Saudi Arabia End-Market Requirements and the Implications for Somaliland Livestock Exports I
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View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by CGSpace ISBN 92–9146–478–3 ILRI RESEARCH REPORT Saudi Arabia end-market RESEARCH requirements and the PROGRAM ON The International Livestock Research Institute (ILRI) works to improve food security and reduce Policies, poverty in developing countries through research for better and more sustainable use of livestock. Institutions ILRI is a CGIAR research centre. It works through a network of regional and country offices and implications for Somaliland projects in East, South and Southeast Asia, Central, East, Southern and West Africa, and Markets and in Central America. ilri.org livestock exports CGIAR is a global agricultural research partnership for a food-secure future. Its research is carried out by 15 research centres in collaboration with hundreds of partner organizations. cgiar.org 40 Saudi Arabia end-market requirements and the implications for Somaliland livestock exports i Saudi Arabia end-market requirements and the implications for Somaliland livestock exports Godiah L. Mugunieri1, Nadhem Mtimet2, Kiptoo Enock3, Riccardo Costagli1 and Ibrahim Gulaid1 1 Terra Nuova 2 International Livestock Research Institute 3 IGAD Sheikh Technical Veterinary School June 2016 © 2016 International Livestock Research Institute (ILRI) ILRI thanks all donors and organizations which globally supports its work through their contributions to the CGIAR system This publication is copyrighted by the International Livestock Research Institute (ILRI). It is licensed for use under the Creative Commons Attribution 4.0 International Licence. To view this licence, visit https://creativecommons.org/ licenses/by/4.0. 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Cover photo—Terra Nuova/Ibrahim Gulaid ISBN 92–9146–490-2 Citation: Mugunieri, G.L., Mtimet, N., Enock, K., Costagli, R. and Gulaid, I. 2016. Saudi Arabia end-market requirements and the implications for Somaliland livestock exports. ILRI Research Report 40. Nairobi, Kenya: International Livestock Research Institute (ILRI). Patron: Professor Peter C Doherty AC, FAA, FRS Animal scientist, Nobel Prize Laureate for Physiology or Medicine–1996 Box 30709, Nairobi 00100 Kenya ilri.org Box 5689, Addis Ababa, Ethiopia Phone +254 20 422 3000 better lives through livestock Phone +251 11 617 2000 Fax+254 20 422 3001 Fax +251 11 667 6923 Email [email protected] ILRI is a CGIAR research centre Email [email protected] ILRI has offices in East Africa • South Asia • Southeast and East Asia • Southern Africa • West Africa Saudi Arabia end-market requirements and the implications for Somaliland livestock exports iii Contents Tables iv Figures v Acronyms vi Acknowledgements vii Summary viii 1. Introduction 1 1.1 Justification and objectives 1 1.2 Methodology 1 2. The Saudi livestock and meat market 5 2.1 Key features of the Saudi economy 5 2.2 Production and consumption trends of livestock and meat in Saudi Arabia 6 2.3 Competition in the Saudi livestock import market 8 3. Value chains, grading and pricing system in the Saudi end-market 11 3.1 Commercial livestock value chain 13 3.2 The sacrificial animal value chain 19 4 Gross margin analysis 25 5. Conclusions 28 References 31 iv Saudi Arabia end-market requirements and the implications for Somaliland livestock exports Tables Table 1. GDP per capita in Saudi Arabia and neighbouring countries (USD, 1970–2012) 5 Table 2. Trends in livestock population in Saudi Arabia 6 Table 3. Trends in slaughter stock imports into Saudi Arabia 6 Table 4. Livestock imports into Saudi Arabia by species and origin 8 Table 5. Average prices for sheep in peak demand season (a few days before the Muslim holiday of Eid, Riyadh municipality markets—2012) 9 Table 6. Saudi Arabia livestock imports from Somaliland—2014 12 Table 7. Purpose of import certificates into Saudi Arabia 13 Table 8. Grading and pricing of export quality sheep and goats in Somaliland 17 Table 9. Saudi Arabia grading and pricing of sheep and goats originating from Somaliland 17 Table 10. Commercial prices at the Hajj—2014 17 Table 11. Grading of camels for export in Somaliland 18 Table 12. Saudi Arabia grading of camels originating from Somaliland 18 Table 13. Trends in Hajj pilgrims to Saudi Arabia 19 Table 14. Indicative gross margins from small ruminants in commercial value chain—Off peak season (February 2014) 26 Table 15. Indicative gross margins from small ruminants for commercial value chain—Peak season (October 2014) 26 Table 16. Indicative gross-margins from small ruminants—Sacrificial animal value chain 26 Table 17. Indicative gross-margins in commercial value chain for camels 27 Saudi Arabia end-market requirements and the implications for Somaliland livestock exports v Figures Figure 1. Map of Saudi Arabia 2 Figure 2. Current activities, arrangements and requirements along the Berbera livestock marketing chain (2015) 4 Figure 3. Trends in livestock imports into Saudi Arabia 7 Figure 4. Trends in imported meats into Saudi Arabia (Mt) 7 Figure 5. Trends in sheep and goats exports to the Middle and Far East 10 Figure 6. Commercial retail-market holding yards for Somaliland sheep and goats, Jeddah—February 2014 15 Figure 7. Commercial wholesale–market holding grounds—30 km from Jeddah city—February 2014 15 Figure 8. Fattening grounds—60 km from Jeddah (lean and peak seasons) 15 Figure 9. Schematic presentation of the commercial value chain and market network in Saudi Arabia 16 Figure 10. Timeline of sacrificial animals export from Somaliland in 2014 20 Figure 11. Hajj destination—catchment area for sacrificial livestock 21 Figure 12. Distribution of meat by the ISDB to the eligible recipients 22 vi Saudi Arabia end-market requirements and the implications for Somaliland livestock exports Acronyms CDSI Central Department of Statistics and Information GDP Gross domestic product ESCAS Exporter Supply Chain Assurance Scheme ISDB Islamic Development Bank Saudi Arabia end-market requirements and the implications for Somaliland livestock exports vii Acknowledgements This report is a product of a collaborative effort between the International Livestock Research Institute (ILRI), Terra Nuova (TN) and the IGAD Sheikh Technical Veterinary School (ISTVS). The effort of various Somaliland livestock exporters and their Saudi partners in providing information that facilitated realization of this assessment is appreciated. The authors would also like to express a special thanks to the companies and traders which facilitated their visit to Saudi Arabia and helped with the organization of ground logistics. The authors acknowledge Moez Ayadi (College of Food and Agriculture Sciences, King Saud University—Saudi Arabia) and Derek Baker (University of New England—Australia) for reviewing the initial version of the report and providing interesting comments and suggestions which improved its quality. We acknowledge and are grateful to the Danish International Development Agency (DANIDA) for funding this study, and the CGIAR Research Program on Policies, Institutions and Markets (PIM) for providing additional funds to complete the paper. Disclaimer The contents of this report are the sole responsibility of Terra Nuova and ILRI, and can under no circumstances be regarded as reflecting the position of the Danish government. viii Saudi Arabia end-market requirements and the implications for Somaliland livestock exports Summary 1. Introduction Livestock is the backbone of the Somaliland economy. It accounts for about 60% of the country’s gross domestic product, 70% of employment opportunities and 85% of export earnings. The livestock sector is export oriented; in 2014, a total 1.1 Justification and objectives of 3.4 million heads of livestock were exported, of which 3.1 million were sheep and goats, 0.25 million cattle and 60,000 Livestock is the main economic activity in Somaliland. Livestock production accounts for between 60–65% of the country’s camels. Direct taxes on these exports contributed about 15% of total government revenue. gross domestic product (GDP), employs over 70% of the population and contributes 85% of export earnings (MoNPD There exists a distinct indigenous grading system for export quality livestock traded in Somaliland markets. Export quality 2012). In 2014, a total of 3.4 million heads of livestock were exported, of which 3.1 million were sheep and goats, 0.25 cattle, sheep and goats are graded in three groups, viz. grades I, II and III while camels are categorized into two grades: million cattle and 60,000 camels (SLCCIA 2015). Assuming an average export price of USD78 for sheep and goats, USD596 I and II. Animals thus categorized