Res. Bult., No. (101), Res. Cent. Coll. of Agri., King Saud Univ., pp. (5-16)

Transcription

1 1422 (16-5) (101)..,,.., Res. Bult., No. (101), Res. Cent. Coll. of Agri., King Saud Univ., pp. (5-16)

2 Goat Production in Oman: Management and possible Improvements A. S. Al-Marshudi K. M. Al-Sharji L. Zaibet Abstract This paper examines the effect herd size, fodder, capital, water condition and management on goat gross revenue in Oman. There were several essential results. First, there is a strong positive relationship between some of the mentioned variables, namely fodder and labor, with gross revenue. Second, increasing goats herd size shows a positive effect on revenue. However, as size become large so that input exceed output we get what economist referred as the law of dimishing return. Third, Factors such as water condition and management practice are of some important on the goat production system. A program and policy effort to encourage farmers to use innovation for animal husbandry will no doubt improve the productivity of tradition goat system in Oman. Department of Agricultural economics and Rural Studies, College of Agriculture, Sultan Qaboos University, P.O. Box 34, Al Khod 123, Sultanate of Oman

3 Introduction Goats are important for the provision of animal protein and as a source of income to small holders in the less developed parts of the world (Mahgoub, 1997). In less developed economies, owning livestock is often the only way to build up collateral and insure against risk. Stock raising offers greater economic stability wherever variable rainfall reduces income security from cropping. In favorable location it is a saving bank and a security for the household (Armbruster, 1993). Production levels of Oman local goats under traditional systems are low in terms of growth rates and carcass yields. Consequently, they contribute only a small proportion of the total meat consumption. Large numbers of live goats and sheep, as well as large amounts of chilled and frozen meat products, are imported into the country (Mahgoup, 1994). Because of high demand for meat products, market demand can often be covered only by imports from countries producing surpluses. The demand for imported meat products in Oman has accordingly shown an almost linear increase in recent years to an annual value of 75.8 million RO (Ministry of National Economy, 1996). National dependence on local production or at least decreasing the demand for imports is an incentive for government to encourage people to produce meat. Policy makers recognize livestock importance as a source for human nutrition and farmers well fair. In 1988, Ministry of agriculture and fisheries initiated a goat development project (GDP), aiming to achieve two things. Firstly, an increase in the production of goats, and thereby to achieve a reduction in the quantity of imported meat, and save hard currency. Secondly, by increasing the efficiency of production, the project will increase farmer incomes (Conel, 1993)

4 Further investigation on other management factors that affect the revenue obtained from those animals that raised under intensive management is needed to evaluate their future role for meat production in Oman. In order to examine the relationship between different managerial factors that affect goat revenue, a production function model is used. This model explores the determinants of the goat productivity in Oman, using a national-wide survey over one year by the Ministry of Agricultural and Fisheries. The objectives of the paper include: testing for the revenue determinants in goat production namely: explaining the effects of herd size, the water condition and management practices. The rest of the paper is organized as follows: The next section review livestock and goat production in Oman. Section three discusses the data and the empirical results. The paper concludes with recommendation and policy implications, which can be used for improving livestock and goat production in Oman. Livestock and goat production in Oman It is clearly not possible to develop production systems without first studying the existing ones. On the one hand, the performance of the existing, traditional system provides a baseline standard with which to compare proposed innovations. On the other hand, an understanding of the resource requirements and constraints of the existing provides guidance as to which of the possible new technologies are appropriate and worth pursuing and which are not (Upton, 1986). The total number of animals was estimated at 1.35 million heads according to the latest census including heads of goats, heads of sheep, heads of cattle and heads of camels. When these correspond to 16% of goats, 7.5% sheep, 45.5% cattle and 31.3% camels. However, goats followed by cattle are the - 8 -

5 most important meat animals in Oman with their meat being sold for the highest prices especially during festivals and social occasions. Lamb and mutton are preceded only by goat meat preference by the local population. Goats are commonly slaughtered for religious and social occasion throughout the Omani calendar. However, local animals contribute only a very small proportion of the total need and therefore a substantial numbers of live goat, as well as frozen and chilled goat meats are imported into the country annually (Mahgoup, 1997). Local goats are generally kept in small flocks of about ten by nomadic, semi-nomadic and settled farmers. They browse acacia shrubs and tress or feed on seasonal range grass, Rhodesgrass hay byproducts such as dates, fish, and banana stems and household leftovers. (Mahgoup, 1994). Goat development project has been promoting a more intensive system of goat production than the traditional ones, which rely heavily on range feeding. This system is targeted at settled farmers, eliminates range grazing and relies primarily on fodder produced on the farm, together with purchase concentrates. Information on performance of Omani goats under intensive system is very limited. However, this paper can provide some insights of the intensive goat system. Methods and Data We use a production function relating goat revenue as independent variable with respect to some explanatory variables such as herd size, water condition, management etc. Cobb-Douglas production function is used. The general equation for this function is: α i i y = xi e δ, i = 1,2,..., n (1) - 9 -

6 The coefficients are estimated by connecting all variables measured, both inputs and output, into their logarithms and then using ordinary linear least squares method to estimate the function in its linear form. log y = a + b + 1 log x1 b2 log x 2 (2) This function may show diminishing marginal returns and can be used to estimate returns to scale. However, it cannot show both increasing and diminishing marginal returns in a single response curve (Upton, 1976). The Cobb-Douglas function is linear in logarithmic form, Simplifying estimation of the parameters. For small changes in prices, the estimated parameters from a linear demand equation should give unbiased results. Transforming the Cobb-Douglas function into logarithmic form provides for easy interpretation of the estimated demand parameters α The data used are from questionnaires conducted by Ministry of Agriculture and Fisheries with the help of Durham University over the year 1992 to ( Conrol, 1993). The sample was taken from different part of the country of 40 farms selected randomly. The survey covered availability of fodder, water condition, management system and labor. An interview schedule was prepared with the assistance of MAF staff familiar with goat production. A pilot survey was the carried out in late January (1993) in order to test the interviews schedule in the field

7 Estimation and empirical results An attempt was made to construct a model that holds all variables in a form of multiple regression as follows: y = f ( x x... 2 x ) 1 n Then we can apply this equation into our model as follows: (3) ln( output) = β + β ln( labour) + β ln( fodder) + β ln( capital) + β ln( herdsize) + β ln( water, condition) + β ln( management) ( 4) Before turning to the empirical results, a brief description of the variables is in order. Output is gross revenue (number of goat sale variable cost) in one year. Every goat present on 1/1/1993 has had a value attached to it. Some goats were only breeding for part of the year (1993) either because they reach 15 months, in which gross revenues will be measured, during the year, or because they died or were removed during the year. In order to allow for this the average number of breeding animal present in each farm during the year has been calculated. Estimating the total animal days as adult, for each female present during the year has done this. Then dividing this figure by 365. The longer a male goat is kept on the farm, the higher its value will be (up to two or three years of age), but the higher its cumulative feed cost will be. Thus, ideal time to sell the goats would be when the marginal cost of feeding them equals the marginal appreciation in their value. After that, the gap between costs and value will narrow. Until the cumulative feed, costs exceed the income from the sale of the animal. All except one of the farms employed one or more agricultural laborers full-time, whose monthly wages is 63 RO (Conel, 1993). There was no casual labor involved in goat production, so all paid

8 labor is a fixed cost. On most farms, a combination of family labor and paid labor was involved. Respondents were asked how many hours a day was spent on work related to goat rearing. Only 15 per cent of farmers grew less than half of their goat fodder on their farms: all of them are ones whose fodder production is constrained by a lack of water. The rest grew all, or most, of their fodder. The largest quantities of goat fodder, on an annual basis, come from the perennial crop alfalfa and Rhodes grasses. Barley and cowpea, being seasonal crops, tend to be given in smaller quantities than alfalfa and Rhodes grass. A variety of other types of fodder are used. Most farmers feed their goats commercial concentrates. They are three types that commonly used by the farmers. These are General concentrate, Barley and Wheat bran. The wholesale prices are 4.200, and RO per bag respectively (Conel, 1993). Tabulation Analysis Table 1; Calculation of Gross revenue per herd size Herd size classes No. of farms Cost of feed Labor and capital Gross revenue GR/HS < >

9 The herd size was divided into groups. The groups range from less than 15 to more than 26 herd. The choice of these groups division based on the link that prediction to obtain the economy of scale. An attempt was made in order to look at the effect of herd size with respect to cost of feed, labor, capital, and gross revenue. From table 1, two inferences can be drawn. Firstly, clearly indicated that as herd size increases gross revenue per herd size rise, that is as size becomes large, output increases. (Ellis, 1992) Secondly, looking closely at each class, it appears the law of diminishing return. The difference between class one (>15) and second class is 13.29, gross revenue has risen by In contrast, increasing herd size to a maximum has resulted in only small difference. That because additional units of input (in this case herd size) yielded smaller increments to output (goat gross revenues). Analysis of variance procedure Tabulation finding required to be tested, using one of the statistical testing procedures, to look at the level of significant. Analysis of variance procedure, In particular Duncan s Multiple range tests for variables was selected. Mean of revenue is used to see the variation between groups. Thus, means with the same letter are not significantly different. Code 1 to 4 used to indicate the group class. For instance, one is used to indicate group less than 15 and so on. Table 2: Duncan tests result Duncan Grouping Mean N Group A A B A B B C

10 According to table two only group one showing significant different at 5% level. This clearly confirms our finding using tabulating procedure.. In conclusion, beyond group one size is not economically feasible. Regression Analysis Results from OLS regression based on the specified model of Equation 4 are presented in table 1. Goodness of fit is acceptable with an R 2 of 0.93 and a very significant F.test value. The signs and magnitudes of the estimated coefficients are broadly in line with theoretical expectations. In summery, tests for model adequacy are satisfactory. Most parameters are significantly greater than zero at the 5% level with the exception of capital and herd-size. This implies that variables like labor, fodder, water condition and farm management have a direct affect on the revenues. Fodder and labor parameters show the production elasticity in Cobb-Douglas form. That is if labor increased by 10%, the goat gross revenue will increase by 3.9%, and so the fodder parameter. Table 3: Least square regression results Variables Parameters T-test F.test D.W R 2 Intercept Labor Fodder Herd size Capital Water condition Farm management

11 In conclusion, the model has clearly indicated that the availability of fodder and labor will have greater effect on the goat gross revenue. Similarly, in principal can be applying for the availability of water and management. Conclusion Traditionally, meat is an important component of the Omani diet, especially goat and sheep, as the last agricultural censer indicated. With high per capita in Oman during the 1980s and 1990s, it is not surprising to find meat demand a necessary good. However, it has been found that high proportion of this quantity was met by import. There is no official estimate of how local meat will contribute to the total consumption. Nevertheless, one can assume to be %. This can be attributed to that fact that the regional meat industry is poorly developed. This paper reviews the nature of goat production function in Oman, and considers a number of gross revenues determinants. It is shown that there is diminishing return as herd size increased because increasing labor and fodder by 10% result in increasing gross revenues by 3.9% and 5.8% respectively. The results of the analysis lead to the conclusion that availability of fodder and labors are highly significant effect on the goat gross revenues. The tabulated analysis as well as analysis of variance and regression result confirms this conclusion. These finding however, while important and straightforward to the basic assumption of higher revenue at present of labor and fodder, is very limited and does not indicate much information on specific reasons on location and prices. The future of livestock herding in Oman is uncertain. There is a demand for meats which is constantly rising, but farmers with animal keeping are yet to develop a strategy for breeding, fattening and selling

12 to meet this demand. It is by no means certain that such a development is possible given the limitation imposed by poor vegetation cover. Livestock numbers however may be also related to the amount of animal foodstuffs now available in the market. Greater supplies of animal products for the market are only possible in many developing countries by expanding stocks. Local constraints profoundly influence the production efficiency per animal. Unfavorable local economics developments lead to low external inputs and limited production intensity. In future, a growth in the output of animal products will have to be achieved mainly through individual productivity improvement. References [1] Anon. (1978). Livestock sector Review and project Identification. Final Report, Vol. 1. Oman, Ministry of Agricultural and Fisheries. by Hunting Technical services Ltd. [2] Armbruster, T and Peter, (1993). Traditional Sheep and Goat production system in southern Cote d Ivoire. Small Ruminant Research, 11, [3] Conel M.A. (1993). A financial analysis of intensive goats production in Northern Oman. Ministry of agriculture and fisheries and University of Durham, UK. [4] Ellis F. (1993). Peasant Economics. Cambridge University Press, 2 nd ed. [5] Japan International cooperation Agency (JICA), (1990). The Study on a master plan for agricultural development. Sultanate of Oman. Final Report, Vol

13 [6] Kurt J. Peter (1999). Livestock production and food security. Agricultural and Rural Development. Vol. 6 No., CTA. [7] Mahgoub, O (1997). Meat production from the Omani Dhfari Goat. Int. J. Anim. Sc. 12: [8] Mahgoub, O and G, A. Lodge. (1994). Growth and body composition of Omani local sheep. British Society of Animal production. 58: [9] Ministry of Agriculture and Fisheries. (1993). Agricultural Census, Sultanate of Oman. [10] Ministry of National Economy. (1996). Statistics YearBook, Sultanate of Oman. [11] SAS statistical Institute, Cary: United states. [12] Tomek W, and K. Robinson. (1990). Agricultural Product Prices. Third edition. Cornell University Press. United States. [13] Upton M. (1976). Agricultural production economics and resource use. [14] Upton, M. (1986). Model of improved production system for small ruminants. Study No. 6. Dept. of Agricultural Economics. University of Reading