that costs under commercial management are much higher than under the traditional system.
A breakdown of the annual costs of minerals, feed concentrates and drugs used on the three commercial farms in Ivory Coast and Ghana was also calculated, as given in Table 13. The Ghanaian figures are given in US dollars both at the official exchange rate and at a shadow rate of US $ 1 = 
2.50. Total annual costs calculated in this way were US $ 6.89 per adult female maintained in Ivory Coast, including a 25% provision for contingencies, US $ 9.32 in Ghana at the official exchange rate, and US $ 3.64 at the shadow rate.
Table 13. Estimated annual costs of minerals, concentrates and drugs on three commercial sheep farms in Ivory Coast and Ghana per adult female (US $)
|
|
Ivory Coast |
Ghana |
|
|
official rate |
shadow rate |
||
|
Minerals |
1.87 (4.3 kg) |
1.12 |
0.41 |
|
Urea supplement |
- |
1.12 |
0.41 |
|
Concentrates |
1.90 (200 g rice bran daily) |
3.54 |
1.41 |
|
Drugs |
1.74 |
1.12 |
0.41 |
Sources: Same as Table 12.
Labour requirements and organization vary according to the system of flock management. In the forest zone where sheep and goats are usually kept in small household flocks of less than ten animals, the labour required from each family is very low. As the animals are not herded, labour input consists almost entirely of the preparation and feeding of household refuse. The only estimate of labour input under this system was made by Upton (in Oluwasanmi et al., 1966) for eastern Nigeria. He reported from Uboma District that a family spent on average one-half hour per week on livestock-related activities, though this may be an underestimate.
The cost of family labour is expressed in terms of the value of alternative uses to which this labour could be put. In the humid zone, there are few alternative tasks during the dry season, but a high demand for labour during the wet season for crop-related work, such as clearing, burning and planting, which generally takes place in February and March. Lagemann (1977) estimated the productivity of agricultural labour in eastern Nigeria in terms of the average returns from agricultural tasks. These were fairly high, ranging from N 0.53 to 1.12 (US$ 0.83 to 1.75) per man-hour on fields near the compound to N 0.11 to 0.23 (US$ 0.17 to 0.36) on more distant fields. Gross returns per man-hour tended to be higher in less densely populated villages.
Under different management systems, the labour required for tending flocks is organized differently. In Ivory Coast, village flocks of 100 to 150 animals are often managed cooperatively, tended by one person (SODEPRA, 1976). Labour requirements for herding and watering the animals are about three hours a day during the wet season and four hours during the dry season.
On commercial farms in Ghana, flocks of up to 500 sheep are tended by one or two persons who work six or seven hours a day. Daily labour costs are reckoned at 
4.00 (US$ 3.48) per person. The labour requirements for shepherding are reduced on these farms because the pastures are fenced (Cockcroft, 1977).
If prolificacy in sheep under the traditional management system is estimated at 180%, fertility at 150% and annual mortality at 40 to 50%, then offtake is on the order of 100% and economic efficiency is high. Costs under the traditional system are very low, giving an internal rate of return of 50 to 60%. For a household flock of five adult females with an offtake of 100%, annual gross income would be around US $ 150. Assuming a labour requirement of one-half hour per day, as suggested by the preliminary results of ILCA's survey in western Nigeria, and total costs of about US $ 30 per year, a net income from labour of US $ 0.70 per man-hour can be calculated, comparable to the estimates given by Lagemann (1977) for other agricultural activities in Nigeria.
In addition to calculations of economic efficiency, the element of risk must be considered. Epidemics can wipe out entire household flocks more or less at random, making sheep and goat production a rather speculative undertaking under traditional farming conditions. In addition, mortality rates are positively correlated with flock size, which means that the risks are greater for farmers who increase their flocks. Although other inputs are minimal, the purchase of stock is a significant investment for a small farmer. This cash requirement for an enterprise which entails a high degree of risk may help explain the fact that the overall number of sheep and goats in the humid zone does not seem to be increasing and holdings seem to be becoming more concentrated in the hands of a few relatively wealthy families.
By contrast, commercial production systems appear to be less efficient economically, but have a greater potential for growth. Given an average investment cost of US $ 100 per head of sheep at an annual interest rate of 10% and a recurrent cost of US $ 30 per head, total annual costs per head are on the order of US $ 40. Thus, an offtake of 130% would be required to break even and 150% would be required to obtain an acceptable rate of return. If it is assumed that and fertility prolificacy remain the same under commercial conditions as under the traditional husbandry system, the mortality rate would have to be reduced to about 20% to achieve an acceptable offtake rate. Such a reduction would appear to be feasible. For goats, average prolificacy is higher, in the order of 150%, but mortality is also somewhat higher, so that if mortality could be reduced to the same level the opportunities for an acceptable rate of return would appear to be somewhat greater than for sheep.
The rates of return calculated for four commercial farms in Ivory Coast and Ghana are given in Table 14. These figures are fairly low, partly due to the high cost of inputs, the generally high investment costs and the absence of real improvement in offtakes or weights over the level achieved under traditional production systems. In both countries, the smaller enterprises appear to have a higher rate of return than the larger ones. The two farms in Ghana have also included maize production with sheep rearing in order to improve their short-term returns.
Table 14. Estimated rates of return for four commercial sheep farms
|
|
Rate of Return | |
|
Ivory Coast |
| |
|
|
50 ewes, artificial pasture |
33 - 35% |
|
|
100 ewes, artificial pasture |
18 - 19% |
|
Ghana |
| |
|
|
100 sheep, artificial pasture & maize |
19% |
|
|
9000 sheep, artificial pasture & maize |
13% |
Sources: For Ivory Coast, SODEPRA (1976); for Ghana, Cockcroft (1977).
Given the economic characteristics and constraints of the traditional and commercial systems, it would appear that the best strategy for improving sheep and goat production in the humid zone would be to develop an intermediate system combining the best elements of both. Such a system would be efficient if investment costs for such items as fencing and pasture establishment could be kept at the lowest possible level, while at the same time mortality rates could be reduced.
Household budget surveys in Nigeria indicate that most of the sheep and goats produced under the traditional system are sold rather than consumed at home, though this tendency diminishes with increasing income. In Ghana, the urban meat market is dominated by beef and chicken, with the estimated market share for mutton and lamb only 6.8% and for goat meat only 5.4%. Even so, a substantial proportion of the sheep and goat meat marketed comes from outside the country: live and carcass imports account for as much as 50% of the mutton market and 25% of the goat meat market, though this proportion appears to be declining (Cockcroft, 1977).
According to FAO (1966), goat and sheep meat accounted for 35% of total meat consumption in eastern Nigeria and 45% of the total meat supply. In western Nigeria, goat and sheep meat accounted for only 13% of total consumption and 22% of supply. Consumption patterns, however, may well have changed since these data were collected.
Information on preferences for certain types of meat may be obtained from many sources. For example, Devendra and Burns (1970) reported that 'a carefully planned survey on the meat preferences of people in central Ghana revealed the preference of the indigenous Ashanti people for goat meat'.
Little is known about price patterns in the region. Retail prices for goat meat in Nigeria are on about the same level as beef prices, with mutton prices about 20% lower. The Ghanaian Central Bureau of Statistics (1977) compiled indices of farm-gate prices for sheep, fowl and the main agricultural crops in northern Ghana at Tamale, as shown in Table 15.
Table 15. Farm-gate price indices for principal agricultural products in Tamale, northern Ghana (1967 = 100)
|
|
Groundnuts 180 lbs |
Millet 240 lbs |
Maize 220 lbs |
Fowl |
Sheep large |
All Local Food: rural prices |
All Local Food: national prices |
|
1968 |
136 |
157 |
157 |
96 |
112 |
109 |
108 |
|
1969 |
128 |
286 |
171 |
104 |
120 |
118 |
116 |
|
1970 |
160 |
200 |
157 |
126 |
88 |
125 |
120 |
|
1971 |
144 |
157 |
157 |
104 |
104 |
139 |
131 |
|
1972 |
192 |
286 |
214 |
148 |
176 |
151 |
144 |
|
1973 |
256 |
300 |
257 |
178 |
224 |
181 |
170 |
|
1974 |
264 |
475 |
243 |
267 |
288 |
207 |
201 |
Source: Ghana, Central Bureau of Statistics (1977).
These figures reveal several interesting patterns. For one thing, sheep and fowl price increases lagged behind food grain price increases from 1968 to 1971, but began catching up from then onwards. Local food prices, which included all the individual items in the table, rose faster in the rural areas than in the country as a whole and apparently much faster in Tamale, which means that the terms of trade for producers were improving in favour of the Tamale area.
In the Tamale area, sheep production has become somewhat more favourable than groundnut or maize production in recent years. No figures were given on price changes at various times of the year, but it is widely believed that these are linked with the major festivals. Market records of livestock sales are probably available, and the collection and analysis of this information could make a valuable contribution to efforts to improve animal production.
It has already been suggested that the return on labour devoted to livestock production is probably similar to or higher than the return on labour devoted to crops. However, very little labour is required for livestock production, and the opportunities for maximizing income through concentration on livestock are probably limited. Further indications of the role of livestock in the traditional farming system may be obtained by reviewing household budget surveys undertaken in rural Ghana and Nigeria. These surveys include information on expenditures for various inputs related to livestock production and the income received from livestock. The provisional results of a national farm income survey undertaken in Ghana are presented in Table 16. These figures suggest that absolute income from livestock production increases with farm size, but the proportion of income from livestock in total farm income remains roughly constant. The smallest farms appear to receive the highest proportion of total income from livestock production, though the differences are not great. Expenditure data do not give separate figures for livestock-related expenses, which suggests that they are either zero or too small to be shown separately. When these figures are broken down by region, it appears that the proportion of total farm income derived from livestock production is higher in Northern and Upper Regions in the north and Eastern Region in the south than in Brong Ahafo and Ashanti Regions where substantial incomes are derived from cocoa production.
Table 16. Estimated annual farm incomes in Ghana (cedis, US dollars in bracketsa)
|
Farm size |
Crop Income |
Livestock Income |
Total Farm Income |
Livestock Income as % of Total |
|
Up to 1 ha |
151 ($131) |
16 ($14) |
166 ($145) |
9.6 |
|
1 - 2.5 ha |
381 ($331) |
23 ($20) |
404 ($351) |
5.7 |
|
2.5 - 5 ha |
593 ($516) |
50 ($44) |
644 ($560) |
7.8 |
|
5 - 10 ha |
1080 ($939) |
42 ($37) |
1122 ($976) |
3.7 |
|
over 10 ha |
1865 ($1622) |
143 ($124) |
2009 ($1746) |
7.1 |
|
Overall |
537 ($467) |
37 ($32) |
574 ($499) |
- |
a. US $ 1 taken as equivalent to1.15. Source: Ghana (1974).
No comparable national survey has been carried out in Nigeria, but a number of village-level surveys have been undertaken. Galletti et al. (1972) surveyed cocoa-farming families in western Nigeria from 1951 to 1953 and determined that only 1% of total household cash sales were derived from livestock. Matthewman (1977) surveyed 95 livestock owners in two villages near Ibadan and noted that 91% reported that they kept animals for financial gain. He observed that 'to the individual livestock owner, the main role of animals is to provide small, periodic incomes', and estimated that the income derived from livestock, including poultry, averaged about 7.5% of total farm income. It may be significant that an exhaustive study of the Yoruba farming system in western Nigeria undertaken by Zuckerman (1972) made no mention of livestock production. Results from a further village survey in the Ibadan area undertaken by Aye are expected soon.
In eastern Nigeria, the Uboma District was surveyed in 1963 and again, though on a smaller scale, in 1972 (Oluwasanmi et al., 1966; Anthonio and Ijere, 1973). According to the 1963 survey, the average stock-owning household had 12 chickens, 4.5 goats and 1.4 sheep. The cash and subsistence derived from livestock annually averaged only 3.7% of total farm income. It was noted that fresh meat, eaten almost exclusively during the harvest season, contributed only 10% of annual protein consumption, whereas dried fish, eaten throughout the year, contributed 33.5%. Both meat and fish were important purchase items in the household budgets of the area.
The 1972 survey indicated that average farm family incomes, estimated at N 257.50 (US$ 402.34) in 1963, increased to N 511.33 (US$ 798.95) in 1972, though real income did not rise as sharply. Using the Enugu price index quoted by Lagemann (1977), the 1972 income at 1963 prices amounted to N 319.50 (US$ 499.22) only, an increase of 24% over the period or 2.2% per annum.3 Income from livestock increased sharply from N 9.50 (US$ 14.84) in 1963 to N 48.50 (US$ 75.78) in 1972 in terms of 1963 prices, a rise of over 400%. The share of livestock income in total farm income increased from 3.7% in 1963 to 15.2% in 1972, probably due to the introduction of large-scale poultry farming and rabbit production, practised on four of the six farms surveyed. The income obtained from sheep and goat production increased slightly, from N 4.20 (US$ 6.56) to N 5.47 (US$ 8.55), though it is not possible to determine from available information whether this increase was due to increased numbers, higher prices or other factors.
3. These figures are only illustrative and are not statistically reliable. They are derived from case studies of only six farms. A less optimistic picture emerges from the fact that increased production over the period was insufficient to offset estimated population increases. On the basis of estimated total district income in 1963, per capita incomes actually appear to decline in real terms over the period in question, from N 59.5 (US$93.0) to N 51.6 (US$80.6) in terms of 1963 prices.
More recently, Lagemann (1977) surveyed three villages in eastern Nigeria to determine the effects of different population densities on the farming system. The information he collected on ownership of animals and incomes derived from livestock production, as presented in Table 17, reveals substantial differences between the villages with low, medium and high population densities.
Table 17. Livestock ownership and incomes in villages of low, medium and high population density in eastern Nigeria
|
Population Density |
Average Livestock Holdings per Household |
Annual Household Incomes (naira, US dollars in bracketsa) |
||||
|
Goats |
Sheep |
Poultry |
Livestock |
Total Farm |
Total Family |
|
|
Low |
1.4 |
- |
9.1 |
21 ($33) |
480 ($750) |
721($1127) |
|
Medium |
2.0 |
0.6 |
15.6 |
38 ($59) |
321 ($502) |
655($1023) |
|
High |
3.2 |
0.5 |
20.6 |
58 ($91) |
272 ($425) |
946($l478) |
a. US $ 1 taken as equivalent to N 0.64.
Source: Lagemann (1977).
More livestock were kept in the densely populated areas, but Lagemann noted that the total meat supply was in fact slightly higher in the less densely populated areas, due to the importance of meat from game animals. He calculated average farm incomes in the three areas, including income from game meat, and reckoned the proportion used for subsistence consumption. These figures are given in Table 18, which suggests that income from livestock tends to displace income from crops as population pressure increases, though the ratio of livestock to total income remains roughly constant. The cash income derived from livestock production was about the same for all families in all villages, but subsistence derived from livestock was considerably higher in the more densely populated villages. As the sample sizes were small, however, and a number of measurement problems occurred4, the interpretation of these data must remain tentative.
4. Inventory changes were not recorded, opening/closing values were assumed to be identical, implying an underestimation of incomes and an unknown bias, and the value of animal manure was not included.
Table 18. Average annual household incomes from livestock production and game meat with subsistence components (naira, US dollars in bracketsa)
|
Population Density |
Income from Livestock and Game Meat |
Subsistence Component |
Total Farm Income |
Subsistence Component |
Total Family Income |
|
Low |
41 ($64) |
28.7 ($44.8) |
500 ($781) |
173 ($270) |
741 ($1158) |
|
Medium |
38 ($59) |
24.2 ($37.8) |
321 ($502) |
148 ($231) |
655 ($1023) |
|
High |
58 ($91) |
48.1 ($75.2) |
272 ($425) |
196 ($306) |
946 ($1478) |
a. US $ 1 taken as equivalent to N 0.64.
Source: Adapted from Lagemann (1977).
Lagemann (1977) concluded from this survey that farmers put more effort into livestock production as population pressure increased in order to increase their food supplies and cash incomes, and that they also made fuller use of animal manure as a fertilizer in more densely populated areas. The data presented in Table 18 confirm this observation for the most densely populated village, but any increases in livestock production from the low-density to the medium-density villages were masked by accompanying decreases in the use of game meat. The decline in total farm incomes with increasing population density, largely reflecting declining crop incomes, is clear from the table, as well as the increase in total family incomes.
The figures from Uboma District suggest that livestock husbandry intensifies with development, while Lagemann's survey suggests that production intensifies with increasing population pressure. In Uboma, intensification occurred through specialization, but in other areas there might be a more general spread of livestock production among rural households. Neither of these surveys suggests what might be the principal causes of livestock intensification. In the villages surveyed by Lagemann, marketing opportunities did not increase and there were no technical innovations. In Uboma, these two factors might have played a role, whereas increasing population pressure was not a factor.
