Incidence of Antibiotic Resistance in Lactic Acid Bacteria Isolated from Various Fermented Foods

Incidence of Antibiotic Resistance in Lactic Acid Bacteria Isolated From Various Fermented Foods

By Rania Mohamed Saeed B.Sc (agric) honour

Faculty of Agriculture - University of Khartoum November 2004

A Dissertation Submitted to the University of Khartoum in partial fulfillment of the requirement of the degree of M.Sc. in Food Science and Technology

Supervisor Dr. Nuha Mohammed Elkhatim Yousif

Dept. of Food Science and Technology Faculty of Agriculture - University of Khartoum December - 2007

DEDICATION

TO MY FAMILY...

WITH LOVE

ii Acknowledgment

I would like to express my deepest thanks to my supervisor Dr. Nuha Mohammed Elkhatim for her close supervision, supporting, advising and encouraging me throughout this study, and thanks for her personal guidance and fruitful criticism from which I benefit much. My thanks are also to all staff of the Department of Plant and Agric. Biotechnology and the Department of Food Science and Technology, Faculty of Agriculture, University of Khartoum. My deep gratitude goes to all staff of the Central Laboratory-Shambat Campus for unlimited help and friendly attitude during the practical work. I am pleased to express my appreciation to Mr. Abed Elazeez Mustafa, Mr. Mohammed Osman, my Friends and to my colleagues Hunda and Sara for their unlimited and continuous help. Thanks are first and last to Allah who enabled me to conduct this study by the grace of Him who gave me strength and patience.

iii Abstract

In this study, 25 isolates of lactic acid bacteria (LAB) were isolated from different types of fermented foods consumed in Sudan. Phenotypic tests revealed that, all isolates were homofermentative LAB. Among these, 40% were identified as lactobacilli, 44% as enterococci, and 16% of them were identified as pediococci. Standard disk diffusion method was used to determine the resistances of these isolates to 8 different antibiotics ; amoxicillin, ceftriaxone, ciprofloxacin, chloramphenicol, erythromycin, tetracycline, tobramycin, and vancomycin. All isolates showed multiple resistances to the antibiotics used, specifically, tobramycin, ceftriaxone and ciprofloxacin. 50% of Lactobacillus isolates and 27% of Enterococcus isolates were resistant to vancomycin, whereas all Pediococcus isolates were resistant to vancomycin. 36% of Enterococcus isolates were resistant to amoxicillin and erythromycin, whereas, Lactobacillus and Pediococcus isolates were susceptible amoxicillin and erythromycin. All isolates were susceptible to chloramphenicol and tetracycline.

iv ﻣﻠﺨﺺ اﻷﻃﺮوﺣﺔ

ﺧﻼل هﺬﻩ اﻟﺪراﺳﺔ ﺗﻢ اﻟﺤﺼﻮل ﻋﻠﻰ 25 ﻋﺰل ﻣﻦ ﺑﻜﺘﻴﺮﻳﺎ ﺣﻤﺾ اﻟﻼآﺘﻴﻚ ﻣﻦ أﻧﻮاع ﻣﺨﺘﻠﻔﺔ ﻣﻦ اﻷﻏﺬﻳﺔ اﻟﻤﺨﻤﺮة اﻟﻤﺴﺘﻬﻠﻜﺔ ﻓﻲ اﻟﺴﻮدان . أآﺪت اﻻﺧﺘﺒﺎرات اﻟﻤﻈﻬﺮﻳﺔ أن ﺟﻤﻴﻊ اﻟﻌﺰﻻت ﻋﺒﺎرة ﻋﻦ ﺑﻜﺘﻴﺮﻳﺎ ﺣﻤﺾ اﻟﻼآﺘﻴﻚ ﻣﺘﺠﺎﻧﺴﺔ اﻟﺘﺨﻤﻴﺮ، و ﻣﻨﻬﺎ ﺗﻢ اﻟﺘﻌﺮف ﻋﻠﻰ ﺛﻼث ﻣﺠﻤﻮﻋﺎت أﺳﺎﺳﻴﺔ و هﻲ : pediococci . و(lactobacilli%44) ، enterococci ((%16(%40) ﺗﻢ اﺳﺘﺨﺪام ﻃﺮﻳﻘﺔ ﻧﺸﺮ اﻷﻗﺮاص اﻟﻘﻴﺎﺳﻴﺔ ﻟﺘﺤﺪﻳﺪ ﻣﻘﺎوﻣﺔ هﺬﻩ اﻟﻌﺰﻻت ﻟﻠﻤﻀﺎدات اﻟﺤﻴﻮﻳﺔ اﻟﺘﺎﻟﻴﺔ : أﻣﻮآﺴﻴﺴﻠﻴﻦ، ﺳﻔﺘﺮﻳﺎآﺴﻮن، آﻠﻮراﻣﻔﻴﻨﻜﻮل، ﺳﻴﺒﺮوﻓﻠﻜﺴﺎﺳﻴﻦ، إرﻳﺜﺮوﻣﻴﺴﻴﻦ، ﺗﻴﺘﺮاﺳﻴﻜﻠﻴﻦ، ﺗﺒﺮاﻣﻴﺴﻴﻦ وﭬﺎﻧﻜﻮﻣﻴﺴﻴﻦ. وﺟﺪ أن ﺟﻤﻴﻊ ﻋﺰﻻت ﺑﻜﺘﻴﺮﻳﺎ ﺣﻤﺾ اﻟﻼآﺘﻴﻚ ﻣﻘﺎوﻣﺔ ﻟﻠﺴﻔﺘﺮﻳﺎآﺴﻮن ، ﺳﻴﺒﺮوﻓﻠﻮآﺴﺎﺳﻴﻦ و واﻟﺘﺒﺮاﻣﻴﺴﻴﻦ. آﺎﻧﺖ ﻣﻘﺎوﻣﺔ Lactobacillus و 27% ﻣﻦ ﻋﺰﻻت 50Enterococcus % ﻣﻦ ﻋﺰﻻت ﻣﻘﺎوﻣﺔ ﻟﻠﭭﺎﻧﻜﻮﻣﻴﺴﻴﻦ .Pediococcusﻟﻠﭭﺎﻧﻜﻮﻣﻴﺴﻴﻦ ، ﺑﻴﻨﻤﺎ آﺎﻧﺖ ﺟﻤﻴﻊ ﻋﺰﻻت آﺎﻧﺖ ﻣﻘﺎوﻣﺔ ﻟﻸﻣﻮآﺴﻴﺴﻴﻠﻴﻦ و 36 % أﺧﺮى ﻣﻨﻬﺎ آﺎﻧﺖ 36Enterococcus% ﻣﻦ ﻋﺰﻻت ﺣﺴﺎﺳﺔ Pediococcus و Lactobacillusﻣﻘﺎوﻣﺔ ﻟﻺرﻳﺜﺮوﻣﻴﺴﻴﻦ ، ﺑﻴﻨﻤﺎ آﺎﻧﺖ ﻋﺰﻻت ﻟﻸﻣﻮآﺴﻴﺴﻠﻴﻦ و اﻹرﻳﺜﺮوﻣﻴﺴﻴﻦ . ﺟﻤﻴﻊ ﻋﺰﻻت ﺑﻜﺘﺮﻳﺎ ﺣﻤﺾ اﻟﻼآﺘﻴﻚ آﺎﻧﺖ ﺣﺴﺎﺳﺔ ﻟﻠﻜﻠﻮراﻣﻔﻴﻨﻜﻮل و اﻟﺘﻴﺘﺮاﺳﻴﻜﻠﻴﻦ.

v Table of Contents

page Dedication ……………………………………………………… i Acknowledgement ……………………………………………. ii Abstract ……………………………………………………….. iii Arabic abstract………………………………………………… iv Table of contents ……………………………………………… v List of tables …………………………………………………... vii List of figures …………………………………………………. viii

Chapter 1: Introduction…………………………………………. 1.1. Introduction ………………………………………… 1

Chapter 2: Literature Review…………………………………... 2.1. Food fermentation …………………………………………. 4 2.1.1. Lactic acid fermentation …………………………………. 5 2.1.2. Types of fermented foods ……………………………….. 6 2.1.2.1. Fermented milk products………………………………… 6 2.1.2.2. Fermented meat products ……………………………….. 6 2.1.2.3. Fermented vegetable products ………………………… 7 2.1.2.4. Cereal -based (European breads) …………… 7 2.1.2.5. African fermented cereal-based foods…………………… 8 2.2. Lactic acid bacteria 10 2.3. Antibiotic gents……………………………………………… 12 2.3.1. Mechanism of action of antibiotics. 13 2.3.2. Types of antibiotics……………………………………….. 14 2.4. Antibiotic resistance……………………………………….. 18 2.4.1. Types of bacterial resistance ……………………………. 18 2.4.1.1. Intrinsic resistance…………………………………….. 18 2.4.1.2. Acquired resistance …………………………………… 18 2.4.2. Transmission of resistance gene………………………… 19 2.4.3. Mechanisms of resistance ……………………………… 20 2.5. Antibiotic resistance of LAB 21

Chapter 3: Materials and Methods …………………………….. 3.1. Microbiological sampling and isolation …………………… 24

vi 3.2. Phenotypic characterizations………………………………. 25 3.2.1. Cell morphology ………………………………………… 25 3.2.2. Catalase activity…………………………………………. 25 3.2.3. Gram reaction …………………………………………… 25 3.2.4. Endospore stain …………………………………………. 26 3.2.5. Growth in different temperatures ………………………… 26 3.2.6. Growth in NaCl concentrations…………………………... 26 3.2.7. Growth at pH 9.6 …………………………………………. 27 3.2.8. Production of acid and/or gas (CO2) from glucose ……….. 27 3.3. Antibiotic susceptibility testing ……………………………. 27

Chapter 4: Results and Discussion………...... 4.1. Phenotypic characterization of LAB isolates………………... 30 4.2. Antibiotic susceptibility testing……………………………. 33 4.2.1. Antibiotic resistance of Lactobacillus sp…………………. 36 4.2.2. Antibiotic resistance of Enterococcus sp………………. 36 4.2.3. Antibiotic resistance of Pediococcus sp……………... 41

Chapter 5: Conclusions and recommendations………………... 5.1. Conclusions...... 44 5.2. Recomendations...... 45

REFERENCES...... 46

APPENDIX...... 63

vii List of Tables Table 1 Antibiotic discs used, their abbreviation, concentration 29 and action

Table 2 Characteristics Used To Differentiate Isolated LAB 31

Table 3 The genera of LAB isolated from different sources 34

35 Table 4 Antibiotic Resistance of LAB Isolated From Different Fermented Foods

viii List of Figures Figure 1 Reaction of Lactobacillus to Different Antibiotics 37

Figure 2 Inhibition Zone of Lactobacillus Isolates Towards the Different 38

Antibiotics Tested

Figure 3 Reaction of Enterococcus to Different Antibiotics 39

Figure 4 Inhibition Zone of Enterococcus Isolates Towards the Different 40 Antibiotics Tested

Figure 5 Reaction of Pediococcus to Different Antibiotics 42

Figure 6 Inhibition Zone of Pediococcus Isolates Towards the Different 43 Antibiotics Tested

CHAPTER 1: INTRODUCTION

1.1. Introduction

Lactic acid bacteria (LAB) are constituted of a heterogeneous group of Gram-positive bacteria united by a constellation of morphological, metabolic and physiological characteristics (Axelsson, 1998). Lactococcus, Leuconostoc, Pediococcus, Enterococcus, Lactobacillus and Streptococcus are example of bacterial genera that are members of the LAB group (Adams & Moss, 2000). They can be found in different nutrient rich habitats like mucosal membranes of humans and animals, on plants and in many food and feed systems (Holzapfel et al., 2001). LAB have strictly fermentative metabolism from which lactic acid is the main metabolite during the fermentation of carbohydrates (Axelsson, 1998; Holzapfel et al., 2001). The fermentation pattern of LAB can be described as homo- or heterofermentative depending on how they ferment carbohydrates under non-limited conditions. Homofermentative LAB use the glycolysis pathway with lactic acid as the main product. Heterofermentative LAB use the 6P-gluconate pathway or phosphoketolase pathway and the main end products are equal amounts of lactic acid, carbon dioxide and ethanol (Adams & Moss, 2000). LAB have a long and safe history of use in the production and consumption of fermented foods and beverages (Wood and Holzapfel, 1995; Caplice and Fitzgerald, 1999; Leroy and Vuyst, 2004). Therefore, lactic acid bacteria are widely used as probiotics or in starter cultures in food fermentation

process (Schleifer and Ludwig, 1995). Lactic acid fermentation as a means of food preservation is probably one of the oldest ‘biotechnological processes’ rooted in the cultural history of mankind (Geisen and Holzapfel, 1996).

About 50 years ago, antibiotics were introduced for the treatment of microbial diseases. Since then, the greatest threat to the use of antibiotics for therapy of bacterial infections has been the development of antibiotic resistance in pathogenic bacteria that consequently cannot be treated by previously successful regimens. Extensive recent reviews of the application of antibiotics in human and veterinary medicine (Levy, 1997; WHO, 1997), agriculture (Natural Research Council and Institute of Medicine US, 1998; Falkiner, 1998) and aquaculture (Reilly and Kaferstein, 1997) have documented the evolution and enrichment of antibiotic resistant bacteria. Antibiotic resistance has been shown to have occurred rarely in bacteria collected before the antibiotic era (Hughes and Datta, 1983). Shortly after the introduction of each new antibiotic compound, emergence of antimicrobial resistance is observed (Levy, 1997). The magnitude of the problem is significantly increased by the possibility of bacteria to transfer resistance determinants horizontally and by the mounting increase in the use (over-use and misuse) of antibiotics, which has created an enormous selective pressure towards resistant bacteria (Levy, 1992). Gene transfer occurs widely in vivo between gastrointestinal tract bacteria, and pathogenic bacteria, as identical resistance genes are present in diverse bacterial species from different hosts (Scott 2002). In fact we face the frightening probability that most

pathogenic bacteria that threaten human health will soon be resistant to all known antibiotics (Scott 2002).

Like other bacteria LAB can be antibiotic resistant and this might be a problem. LAB themselves are not pathogenic but they can transfer antibiotic resistance genes to pathogenic bacteria that infect humans or animals (Teuber et al., 1999; Herreros et al., 2005; Franz et al., 2005 ). The food chain can be considered as the main route of transmission of antibiotic resistant bacteria between the animal and human population (Witte, 1997). More specifically, fermented dairy products and fermented meats and vegetables that are not heat-treated before consumption provide a vehicle for antibiotic resistant bacteria with a direct link between the animal indigenous microflora and the human gastrointestinal tract. Although we face a major problem in Sudan with misuse and abuse of antibiotics, not much research has been done on the antibiotic resistance of LAB associated with foods consumed in Sudan. So the objective of this study was investigating the possible presence of antibiotics resistant LAB isolated from Sudanese food and to study antibiotic resistances of the different species among the LAB isolated from Sudanese foods.

CHAPTER 2: LITERATURE REVIEW

2.1. Food Fermentations

Fermentation has been used as a means of improving the keeping quality of food for more than 6000 years (Holzapfel, 1997). Fermented foods are food substrates that are invaded or overgrown by edible microorganisms (bacteria, yeast and molds) whose enzymes, particularly amylases, proteases, and lipases hydrolyze the polysaccharides, proteins and lipids to nontoxic products that have acceptable qualities of food with flavors, aromas and textures pleasant and attractive to the human consumer (Ray and Daeschel 1992; Steinkraus 1995, 1996a, 1997). If the products of enzyme activities have unpleasant odors or undesirable, unattractive flavors or the products are toxic or disease producing, the foods are described as spoilt (Steinkraus 1995, 1996a, 1997). Fermentation plays at least five roles in food processing (Steinkraus, 1983b): (1) Enrichment of the human diet through development of a wide diversity of flavors, aromas and textures in food. (2) Preservation of substantial amounts of food through lactic acid, alcoholic, acetic acid, alkaline fermentations and high salt fermentations. (3) Enrichment of food substrates biologically with vitamins, protein, essential amino acids and essential fatty acids. (4) Detoxification during food fermentation processing.

(5) A decrease in cooking times and fuel requirement. Food can be fermented in three different ways, based on the sources of microorganisms; namely, natural fermentation, back slopping, and controlled fermentation. Natural fermentation typically results from the competitive activities of microorganisms, where strains are best adopted to the substrate and with the highest growth rate and produce metabolic by-products which give the food unique characteristics of the food. Back-slopping fermentation involves the use of residue (‘starter dough’) from a pervious batch of acceptable quality for inoculation. In a controlled fermentation, the fermentative microorganisms, called starter cultures, which are described as a preparation containing high numbers of viable microorganisms, may be added to foods to start fermentation (Holzapfel, 1997).

2.1.1. Lactic acid fermentations Lactic acid fermentation is a common means of preservation in tropical countries (Cooke, et al., 1987). It includes those in which the fermentable sugars are converted to lactic acid by lactic acid bacteria such as Leuconostoc mesenteroides, Lactobacillus brevis, L. plantarum, Pediocccus cerevisiae, Streptococcus thermophilus, Streptococcus lactis, L. bulgaricus, L. acidophilus, L. citrovorum, Bifidobacterium bifidus, and so on. LAB have been used traditionally for the fermentation of foods and beverages because of their contribution to flavor and aroma development and to spoilage retardation. The preservative effect of LAB during manufacture and subsequent storage of fermented foods is mainly

due to the acidic conditions that they create, converting carbohydrates to organic acids in the food during their development (Ray and Daeschel 1992).

2.1.2. Types of fermented foods The types of fermented foods associated with LAB are classified as follows: 2.1.2.1. Fermented milk products The most ancient lactic fermentation, likely, is fermented/sour milk. Raw, unpasteurized milk will rapidly sour because the LAB present in the milk ferment milk sugar, lactose, to lactic acid. In the presence of acid and a low pH, other microorganisms that might invade the milk and transmit disease-producing organisms are less able to do so. If the whey is allowed to escape or evaporate, the residual curd becomes a primitive cheese (Wood, 1998). In hard cheeses, lactococci are used as inoculum, but adventitious lactobacilli such as L. casei play an important role in ripening process (Stiles, 1996).

2.1.2.2. Fermented meat products Fermentation is a traditional method for preserving meat (Rebecchi et al., 1998). Sausages are produced either by adding starter cultures containing a mixture of LAB, Micrococcaceae and Streptomycetes (modern sausage), or produced without the addition of starter cultures (Italian fermented sausages) (Hammes, et al., 1990; Buckenhueskes, 1993), where the environmental conditions promote the growth of a specific microbial flora (Grazia et al., 1986; Hammes et al., 1990; Grazia, 1992).

LAB used in meat fermentation include; lactobacilli such as L. sakei, L. plantarum, L. curvatus, L. farciminis, and pediococci such as P. acidilactici and P. pentosaceus (Grazia et al., 1986; Cantoni et al., 1989).

2.1.2.3. Fermented vegetable products Vegetable foods are preserved around the world by lactic acid fermentation (Steinkraus, 1983a; 1996). The classic lactic acid/vegetable fermentation is sauerkraut (Pederson and Albury, 1969; Pederson, 1979). There is a sequence of lactic acid bacteria that develop. First, Leuconostoc mesenteroides grows producing lactic acid, acetic acid and

CO2 which flushes out any residual oxygen making the fermentation anaerobic. Then Lactobacillus brevis grows producing more acid. Finally Lactobacillus plantarum grows producing still more lactic acid and lowering the pH to below 4.0. At this pH and under anaerobic conditions, the cabbage or other vegetables will be preserved for long periods of time. Pickled vegetables, cucumbers, radishes, carrots and very nearly all vegetables and even some green fruits such as olives, papaya and mango are acid fermented in the presence of salt around the world (Steinkraus, 1983a; 1996).

2.1.2.4. Cereal-based (European breads) The benefits of lactic acid fermentation are apparent in making rye bread (Seibel and Bruemmer, 1991; Roecken and Voisey, 1995), and wheat sourdoughs which are utilized in the production of crackers (Barber et al., 1989; Spicher and Stephan, 1993; Gobbetti et al., 1995). Acidification by lactic fermentation improves bread-making properties of

rye by suppression of the high endogenous activity of α-amylase and other enzymes, and also increase resistance to microbiological spoilage (Roecken and Voisey, 1995; Rosenquist, 1996). LAB which play a major role in bread making are the facultatively heterofermentative L. casei (Spicher, 1984; Kazanskaya et al., 1983), L. plantarum (Damiani et al, 1996) and L.rhamnosus (Spicher and Lönner, 1985). Obligately heterofermentative Lactobacilli are detected in sourdough; L. brevis, L. pontis, L. sanfrncisco, and L. fermentum (Spicher, 1984; Spicher and Lönner, 1985) are strains which predominate in this product.

2.1.2.5. African Fermented Cereal-Based Foods Considerable parts of cereal-based food made by lactic acid fermentation are products other than sour bread, and include beverages; gruels, and porridges, dumplings used in stews, and fried products. Such meals are stable foods, especially in Africa (Hesseltine, 1979; Campell-Platt, 1987).

2.1.2.5.1. Acid-leavened bread and pancakes Kisra is Sudanese indigenous food made from fermented sorghum or millet flour. The two major forms of Kisra are thin baked sheets, or a stiff porridge/dumpling called ‘aceda’ (Dirar, 1993). The predominant microorganisms are Lactobacillus spp., Acetobacter spp., and S. cerevisiae (Abdel Gadir and Mohammed, 1977). Injera is a fermented sour leavened pancake consumed as staple food in Ethiopia. It is made from tef, corn, barley, millet, sorghum, or wheat (Vogel et al., 1977). The predominant microflora at the latter stages of

injera fermentation are P. pentosaceus, L. bervis and L. plantarum (Gashe, 1988).

2.1.2.5.2. Acid-fermented gruels and beverages Sudanese hussuwa, Nigerian ogi, Kenyan uji, and Ghanaian kenkey are examples of the porridge prepared by the acid fermentation of maize, sorghum, millet, or cassava, followed by wet-milling, wet-sieving and boiling. Hussuwa is a sorghum-based fermented product that is consumed mainly in Northern Sudan. Heterofermentative Lactobacillus spp. make up the numerically dominate lactic acid bacteria, followed by Pediocccus spp. The enterococci made up a minor but significant proportion of hussuwa microflora (Yousif 2003). Ogi is prepared from maize, sorghum, or millet, the fermentation takes place without the intentional addition of any inoculum or starter culture (Banigo and Muller, 1972). L. plantarum is the predominant organism during fermentation, and responsible of lactic acid production (Banigo and Muller, 1972). Uji is a suspension of maize, millet, sorghum, or cassava flour in water. It is either fermented before or after cooking, or is cooked fresh to make a creamy soup (Mbugua, 1977). The predominant organism isolated in fermenting uji is L. plantarum; other isolates included L. cellobiosus, P. acidilactici, P. pentosaceus, and L. fermentum (Mbugua, 1981). Kenkey is fermented maize dough, which is consumed in Ghana (Steinkraus, 1993a). The main LAB present in the fermenting kenkey

doughs were identified as L. Plantarum, Weissella confusus, L. bervis, and P. pentosaceus (Nche et al., 1994).

2.2. Lactic acid bacteria

Lactic acid bacteria (LAB) are a distinct group of bacteria that share the same properties: Gram positive, non-sporulating rods or cocci, catalase negative, acid tolerant, fermentative (lactic acid is the main metabolite) and prefer growing under anaerobic conditions but are aero-tolerant (Wessels et al., 2004). LAB consist of a number of bacterial genera within the phylum Firmicutes. The genera Carnobacterium, Enterococcus, Lactobacillus, Lactococcus, Lactosphaera, Leuconostoc, Melissococcus, Oenococcus, Pediococcus, Streptococcus, Tetragenococcus, Vagococcus and Weissella are recognized as LAB (Ercolini et al., 2001; Jay, 2000; Holzapfel et al., 2001; Stiles and Holzapfel, 1997). Lactic acid-producing Gram-positive bacteria but belonging to the phylum Actinobacteria are genera such as Aerococcus, Microbacterium, and Propionibacterium (Sneath and Holt, 2001) as well as Bifidobacterium (Gibson and Fuller, 2000; Holzapfel et al., 2001). The classification of LAB into these different genera and species is largely based on phenotypic characteristics such as cell morphology, mode of glucose fermentation, growth at different temperatures, and configuration of lactic acid produced, ability to grow at high salt concentrations, and acid or alkaline tolerance. Chemotaxonomic markers such as fatty acid composition and constituents of the cell wall may also be useful in classification

(Axelsson, 1998). Depending on the organism, metabolic pathways differ when glucose is the main carbon source: homofermentative bacteria such as Lactococcus and Streptococcus yield two lactates from one glucose molecule, whereas the heterofermentative (i.e. Leuconostoc and Weissella) transform a glucose molecule into lactate, ethanol and carbon dioxide (Caplice and Fitzgerald, 1999; Jay, 2000; Kuipers et al., 2000). The genera that belong to the phylum Actinobacteria are based on their relatively high mol% G+C content, which is more than 50% whereas the LAB have a mol% G+C value which is generally below 50% (Axelsson, 1998). On the other hand, growth at certain temperature is mainly used to distinguish between some of the cocci. The enterococci grow at 10 ° C and 45° C, lactococci and vagococci at 10 ° C, but not at 45° C .Salt tolerance (6.5%NaCl) may also used to distinguish between enterococci, lactococci/vagococci , and streptococci , although variable reaction can be found among streptococci(Mundt, 1986). Extreme salt tolerance (18%) is confined to the genus Tetragenococcus. Tolerance to acid and /or alkaline condition may be useful characteristic (Axelsson, 1998). LAB occur naturally in foods and fermented products such as meat, milk Products, vegetables, beverages and bakery products (Aukrust and Blom, 1992; Harris et al., 1992; Gobbetti and Corsetti, 1997; Caplice and Fitzgerald, 1999; Jay, 2000; Lonvaud-Funel, 2001; O’Sullivan et al., 2002; Liu, 2003), also have been detected in soil, water, manure and sewage (Holzapfel et al.2001). They exist in human (Carroll et al., 1979; Eideman and Szilagyi, 1979; Elliott et al., 1991; Boris et al., 1998; Ocaña et al., 1999; Schrezenmeir and de Vrese, 2001; Reid, 2001; Martín et al., 2003;) and in animal (Sandine et al., 1972; Fuller and Brooker, 1974; Gilliland et

al., 1975; Klijn et al., 1995; Fujisawa and Mitsuoka, 1996; Schrezenmeir and de Vrese, 2001). LAB have been used as flavoring and texturizing agent as well as a preservative in food for centuries and are now added as starters in food (Caplice and Fitzgerald, 1999). LAB, such as lactobacilli, L. lactis, and Streptococcus thermophilus, inhibit food spoilage and pathogenic bacteria and preserve the nutritive qualities of raw food material for an extended shelf life (O’Sullivan et al., 2002). The antimicrobial effect of LAB is mainly due to their lactic and organic acid production, causing the pH of the growth environment to decrease (Caplice and Fitzgerald, 1999; Kuipers et al., 2000). Low pH induces organic acids to become lipid soluble and diffuse through the cell membrane into the cytoplasm (Gottschalk, 1988). LAB also produces acetaldehyde, hydrogen peroxide, diacetyl, carbon dioxide, polysaccharides and bacteriocins (Caplice and Fitzgerald, 1999; De Vuyst and Degeest, 1999), some of which may act as antimicrobials.

2.3. Antibiotic Agents

An antibiotic is defined as antimicrobial substance produced by a living microorganism (Carter, 1986). Antibiotics are used to combat infection (chemotherapy) and the fundamental principle of chemotherapy is' selective toxicity '; selective toxicity means 'harmful to the parasite (by killing or injuring) without injuring the host' (Baker and Breach, 1980; Rosen and Barkin, 1992; Tintinalli et al., 1995). The first antibiotic , penicillin, was discovered accidentally from a mold culture 'Penicillium'

in 1928 by Alexander Fleming. After the discovery of penicillin an extensive search for antibiotics began. Today, over 100 different antibiotics are available to cure minor discomforts as well as life- threatening infections (Carter, 1986; Rosen and Barkin, 1992; Tintinalli et al., 1995).

2.3.1. Mechanism of Action of Antibiotics

Antibiotics may act on organisms in one of several ways. The bactericidal antibiotics usually act in one of four ways (Baker and Breach, 1980; Carter, 1986):

2.3.1.1. Inhibition of cell wall synthesis

The normal function of the microorganism's mucopeptidases is to lyse the inner part of the wall to allow the division of the growing bacteria. The antibiotic disrupts this mechanism, by binding cross-linking of the glycopeptides by transpeptidization, and causing complete weakening of the cell. Antibiotics which inhibit cell wall synthesis are penicillins, cephalosporins and vancomycin.

2.3.1.2. Inhibition of protein synthesis Antibiotics in this case bind to the smaller of the two ribosomal subunits (30s), resulting in miscoding of proteins and inhibition of peptide elongation. Examples of these antibiotics are: aminoglycosides, erythromycin and tetracycline.

2.3.1.3. Impairment of membrane function Antibiotics in this case damage the membrane of bacterial cell, resulting in loss of osmotic control, with leakage of bacterial components and disrupting multiplication of the microorganism. Polymyxins represent antibiotics which impair membrane function.

2.3.1.4. Inhibition of nucleic acid synthesis Some antibiotics inhibit DNA synthesis without affecting RNA synthesis. Other antibiotics inhibit RNA- polymerase enzyme, thus preventing the production of RNA. Antibiotics which inhibition nucleic acid syntheses are rifampicin and quinolones.

2.3.2. Types of Antibiotics

Although there are well over 100 antibiotics, the majority come from only a few types of drugs. These are the main classes of antibiotics (Baker and Breach, 1980; Carter, 1986):

Penicillins: (benzylpenicillin, ampicillin, amoxicillin …etc.)

Penicillins are derived from Penicillium mold, and are active against Gram-positive and Gram-negative organisms. Penicillins weaken the cell wall by binding to the cross-linkage enzyme between the layers of peptidoglycan and thus inactivating it. As a result of antibacterial action, the cell wall is progressively weakened and, the wall can no longer withstand the high internal pressure and the microorganism explodes. Penicillins are used to treat skin infections, dental infections, ear

infections, respiratory tract infections, urinary tract infections, and gonorrhea. Cephalosporins: (1st generation: cefalothin, cefazolin; 2nd generation: cefoxitin, cephalixin; 3rd generation: ceftriaxone, cefotaxime; 4th generation: cefepime) The original antibiotics in this group were derived from a Cephalosporium mold. These antibiotics possess a similar mode of action to the penicillins. The advantage of the cephalosporins over the non–β– lactamase stable penicillins is that the majority of the cephalosporin groups of antibiotics are unsusceptible to the action of β–lactamase in both Gram–positive and Gram–negative bacteria. Cephalosporins are used to treat pneumonia, strep throat, staph infections, tonsillitis, various types of skin infections, and gonorrhea. Aminoglycosides: (streptomycin, gentamicin and tobramycin)

All drugs in this group are antibiotics derived from Streptomyces species. These antibiotics are active against gram-negative bacteria and some gram-positive organisms. They inhibit protein synthesis firstly, then damage bacterial respiration, nucleic acid synthesis and, finally cause cell membrane disruption. Aminoglycosides are used to treat severe systemic infections.

Polypeptides: (Bacitracin, polymyxin & colistin)

Polypeptide antibiotics are derived from Bacillus species. They attack the cell membrane (polymyxin and colistin) and disrupt multiplication of the microorganisms, or prevent development of the cell wall (Bacitracin) and

cause cell death by the accumulation of uridine nucleotides. This type of antibiotics is active against Gram-negative bacteria and used to treat severe systemic infections.

Tetracyclines: (Tetracycline, doxycycline, oxytetracycline …etc.)

Antibiotics in this group are derived from streptomycetes. They are active against a wide range of Gram-positive and Gram-negative organisms, and inhibit protein synthesis by blocking the formation of peptide linkages between the amino acid of the protein. . Tetracyclines are used to treat disease such as upper respiratory tract infections, urinary tract infections, sexually transmitted diseases, and typhus.

Macrolides: (erythromycin, lincomycin & clindmycin) This group of antibiotics is derived from streptomycetes, and inhibits protein synthesis by interference with amino acids for ribosomal binding sites, or by interfering with translocation and prevention of protein synthesis. They are active against a number of Gram-positive and several Gram-negative organisms that are penicillin- resistant. Macrolide antibiotics are used to treat respiratory tract infections, gastrointestinal tract, and soft tissue infections.

Fluoroquinolones: (Ciprofloxacin, Levofloxacin, Ofloxacin…etc.) Fluoroquinolones are active against gram-positive and gram-negative organisms. Fluoroquinolones inhibit bacteria by interfering with their ability to make DNA. This activity makes it difficult for bacteria to

multiply. They are used to treat most common urinary tract infections, skin infections, and respiratory infections.

Sulphonamides: (Trimethoprim, sulphamethoxazole, sulphadiazine …etc.) Sulphonamides are active against Gram-positive and Gram-negative bacteria which synthesis folic by using Para aminobenzoic acid, and inhibit folic acid synthesis. Sulphonamides are used to treat urinary tract infections. Other antibiotics: Vancomycin: Vancomycin is glycopeptides antibiotic, it is derived from Streptomyces orientalis .It is active against Gram-positive and Gram-negative bacteria and acts by chemical interference on the cell wall. It is used to treat severe staphylococcal infection. Chloramphenicol: Chloramphenicol is derived from Streptomyces venezuelae. It is active against Gram-positive bacteria and acts by inhibiting protein synthesis. Chloramphenicol is used to treat typhoid and other Salmonella infections, and meningitis. Rifampicin: This antibiotic is derived from Streptomyces mediterranei. It acts by inhibiting the RNA-polymerase enzyme, thus preventing the production of RNA. It is active against gram-positive and gram-negative bacteria, and used to treat tuberculosis and leprosy.

2.4. Antibiotic Resistance

According to WHO the resistance to antibiotic is an ability of bacteria to survive the effect of inhibitory concentrations of antibiotics. When bacteria are exposed to the same antibiotic over and over, the bacteria can change and are no longer affected by the drug. Bacteria have a number of ways how they become antibiotic-resistant (Lochmann, 1994).

2.4.1. Types of bacterial resistances: 2.4.1.1. Intrinsic resistance: Resistance to a given antibiotic can be intrinsic to a bacterial species or genus (inherent or natural resistance) that results in an organism’s ability to thrive in the presence of an antimicrobial agent due to an inherent characteristic of the organism. Intrinsic resistance is not horizontally transferable, and poses no risk in non-pathogenic bacteria (Davies, 1997).

2.4.1.2. Acquired resistance: Acquired resistance to antimicrobial agents can arise either from mutations in the bacterial genome or through the acquisition of additional genes coding for a resistance mechanism (Davies, 1997). Antibiotic resistance genes may be vertically or horizontally spread in natural microbial communities. A vertical dissemination is mediated by the clonal spread of particular resistance strain (Davison, 1999). For horizontal spread the resistance genes can be transferred between bacteria in three different mechanism, by conjugation, transformation or transduction (Madigan et al., 2003). In fact, horizontal gene transfer is

essential for bacteria to survive and adapt to new environments (Kurland et al., 2003).

2.4.2. Transmission of resistance gene:

1- Conjugation is transfer of plasmids where cell-to-cell contact is required. A plasmid is a genetic element that replicates independently of the host chromosome and it normally carries non-essential genes but still is useful to bacteria. When the plasmid also carries genes for its own transfer it can transfer a copy from the host cell to a recipient cell, which in turn becomes a donor cell as it receives the plasmid. This type of plasmids can be spread very rapidly in bacterial populations and is responsible for a great deal of the spread of antibiotic resistant genes (Davies, 1994; Madigan et al., 2003). Plasmid -linked antibiotic resistance poses a hazard (Lindgren, 1999). 2- Transformation form of transfer involving the uptake and incorporation of free DNA fragments, by recipient cell, from extra-cellular medium (Davies, 1994; Maloy et al., 1994). Free DNA is released from dead bacterial cells. 3- Transduction is transfer of bacterial DNA carried from one bacterium to another by phage particle (transduction particle). This phenomenon is widespread but not all phage are able to transduce and not all bacteria are transducible (Davies, 1994; Maloy et al., 1994; Madigan et al., 2003). The relative contribution of these different mechanisms is unknown, but conjugation is thought to be the main mode of antibiotic resistance gene transfer (Salyers, 1995). One reason of thinking this is that many

antibiotic resistance genes have been found on mobile elements like plasmids and conjugative transponsons. A second reason is that conjugation allows DNA to move across genus and species lines, whereas transformation and transduction are usually restricted to within the same species (Noble et al., 1992; Arthur et al., 1993; Teuber et al., 1999; Danielsen and Wind, 2003; Mathur and Singh, 2005).

2.4.3. Mechanisms of resistance: Bacterial resistance may occur by several mechanisms (Cheesbrouch, 1984; Carter, 1986; Davies, 1997; Brouer et al., 2004): • By genetic mutation which changes the protein and other components of bacterial cells which antibiotics use as binding sites. • By bacteria producing enzymes that destroy or inactivate antibiotics. • By bacteria changing to other metabolic systems not affected by the antibiotics being used. • By bacteria altering the permeability of their cell membrane making it difficult for antibiotics to enter. A single antibiotic may not only select for resistance to that particular drug. It can also include resistance to other structurally related compounds of the same class; e.g. resistance to tetracycline, by tet (M) includes also resistance to oxyteteracycline and minocycline (Chopra 1994; Chopra and Roberts, 2001). When antibiotics of different classes share the same target site, and this target site is modified by the product of a resistance gene, cross-resistance between structurally unrelated antibiotics is observed (Roberts et al., 1999).

2.5. Antibiotic resistance of LAB

There have been very few systematic studies to investigate acquired antibiotic resistance in LAB from food. Most data exist on pathogenic enterococci, while the number of reports on lactococci, pediococci, and lactobacilli is limited (Mathur and Singh, 2005). Vancomycin resistant enterococci (VRE) have emerged in the last decade as a frequent cause of nosocomial infections. Of considerable concern is the possibility that VRE, selected and enriched by the use of avoparcin (with cross resistance to Vancomycin) as a growth promoter in animal husbandry, are spread via the food chain (Giraffe and Sisto, 1997; Wegener et al., 1997; Klein et al., 1998; Van Den Braak et al., 1998; Van Den Bogaard and Stobberingh 2000). Recently, Flóreze et al. (2005) have reported the prevalence of tetracycline resistance in Enterococcus isolates from the Spanish traditional cheese. The tetracycline resistance could be linked to the presence of tet (M) genes in enterococcal isolates. In study by Yousif, (2003) 50% Enterococcus strains isolated from hussuwa showed resistance to at least one antibiotic and some even to three antibiotics. Three strains were resistance to penicillin, ciprofloxacin and vancomycin. Numerous strains were resistant to erythromycin. Investigated strains of Lactococcus lactis were sensitive to ampicillin, 1st generation cephalosporin, chloramphenicol, erythromycin, gentamycin, imipenem, oxacillin, penicillin, sulphonamide, tetracycline,

trimethoprim/sulfomethoxazole, and vancomycin (De Fabrizio et al., 1994). Lactobacilli, pediococci and Leuconostoc spp. have been reported to have a high natural resistance to vancomycin, a property that is useful to separate them from other Gram-positive bacteria (Hamilton-Miller and Shah, 1998; Simpson et al., 1988). Some lactobacilli have a high natural resistance to ceftriaxone, ciprofloxacin, kanamycin, gentamycin, vancomycin (Danielsen and Wind, 2003; Herreros et al., 2005; Ocaňa et al., 2006), and sensitive to erythromycin, while sensitivity to tetracycline was variable and depending on the species (D̉Aimmo, et al., 2006; Flóreze, et al., 2005). Many strains of L. plantarum, L. casei, L. salivarius, L. leishmannii, and Lb. acidophilus carry intrinsic resistance towards vancomycin which is due to the presence of d-alanine: d-alanine ligase-related enzymes (Elisha and Courvalin, 1995). The resistance spectrum of Pediococcus was described recently by Kastner et al. (2006) and Hummel et al. (2006). The investigated Pediococcus spp. are susceptible to penicillin, amoxicillin and chloramphenicol. Resistances–some being most likely intrinsic–exist towards vancomycin, tobramycin, and tetracycline on some species of Pediococcus. Furthermore, Rojo-Bezares et al (2006) reported a slight resistance to erythromycin in P. acidilactici due to the presence of erm (B) gene. In a study by Aslim and Beyatli (2004) 34 S. thermophilus strains isolated from Turkish yoghurts were examined for their antibiotic resistance patterns and plasmid carriage. Most strains of S. thermophilus

were found to be resistant to gentamicin (79%) and penicillin G (64%) and susceptible to chloramphenicol (94%) and tetracycline (88%); however, no correlation was observed between the resistance to antibiotics and the occurrence of plasmids in some strains.

CHAPTER 3: MATERIALS AND METHODS

3.1. Microbiological sampling and isolation

Six different fermented foods were collected from local markets and homes. The samples represented different types of fermented foods consumed in Sudan which were:- Cereal-based: sorghum dough prepared in home; dairy products: mish, yoghurt (both were home made), cheese; vegetables: pickles, which was home made from cucumber and radish; meat: sausage (not fermented food but example for meat bas) which was obtained from market. Presumptive LAB was isolated from each of the food samples. Ten grams were separately blended with 90ml sterile peptone water and homogenized for 30 seconds in Lab- Blender . The samples were further diluted serially (10− 1 to 10− 10) and 0.1ml of suitable dilutions was spread evenly on selective media for LAB, MRS (de Man, Rogosa and Sharpe 1960) agar plates. The plates were incubated for 3 days at 37 °C under aerobic conditions. Bacterial colonies that developed on the plates were individually picked from the agar plates of the highest dilutions (10-6 and 10-7) which still showed growth, to obtain predominant strains associated with the fermentation. After picking, the isolates were streaked on fresh MRS agar plates by dilution-streaking to obtain single colonies. This procedure was repeated in order to purify the isolates, which were maintained on MRS agar slants for immediate use and stored at -20 °C for

further testes. A total of 25 isolates were obtained from the different fermented foods.

3.2. Phenotypic characterizations

Presumptive LAB isolates were identified phenotypically using the methods as described by Schillinger and Lücke (1987). 3.2.1. Cell morphology A single colony was picked with a sterile wire loop. The colony was emulsified in a drop of distilled water on a clean slide and covered with the slide cover, then examined microscopically by the oil immersion lens.

3.2.2. Catalase activity Each of the isolates was first tested for catalase by placing a drop of 3% hydrogen peroxide solution on a clean slide. A loopfull of a 24 hour culture from isolate was added. The release of bubbles of gas indicated the presence of catalase enzyme.

3.2.3. Gram reaction A single colony was picked with a sterile wire loop. The colony was emulsified in a drop of distilled water on a clean slide and spread out to make a thin film. The smear was fixed by passing through a flame three times. The smear was then stained with crystal violet solution for one minute and rinsed rapidly with tap water. Gram iodine solution was added and left for one minute, then poured off and the slide was left to dry. The slide was washed with 95% ethanol and was then rinsed with tap water

and stained with safranine for 30 seconds and was then well washed and air dried. The smear was then examined microscopically by the oil immersion lens.

3.2.4. Endospore stain A bacterial smear was made as described in section 3.2.3. The smear was flooded with malachite green solution and placed over a bath of water for 5 minutes. The slide was kept flooded with malachite green by adding the solution to the slide. Then the slide was washed with tap water and stained with safranine for one minute. The slide was washed well and air dried. The smear was examined microscopically by the oil immersion lens.

3.2.5. Growth temperatures Growth at 10°C and 45°C was tested according to Holt et al. (1994).Two sets of test tubes each of which contained 9-ml of MRS broth were used. Each of these tubes was inoculated with 1- ml of 24 hour old broth culture of each LAB isolate. The first was incubated at 10°C and the second at 45°C. Incubated tubes were examined for growth (turbidity) after 48 hours at 45°C and after 5 days at 10°C.

3.2.6. Growth in NaCl: Growth in the presence of 6.5% and 18% NaCl in MRS broth was determined according to the method described in Holt et al. (1994); Two sets of test tubes were used, in which 9-ml of MRS broth containing 6.5% NaCl in first set and 18% NaCl in the second set were inoculated with 1- ml of 24 hours old broth culture of each LAB isolate, and

incubated at 37°C for 48 hours. Growth was assayed by visual assessment of turbidity.

3.2.7. Growth at pH9.6 Growth at pH9.6 was tested according to Holt et al. (1994). Adjusted MRS broth at pH9.6 was distributed in test tubes, where each one containing 9-ml of MRS broth, then inoculated with 1- ml of over night culture of each LAB isolate, and incubated at 37°C for 48 hours. Growth was assayed by visual assessment of turbidity.

3.2.8. Production of acid and/or gas (CO2) from glucose

Production of acid and/or gas (CO2) from glucose was assayed according to Hitchner et al. (1982) using 1.5% peptone water to which was added 1% glucose and one-ml of fresh Andrade indicator solution per 100ml distilled water. The medium was distributed in test tubes containing inverted Durham tubes. The medium was autoclaved at 110°C for 10 minutes and was then inoculated with one- ml of 24 hours old broth culture of each LAB isolate. Two ml of sterile paraffin wax were poured over each test tube to prevent entry of oxygen. All tubes were incubated at 37°C and examined daily for acid and/or gas production for 7 days.

3.3 Antibiotic susceptibility testing

Antibiotics selected were representative of the different types of the antibiotic groups. Susceptibility of the isolates to 8 antibiotic agents was determined by the standard disc diffusion method (Buxton and Frazer,

1977). The antibiotic discs used (Oxoid), their abbreviations, concentrations and action are shown in Table 1. The medium used for susceptibility testing was semi-solid MRS medium (MRS broth with agar 8g/l). The medium was distributed in test tubes (15 ml in each tube) and was then sterile and inoculated with 0.5 ml of over night culture of each LAB isolate and poured onto empty petri- plates and were then allowed to dry 15-30 minuets. Four antibiotic discs were used per plate. Sterile tongs were used to apply the discs over the surface of media, and then plates were incubated at 37 °C for 24 h. The diameter of the zone of inhibition of each LAB isolate to different antibiotics tested was measured in millimeters. The results were interpreted as susceptible, intermediate or resistant according to NCCLS (1999).

Table 1. Antibiotic discs used, their abbreviations, concentrations and action

Antibiotic disc Abbreviation Disc content(µg) Action

Amoxicillin AMX 10 Bactericidal

Ceftriaxone CRO 30 Bactericidal Chloramphenicol CHL 30 Bacteriostatic Ciprofloxacin CIP 5 Bactericidal Erythromycin ERY 15 Bacteriostatic Tetracycline TET 30 Bacteriostatic

Tobramycin TOB 10 Bactericidal Vancomycin VAN 30 Bactericidal

CHPTER 4: RESULTS AND DISCUSSION

4.1. Phenotypic characterization of LAB isolates.

The 25 isolates of LAB obtained from different fermented foods, were examined. The results of phenotypic characterization of LAB isolates tested are illustrated in Table 2, where all isolates were Gram-positive, catalase-negative, non-endospore-forming, and produced acid without production of gas from glucose. Among these, 40% (10 isolates) were rods, which occurred either singly or in pairs, unable to grow in the presence of 18% NaCl, or at pH 9.6, some of which were unable to grow in the presence of 6.5% NaCl, or at 45°C when tested in MRS broth. These isolates were considered to constitute the lactobacilli. Sixteen percent (4 isolates) were cocci which occurred in pairs or tetrads, unable to grow in the presence of 18% NaCl, or at pH 9.6, and able to grow in the presence of 6.5% NaCl, at 45°C in MRS broth. These cocci were considered to constitute the pediococci; also these cocci exhibited a well rounded cell morphology typical of the pediococci, while other LAB cocci such as enterococci and leuconostocs exhibited a more elongated or coccid cell morphology. Forty four percent (11 isolates) were cocci which occurred single or in pairs with elongated, coccid cell morphology, and which were able to grow in the presence of 6.5% NaCl, at pH 9.6, at 45°C and at 10°C in MRS broth. These cocci were considered to constitute enterococci.

Table: 2. Characteristics Used To Differentiate Isolated LAB.

isolates Cell Gram Endospore Catalase Co2 from Growth Growth Growth in Growth in form reaction stain reaction glucose at 10°C at 45°C 6.5%NaCl 18%NaCl 1 rod + - - - - - + - 2 rod + ------3 cocci + - - - + + + - 4 cocci + - - - - + + - 5 cocci + - - - - + + - 6 cocci + - - - - + + - 7 rod + - - - - + + - 8 rod + - - - - + + - 9 cocci + - - - + + + - 10 rod + - - - - + + - 11 cocci + - - - + + + - 12 cocci + - - - + + + -

Table: 2. (cont.)

isolates Cell Gram Endospore Catalase Co2 Growth Growth Growth in Growth Gr form reaction stain reaction from at 10°C at 45°C 6.5%NaCl in glucose 18%NaCl 13 cocci + - - - + + + - 14 cocci + - - - + + + - 15 cocci + - - - + + + - 16 cocci + - - - + + + - 17 cocci + - - - + + + - 18 rod + - - - - + + - 19 rod + - - - - + + - 20 rod + - - - - + + - 21 rod + - - - - + + - 22 rod + - - - - + - - 23 cocci + - - - + + + - 24 cocci + - - - + + - - 25 cocci + - - - - + + -

As summarized in Table 3, about 50% of Lactobacillus sp. were isolated from mish, 20% were isolated from sorghum dough, 20% were isolated from pickles, and the remaining 10% were isolated from sausage. Sixty four percent of Enterococcus sp. were isolated from sausage, 18% were isolated from yoghurt, 9% were isolated from pickles, and 9% were isolated from cheese. About 75% of Pediococcus sp. isolates were isolated from cheese, and the remaining 25% were isolated from yoghurt.

4.2. Antibiotic susceptibility testing

The results of antibiotic susceptibility testing of 25 LAB isolates to 8 types of antibiotics are presented in Table 4. The results reveal that all LAB isolates showed resistance towards ceftriaxone, tobramycin and ciprofloxacin. Highest susceptibility of isolates was shown towards amoxicillin, tetracycline and chloramphenicol. An intermediate reaction (shown inhibition zone smaller than resistant) appeared towards erythromycin, which could develop into resistance. Most antibiotics resistant LAB isolates were isolated from meat based and dairy products.

Table 3. The genera of LAB isolated from different sources.

Isolated genera

source Lactob. Enteroc. Pedioc. Sorghum(SH) a2(20%) - - Pickles(P) 2(20%) 1(9%) - Cheese(C) - 1(9%) 3(75)% Yoghurt(Y) - 2(18%) 1(25%) Mish(M) 5(50%) - - Sausage(SA) 1(10%) 7(64%) - Total 10(40%) 11(44%) 4(16%)

a, no. of isolates; -, not detected; (% ), percentage of isolates from different sources

Table 4. Antibiotic Resistance of LAB Isolated From Different Fermented Food. Tested Antibiotics

Isolates source genus Amx Cro Chl Cip Ery Tet Tob Van

SH1 Sorghum Lactob. - + - + - - + + SH2 Sorghum Lactob. - + - + - - + + C1 Cheese Enteroc. - + - + -- - + - C3 Cheese Pedioc. - + - + - - + + C4 Cheese Pedioc. - + - + -- - + + C5 Cheese Pedioc. - + - + -- - + + P1 pickles Lactob. - + - + - - + -- P2 pickles Lactob. - + - + -- - + - P3 pickles Enteroc. - + - + -- - + - SA1 Sausage Lactob. - + - + -- - + - SA2 Sausage Enteroc. + + -- + -- - + -- SA3 Sausage Enteroc. + + -- + -- - + -- SA4 Sausage Enteroc. + + -- + -- - + + SA5 Sausage Enteroc. -- + -- + + - + + SA6 Sausage Enteroc. + + -- + + - + -- SA7 Sausage Enteroc. - + - + -- - + -- SA8 Sausage Enteroc. - + - + -- - + + M1 Mish Lactob. - + - + -- - + - M2 Mish Lactob. - + - + -- - + - M3 Mish Lactob. - + - + -- - + + M4 Mish Lactob. - + - + -- - + + M5 Mish Lactob. - + - + -- - + - Y1 Yoghurt Enteroc. -- + - + + -- + -- Y2 Yoghurt Enteroc. - + - + + - + -- Y3 Yoghurt Pedioc. - + - + -- - + +

-, susceptible; +, resistant; --, intermediate.

4.2.1. Antibiotic resistance of Lactobacillus sp. Figures 1and 2 show that, all Lactobacillus sp. isolates were resistant to ceftriaxone, tobramycin and ciprofloxacin. About 50% of Lactobacillus sp. isolates were resistant to vancomycin, whereas 40% were susceptible to vancomycin and 10% showed intermediate reaction. These results were similar to findings of Herreros et al. (2005), Erdoğrul and Erbilir (2006), and Ocaňa et al (2006) who found that, some Lactobacilli have a high natural resistance to ceftriaxone, tobramycin, vancomycin and ciprofloxacin. All Lactobacillus sp. isolates were susceptible to chloramphenicol, erythromycin and tetracycline. Such findings agreed with D̉ Aimmo, et al. (2006) and Flóreze, et al. (2005) who concluded that, Lactobacilli was susceptible to chloramphenicol, erythromycin and its susceptibility to tetracycline was variable and depending on the species .

4.2.2. Antibiotic resistance of Enterococcus sp. Figures 3 and 4 show that, all Enterococcus sp. isolates were resistant to ciprofloxacin, tobramycin and ceftriaxone. About 36% of Enterococcus sp. isolates were resistant to amoxicillin, 46% were susceptible and 18% showed intermediate reaction, 27% were resistant to vancomycin, 18% were susceptible and 55% showed intermediate reaction Whereas, all Enterococcus sp. isolates were susceptible to chloramphenicol and . shown Susceptibility of Enterococcus to 2tetracycline. Appendix amoxicillin and chloramphenicol, and their resistance to ceftriaxone and tobramycin. These results confirmed those reported by Yousif (2003)

100 90 80 70 ates l

so 60 f i o 50 tage

n 40 ece 30 Pr 20 10 0 Amx Cro Chl Cip Ery Tet Tob Van

Antibiotics Resistant Susceptible Intermediate

Figure: 1. Reaction of Lactobacillus sp. to Different Antibiotics

Amx, amoxicillin; Cro, ceftriaxone; Chl, chloramphenicol; Cip, ciprofloxacin; Ery, erythromycin; Tet, tetracycline; Tob, tobramycin; Van, vancomycin.

SA1

M4 Van M3 Lactobacills Lactobacills Tob Tet M2 Ery Cip M1 isolates Chl Cro

Lactobacillus isolates Lactobacillus P2 Amx P1

SH2

SH1

0 5 10 15 20 25 30 Inhibition zone diameter (mm)

Figure: 2. Inhibition Zone of Lactobacillus Isolates Towards the Different Antibiotics Tested Amx, amoxicillin; Cro, ceftriaxone; Chl, chloramphenical; Cip, ciprofloxacin; Ery, erythromycin; Tet, tetracycline; Tob, tobramycin; Van, vancomycin; SH, sorghum dough; P, pickles; M, mish; SA, sausage.

100

Precentage of isolates 20

0 Amx Cro Chl Cip Ery Tet Tob Van

Antibiotics

Resistant Susceptible Intermediate

Figure: 3. Reaction of Enterococcus sp. to Different Antibiotics Amx, amoxicillin; Cro, ceftriaxone; Chl, chloramphenical; Cip, ciprofloxacin; Ery, erythromycin; Tet, tetracycline; Tob, tobramycin; Van, vancomycin.

SA8

SA7

SA6 Van

SA5 Enterococcus Tob Tet SA4 Ery Cip SA3 isolates Chl SA2 Cro

Enterococcus isolates Amx Y2

0 5 10 15 20 25 30 35

Inhibition zone diameter (mm)

Figure: 4. Inhibition Zone of Entrococcus Isolates Towards the Different Antibiotics Tested Amx, amoxicillin; Cro, ceftriaxone; Chl, chloramphenical; Cip, ciprofloxacin; Ery, erythromycin; Tet, tetracycline; Tob, tobramycin; Van, vancomycin; C, cheese; Y, yoghurt; P, pickles; SA, sausage.

who found that, 50% of strains isolated from hussuwa were resistant to at least one antibiotic, and some even to three antibiotics. Enterococcus shown resistance to penicillin, ciprofloxacin, vancomycin and erythromycin.

4.2.3. Antibiotic resistance of Pediococcus sp. The results shown in figures 5 and 6 indicate that, all Pediococcus sp. isolates were resistant to tobramycin, ciprofloxacin, ceftriaxone and vancomycin. All Pediococcus sp. isolates were susceptible to amoxicillin, chloramphenical, tetracycline and erythromycin. Appendix 1. shown Susceptibility of Pediococcus to tetracycline, chloramphenicol, and erythromycin, and their resistance to Vancomycin. These findings are in agreement with those obtained by Rojo-Bezares et al. (2006) who isolated lactic acid bacteria strains from wine, and found vancomycin and erythromycin resistance in some of the Pediococcus strains. The presence of vancomycin resistant Pediococcus may be due to the known intrinsic resistance to glycopeptides of some Pediococcus spp.

100 90 80 70 60 e of isolates of e

g 50 40 30 P recen ta 20 10 0 Amx Cro Chl Cip Ery Tet Tob Van

Antibiotics

Resistant Susceptible Intermediate

Figure: 5. Reaction of Pediococcus sp. to Different Antibiotics Amx, amoxicillin; Cro, ceftriaxone; Chl, chloramphenical; Cip, ciprofloxacin; Ery, erythromycin; Tet, tetracycline; Tob, tobramycin; Van, vancomycin.

Pediococcus Pediococcus Van C4 Tob Tet Ery Cip

isolates Chl Cro C3 Amx

0 5 10 15 20 25 30 35 Inhibition zone diameter (mm)

Figure: 6. Inhibition Zone of Pediococcus Isolates Towards the Different Antibiotics Tested Amx, amoxicillin; Cro, ceftriaxone; Chl, chloramphenical; Cip, ciprofloxacin; Ery, erythromycin; Tet, tetracycline; Tob, tobramycin; Van, vancomycin; C, cheese; Y, yoghurt.

CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS

5.1. Conclusions: The different food types tested in this study contained lactic acid bacteria which shared multiple resistance to at least three types of antibiotics. The presence of high percentage of isolates showing antibiotic resistances (especially vancomycin) in Sudanese fermented foods is cause for concern. Most of antibiotic resistant LAB isolates were isolated from meat-based and dairy products. Pediococcus and Lactobacillus isolates were resistant to four antibiotics; ceftriaxone, tobramycin, ciprofloxacin, and vancomycin. Enterococcus isolates were resistance to six antibiotics; ceftriaxone, tobramycin, ciprofloxacin, erythromycin, amoxicillin and vancomycin. The presence of vancomycin resistant Lactobacillus, Pediococcus and Enterococcus isolates is a major concern because vancomycin is one of those last antibiotics broadly efficacious against clinical infections caused by multi-drug resistant pathogens.

5.2. Recommendations: Prudent employment of antibiotics and reduction of excessive usage outside medical and veterinary practice. If foods are fermented industrially using starter cuture / or probiotic strains, these strains should be tested for presence of transferable genes before being used as commercial starters, and use of proper substrates, where the transfer of antibiotic resistant bacteria from animals into fermented and other foods can be avoided if the raw substrate milk or meat is pasteurized or otherwise heat-treated. Introduce alternatives to antibiotics to treat bacterial infection, which include: a) Modification of bacterial phenotype. b) Bacteriophage therapy. c) Photosensitization of pathogenic bacteria. Research at an extensive level should be carried out to screen for antibiotic resistant food-related bacteria.

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APPENDIX

Appendix: 1. Susceptibility of Pediococcus to tetracycline (3), chloramphenicol (4), and erythromycin (2), and their resistance to vancomycin (1)

Appendix: 2 Susceptibility of Enterococcus to amoxicillin (3) and chloramphenicol (4), and their resistance to ceftriaxone (1) and tobramycin

CHAPTER ONE

INTRODUCTION

1.1. Background and justification: Sudan extends over 2.5 million square kilometers, has one of the harshest climates in the world, with one third of its area being desert and 60% of the remainder suitable for grazing and less than a quarter being potential arable land (FAO, 1997). Sudan is the largest country in Africa, and shares borders with nine countries; Egypt and Libya in the North, Chad and the Central African Republic in the West, Democratic Republic of Congo, Uganda and Kenya in the South and Ethiopia and Eritrea in the East. It also neighbors the Kingdom of Saudi Arabia across the Red Sea (Figure 1.1.). Human population in Sudan in 2003 was 33.648 millions (CBS, 2004). Sudan has a large livestock population, estimated in 2006 at 41 million heads of cattle, 50.1 m. heads of sheep, 42.1 m. heads of goats and 4 m. heads of camels (Table 1.1, Appendix 1). However, statistics on livestock numbers and production in Sudan should be used with caution (Ibrahim, 2004). The data are not always collected systematically rather they are based on sporadic samples estimates Out of the total livestock population of the Arab World, the Sudanese cattle constitute about 70%, sheep 31%, goats 49% and camels 25%. In terms of red meat production, Sudan contributes about 43% to the Arab World's production. The livestock sector, under traditional system, is an important contributor to the overall national economy. It contributes approximately 25% to GDP and provides employment to about 40% of the population. Livestock used to generate 20 per cent of the national foreign exchange earnings (second to oil). However, after the discovery of oil, this contribution has declined to below 8 per cent (MARF, 2005). Traditional system is frequently facing drought and famine leading to depletion of assets and loss of livestock and increased competition over scarce resources (land and water). Production sites are remote from major consumption centers and export outlets. Economically valuable livestock populations in Sudan are concentrated in the Western States of Northern, Western and Southern Kordofan, Northern, Western and

Southern Darfur with 36% of the cattle population, 40% of sheep, 36% of goats and 33% of camels (Figure 1.1., Appendix 1).

Table 1.1: Livestock Population (million heads) in the Sudan, 1996 – 2006 (millions) Year Sheep Goats Cattle Camels 1996 37.202 35.215 31.669 2.915 1997 39.835 36.037 33.102 2.936 1998 42.363 36.498 34.584 2.974 1999 44.802 37.346 35.825 3.031 2000 46.095 38.548 37.093 3.108 2001 47.043 39.952 38.325 3.203 2002 48.136 41.485 39.479 3.342 2003 48.440 42.030 39.760 3.503 2004 48.910 42.179 39.760 3.519 2005 49.797 42.526 40.468 3.908 2006 50.100 42.100 41.000 4.000

Source: Ministry of Animal Resources and fisheries, 2006.

SUDAN STATES 1:13144279

Egypt

Libya Re d S ea

RE D S EA

NORTHERN

Cha d RIVER NILE

NORTH DARFUR Eritrea KHARTOUM KAS SALA

NORTH KORDOFAN EL GEZIRA

EL GEDARIF WEST DARFUR Sudan

WHITE NILE WHITE SENNAR

SOUTH DARFUR WEST KORDOFAN SOUTH KORDOFAN BLUE NILE

UPPER NILE

Ethiopia UNITY N. BEHER EL GHAZAL

WARRAB

W. BEHER EL GHAZAL JONGELI LAKES C. A. R.

WEST EQUATORIA EAST EQUATORIA

BEHER EL JABEL

D.R.C. Ke nya Uga nda

PACE-Epidemiology Unit, Nov. 2002

Map Figure 1.1: Of Sudan showing State names and neighboring countries

The Sudan established a Disease Free Zone (DFZ) in 1972, based on the DFZ Act of 1973. Main objectives were to promote livestock exports, control of diseases, and regulate the flow and movement of traded livestock. The Disease Free Zones Act provides procedures for restrictions of entrance and release off the zone as well as quarantine periods setting and issuing international certificates of live animals, meat and meat products. The Zone is located in the North-Eastern triangle of Sudan (Port Sudan – Kadaro - Nuba lake), with an area of 170,000 square miles. The objectives of the DFZ act are as follows: to satisfy regulations and conditions of international organizations and importing countries, prevent access of epizootic diseases in a vast area (DFZ), vertically expand Sudanese livestock exports, and create new export markets; fulfill sanitary measures, guarantee export flow without risk, minimize economical losses due to animal diseases, and secure good reputation and rewarding prices for Sudanese livestock. Share of exported live animals (mainly sheep) sheep from total non-oil exports in the Sudan during the period 2000-2006 fluctuated from 5% to 22%, while slaughtered meat exports from total non-oil export during the same period ranged between 2.6% and 41%,(Table 1.2).

Table 1.2. Volume of Sudanese exports (US$ Millions) for the period 2000-2006 and the percentage share of live animals exports and meat exports from total non oil export Item 2000 2001 2002 2003 2004 2005 2006 Total 1806.7 1698.7 1949.1 254.1 3777.8 4824.3 5656.6 exports Oil exports 1350.8 1376.7 1510.9 2047.7 3100.5 4187.4 5087.1 % from 74.8 81 77.5 80.6 82.1 87 90 total export Non oil 456.0 332.0 438.3 494.4 677.2 636.9 569.5 exports % from 25.2 19 22.5 19.4 17.9 13 10 total export Agricultural 238.6 182.3 179.1 219.9 338.4 332.9 325.4 exports % from 52 55 41 44 50 52 57.1 total Non oil export Live 66.4 17.0 95.3 81.0 119.4 95.4 121.7 animals export % from 14 5 22 16 18 15 21.4 total Non oil export Slaughtered 17.7 17.0 17.3 21.6 18.0 18.2 4.9 meat exports % from 38 41 4 4 2.6 2.8 0.9 total Non oil export Source: Bank of Sudan Annual Reports. Livestock exports regularly bring in 20-25 per cent of foreign currency revenues (Bank of Sudan, 2004). But since 1999 oil has become the most important item of the Sudanese exports (82.1% of the total value of Sudanese exports in 2004), agriculture (both crops and livestock) rank the second (Bank of Sudan, 2004). Sheep are by far the major live animal exports, with most going to Saudi Arabia (Appendix 3, 4 and Tables 1.3, 1.4 and 1.5). It was reported that; "there is very limited stratification in export marketing, animals for export are usually the better quality ones that are selected from the common lot entering the overall market chain and these are handled for export by the same trading companies that deal with local marketing” (FAO/AAADC, 1997). However; recent developments in the industry reflect a different situation; domestic demand competes with export market and wholesale prices in the local market are almost similar to export market price for lamb meat which induced exporters to export

relatively inferior quality meat. Even for live sheep export the supply of quality heavy weight sheep (45kg live weight) deteriorated due to the shortage of supply from Darfur State because of the conflicts there and exporters tend to export relatively lower quality animals. Sudan is the world’s tenth largest exporter of lamb and mutton (Australia is the third largest). In terms of sheep meat exports, New Zealand is the world leader, while Australia comes a close second ([email protected]). Analysis of global meat production and trade statistics indicates that Saudi Arabia is one of the world’s largest importers of sheep and goat meat, and that Australia and

New Zealand provide the bulk of supplies to the live sheep and sheep meat markets. Australia is the largest livestock exporting country in the world. In 2004/05 Australia exported 3.2 million sheep, the majority of which to Middle Eastern countries ([email protected], 2006). Growth in Saudi Arabian demand for meat in 1999 followed the lifting of a 16- month ban on imports of live animals and consequential increase in live sheep imports from neighboring countries in West Asia and Africa (FAO, 2000; http://www.fao.org). An interesting development in January 2006 in the Middle East is the arrival of sheep from China into markets in the Gulf. A consignment of just over 70,000 fat-tail type sheep from northern China with a delivery rate reported at over 99.3% has augmented Australian and regional supplies. However, they subsequently fared less well than Australian stock due to their feeding habits when there was less than efficient feed management ([email protected], 2006). Table 1.2 Records volume of Sudanese exports for the period 2000-2005 and the percentage share of live sheep exports and meat exports from total non-oil export. Table1.3 records live sheep exports from Sudan during the period from 2000 to 2006. Live sheep exports declined significantly following the Rift Valley Fever (RVF) ban in 2000 and particularly in 2001. However, Sudan increased its market share in Saudi Arabia following the lifting of the ban in 2002 (on the grounds of anticipated shortage of supplies from other sources for the Hajj season among other things).

Table 1.3. Exports of Live Animals from Sudan, 1990 – 2006 (head) Year Sheep Cattle Goats Camels 1990 257184 0 4607 260 1991 452225 3168 1017 26356 1992 557054 80 4833 56957 1993 592092 0 8402 59423 1994 578577 820 7809 50583 1995 415185 2419 8159 21463 1996 1001705 9609 30940 72071 1997 1074576 3595 16891 77714 1998 1586193 3686 48891 131570 1999 1616363 435 40501 159439 2000 731242 315 16599 145246 2001 15417 0 13883 185500 2002 1602638 2655 53164 155910 2003 1315399 0 57639 46417 2004 1703562 0 101899 132602 2005 1188793 501 155728 135129 2006 1422100 0 102378 116184 Source: Ministry of Animal Resources and fisheries, 2006. Table 1.4.Sudanese live sheep exports (in heads) by destination country from 2000 to 2006

Country 2000 2001 2002 2003 2004 2005 2006 Saudi Arabia 727602 0.0 1600567 1309974 1700633 1267998 1419799 U.A.E. 2247 0.0 60 5425 2002 1755 1349 Egypt 1393 11523 105 0.0 0.0 0.0 0.0 Qatar 0.0 0.0 0.0 0.0 927 18 961 Libya 0.0 3984 1906 0.0 0.0 0.0 0 Kuwait 0.0 0.0 0.0 0.0 0.0 2016 0 Total 731242 15507 1602638 1315399 1703562 1271787 1422109 % of Saudi 99.5 0.0 * 99.9 99.6 99.8 99.7 99.8 Arabia from Total * Export ban to Saudi Arabia. Source: Ministry of Animal Resources & Fisheries export figures, 2006.

Table 1.5. Sudanese mutton and lamb meat exports (in M.T.) by Country, 2002-2006 Country 2002 2003 2004 2005 2006 Saudi Arabia 7154.9 7837.5 4911.3 4347 2113.9 Jordan 1115.3 1442.7 233.5 0.0 2.3 Qatar 243.4 345.8 302.2 207.5 128.1 U.A.E. 100.3 58.7 22.8 11.7 18.7 Bahrain 0.0 4.3 7.1 1.0 1.0 Egypt 0.0 3.0 0.0 0.1 0.0 Libya 0.0 3.0 88.1 0.0 0.0 Sultanate of 5.9 1.8 0.0 14.7 0.0 Oman Kuwait 0.0 0.3 0.0 0.3 0.0 Abu Dhabi 0.0 3.3 0.0 0.0 0.0 Total 8619.8 9700.4 5565 4710 2264 % Share of 83 81 88 92 98 Saudi Arabia from Total Source: Calculated from Ministry of Animal Resources & Fisheries export figures, 2006. Exports of live animals from the Sudan are predominantly sheep, (Table 1.6). It is subjected to seasonal variations, but usually within the period of Hajj each year. Table 1.6 shows small ruminants' meat exports from Sudan, in recent years. Sheep meat exports declined form 7837.1 mt in 2003 to 2264 mt in 2006, while goat meat exports declined sharply from 353.8 mt in 2002 to 8.4 mt in 2006. Table 1.6 Sheep and goats meat exports from Sudan during 2000-2006 Year Mutton &Lamb meat (m.t.) Goats meat (m.t.) 2000 5157.8 311.9 2001 4855.2 35.8 2002 7113.8 353.8 2003 7837.1 221.3 2004 5570.9 127.1 2005 4783.8 30.0 2006 2264 8.4 Source: MARF (2007).

1.2. Problem Statement: - summarize problem statement – objectives. According to FAO, the Sudan comes number six from the top ten world lamb and mutton exporters during 2003/2004. Number one and two are New Zealand and Australia followed by Urguay, Namibia, Bulgaria then Sudan, after which Chille, US, India and Macedonia. The most important livestock importing Middle East countries for Sudan are the Gulf countries in addition to Egypt. Although the Gulf countries have small population bases, they have high population and income growth rates. The expected annual population growth rate for the period 2001 – 2015 ranges between 1.8% for U.A.E. and 2.9% for Saudi Arabia (Table 1.7). The expatriate communities are large. In Saudi Arabia, for instance, it constitutes 28% of the total population, while in the U.A.E. it goes up to 60%. Table 1.7: Some economic indicators for some Arab Gulf Countries Country Population Population Average per Consumption as growth rate (%) (2001) Million capita percent of GDP 2001- 2015 income($) Kuwait 2.1 2.0 14627 48.0 Oman 2.2 2.5 8314 - Qatar - - 28140 - Saudi Arabia 2.9 21.4 13290 37.0 U.A.E. 1.8 3.0 20602 - Source: World Bank, World Development Report, 2003. The Gulf countries are also characterized by high per capita income as an indication of high purchasing power. Their markets are highly competitive and wide open to trade from all over the world. New Zealand is the world leader in sheep meat exports, while Australia comes close second. New Zealand exported in 2004 442,200 tones carcass weight equivalent (cwe) out of 39.6 million head of sheep (55.8% off take rate) ([email protected], 2006), while Sudanese sheep population in 2004 was 48.9 million heads (Ministry of Animal Resources and fisheries), meat export volume from Sudan in 2004 were 40,400 tones (cwe) or 9% of New Zealand exports, with 0.8% off take rate. 1

1 Calculated from export figures in 2004, by adding mutton and lamb meat export together with the live sheep export. Both converted into meat in tones; live sheep export were 1703562 heads converted into 9

Table 1.8 shows Sudan's market share in live sheep exports to Saudi Arabia, which was 29% compared to Syria's 31% and Australia's 38%. In case of Australia, it is obvious that they have the advantage of lower price, $1107/ton, compared to $ 1771/ton for Sudan. Syria, however, seems to have had the advantage of better quality and/or better preparation of the Awassi sheep or any other non-price factors, because although Syria's price was $ 3054/ton, its market share was higher than that of Sudan by about 2%. For young sheep meat, fresh or frozen, Sudan has the highest market share of 45% compared to Pakistan's 32%, Australia's 36 % and New Zealand’s 22%. The Sudan's price of $3043/ton was lower than the $4100/ton and $ 4429/ton for Australia and New Zealand respectively but Pakistan's $1908/ton price, although lower than that of Sudan and Australia, gave a market share lower than both of them, most probably because of quality. The three countries, Australia, New Zealand and Pakistan, with their present market shares are very strong competitors for Sudan in this market. Thus in comparing Sudanese fresh young sheep meat with other exporting countries to Saudi Arabia, differences in product characteristics, in terms of shelf life, need to be considered. Sudanese chilled meat expires after two weeks while that of Australia and New Zealand, shelf life is three months. This is due to differences in packaging materials and technology, as they use vacuum packing for the whole carcass with Carbon Dioxide fumigation while for Sudanese meat, cotton raping is used in packaging. Also there are differences in the product quality; in terms of sheep meat taste as well as in consumers demand for preferred average carcass weight (kg. /head). Exported Sudanese chilled lambs meat weigh 11 kg cwt while that of Australia and New Zealand weigh 17 kg cwt ([email protected]).

meat by multiplying by 20Kg carcass weight equivalent to obtain 34071.24 tones. Then adding meat exports, which were 6329.4 tones; to get 40400.64 tones (cwe).

Table 1.8: Average prices of live sheep and sheep meat, c.i.f Jeddah, Saudi Arabia and market shares of exporting countries in 2004. Exporting live sheep Young sheep meat Sheep meat (whole country ( fresh or frozen) fresh carcasses) Price Market Price Market Price Market $/ton share (%) $/ton share (%) $/ton share (%) Sudan 1771 29 3043 45 4243 69.3 Syria 3054 31 N.A. N.A. N.A. N.A. Jordan 2696 1 N.A. N.A. N.A. N.A. Kuwait 3280 0 N.A. N.A. N.A. N.A. Yemen N.A. N.A. N.A. N.A. 1473 0.13 Egypt N.A. N.A. 3202 1 3149 0.06 Pakistan N.A. N.A. 1908 32 2175 5 Australia 1107 38 4100 36 2254 3 New Zealand N.A. N.A. 4429 22 2884 20.4 Average price 2381.6 3336.4 2696.3 c.i.f. Jeddah Source: Arab Authority for Agric Investment and Development (AAAID), 2005.

The above mentioned prices from non-Arab countries reflect a lower quality meat, in terms of flavour and taste, basically originating from old aged animals, they are either of a very low fat content (not lean meat) or of a very high fat content (personal observation of the author). Fresh whole carcass sheep meat exports from Sudan to the Saudi market, on the other hand, have a relatively good market share of 69.3% compared to the nearest competitor, New Zealand, with a market share of 20.40%. This is so although Sudan's price is $4243/ton while that of New Zealand is $2884/ton. The above analysis indicates that although Sudan has the advantage of being near the Gulf markets for sheep and sheep meat it faces tough competition from countries like Australia, New Zealand and Syria. Competition is in the form of price, reliability of supply and terms of trade in case of Australia and New Zealand, and in form of quality of product and other non-price factors in case of Syria. The problem faced by Sudan is thus one of enhancing its competitiveness in the Middle East markets for sheep and sheep meat in order to increase and maintain its market share and in order to make use of the great potential it has. This entails improving the internal marketing system to enhance its efficiency, increasing the efficiency of the livestock export

procedures, and improving the quality of product and preparation of the product for the market. If an export is not of the quality and form dictated by the consumer, and if it is not offered at a price that the consumer can afford, there is no advertising campaign, personal friendship or relationship between countries that can overcome these obstacles to sell the product. With regard to quality, serious attention needs to be given to grades and standards, and the sanitary and phytosanitary measures (SPS) or safety of animal health standards in compliance with international agreements. Sudanese sheep is recognized in Saudi Arabia markets as "Swakni" for live sheep and sheep meat. There is no brand name or labeling, except removable stickers on meat carcasses. There are no promotional services for Sudanese meat in the domestic or international markets. There is no brand recognition or programmes to stimulate demand in Middle East countries through influencing consumer attitudes, building confidence in the quality and integrity of the product and enhancing the appeal of Sudanese meat. International meat trade is mainly in cuts or parts, not in the form of live animals or carcasses. The slaughter of a meat animal automatically generates a full set of muscle meat cuts, as well as trimmings, offal, and other byproducts. The value of a carcass is the composite value of the cuts and other products taken from it, and the derived value of a meat animal is the composite value of the carcass and byproducts from the animal, less processing and transaction costs (Dyck and Nelson, 2003). But livestock and their products processing is below a threshold of an industry compared to the actual demand and the potential of livestock resources of Sudan (Ibrahim, 2004). The livestock and their products industry appear to lack direction and are still without coherent development policy. Contemporarily, institutions involved in livestock industry are in a state of rapid transition as a result of the macro-economic policy pursued by the Government. Little quantities of meat are exported due to lack of expertise in meat processing, handling and packing. Training in meat technology is vital for the future flourishing of meat industry (Ibrahim, 2004). The Middle East region is currently experiencing unparalleled growth in the foodservice sector due to increased investment in tourism demonstrated by double-digit growth in the number of hotels over the past five years ([email protected], 2006).

1.3. Objectives of the study: The overall objective of this study is to explore the potential of Sudanese exports of sheep and sheep meat to the Middle East countries, identify the problems that hold back the country from realizing its objectives and identify the factors that would enhance competitiveness. The primary objective of this study was to describe the socioeconomic characteristics along the market chain of sheep traders in the Sudan and to shed light on health and market constraints from producers to consumers (markets, domestic and export). The specific objectives of the study were to: 1. Describe the internal marketing system of sheep, assess its efficiency and the extent to which livestock markets are integrated. 2. Describe the export marketing procedures, export marketing policy and the rules and regulations that govern the system. 3. Shed light on the competitiveness of the Sudanese sheep and sheep meat export and identify the factors that influence it.

CHAPTER TWO RESEARCH METHODOLOGY 2.1 The study framework The objective of the study was to describe the socioeconomic characteristics along the market chain of sheep and goats in The Sudan and to shed light on health and market constraints at specific market point, or points along the chain from producers (village– households) to consumers (markets, domestic and export). Therefore, a supply chain framework as suggested by Jabbar and Majok (2004) and illustrated in Figure 2.1 was used to design the study. The framework shows that animals flow from producing households through various market channels including retail, wholesale and processing units to consumers in local, distant urban and export markets. The framework also shows the role of animals’ health and marketing institutions and services at various points in the chain. In order to characterize the chains and their health and market constraints limiting smallholder access to markets, the following types of actors or sample units were studied: a. Village level condition of livestock resources, services and marketing infrastructure b. Households flocks, c. Livestock markets- primary, secondary and tertiary, d. Traders and exporters at these markets, e. Veterinary services at local and district levels serving producers, f. Veterinary quarantines serving export, g. Slaughterhouses for processing export meat. 2.2 Data Sources and Data collection: Secondary data was collected at the national and state levels as well as at the local authority and administration unit levels, from the records and statistics of the relevant departments of these units. Other sources include research organizations, academic institutions and published material and internet. Structured and non structured questionnaires were used to interview market participants (producers, market intermediaries, traders, exporters, etc.), using a multistage random sample from the three States: Blue Nile, Gedarif and West Kordofan. Questions were designed to reveal information about the general characteristics of the producers, the production system, health constraints, market outlets, market structure, conduct and performance and the marketing and export procedures.

Export market for live animals and meat Demand characteristics: Product attributes in terms of

Health Services Export facilities/capacity at Slaughterhouses Terminal Markets/ Provincial level Export Points

- Ch. of traded animals - Diagnostic labs, Slaughterhouses/ - Ch. of markets Clinics, vaccination Butchers service, Vet staff, and traders Drug manufactures, - Transaction costs Drug stores, Super- Consumers quarantine, Vet markets schools, Rules / regulations governing Secondary Markets health services and Slaughterhouses/ markets butchers - Ch. of traded animals - Ch. of markets and Traders

- Transactions costs Consumers Health

facilities/capacity at

district level Local butchers/ Primary Markets slaughterhouses - Ch. of traded animals - Ch. of markets and

Health Traders

facilities/capacity at Consumers - Transaction costs

local level

Households/flocks

• Producer characteristics • Animal characteristics in terms of health, quality, safety, productivity and other criteria • Market constraints, transaction costs

Source: Jabbar and Majok. (2004). Figure 2.1: Market chain flow chart

2.3. Selection of sites and samples: The criteria for selecting the three States are dominance of sheep, diversity of production systems, market outlets, and prevalence of poverty. Incidentally, two States, namely Gadarif and Blue Nile, have common borders with Ethiopia, which is a competitor of Sudan in the Middle East market. These two states may contain transboundry diseases due to the proximity to Ethiopia. Initially it was proposed to adopt a stratified multistage random sample by taking within each selected state one Local Authority (LA) to represent the state level characteristics. Within each LA one Administrative Unit (AU) would be selected to represent the state and LA level characteristics. From the selected AU, 10% of the villages were to be selected at random. Households list were to be obtained from local veterinary authorities (from free vaccination programme list), administrative units or local taxes offices excluding any household without small ruminants. Depending on geographical distribution and stratification the required numbers of households were to be selected. Finally, within Western Kordofan state, one Local Authority ((El Nihood Local Authority) was selected to represent the state level characteristics due to security reasons; other localities were not safe as they are adjacent to Southern Darfur state. Within El Nihood LA, one Administrative Unit (El Khowei) was selected to represent the State and LA characteristics; combining both health and marketing issues. Villages within El Khowei were selected at random according to the existence of small ruminants and being nearby livestock markets. But due to the dry season during the time of the year when questionnaires were administered, cluster sampling was adopted: The research team had some problems with applying the stratified sampling frame in the other two States, Gadarif and Blue Nile, because of the following: a. Definition of a household as a nucleus family does not apply under nomadic conditions; the head of the family could have 2 or 3 households. b. Nomadic and transhumant households are not stable or permanent residents. c. No figures of ownership structure or vaccination figures by localities were found; only some of the vaccination figures in vaccination camps during rainy season in remote areas were found, compared to their aggregated present sites. d. Villages in the Blue Nile State are not clearly defined post conflicts, the selected 5 villages (Aboghmy, Badows, Boought, Midiem, Ofod and Wadabook) were “what was found”. 16

e. Almost all of the major markets were selected in the both states. In each state there is only one secondary market (in Gedarif and Damazeen towns). The rest of livestock markets were, small primary markets. f. In Gedarif state, Abu Rukhum, Bazoora, El Hawata Elmagata and Gedarif local authorities and in Blue Nile state Aboghmy, Badows, Boought, Midiem, Ofod, Wadabook and El Damazeen. Local areas were chosen after several meetings with officials from veterinary authorities, ministries of finance, livestock taxation units, local producer associations and after having group discussions with producers, traders, and local experts. Accordingly, livestock population concentration was identified in both the states. Target and study populations were the markets in the three states described previously. Data related to infrastructure, human resources management and procurement of these activities were collected using questionnaires. The total sample size, for all levels of data sources are summarized in Table 2.1. However, only data for the markets and traders were primarily used for this thesis research, some information from other surveys was also used. The remainders of the surveys were used for other purposes of the overall project, of which the market surveys were a part.

Table 2.1. Distribution of samples by type of surveys S/N Questionnaires State Total Gedarif Blue Nile West. Kordofan 1 Village level rapid appraisal 8 5 6 19 2 Households 46 108 106 260 3 Livestock traders 16 21 19 56 4 Livestock markets 6 7 8 21 5 Vet. services 5 4 1 10 6 Vet. quarantines 1 0 2 3 7 Slaughterhouses 3 3 2 8 Source: survey data 2005. 2.4. Description of the Study Area: Three states were selected as study areas Gedarif, Blue Nile and Western Kordofan. Each state has got a distinct comparative advantage. Gedarif state is rich in fodder and grazing areas and crop byproducts (from sorghum and sesame) and closes to export point – Port Sudan. During the rainy season this state is very rich in fodder and water in Butana area (northern part of the state). During the summer season, due to the scarcity of water, the concentration of sheep is around the Blue Nile River, in places where there is fodder for grazing in big sorghum and sesame agricultural schemes2, and around Hafeers (man made water reservoir) and deep bore wells. The Blue Nile state is rich in water resources. Beside the Blue Nile River and its tributaries (Dindir and El Rahad) this state has got 58 Bore holes, 21 Deep wells, 3 Sudd (small dam) and 750 hand pumps. For this reason livestock population is very high in the dry season in Blue Nile State due to migration from neighboring states. The Blue Nile State posses prime quality lamb meat for export of 12 kg average carcass weight (Watiesh- Desert sheep named after Watiesh sub-tribe). This type of sheep is the best in the whole country for meat export. They are not in big numbers. It has got a name in the terminal livestock market as Sheibeilat. This name stands

2 A scheme standard area is 1000 Feddans. Some farmers may have up to 10 schemes in one area or different areas. There was also small schemes with areas ranging from 10 to a few hundred feddans. One feddan is approximately one acre. (or 0.417 Hectare)

18 for a branch of Ruffaa tribe, specialised in feedlots and trade in sheep basically for meat export. West Kordofan state owns Hamari sheep, the first top quality for live sheep export in the Sudan and the second best breed for meat. This is from the point of view of Saudi Arabia importers. Hamari is a desert sheep named after Hammar tribe. The bulk of Sudanese sheep exports and sheep meat for local consumption are from this State. Mainly sheep of the large size of 45 kg average live weight, medium size for Haddi of 35 kg average live weight during the hajj season and meat quality lambs during Ramadan, originate here. Production systems and market outlets for sheep in the three states are shown in the Table 2.2. Table 2.3 Indicates basic information on the three States for area, human and livestock population. Tables 2.4 and 2.5 indicate the total livestock population by localities in the two states- Gedarif and Blue Nile, according to official records. No data on livestock population was available in West Kordofan State. All localities except El Fao were covered by the survey due to the presence and concentration of sheep population during the time of survey. These localities were covered by the survey due to the presence and concentration of sheep population during the time of survey. Gissan locality was covered but not Kurmok. Table 2.6. Shows the number of livestock owners and livestock owned in survey areas.

19 Table 2.2. Sheep production systems and market outlets in the three states: State Sheep production system Market Outlet( Sheep) Gedarif Mixed crop-livestock Domestic and export (meat) Blue Nile Nomadic, semi- sedentary Domestic and export(meat) West Semi-sedentary, Sedentary and Mainly export (live and meat) and Kordofan nomadic domestic

Table 2.3. Area, human and livestock population in the three states State Area in Human Livestock Population (million heads) Square Populatio Sheep Goats Cattle Camels km n Gedarif (1) 75,263 1,148,262 1,235,978 1,210,329 177,411 141,305 * B.Nile (2) 84,445 845,512 3,665,000 222,330 2,977,600 15,694 W.Kordofan 111.373 992.172 3,763,788 2,017,440 3,288,394 449,785 (3) Sources: (1) State Ministry of Finance, Economy and Labour Force. Livestock Taxation Administration, Gedarif.2005. (2) Veterinary authority. Blue Nile State.Damazeen. 2005. (3) General Planning and Animal Resources Economics Administration, MARF, Khartoum.

Table 2.4. Total livestock population in Gedarif State by locality in heads for 2004 Locality Camels Cattle sheep El Ghalabat 16,482 56,438 253,445 El Gedarif 44,257 38,270 496,705 El Fashaga 24,216 18,872 96,804 El Fao 26,322 34,335 222,732 El Rahad 29,828 29,496 166,292 Grand Total 141,305 177,411 1,235,978 Source: State Ministry of Finance, Economy and Labour Force. Livestock taxation Administration, Gedarif 2005.

20 Table 2.5. Total livestock population in the Blue Nile State by locality in heads for the year 2004 Locality Cattle Sheep Goats El Damazeen 1,191,040 1,466,000 89,040 El Roseris 893,280 1,099,500 66,780 Bao 595,520 733,000 44,250 Gissan and Kurmok 297,760 366,500 22,260 Total 2,977,600 3,665,000 222,330 Source: Veterinary authority, Blue Nile State, Damazeen.2005.

Table 2.6. Number of livestock owners and livestock owned in survey areas. State Local Local No. No Livestock Numbers Authority Adm. Villages owning Sheep Goats Cattle Livestock Gadarif 3 4 8 59730 36500 11000 70580 Blue Nile 3 3 5 21050 1535500 1008000 1003400 W.Kordofan 1 1 6 13415 51750 20900 400 Total 7 8 19 94195 19737501089970 1074380 Source: Ministries of Agriculture and Animal Resources in Gadarif, Blue Nile and W. Kordofan States 2005.

2.5. Collection of data Two comprehensive questionnaires were developed to address the stated objectives. The first questionnaire included data on the components of the markets and the different associated activities including traders and their preferences. The second questionnaire was concerned with the infrastructure of the markets and related institutional issues. The two questionnaires were developed after thorough review of the literature, discussions with local experts, and field visits. The initial drafts of the questionnaires were validated by testing their efficiency and utility on a sub sample of traders and local markets. A final copy of the questionnaire was then produced and used to collect data on markets, traders, and related activities that were hypothesized to influence either or both.

21 All questionnaires were collated and reviewed by the author for consistency and errors. The data were then coded and entered in the SPSS data management section of the computer programme3. The data were then examined for error in the entry. Surveys were conducted by M.Sc. (Animal health) Students as well as the M.Sc. Agricultural economics student within the NENA project. The data were actually collected during March 2005 in Gedarif State, May 2005 in Blue Nile State, June 2005 in West Kordofan. For markets, traders and exporters surveys were conducted by the researcher and enumerators in the terminal market during June 2006. Discussion groups were conducted during the same periods at the livestock markets, at government official's offices (local councils, taxation and zakat, and veterinary authorities) and at nomadic camps. Problems encountered were related to the dry season where surveys were conducted and the search for animal owners in the vicinity. The perception was excellent since all enumerators were veterinarians and knew how to answer respondents' enquiries and stimulate their interest during interviews. The conceptual framework was relevant and stimulating positive responses to all stakeholders

3 The appreviation SPSS changed through time ;when the programme was designed in 1979 it was Statistical Package for Social Sciences .From 1996 to 2004 it was ;Superior Performing Software Systems. Since then it stands for Statistical Products and Services Solutions. It is used for marketing and business activities analysis.

22 2.6. Methods of analysis: By its nature this research problem involves economic relationships. Numerical values have to be provided for the parameters of these economic relationships e.g. marginal values. Therefore regression analysis will be used to analyse the data in addition to descriptive statistics. Descriptive analyses were performed using the SPSS statistical software. Means, medians, standard deviations, ranges, and coefficients of variations were computed for some of the continuous variables. Frequencies, proportion, and variances were computed for some of the categorical variables. A systematic approach was used to identify all activities along the market chain. The systematic analytical approach consisted of evaluating the bivariate association between each of the putative activities and the output. Factors that were found significantly associated with a particular outcome in the bivariate association were further assessed for their significance in a multivariate analysis. Secondary price data was used in time series analysis. Price data were obtained from the Animal Resources Services Company (for Omdurman and El Obeid) and by the State Animal Resources Directorate - El Damazeen for sheep prices during 5 years from 2001 to 2005. The time series price data from the three livestock markets were entered in Ms-Excel and analysed in Econometric Views (E Views) software. The following steps were followed during analysis; the sheep price series for Omdurman, El Obeid and El Damazeen were tested for stationarity using the Augmented Dickey- Fuller (ADF) unit root test. After confirmation of nonstationarity the price series were tested for cointegration using the Johansen method (1988). The test focuses on investigating the price cointegration among Sudanese livestock markets, between Omdurman terminal, El Obeid and El Damazeen secondary markets. Marketing institutions and transaction costs were analysed. Institutions are integral part of the marketing system. They include private sector business firms of various sizes and types and government agencies that provide services, rules and facilities (Padberg, 1997). Marketing failure or faulty performance may be traceable to many causes, including imperfect information, high transaction cost, lags in adjustment to change, or inadequate infrastructure. In the Sudan the Livestock and Meat Marketing Corporation (LMMC) was the only government sanctioned institution authorized to facilitate collective activities in

23 livestock marketing. LMMC acted as a marketing board; as an organization set up by a government to regulate the buying and selling of livestock in a specified area. The powers of marketing boards range from advisory and promotional services to full control over output and sales but that was not reached by LMMC. But it succeeded in establishing infrastructure of nine secondary and two terminal livestock markets, carrying out market research, promoting sales, and furnishing information. It was financed by a fee levied on all sales of livestock in livestock markets run by LMMC. The prime motive in the establishment of LMMC was to stabilize producer prices, particularly in case of livestock and meat destined primarily for export markets in which price fluctuations are most violent. Transaction cost is the cost associated with buying or selling of a financial instrument. It is a cost incurred in making an economic exchange. Commission is a transaction cost of doing the stock deal. In considering buying sheep from producers or livestock markets the costs will be not only the price of the sheep itself, but also the energy and effort it requires to travel to and return from market, the time waiting and effort exerted to conclude a deal. The costs above and beyond the cost of sheep are the transaction costs. According to the new institutional economics (NIE) approach, the unit of analysis is the transaction rather than the price. Exchange itself is costly. Transaction costs, which are distinct from physical marketing costs such as those for transport and storage, arise from the coordination of exchange among market actors. They include the costs of obtaining and processing market information, negotiating contracts, monitoring agents and enforcing contracts (Gabre-Medhin, 2001). However, it is widely recognized that market transactions, particularly in developing countries (Sudan is not an exception) are often embedded in long- term, personalized relationships. Personalised exchange emerges in response to commitment failure, in which the risk of breach of contract or opportunism is high, resulting from lack of market information, inadequate regulation and the absence of legal enforcement mechanisms Institutions that build trust and promote reputation and social capital, such as trade associations, solidarity networks, and groups that enhance ethnic or religious ties, emerge to circumvent commitment failure (Gabre-Medhin, 2001).

24 Individual efforts to minimize transaction costs lead to the emergence of alternative institutional arrangements. The link between transaction costs and the emergence of institutions has long been recognized in institutional economics theory. In Sudanese livestock markets traders use brokers (different categories of brokers) to reduce transaction costs, depending on the type of transaction, sale versus purchase and the location of the trader, whether in a surplus or deficit region. These marketing costs can be distinguished as costs of: (i) transporting (trekking, trucking and/or railing); (ii) feeding (including grazing); (iii) marketing levies and taxes imposed by local and national authorities; (iv) mortality or loss (some animals die during transit because of diseases or other physical stress; some might stray and not be recovered); (v) slaughtering and processing costs; (vi) capital as represented by the interest on the money tied up by the livestock from the point of purchase to the point of sale; and (vii) the opportunity cost or salary of the operator (trader, butcher etc.).

25 CHAPTER THREE MACRO LEVEL INSTITUTIONS AND POLICIES

3.1. Public Sector Institutions The Sudanese private sector is active and provides most of the services needed for successful livestock exports. Yet, the Government has a role to play where the private sector is neither technically nor legally competent. In addition to ensuring the general economic and infrastructure environment, public sector activities are of direct relevance to the livestock and meat trade. These activities include: public health and food safety in relation to hygiene and sanitation of meat slaughtering and processing facilities for exports, animal disease control and monitoring and documentation (Aklilu, 2002) The public sector is no longer involved in production or marketing. Its responsibilities are now limited to regulation, research, planning and investment promotion. The performance of all public sector institutions is severely limited by lack of operating funds (FAO/AAADC, 1997). At the federal level, public sector activities in the livestock sector are confined to the Ministry of Animal Resources and Fisheries (MARF) comprising seven General Administrations and training institutes reporting to the Minister through the Undersecretary, and Ministry of Science and Technology. At the State level, each of the 25 states has a Department of Animal Resources which is part of a combined Ministry of Agriculture, Animal Resources and Irrigation. Some Government institutions have important impact on livestock exports as the Ministry of Foreign Trade (MFT) and the Central Bank of Sudan (CBS). The Ministry of Foreign trade sees its role as a moderator between the private business and the government. It issues export licenses and puts minimum prices (called minimum indicative prices) on the export price (claimed to be in consultation with exporters) (Aklilu, 2002). Recent (2006) minimum export prices were $1,400/ton for beef (for Egypt, it was $ 1200), $700/ton for live cattle, $1,665/ton for live sheep, $ 3750 for mutton and lamb meat, and $ 25 for live goat, and $175/head live camel (meat type). While Sudan’s racing camels minimum prices are $2,000/head.

26 The MFT has formed Export Promotion Councils for major export commodity groups. The Live Animals and Meat Export Promotion Council (LAMEPC) consist of mainly exporters, members of other relevant institutions, randomly selected pastoralists and is chaired by the MFT. The most important function of the LAMEPC is to enable exporters to make use of their foreign exchange earnings to import commodities or sell their hard currencies to third parties. The MFT appoints commercial attachées in important foreign trade missions such as in Riyadh, Jeddah and Cairo to create market opportunities for Sudanese exports. In another development, the MFT, in collaboration with the Khartoum State (Ministry of Agriculture), has put up a separate livestock market for sheep exports in Omdurman. Since 2002, only rejects of sheep from export are sold at this market. The Animal Resources Company (of the Livestock Bank) has also put El Salam market for sheep in Omdurman in 2001 under an arrangement where market fees will be shared by the Company (75%) and Khartoum State represented by State Ministry of Agriculture (25%). The market liberalization policy, on the other hand, has left a vacuum after the demise of the LMMC. At present no single entity is in charge of the domestic livestock markets despite the involvement of the Federal State through the Animal Resources Bank affiliated company (Animal Resources Services Co.), and the MFT and the MARF in one way or another. Traders have to deal with all these entities in addition to the Ministry of Finance, Customs, Transport, Aviation, banks etc. It will be difficult to envisage the formulation and development of pro-trade policies in the absence of one entity with overall responsibility to look after the improvement of livestock marketing (Aklilu, 2002). The current situation has led to the physical deterioration of the livestock markets and staging points built by the ex-LLMC and the acquisition of the 100 Livestock wagons and 10 locomotive powers by the Railways Corporation. Banking services are provided by commercial banks, one of which is the Animal Resources Bank which remains in the public sector with22.71% Government holding (2006), but is managed as a private sector enterprise. Sudanese Standards and Metrology Organization (SSMO) in collaboration with the Ministry of Animal Resources and Fisheries issued standard specifications for meat and meat products that ensure safe and suitable products for human consumption. Standards are ideal but not practical; they can not be adopted unless Hazard Analysis

27 for Critical Control Points (HACCP) is practiced in all slaughterhouses and meat processing plants. Criteria of setting meat standards are highly technical, not enforced yet and hence not effective.

3. 2. Private Sector Institutions: Livestock production in Sudan is predominantly pastoral and a significant proportion of the livestock population is owned and managed by this sector. There are three systems of animal production: traditional low input low output system, modern system or intensive system, and feedlots. Under the traditional low input - low output systems, there are three subsystems. The first and the main is the pastoral nomadism and transhumance system, the second is the sedentary and semi sedentary agropastoralism and the third is the urban and peri-urban scavenging system. The first two have got high importance in relation to export trade. A pastoral system is defined as one in which more than 50 percent of total household revenue (the value of home consumption plus income) or more than 20 percent of human food energy is derived from livestock or livestock products. There is little integration of livestock and crops in this system. An agro pastoral system is defined as one in which 10-50 percent of total household revenue is derived from livestock or livestock products (FAO, 1997). It is worth mentioning that livestock migration has been recently constrained following the tribal conflict of 2000 between the Meidob and Berti of Northern Darfur (Young et al., 2005). Recently also increasing conflicts in Darfur reduced the level of supplies from primary to secondary markets raising the price of meat and livestock in the latter. It is also said that livestock prices are on the decline in some primary markets that are cut off from the secondary markets. The second production system is the modern or intensive system, mainly for milk and poultry production and based on irrigated fodder and agro-industrial by-products. The third system is feed lotting, around livestock markets (usually seasonal activity during summer) to support domestic consumption and export. It is worth mentioning that conflicts in North Darfur made grazing areas and their migratory routes as well as commercial stock routes inaccessible, which led to adopting remote routes for transferring animals to main urban markets in Khartoum and for export and hence high cost for commercial herds. The marketing of livestock and meat for both domestic and export markets is organized and financed by the private sector. The private sector marketing is

28 managed and run through a network of traders, corporate entities, brokers, agents, and sub agents throughout the country. Small publicly owned slaughterhouses cater for much of the domestic market and two large ones, Kadaro and Sabalowka (at Omdurman) are operating in the export trade. Four privately owned abattoirs are operating for export trade: Ghanawa, GIMCO (Gizera International Meat Company), and Port Sudan and Nyala abattoirs. Export trade is dominated by individual traders, family companies and shareholding companies as a result of recent development in the private sector that are involved in trading operations as well as in other parts of the livestock sector. Many of these have some vertical integration with livestock buying as the first step in a business chain that includes ranching, fattening, feed milling, slaughtering and meat processing (FAO/AAADC, 1997). But till now the private sector has not been successful to achieve this vertical integration to its full extent.

3. 3. Economic Liberalization Policies:

Market liberalization in Sudan is going at full swing. Nearly all the slaughterhouses and tanneries have been privatized. New policies that encourage the export of livestock are being developed at least at the federal level. One such encouraging initiative includes allowing traders to have unrestricted access to their foreign exchange earnings whether to use it for importation of goods, sell it to the bank or to a third party (Aklilu, 2002). The government is having limited intervention in marketing and pricing of livestock and meat. Some problems have arisen due to States Government policy of revenue generation from primary and secondary livestock markets. The first problem is the use of markets to provide municipal revenues at the expense of promoting the livestock sector as the case in West Kordofan State where there are multiple and excessive taxes. Beside the market fees, there are veterinary health certificate fees, veterinary services fees (local authority), industrial chamber fees, state veterinarian union fees, business tax, wounded tax, Producers Union fees, and Jihadia fees and pasture development tax. The last one is to be paid three times in the three localities within the same State of Western Kordofan (Ghebeish, El Nihood and El Khowei). In this situation markets are viewed as tax instruments rather than means of facilitating the

29 marketing of local produce. That is "by imposing a tax which tries to catch everything that goes through the system (in a very rigorous and labour- intensive manner), the market authorities may inflict greater economic losses than the actual revenues collected. The losers are the overall national economy, the rural producers and the urban consumers "(FAO, 1999). The second problem is the lack of understanding (and data) on the location and role of major livestock producing areas and the extent of internal and export trade flows. Limited credit is available and most working capital is generated within the industry. Financial resources are fully extended and are a major constraint to export expansion (FAO/AAADC, 1997).The main inputs are veterinary products, which are now imported, distributed and retailed entirely by the private sector. The other important input for the livestock industry is the feed and it is a major constraint that government is making only limited effort to improve through research on cultivated and irrigated fodder and by range management through pilot projects (Ibrahim, 2004). But would that be sufficient to deliver the expected results or is it as the case of many Sub-Saharan Africa (SSA) countries where " national policies have not provided the right incentives while agricultural and trade policies were also damaging the interests of poor people in their own countries or other developing countries delivered the expected results". Liberalisation of markets has not delivered the expected results because markets do not function smoothly or, in some cases, even exist. Access to assets (such as land and water) is unequal and often reflects intractable patterns of inequality. Poor people’s decisions are geared to avoiding risk and vulnerability rather than optimizing investment returns (Brückne, 2004). The livestock sector in Sudan has suffered from negligence compared to the relatively better supported irrigated and mechanized farming. Development spending has hovered around 1% of public investment in spite of livestock's 10-20 per cent contribution to GDP. Some reasons for the neglect include largely satisfied domestic needs, exports dominated by trade in live animals and the difficulties of "investing" in nomadic and agro pastoral systems (FAO, 1997). The main development policies formulated during the last 15 years include the following: 1. The Economic Salvation Programme (1990-1992): the strategies under this programme were liberalization of trade and exchange rates, removal of subsidies on inputs and energy products, expansion of credit for agriculture, abolition of some monopolies, measures to encourage private investment and improvement of public

30 services. Objectives of the salvation programme were not realized for the livestock sector, as it neglected livestock production and export side. Liberalization of trade policy was not effective in the livestock sector. The Economic Salvation Programme had no impact on the livestock industry because it was of very short duration. It did not achieve its goals. 2. The comprehensive National Strategy (CNS) (1992-2002): the purpose was to confirm the policy of liberalizing the economy via: - allowing the value of the national currency to be determined by the market with the Central Bank having a regulatory function only; - establishing broad forms of private ownership in all non strategic economic sectors. -paying particular attention to cooperative ownership; and -reducing the size of the public sector through restructuring in terms of implementation of liberalization policies. Ibrahim, (2004) stated that; "some of the stated tools, including the improvement of the marketing system, were basically sound but the main impression is that targets have been set without detailed analysis of the potential and constraints. There was no detail in the plan or in supporting documents of how specific target were to be achieved. Whereas documentation of government policy is poor, the private sector-led execution, with government support, has been more impressive. Ibrahim continued to state that, in the livestock sector "positive features were the leasing of the Kadaro abattoir to the Irish/Sudanese consortium, establishment of the Animal Resources Bank, encouragement of the private sector to supply veterinary products and the zero based budgeting of MAR and ARRC following institutional restructuring". Objectives of this policy were not fully fulfilled. Value of the national currency determined by the market inflated 170 times. Privatization was established in some strategic economic sectors and even the positive features like leasing of the Kadaro abattoir to the Irish/Sudanese consortium has again become fully governmental. There were attempts of reducing the size of the public sector through restructuring. The Livestock and Meat Marketing Corporation (LMMC) is an example of this. In April 2002 it was dissolved and replaced by the Animal Resources Bank, which created institutional problem in the livestock marketing sector.

31 3. The Millennium Strategy for the Development of the Agricultural Sector (2007- 2031): It focused on the agricultural sector with all its sub-sectors: the traditional rainfed, the semi-mechanized rainfed, the irrigated, the livestock and fisheries, the natural resources, and the irrigation and water resources. It is an outcome of collaborative efforts by the Ministries of Agriculture and Forests, Animal Resources and Fisheries, Irrigation and Water Resources and Science and Technology. Major objectives envisaged for the long-term strategy comprise: food security; promotion of agricultural exports; sustainable development of natural resources and control of desertification; poverty reduction; forward linkages with those sectors supplying agriculture with inputs and backward linkages with those sectors receiving agricultural products and raw materials. However, if conducive policies are adopted and sustained, livestock exports may well regain their relative importance in the long run (Ibrahim, 2004). 4. Five years development plan from 2007 to 2011. The Millennium Strategy became invalid once the new Government of National Unity (GONU) took power. The announced Government policy within the five years development plan in June 2006 is called the Green Mobilization (Al Nafra Al Khadra). Policies issued for the 5 year Plan for achieving the livestock sector development in the Sudan are the following: a. Expansion in veterinary drugs and vaccines manufacturing and provision of veterinary services to nomads. b. Focus on research, capacity building and livestock genetical improvement. c. Rehabilitation of veterinary quarantines, slaughterhouses and tanneries. d. Baled dry fodder production from the rainy season to be available during summer.

e. Establishments of Dams, Haffeers and other water reservoirs for livestock. Accordingly, the funds available for the animal production sector will be 37%, out of 313 billion SD for 2006. The source of finance will be 60% Governmental and 40% through local banks. The Green Revival policy within the 5 year Plan has the following features: - Provision of credit facilities for the public and private livestock sectors (governmental; cash, bonds and promissory notes; loans from the banking system - credit lines and loans). The cost of finance (equivalent to rate of interest) will be 5% annually instead of the present 12%, and the difference of 7% will be paid by the

32 Ministry of Finance and National Economy. Credit facilities will have longer grace periods and 4 years pay back period. - Concentration on human element and capacity building. Establishment of specialized institutes in all livestock industry sectors. - Encouragement of modern dairy production (both for milk and meat production). - Enhancement of promotion programmes. - Designing programmes to develop livestock production exports. The implementation of this new policy has only started and results are to be seen.

33 CHAPTER FOUR SURVEY RESULTS

4.1. Socio-economic characteristics of markets and market actors A major objective of this study was to describe the socioeconomic characteristics along the market chain for sheep and goats. In order to shed light on the link between health issues at specific market point, or points along the chain from producers (village, households) to consumers (domestic and export markets), as indicated in the market chain flow chart presented in Chapter 2.1, 15. This is the base for which different survey tools (questionnaires) were developed to focus on health and market constraints (issues) at each point in the chain. The aim was to identify the activities associated with the market and traders that could either promote or constrain market access and flow. The expected outcome was to develop a better understanding of the activities through which the sheep markets in Sudan could develop a competitive advantage and create more value to the stakeholders. By using the value chain model we were hoping to characterise the system for the sheep markets in the Sudan through which we could identify sequence of primary and supporting activities that offer the local consumers and importing countries a level of value that exceeds the cost of activities which would therefore result in a greater profit margin.

4.1.1. Producers characteristics, types of export sheep and preferred live sheep weights in export markets The production system in the Sudan is not adequately market-oriented, and there is little strategic production of sheep for marketing except some sales targeted to export market by small producers in Western, Eastern and Central Sudan. More or less the same as in Ethiopia, where producers are not adequately market oriented and small producers target traditional Ethiopian festivals for sale other than sporadic sales when there is need for cash (Jabbar, 2006). Producers' characteristics from the household surveys in the three states (Gedarif, Blue Nile and west Kordofan) are shown in Table 4.1. Dependence on livestock as sole or main source of livelihood is higher in Blue Nile followed by

34 W.Kordofan and Gedarif. In Blue Nile state as well as in Gedarif state, the seasonal movement pattern is the prevailing type of livestock management, 67.2% of households in B. Nile and 64.4% of households in Gedarif. In West Kordofan state 64.4% of households were sedentary. In the three states the permanent type of movement was very low 6.7% in Gedarif, 4.3% in B. Nile and 3% in W. Kordofan. Table 4.1. Household type and system of management in the three states:

% Households by source of income % hh by livestock management type State Livestock Mainly Mainly Livestock Sedentary Seasonal Permanent rearer livestock crop, and crop movement movement only minor minor equally crop livestock important Gadarif 28.9 33.3 17.8 20.0 28.9 64.4 6.7 Blue Nile 51.7 37.9 4.3 6.0 28.4 67.2 4.3 W.Kordofan 14.9 64.4 13.9 5.9 64.4 31.7 3.0 Source: Households survey data, 2005. Ownership and numbers by state in the survey villages and households is shown in Table 4.2. The average number of sheep per household was the largest in the Blue Bile state (556 heads) compared with W.Kordofan (30 heads) and Gedarif (48 heads). Inventory changes during the year 2004 in the sample households by state revealed that the weighted average of sheep slaughtered for home consumption was 1.8%, mortality rate was 7.7% and the off-take rate was 38.2% for the three states as shown in Table 4.3. Table 4.2.Inventory of the sheep ownership and numbers by state in the survey villages and households

State Numbers of Numbers of Total Sheep Average Range Villages hh surveyed population number per surveyed household Gadarif 8 7990 386500 48 3 - 70

Blue Nile 5 2760 1535500 556 3 - 750

W. 6 1704 51750 30 4 - 25 Kordofan Source: Households survey data, 2005.

35 4.3. Sheep inventory changes during the last 12 months (2004) in the sample households by state

State Given out as Slaughtered Slaughtered Lost/stolen Mortality Off- social/religious for home for social/ (%) rate (%) take gift (%) consumption functions rate (%) (%) Gadarif 1.9 1.9 1.5 1.7 5.8 50.9 B. Nile 0.4 1.8 0.8 1.5 10.8 31.3 W. 0.4 1.6 0.9 2.8 5.8 31.1 Kordofan weighted 0.9 1.8 1.1 1.9 7.7 38.2 Average Source: Households survey data, 2005. Animal characteristics in terms of health, quality, safety, productivity and other criteria were identified from interviews of traders, livestock markets and households. It is worth mentioning that Middle East markets have a preference for sheep carcasses which are in the range of 8 to 12kg carcass weight, because of a perception that the smaller the lamb, the younger the animal. The local sheep breeds in Saudi Arabia — the ‘fat tail’, Harri, Nagdi and Awassi sheep — produce light and lean lamb carcasses that are considered to be of highest quality and subsequently receive the highest prices in the market. Sheep meat exports to the Middle East from different countries, except Sudan, have historically been in the form of frozen carcasses. With improvements in technology the market now expects chilled lamb cuts and carcasses for the growing food industry, restaurants, and retail sectors. Saudi Arabia market has a preference for live sheep within the range of 35 to 45 kg live weight, the first category is mainly during Hajj and for religious purpose Haddi, and the second category is demanded throughout the year. The animals should be no more than 3 years of age (3 pairs of permanent incisor teeth) unless otherwise specified in the import permit. In the Sudan the output of the type of sheep and the quality as a product are indicated in Table 4.4, and by state and markets of traded breeds in Table 4.5.

36 Table 4.4. Sudanese live sheep and sheep meat export quality Export weight Quality 1. Heavy weight: 45 Kg live weight. 1. High quality; Desert or pure breded animal (17 Kg and above carcass weight) (Hammari, Kabashi, Zaghawi, Meidoub, Wateish, Rufaa, Ashgar, Butana, Dubasi) live 2.Medium weight: sheep. 35 kg live weight 13-16 kg carcass 2. Medium quality; Crosses : weight ( Desert X Nilotic) X Desert = Shawrani. 3. Light weight: 25 kg lwt (Desert X Zaghawi) = Shawrani. 3. Low quality; Crosses: Garage (Baggara type). 4. Meat: 4. High quality lamb meat (Halal meat, fat carcass, 11.5-12.5 kg carcass weight Removal of Specific parts, etc.) Three categories: i- Fat and lean. ii- Freshly killed and chilled. iv. Importing country consumers' preference demand

Source: Traders survey data, 2005.

Table 4.5. Dominant sheep breeds (or types) by State State Hamari Abrag White Ashgar Ahmar Kabashi Asfar Zaghawa Garage Gedarif 0 3 2 2 3 0 1 0 0 Blue Nile 0 2 4 1 3 0 1 0 0 W.Kordofan 10 1 0 3 0 4 0 2 2 Total 10 6 6 6 6 4 2 2 2 Note: White is also called Watish, Rofa'a, Shebeilat, and Kenana. Abrag is also called Musalami, Dubasi. Ahmar is also called Kenana. Source: Traders survey data, 2005. Numbers mentioned in Table 4.5. Is number of times the specified sheep breeds were mentioned by traders. Traders were 56 who reported: 16 traders from Gedarif state, 21 traders from Blue Nile and 19 traders from W. Kordofan state. Not each breed was mentioned by one trader, some of the traders did not mention sheep breeds at all, and others mentioned more than one breed within the same state. It is common in west Kordofan State to find some breeds (or types) other than Hamari coming from Darfur State, as the case in Ghebeish livestock market which is considered to be number one and most famous primary market in the Sudan for Hamari sheep in West Kordofan state. But there is also the flow of other breeds or

37 types such as Zaghawa sheep, called locally as Showrani from East and North Darfur States to Ghebeish market (Table 4.6.) Table 4.6. Markets by states from which sheep come to Ghebeish primary market: State Name of Distance Breeds and type Percentage from Means of market (km) total inflow transport East Toeisha 70 - 90 Zaghawa sheep 28 On hoof Darfur Heskanita (Showrani) Khazan Gadeid Abu Sofian Abu Karinka North Kornoy, 150 Zaghawa sheep 20 On hoof Darfur El Teina West El Sogah 45 Desert sheep 50 On hoof Kordofan El Tiboon 60 (Hamari) and Adeila El Magroor 40 El Sereiha 50 Omdebeiba 10 Desert sheep 2 On hoof (local) (Hamari) Abu hebeilat Near by localities Source: Survey data 2006. Producers sell animals at their own village to visiting traders or they go to market for sale or do both (Table 4.7). For the three states, the sales outlets in 2005 was greater in livestock markets compared with 2004, could be due to the lower effective demand and prices. In W. Kordofan, selling place was greater in markets in 2005 (67.2%) compared to Gedarif and B. Nile states and lower during 2004 (45.5%) compared with the two states. Since W. Kordofan state is considered to be the most economically active, with highest sheep population, compared with the other two states. Table 4.7. Sales outlets for sample sheep producers by state: State Selling place in the year (2005) Selling place in the year (2004) Market Village Village and Market Village Village and Market Market Gadarif 71.1 13.3 4.4 57.8 2.2 2.2 Blue Nile 73.3 6.0 0.9 57.8 3.4 0.0 W.Kordofan 76.2 4.0 15.8 45.5 1.0 9.9 Average 74.0 6.5 7.3 53.1 2.3 4.2 Source: Households survey data, 2005. Distances from which livestock come to primary and secondary markets is about 20 km for sheep (most popular or the mode) and 5 km for cattle, as indicated in Table

38 4.8. But at terminal market level distances from which animals come from, vary greatly and range from 1200 to1500 km for cattle (on hoof) and 1000 km for sheep. Table 4.8. Distances livestock travel to come to current market Statistics Distance livestock come to current market (km) Cattle Sheep and goats Mean 65.0 57.5 Median 20.0 20.0 Mode 5.0 20.0 Std. Deviation 113.6 65.1 Coefficient of variation % 174.8 113.3 Minimum 3 5 Maximum 400 250 Range 397 245 Source: Traders survey data, 2005. 4.1.2. Livestock markets characteristics A sample of 23 rural and urban livestock markets- 18 primary, 3 secondary and 2 terminal markets- were surveyed in 2005. The majority of primary markets (43%) meet once a week, others daily (33.3%) and a few twice a week (19%). Secondary markets and all terminal markets meet daily except on Fridays. There is inadequate information on livestock at the markets and they have inadequate infrastructure, except El Salam terminal market, and ineffective and inadequate institutional set-ups to serve traders. These are some of the major reasons for the poor performance of the livestock markets, as shown in Table 4.9. Lack of market infrastructure and services. Table 4.9. Number of markets with infrastructure types by state and type of market State Market Total Markets With markets Fences Holding Vet. Quarantine grounds clinics centers Gedaref Primary 5 0 0 1 1 Secondary 1 1 0 0 0 Blue Nile Primary 6 0 0 3 0 Secondary 1 0 0 0 0 W.Kordofan Primary 7 0 0 1 1 Secondary 1 1 0 1 0 Khartoum Terminal 1 1 1 1 1 (Salam) Terminal 1 1 1 1 1 (Moeilih) Total 23 4 2 8 4 Source: Livestock markets survey data, 2005. The peak and lean periods of business in primary and secondary markets by state are indicated in Table 4.10. There is great variation of seasonality even within the same

39 state. In El Salam terminal market peak period of business is from July to August whereas the lean period of business is during February to May (Summer Season). The main means of transport to primary and secondary livestock markets by state are as follows: 50% on hoof in Gedarif State and 50% by trucks. In W.Kordofan 100% on hoof. In Blue Nile State 85.7% on hoof and 14.3% by boat across the river. Table 4.10. Number of animals traded per market day during peak and lean seasons of business by state and market type State and market Peak season average/market Lean season average/market type day day Sheep Goats Sheep Goats Gedarif Primary 925 217 257 30 Secondary 1800 150 500 50 Blue Nile Primary 188 45 188 29 Secondary 200 100 30 20 West Kordofan Primary 1975 230 1975 230 Secondary 25000 0 1850 100

Source: Livestock markets survey data, 2005. The percentage of sheep sold from the average numbers of sheep supplied per market day at the primary, secondary and terminal markets level were more than 64% except W.Kordofan secondary market (El Nihood market) was 18.4%. That could be due to the limitation of capital, over supply of sheep or sales outside the market. Table 4.11. Table 4.11. Average numbers of sheep supplied per market day and percent of sale by market type and state Primary Secondary Terminal State Supplied/day % Supplied/day. % Supplied/day % sold sold sold Gedarif 1200 64.6 800 81.25 - - Blue Nile 72 86.1 150 66.7 - - W.Kordofan 1027 83.7 12501 18.4 - - Khartoum - - - - 66085 80.1 Males - - - - 40995 77.5 Females - - - - 25090 84.4

Source: Livestock markets survey data, 2005.

Supplied 45000 40000 Sold 35000 Supplied Number in 30000 Sold Heads 25000 20000 15000 10000 5000 0 Males Females Supplied an Sold

Figure 4.1. Sheep supplied and sold by sex in El Salam Terminal Market Source: Livestock markets survey, 2005.

41 4.1.3. Traders' Business Characteristics 4.1.3.1. Assets 4.1.3.1.1. Human Capital The average age of sample traders in the terminal market is 45 years, while age of traders at primary and secondary markets range between 35 and 44 years for 37.5% of the sample. About 26.8% of sample traders ranged between 25 and 34 years. The age of 19.6% of traders in primary and secondary markets ranged between 45 and 54. Only 16.1% are of age 55 years and above. In terms of educational level of traders there was a difference between traders operating in primary and secondary markets compared to those operating in the

terminal market. Illiteracy level was 48% among traders in terminal markets while in primary and secondary markets it was 37.5%. There are more illiterate among terminal market traders compared with primary and secondary market traders. That could be due to the majority of traders were originally illiterate drovers from production areas, delivered animals and stayed at the terminal market. Initially they worked as brokers then gradually shift to be traders. The university graduates among terminal markets traders are 6% compared to 3.6% at the primary and secondary markets level (Table 4.14). Table 4.14. Educational level of traders at primary and secondary markets compared with terminal market Educational level of traders Percent Primary and Terminal secondary market market Illiterate 37.5 48 Khalwa (traditional education , pre –schooling) 7.1 20 Primary school 28.6 20 Intermediate school 14.3 0 Secondary school 8.9 6 University Graduate 3.6 6 Total 100.0 100 Source: Traders survey data, 2005. Traders come from a variety of occupational backgrounds. Higher proportions of terminal market trader’s fathers (38%) were farmers or came from the field of agriculture compared to 33.9% of the primary and secondary market level. The largest proportion of secondary market traders were students followed by farmers (Table 4.15.). Most of the traders came from a non-livestock trading family background as

42 the fathers of 80.4% of traders at primary and secondary markets, and 82.8% of traders at the terminal market had non- trading family background (Table 4.16).

Table 4.15. Occupation of trader's' fathers by state in primary and secondary markets Occupation of traders' fathers % of traders by state Total Gedarif Blue Nile Western (%) Kordofan Agriculture 43.8 23.8 36.8 33.9 Livestock/Agriculture 12.5 28.6 21.1 21.4 Livestock trader 25.0 9.5 26.3 19.6 Livestock breeder/ producer/nomads 6.3 33.3 5.3 16.1 Chief local court 6.3 0.0 0.0 1.8 Ex- Hambaty 6.3 0.0 0.0 1.8 Furniture trader 0.0 0.0 5.3 1.8 Livestock market Guarantor 0.0 0.0 5.3 1.8 Livestock shepherd 0.0 4.8 0.0 1.8 Total 100.0 100.0 100.0 100.0 Source: Traders survey data, 2005.

Table 4.16. Occupation of traders' fathers by market types Occupation of traders' fathers markets Primary and secondary Terminal Agriculture 33.9% 38% Livestock/Agriculture 21.4% 0.0 Livestock trader 19.6% 17.2% Livestock breeder/ producer/nomads 16.1% 13.9% General business 0.0 13.8% Livestock shepherd 1.8% 10.3% Others 9.0 6.8 Total 100.0% 100.0% Source: Traders survey data, 2005.

43 4.1.3.1.2. Physical and financial capital The initial sources of finance of traders at all market levels are mainly own resources. The second main source is gifts from parents or family members. Traders at all levels of livestock markets start with small capital and grow slowly. Table 4.17 indicates sources of finance of traders at primary, secondary and terminal markets when business was started. In the trader's questionnaire, traders were asked if they own weighting scale to weight their animals to determine prices. The answer was that, animals are not weighed in the market because prices are determined and established by visual assessment, so virtually no trader owned any weighing scale nor did the market authorities provide any. In an answer to the question about trader possession of a shop/house in the market (primary and secondary) where they operated, 71.4% answered no while 28.6% answered yes. At the terminal market only 3.5% possess a house, while 96.5% of traders do not have a shop or house in the market. Table 4.17. Source of finance of traders when business was started by market type Source of finance % of traders by livestock markets Primary Secondary Terminal Own resources 76.6 65.3 79.3 Gift from parents/family members 10.0 26.9 13.8 Gift from relatives 0.0 3.8 0.0 Loan from parents/family members 6.7 3.8 0.0 Inherited from parents 0.0 0.0 6.9 Loan from relatives 6.7 0.0 0.0 Total 100.0 100.0 100.0

Source: Livestock Traders questionnaire, 2005.

4.1.3.1.3. Social capital Participation of sample traders in formal groups or associations that might play a role in the marketing process by providing various services and in price formation was very weak. In primary markets 96.7% of the traders answered no when asked if they are members of any trade association. In secondary markets 69.2% said no. In terminal market 96.5 % are not members of any trade association. Only 3.3% of traders at the primary market levels are members of trade association and 10.6% at the terminal market. At the secondary market level membership is the highest (30.8%) in trade association.

44 Since products exchanged in the market are not standardised, with no formal mechanism for contract enforcement and dispute settlement, when various market information (price, supply, demand) are not easily and readily available in the public domain, market operators develop alternative means or institutions to facilitate transactions. Under such circumstances social capital may play a critical role in facilitating market exchange. Social capital is broadly defined as a ‘stock’ of trust resulting from close functional or emotional attachment to a group or society that facilitates the provision of public goods (Fukuyama, 1995; Greif, 1993; Jabbar et al, 2006). For traders of a particular commodity, social capital may be measured by the extent of network of trading contacts available to each trader. Such network may facilitate exchange between anonymous partners, reduce transaction costs of searching potential partners, and also get access to market information (Jabbar, 2006). The general nature of business activity of the sample traders as buying and selling in primary and secondary markets in the three states was 80.4% compared to 90% at terminal market. Those who act as broker/agent/middleman for others were 10% for terminal market (Khartoum State) and 1.8% for primary and secondary markets (Table 4. 18.).

Table 4.18. General nature of business activity of sample traders in primary and secondary markets in the three states compared with terminal market S/N Nature of business activity Percent primary and terminal secondary 1 Buy and sell animals 80.4 90 2 Act as a broker/agent/middleman for others 1.8 10 3 Buy and sell + act as a broker 16.0 0 4 Buy and sell + act as a broker + act as 1.8 0 guarantor Total 100.0 100

Source: Traders survey data, 2005.

45 4.1.3.2. Business practices 4.1.3.2.1. Market coverage and business concentration Almost 52% of the traders in primary and secondary markets had been in this business for periods ranging between 5 to 15 years, while at terminal market 46.4% had been in this business for 16 to 25 years (Table 4.19). Table 4.19. Distribution of sample traders by number of years they have been in business by market type Yrs in business Primary and secondary (%) Terminal (%)

Less than 5 10.7 3.6 5_15 51.8 21.4 16_25 23.2 46.4 26_35 8.9 25 More than 35 5.4 7.6 Total 100.0 100.0 Source: Traders survey data, 2005.

Many traders conduct their activities in more than one market as indicated by Figure 4.2 and Table 4.20. About 28.6% of those operate in primary markets conduct their activities in only one market, 28.6% of traders in primary and secondary markets operate in one primary market, 19.6% in two primary markets, and 10.7% in three markets. About 5.4% operate in four and 14.3% in five or more primary markets. Only 21.4% of traders do not operate in any other market. About 55.4% of traders operate in one secondary market, 7.1% in two secondary and only 1.8% operate in three secondary markets. About 12.5% of the traders from primary and secondary markets work in one terminal market and only 1.8% operate in two terminal markets. This indicates that though there were no formal barriers to enter any market for any livestock trader, most traders operated in known local markets or market routes about which they had good knowledge, and might not generally venture into unknown territory like terminal market. There is no problem in the mobility of traders to do business in different markets and the businesses would not close in their original markets where they operate. This is because of the market day's system, once or twice per week and traders adjust their businesses activities according to market days in the different primary markets. Although the business is highly personal in nature, but transactions are not affected by the physical presence of the parties in their original markets or their absence from the

46 premises of the markets. This is because their dynamic action promotes supply activities to markets they are originally operating in as well as draining other markets by their purchases. In other words, activities of traders evacuate other markets by their purchases. Traders' activities between markets, the one which are working in and other neighboring markets enhance trade activities.

0 Number of Traders Number 1 2 3 4 5 6 9 10

Number of markets

Figure 4.2. Number of markets visited by traders for purchasing animals in the last month (April 2005) Table 4.20. Numbers of primary, secondary and terminal markets traders operate in Number of livestock markets Primary market Secondary Terminal traders market traders market traders (%) (%) (%) One 28.6 55.4 12.5 Two 19.6 7.1 1.8 Three 10.7 1.8 0 Four 5.4 0 0 Five and more 14.3 0 0 Total 78.6 0 0 None 21.4 0 85.7 Total 100.0 100.0 100.0 Source: Traders survey data, 2005.

47 4.1.3.2.2. Product type and quality At all market levels, about half of the traders (56.7%) do not target any specific breed for purchases while the other half target specific breed for purchase, (Table 4.21). Table 4.21. Percentages of traders targeting different breeds for purchases at primary, secondary and terminal markets Targeted Breeds Primary Secondary Terminal Specific breed 43.3 50.0 46.7 Any breed 56.7 50.0 53.5 Total 100.0 100.0 100.0 Source: Traders survey data, 2005. There is specialization in trade activities in the three states. Some traders purchase small lamb of 11.5 - 12.5 kg or the slaughter type of sheep for lamb meat export. Others specialize in live sheep for Haddi export of 13 - 16 kg live weight. Final category of traders is the non specialized group; they prefer to purchase all ranges of weight (Tables 4.22, 4.23 and Figure 4.3). It appears that about half of traders in West Kordofan are specialized in the 17 kg and above (live sheep export animals), Gedarif in the slaughter sheep meat export of 11.5 - 12.5 kg carcass weight and Blue Nile in all ranges of weight. Table 4.22. Preferred sheep weight by traders for their purchases (in kg carcass wt) in primary and secondary markets by state State % of traders with preferred sheep weight in kg carcass weight 11.5 - 12.5 13 - 16 17 kg and All ranges Total kg kg above of weight Gedarif 50.0 18.8 18.8 12.5 100.0 Blue Nile 23.8 19.0 9.5 47.6 100.0 Western Kordofan 5.3 21.1 42.1 31.6 100.0

Source: Traders survey data, 2005.

48 12

6 Prefered sheep wt.

Frequency 11.5_12.5 (slaughter 4 sheep meat export)

13_16 (Haddi sheep)

2 17 and above (Heavy wt.export)

0 All ranges of weight Gedarif Blue Nile Western Kordofan

States

Figure 4.3. Preferred sheep weight by traders for their purchases in primary and secondary markets by state

Table 4.23. Distribution of traders by their preferred sheep weight in kg carcass weight for purchases in primary and secondary markets in the three states Ranges of weight (carcass weight) Type of market Primary % Secondary % 11.5 - 12.5 kg (meat export) 3 10.0 1 6.3 13 - 16 kg (live sheep Haddi export type) 5 16.7 6 37.5 17 kg and above (Live sheep heavy wt. export) 9 30.0 4 25.0 All ranges of weight 13 43.3 5 31.3 Total 30 100 16 100 Source: Traders survey data, 2005.

4.1.3.2.3. Common diseases: Most common diseases for which animals were excluded from the primary and secondary markets in the three States are shown in Table 4. 24. Diseases were Heart Water, PPR, Jaundice, Sheep pox, severe emaciation, heavy Pneumonia, generalized mange, Trypanosomosis, and recently foreign bodies in heavy export quality sheep – especially in West Kordofan State. At El Salam terminal market in Omdurman (Khartoum State), diseased animals such as having emaciation, diarrhea, pneumonias,

49 and severe cases of mange are usually bought by specialized traders. They cure and fatten them for reselling in the terminal market. The different health, safety and quality criteria the traders consider when purchasing sheep and goats are basically to avoid diseased animals (19.8% at primary market level and 38.1% at secondary market) and select fat animals (43.8% at primary market level and 34.3% at secondary market level (Table 4.25). Table 4.24. Number of traders reporting most common diseases for which animals were excluded from the primary and secondary markets in the three States Diseases State Gedaref Blue Nile W.Kordofan Heart Water 3 6 1 PPR 3 5 0 Jaundice 2 5 0 Sheep pox 0 0 3 Emaciation 0 1 3 Pneumonia 1 2 2 Foreign body 0 0 1 Trypanosomiasis 0 0 1 Mange 0 1 1 Source: Livestock markets survey data, 2005. Table 4.25. Distribution of traders according to health, safety and quality criteria the traders consider when purchasing sheep and goats by market type Type of Safety and quality criteria Percent market Primary Avoid animals with Pox, PPR , Fascioliasis, abscesses , 19.8 sheep pox, mange, Heart Water Avoid cough and pneumonias 9.9 Avoid Jaundice Disease 3.3 Avoid unhealthy, should be disease free 13.3 Selection of fat good general health and not emaciated 43.8 Palpation points for fatness; tail, chest, back 3.3 Purchase clean smooth glistening hair not rough coat (rough 6.6 coat is a sign of internal parasites) Total 100.0 Secondary Disease free and eliminate diseased animals, avoid Abscess 38.1 Select fat and good shape animals, good general health and 34.3 appearance condition (active) Avoid Mange, sheep pox, free from foreign bodies 11.4 (Omderradim) Export market standards, pure bred and fat sheep, red or 16.2 Ashgar coloured sheep, smooth hair coat, select 12 kg carcass wt. Total 100.0 Source: Traders survey data, 2005.

50 4.1.3.2.4. Sources of information The first source of information for traders' purchase at the primary and secondary markets, on prices, supply, and demand is the personal observation (88.9%), the second is by speaking with brokers and or agents (37%) and the third is by speaking with other traders (36.2%). Information on supply, demand and prices are essential ingredients in any trading business as decisions on transactions and prices are made on the basis of this information. At the primary and secondary market levels, the available sources of their information on prices, supply and demand are shown in Table 4.26. The same sources of information are applied to the supply and demand in the sale markets, (Table 4.27). Table 4.26. Distribution of traders according to sources of information in primary and secondary markets on prices, supply, and demand condition of his purchase market Sources of information Percent of first Percent of Percent of third source second source source Personal observation 88.9 6.3 6.4 Speaking with regular 3.7 43.8 2.1 customers and suppliers Speaking with brokers/agents 5.6 37.5 31.9 Speaking with other traders 1.9 8.3 36.2 No source 0 2.1 6.4 Mobile telephone 1.9 2.1 10.6 Exporters agents 0 0 4.3 From another primary market 0 0 2.1 Total 100.0 100.0 100.0 Source: Traders survey data, 2005. Table 4.27. Distribution of traders according to main sources of information in primary and secondary markets on price, supply and demand in the sale markets Sources of information Percent of first Percent of Percent of third source second source source Personal observation 81.5 4.3 4.5 Speaking with regular 1.9 34.0 2.3 customers and suppliers Speaking with brokers/agents 9.3 38.3 25.0 Speaking with other traders 1.9 14.9 40.9 No source 0 2.1 9.1 Mobile telephone 3.7 4.3 9.1 Exporters agents 0 0 6.8 From another primary market 0 0 2.3 Radio/TV 0 2.1 0 Total 100.0 100.0 100.0 Source: Traders survey data, 2005.

51 Main Sources of traders' information at the primary and secondary markets levels on price, supply and demand in the export and import market is 77.8% personal observation. Those observations include the flow of certain types of animals, bearing the features of export quality animals and the effective demand on them. This is followed by 35.4% as a second source which is speaking with regular customers and suppliers and speaking with other traders 36.4 % (Table 4.28). Table 4.28. Distribution of traders according to main sources of information in primary and secondary markets on price, supply and demand in the export/import market Sources of information Percent of first Percent of second Percent of third source source source Personal observation 77.8 2.1 2.3 Speaking with regular customers 5.6 35.4 4.5 and suppliers Speaking with brokers/agents 11.1 31.3 27.3 Speaking with other traders 1.9 16.7 36.4 No source 0 4.2 9.1 Mobile telephone 3.7 6.3 9.1 Exporters agents 0 0 6.8 From another primary market 0 0 2.3 Radio/TV 0 4.2 2.3 Total 100.0 100.0 100.0 Source: Traders survey data, 2005. The traders first source of information on changes in government policies, regulations and taxes were obtained from other traders (36.8%) followed by newspapers (3.1%), radio/television (11.1%). Almost 15% of traders have no source or access to information (Table 4.29). Table 4.29. Distribution of traders according to main sources of information in primary and secondary markets on taxes, regulations and other government policies Sources of information Percent of first Percent of second Percent of third source source source Personal observation 22.2 0 3.2 Speaking with regular customers 9.3 13.2 3.2 and suppliers Speaking with brokers/agents 16.7 28.9 6.5 Speaking with other traders 9.3 36.8 29.0 No source 14.8 5.3 6.5 Mobile telephone 9.3 10.5 29.0 Exporters agents 3.7 0 16.1 From another primary market 0 2.6 0 Radio/TV 11.1 2.6 6.5 Marketing agencies 1.9 0 0 Total 100.0 100.0 100.0 Source: Traders survey data, 2005.

52 4.1.3.2.5. Contract violations

Transactions in livestock markets are based on verbal agreements negotiated between the parties involved. There is no system of written documentation of transactions with the exception of some cases on credit bases where they have documents like (Kimbyiala) indicating the transaction as well as witnesses, or bonds, deferred payment chques and the market fees receipt where they record the animal type and the agreed price, seller and buyer name. This lack of any written document increases the probability of contract violations. It is worth mentioning that

certification fees are actually paid by only 16.6% of the traders and 83.4% or the majority of traders did not pay the market fees. The number of dispute settled by local courts, with suppliers as well as with customers, is 6%, among primary and secondary market. Traders experienced contract violations, in cases of selling twice the same animals to another person, or attempt to renegotiate price. There were no cases of disputes settled by higher level courts, or association arbitration, or community leader mediation, or by informal mediation by friends or by brokers/agents. Number of disputes settled by higher level courts with customers was 2%, settled by community leader mediation with customers was also 2%. The prevailing system of solving contract violations among primary and secondary market traders is Joodia. It is a system that involves a group of people from the community with talent in problem solving. At the terminal market, trader's dispute settlement is solved by the informal mediation of friends, brokers/agents or by Joodia.

4.1.3.2.6. Property rights

Theft was the most common problem. Traders at primary and secondary markets faced this at and from stocking grounds (24.5%) , own premises (3.8%), from the market and while trekking (each 3.8%), 1.9% while transporting and at the open pasture (1.9%). About 61% of the sample traders did not suffer from theft of animals during 12 months preceding the survey – 26.5% suffered once from theft and 6.1% twice among primary and secondary market traders. These sheep traders lost an average of 132,610 Sudanese Dinnars ($ 567) due to theft. In 26.1% cases of theft, the traders at primary and secondary markets do not suspect any one for stealing his

53 animals or do not know. Six percent are from known families who steal, 2.2% from own employee. In order to protect animals from theft, traders employ a shepherd to look after animals and guard them, 4% said they don't keep animals long time. When animals were trekked the traders’ means of protecting during trekking or transporting varies: 44.4% said they employed a good shepherd to look after animals and guard them, 17.8% traveled in convoy, 6.7% had night halt near a reputed person's house.

4.1.3.2.7. Major Marketing problems

In about 76% of primary and secondary markets, the local administrative units are responsible for market fees, taxation, security, infrastructure development as well as being responsible for issuing trade licenses. In twenty one percent of primary markets no one is responsible. At the administrative units' level, some of the local community leaders have developed arrangements with some private individuals to collect fees from the market transactions without providing any services. In Blue Nile State primary markets, contractors, market guarantors or no one are responsible for market

management and fees. Sample traders were asked to mention three marketing problems, in descending order of importance, for sheep and goat marketing. The most important sheep marketing problems from traders' point of view in primary and secondary markets in the three states are summarised in Tables 4.30. Unstable price rank number one (22.6%) among sheep traders, followed by unauthorized road taxes (15.4%), multiple taxes (11.3%) high taxation (9.4%) and no or limited access to formal credit (9.4%) appeared to be the main problems. Second and third ranked problems for sheep and goat marketing and a more disaggregated list of the most important problem are shown in Table 4.31.

54 Table 4.30. Distribution of traders according to most important sheep marketing problem from traders' point of view in primary and secondary markets in the three states S/N First sheep marketing problem % 1 Unstable prices 22.6 2 Unauthorized road taxes 15.1 3 Multiple taxes 11.3 4 High taxes 9.4 5 No or limited access to formal credit 9.4 6 Low local price 5.7 7 Market have no infrastructure/facilities 5.7 8 Unlicensed traders in market 3.8 9 High veterinary certificate fees (official and 3.8 unofficial) 10 Others 13.3 Total 100.0

Source: Livestock markets survey data, 2005.

Table 4. 31. Major marketing problems as perceived by traders in primary and secondary markets in the three States Major problem Sheep traders 1st rank 2nd rank 3rd rank Unstable prices 22.6 11.5 0.0 High local price 1.9 5.8 6.5 Low local price 5.7 1.9 0.0 Low export market price 1.9 7.7 6.5 Poor quality animals 1.9 0.0 4.3 Absence of grades and 1.9 3.8 2.2 standards High taxes 9.4 9.6 4.3 Multiple taxes 11.3 15.4 6.5 Unauthorized road taxes 15.1 5.8 8.7 Difficulties in obtaining .0 1.9 0.0 license Unlicensed traders in market 3.8 1.9 4.3 Certification not done 1.9 0.0 0.0 properly No system of certification 0.0 3.8 2.2 Market have no 5.7 11.5 15.2 infrastructure/facilities No or limited access to formal 9.4 7.7 4.3 credit No system for dispute 0.0 0.0 4.3 settlement Low demand in importing 0.0 1.9 4.3 countries Low demand in the market 0.0 3.8 10.9 No demand for type of 1.8 3.8 4.3 animals available in market High veterinary certificate 3.8 0.0 4.3 fees(official and unofficial) Disputes with livestock 1.9 0.0 2.2 owners on who pays the fees Tough penalties for not 0.0 1.9 2.2 paying fees Saudi Arabians importers buy 0.0 0.0 2.2 by themselves from producers directly Others 0.0 0.3 0.3 Total 100.0 100.0 100.0

Source: Traders survey data, 2005.

4.1.4. Trader performance 4.1.4.1. Characteristics of recently completed transactions In an attempt to understand the marketing and transaction costs of livestock trading business in the Sudan, information were collected from each sample trader about his most recent completed purchase and sale transactions. For some traders and brokers at primary and secondary markets, the date of the last purchase is the same date of

selling those animals. They purchase and sell on the same day. There is no capital cost for holding stock. But for other traders they purchase and keep the animals for longer periods up to 4 months. Travel and transport cost for traders in primary markets is almost zero or negligible, as they travel either on foot or on donkeys. All transactions were done in physical presence of the contracting parties, most of the costs were direct physical marketing costs; and transfer of property rights involved simple procedures without formal contract negotiations, documentation and enforcement procedures. At primary and secondary markets, categories of sheep purchased and sold by traders is heterogeneous in nature, may be a combination of adult sheep male, young sheep (lamb), adult culled female and adult breeding female sheep at the same time. Average price per animal from this combinations (or mix) differs greatly. In terms of profits for those traders purchasing those mobs or even sometimes single category, the

profit varies from 300 to 500 S.D. (1.3 to 2.2 $) per head. Prices of adult sheep varies from 5000 S.D. to 20000 S.D., numbers purchased starts from one head to 2000 heads. Numbers sold varies from one head to 1900 heads. Ninety four percent of traders did not face deaths or losses during their transactions. Number purchased of lambs varies from 3 to 220 heads (prices 6000 -18000 S.D.) and number sold varies from 3 to 219 (prices 8000-19000 S.D.). 4.1.4.2. Marketing Costs and Margins: Producers selling prices of heavy weight live export quality sheep averaged 71.2% of the export price in Gedarif State (Gedarif), 75% in Blue Nile (Damazeen) and 69.2% in West Kordofan State (Khowei) as shown in, Table 4.32. As for the light export quality lambs the producers price was 76.7% from the export price in Gedarif State, 66.7% in Blue Nile State and 73.3% in West Kordofan state (Table 4.33). The main cost was the producers selling price and the average purchase price by local traders in

57 Gedarif state compared with Damazeen and El Khowei. Market fees were highest in Gedarif state (300 S.D./head) compared with 150 S.D/head and 160 S.D. /head in Damazeen and Khowei. But transport cost to Omdurman market was highest from Damazeen market (1000 S.D./head) compared with 550 S.D. and 600 from Gedarif and Khowei. It is not related to the distance but due to the paved road condition (which needs maintenance) and the availability of trucks. Value added tax was imposed in Gedarif and damazeen but not in El Khowei. While business tax was imposed in Gedarif and El Khowei but not in Damazeen.

58 Table 4.32. Marketing costs and margins for export live sheep (average wt.45 kg) by state of origin (S.D. / head) June 2005

S/N Items Gedarif Damazen Khowei 1 Producers selling Prices 18000 19000 17500 2 local traders margin 2000 2000 1000 3 Average purchase price/head 20000 21000 18500 4 Market fees 300 200 160 5 Middlemen Commission 100 100 100 6 Guarantor 50 50 50 7 Veterinary Health Certificate fees 180 100 100 8 Value added tax 185 100 - 9 State tax stamp - - 50 10 Municipality tax 500 150 65 11 Business tax 125 0 0 12 Producers’ Union 0 25 15 13 Education support fees 0 - 40 14 Veterinary Services Fees (local authority) 180 100 200 15 Federal wounded tax 25 25 25 16 Zakat 40 40 40 17 Shepherds and water cost (3days) 300 - 50 18 Sub-total cost at market level 21300 21890 19395 19 ShowakVet.Quarantine: inspection, vaccination, 385 - - Brucella ovis test and supervision 20 -Khowei Vet. Quarantine fees - - 77 21 -Federal Vet. Inspection, vaccination 150 150 150 22 -Incentives; inspection, vaccination 60 60 60 23 -Brucella test 60 60 60 24 Transportation cost to Port Sudan 468 1000 1000 25 Truck driver incentive and labour cost (for guarding 50 100 140 & keeping sheep in upright position during the drive) 26 Port Sudan local authority fees 50 50 50 27 Port Sudan inspection incentive 50 50 50 28 Unloading at Port Sudan & Loading to Sawakin 50 50 50 29 Transportation cost (Port Sudan- Sawakin) 300 300 300 30 Unloading at Sawakin and shepherd cost 50 50 50 31 Feed & water (Port Sudan/Swakin (7Days) 500 500 500 32 Total cost FOB Swakin 23203 24260 21882 33 Exporters profit margin 2097 1040 3418 34 Selling Price 25300 25300 25300 Selling price FOB Sawakin Sea port = $110 = 25300 S.D. Source: Calculated from field surveys, questionnaires and interviews, 2005.

59 Table 4.33. Marketing costs and margins of light weight export quality lamb (25kg Lwt.-12kg cwt.) from the three originating states to Khartoum State(June 2005) S/N Items Cost in S.D. Gedarif Damazeen El Khowei 1 Producers selling Prices 11500 10000 11000 2 Local trader’s margin 1000 1000 1000 3 Average purchase price 12500 11000 12000 4 Market fees 300 150 160 5 Middlemen commission (purchase) 100 100 100 6 Guarantor 50 200 50 7 Vet. health certificate 180 100 200 8 Business tax 125 - 200 9 Value added tax 185 100 - 10 Feed & labour cost 200 150 500 11 Transport cost to Omdurman market 550 1000 600 12 Inroad tax & expenses 50 100 50 13 Middlemen commission (selling) 200 100 100 14 Labour& feed cost 200 200 200 15 Total cost 14640 13200 14160 16 Profit margin 360 1800 840 17 Selling price 15000 15000 15000

Source: Calculated from field surveys, questionnaires and interviews, 2005. Another example for marketing margins and transaction cost for sheep purchased from Gedarif is illustrated in Table 4. 34. From Gedarif State two categories of sheep are intended for export: heavy weights live sheep (45 kg lwt) to be exported directly from Gedarif to Port Sudan, and light weight sheep (25 kg lwt) intended for meat export from Gedarif to Khartoum state through export abattoirs.

Table 4. 34. Marketing costs and margins for export quality sheep export from Gedarif State (May 2005) Heavy weight live sheep export Light weight sheep meat export from Gedarif to Port Sudan Gedarif to Khartoum (export Abattoirs) S/N Items Cost in % S/N Items Cost In % Sudanese of Sudanese From Dinnars selling Dinnars selling price price 1 Av. purchase price/head 20000 79.1 1 Av. purchase 1250 84.3 Price/head 2 Market fees 300 5.5 2 Market fees 300 6.6 3 Middlemen cost 100 3 Middlemen 100 cost 4 Guarantor 50 4 Guarantor 50 5 Vet. Health Certificate. 180 5 Vet. Health 180 fees Certificate. fees 6 Vet.inspection,vaccination, 385 6 Stocking tax 175 Brucella test & supervision 7 Stocking tax 175 7 Zakat 40 8 Zakat 40 8 Business tax 125 9 Business tax 125 9 Wounded tax 25 10 Wounded tax 25 10 Transportation 550 3.7 cost 11 Transportation cost 465 1.8 11 Feed & labour 200 cost 12 Quarantine &port cost 150 12 Facilitations 50 13 Total cost 21845 13 Total cost 14295 14 Selling Price 25300 14 Selling Price 15000 15 Profit margin 3455 13.7 15 Profit margin 705 4.7

Source: Survey Data 2005.

Sheep prices in the Sudan differ from one locality to another according to the breed and condition of the animal (whether finished (fat), unfinished or semi-finished) and differ within the same breed (or type) according to sex, age or function; whether for breeding or consumption. Three types of sheep were shown in Table 2.7. To reflect price differential of sheep in the three surveyed secondary markets, prices of these three types are shown in Table 4.35. The types are Wateish in Damazeen market, Butana in Gedarif and Hammari in west Kordofan (El khowei).

61 Table 4.35. Price differential of sheep in selected Sudanese livestock markets in January, 2006 (prices per head in Sudanese Dinnars) Type of sheep Damazeen Gedarif El khowei A-Export Quality sheep: Average live weight 45 kg N.A. 22500 18000 Average live weight 35kg 22000 19000 15000 Average live weight 25kg 11000 13000 12500 B-Domestic consumption quality 1-Culled females 17000 20000 18000 2- Mature Males 18000 22000 16000 3-Young females 10000 N.A. 10000 Sales commission 200 200 100 Average selling Price per kg cwt. 1080 1030 1050 meat exporters (S.D. /kg.)

Source: Survey Data, 2006. N.A.: Not available.

Table 4.36 indicates Sudanese Sheep (export quality) marketing margins and costs from Western Kordofan State (El Khowei) to Saudi Arabia (Jeddah Port) in June 2005. The table shows sheep export transaction costs, starting from purchase price to selling price. All cost items were paid by the exporter. The payments include official fees, taxes, commissions, labour and transportation cost, beside associated labour cost. As far as brokers commissions are concerned, they vary greatly depending on the size of the commercial herd, the distance and the effort exerted. The commission ranges between 100 and 500 S.D./head. The gross profit margin of exporter was US $ 19.55 per head.

62 Table 4.36. Estimated cost and margins of Sudanese sheep (export quality) from Western Kordofan State to Jeddah (June 2005) Heavy Weight Live sheep export (45 kg. live weight) Khowei / Port Sudan/Jeddah S/N Items Cost in Sudanese Dinnars (S.D / head) 1 Average purchase price/head 15000 2 Market fees 100 3 Middlemen commission 150 4 Guarantor 50 5 Health inspection (W.Kordofan Ministry of 100 Agriculture.) 6 State tax stamp 50 7 Producers Union fees 15 8 Education support fees 25 9 Vet. Services Fees (local authority) 20 10 Federal wounded tax 25 11 Zakat 40 12 Shepherds and water cost (3days) 50 Sub-total cost at market level 625 13 -Khowei Vet. Quarantine fees 77 14 -Federal Vet. Inspection, vaccination 150 15 -Incentives; Inspection, vaccination 60 16 -Brucella test 60 17 Transportation cost by trucks (Khowei- Port Sudan) 1000 18 Truck driver incentive and labour cost ( shepherd-or Gellab for Guarding and keeping after sheep ) 140 19 Port Sudan local authority fees 50 20 Port Sudan inspection incentive 50 21 Unloading at Port Sudan and Loading to Sawakin 50 22 Transportation cost (Port Sudan-Sawakin) 300 23 Unloading at Sawakin & shepherd cost 50 24 Feed & water Port Sudan/Swakin (7 Days) 500 25 Rejection & mortality cost 500 26 Customs, duties, ports & clearance cost 350 27 Business tax (addition or subtraction tax 1%) 200 28 Sub-total cost : Free Aside ship (FAS) 19262 S.D. = 83.75 US $ 29 Shipping freight US$ 4 Per head 30 Transport (plus loading & unloading) at livestock US $ 2.7 Per head market 31 Cost and freight to Jeddah US $ 90.45 Per head 32 Selling price at Jeddah (Saudi Arabia) US $ 110 Per head 33 Gross Profit US $ 19.55 Per head Source: Interviews and Survey Data 2005.

63 4.1.5. Export market characteristics Saudi Arabia's population is expected to double over the next 20 years making the country one of the Middle East's most promising in terms of size and buying power. This rapidly increasing population combined with developments in the buying habits of the Saudi people stands to generate good opportunities for food manufacturers, especially in the food processing industry. Live sheep export market characteristics Numbers of live sheep exporters declined from 350 in 1985 (LMMC) to 21 in 1995. During the period from 2003 to 2006 the total numbers of live sheep exporters were 72 companies and business firms or people. Five exporters exported 59.2% of the total live sheep exports during that period. While 67 of the exporters exported 40.8% of the total exports. Out of the 72 exporters, only nine exporters exported regularly (on annual basis during the period). Thirty seven exporters exported once during the last four years, 14 exported twice. Percentage share of the first 16 exporters was 90.96% from the total Sudanese live sheep exports; while 56 exporters exported only 9.04% (Table 4.37). Table 4.37. Sudanese live sheep exporters and number of animals exported during the period 2003 - 2006 Exporter 2003 2004 2005 2006 Total sheep % from total No. exports (4Yrs) exports(4Yrs) 1 475367 316291 227736 343568 1362962 23.9 2 72710 260905 128266 84284 546165 9.6 3 78036 173684 186160 104200 542080 9.5 4 60493 109528 162389 131127 463537 8.1 5 38420 125425 96764201673 462282 8.1 6 8018 24274 61380 115781 209453 3.8 7 12932 186348 9467 0 208747 3.7 8 109513 52681 28231 11794 202219 3.6 9 100329 70447 20204 0 190980 3.6 10 185943 0 0 0 185943 3.5 11 7207 62583 63760 56406 189956 3.3 12 106103 61258 0 0 167361 2.9 13 0 0 22159141957 164116 2.9 14 227 79364 38001 20106 137698 2.4 15 0 25771 23606 15490 64867 1.1 16 18398 33922 2567 0 54887 0.9 Source: MARF. 2007. Interviews were carried out among all sheep meat exporters and two live sheep exporters in 2006. All methods of sheep purchase were adopted by exporters:

64 purchase through commission agents from production areas, through partner's agents, or agents at Omdurman terminal market and by themselves. Means of payments for purchases is the cash followed by deferred payments. Major purchase problem is the lack of sufficient numbers of sheep during the season and the high cost involved along the chain. At Saudi market the problem is competition. Major health problems are sheep pox, mange and diarrhea. Hamari sheep is the demanded quality for exports, within the range of 46-48 kg live weight. Time schedule and export programme is not fixed by live sheep exporters except during Hajj season, at other times they depend on the demand and request. Export batch size ranges between 4000 and 20000 heads at a time, in 30 to 50 batches during the year, depending on the local supply and export demand markets conditions. Target market for exporters is Saudi Arabia and the transaction deal occurs after the arrival of sheep for some of the exporters. Suggestions to improve live sheep export were minimizing the government taxes, fees and levies plus subsidies or incentives to support live sheep exports. Cost and revenues of live sheep exports Fadous Trade and Investment Company limited exported 24.2% of total live sheep exports from the Sudan in 2006. The company claimed that total cost of a head of sheep was 25000 S.D. and the revenue was U.S. $120 in 2006. The cost from production areas to the port of export was 5000 S.D. or 20% of live sheep cost (Table 4. 38). The cost of live sheep export from production areas to the export port was checked with another company called H.H. The cost was almost the same (Table 4. 39). The cost was for two weeks from purchase point up to Port Sudan and one week from Port Sudan up to the loading inside ship point at Sawakin port. The specific cost mentioned in the tables plus unforeseen expenses make the total cost about 5000 S.D.

65 Table 4. 38. Marketing cost per head of live sheep from production areas to port of export in 2006 (Fadous company) s/n Cost Items Cost /Head in S.D. 1 Market Fees (local authorities) 300 2 Local pasture fees (local authorities) 100 3 Vaccination fees 150 4 Quarantine fees (Federal Ministry of Animal 105 Resources) 5 Vaccination services by veterinary authorities staff 30 6 Veterinary authorities staff for loading services 30 7 Brucella test fees 40 8 Veterinary laboratory labour cost for brucella test 25 9 Taxation stamp duty 50 10 local authority fees ( El Khowei ) 50 11 Jihadia fees 10 12 Producers union fees (Itihad El Roah) 10 13 Shaheed fees 20 14 Jareeh fees 25 15 Loading labour cost 23 16 VAT for local transport per head (10% out of 1500 150 S.D.) 17 Transport cost from inspection centers to Port Sudan 1500 18 Feed and water, labour, drugs cost for 7 days 1000 19 Duties fees (at port of shipment) 205 20 Port fees (at port of shipment) 120 21 Port Sudan Veterinary quarantine inspection fees 30 22 Port Sudan Veterinary quarantine services fees 10 23 Port Sudan local authorities environment fees 100 24 Clearance fees 20 25 Transport cost from Port Sudan to Sawakin 200 26 Loading and unloading at Sawakin 100 27 Loading inside ships (vessels) 25 Total 4428

Source: Fadous for Trade and Investment Company limited, 2006.

66 Table 4. 39. Marketing cost per head of live sheep from production areas to port of export in 2006 (H.H. Export Company limited) s/n Cost Items Cost /Head in S.D. 1 Market Fees (local authorities) 150 2 Local pasture fees (El Khowei local authorities) 100 3 Labour cost 100 4 Vaccination fees 150 5 Quarantine fees (Federal Ministry of Animal Resources) 150 6 Vaccination services by veterinary authorities staff 30 7 Veterinary authorities staff for loading services 77 8 Local Veterinary authorities 50 9 Brucella test fees 20 10 Veterinary laboratory labour cost for brucella test 25 11 Taxation stamp duty 50 12 local authority fees ( El Khowei ) 50 13 Jihadia fees 15 14 Producers union fees (Pastoralist Trade Union) 10 15 Shaheed fees 25 16 Jareeh fees 50 17 Water cost 100 18 Transit fees 50 19 Loading labour cost 25 20 Internal transport 100 21 Administrative cost 200 22 VAT for local transport per head (10% out of 600 S.D.) 60 23 Transport cost from inspection centers to Port Sudan 600 24 Feed and water, labour, drugs cost for 7 days 1000 25 Duties fees (at port of shipment) 100 26 Port fees(at port of shipment) 50 27 Port Sudan Veterinary quarantine inspection fees 30 28 Port Sudan Veterinary quarantine services fees 10 29 Port Sudan local authorities environment fees 100 30 Clearance fees 15 31 Transport cost from Port Sudan to Sawakin 200 32 Endorsement of Certificates and others 250 33 Internal transport 50 34 Loading and unloading at Sawakin 100 35 Labour cost (shepherds) 100 36 Sawakin local authority 100 37 Labour cost for loading 50 38 Loading inside ships (vessels) 25 39 Veterinary authorities fees 45 Total 4412 Source: H.H. Company limited .2006.

67 Sheep meat export market characteristics Sheep were slaughtered for export mainly in Kadaro abattoir and to a lesser extent in Sabalogha or Ghanawa; the first two abattoirs are Governmental. There was some slaughtering in Nyala and GIMCO slaughterhouses (Gezira International Meat Company), both are private. The numbers of exporters of sheep meat declined from

14 in 2002 to 5 in 2006, with only one company (Swakni) exporting more than 95% of total meat exports. Sixty percent of the exporters depend on purchase by kg carcass weight system of exported lambs' meat and cash payment. Twenty percent purchase through commission agents from Salam terminal market and twenty percent purchase through commission agents from production areas. Purchase problems of sheep were shortage of supply during summer especially May and June, high prices and emaciation and possibility of loss through theft. Lamb meat exported quality indicators are age from 4-6 month and up to 12 month, weight range between 9-12 kg carcass weights, wide chest and fat. Sometimes importers request heavier weight range of 18-21 kg carcass weight. The carcass should not have contusions or spots, should be white (marbling appearance), labeled with date of slaughtering, stamped and wrapped in light cotton cloth. Major meat exporter's problems were multiple taxes and fees with no services, taxation problem at the federal level, and lower exchange rate, competition from other countries in terms of prices. Exporting companies were facing the airplanes transport problems: no specialized flights for meat, only cargo or passenger flights, with small space available, booking problems in peak season and delay, no storage or cooling facilities or chilling containers at Khartoum air port.

68 4.1.6. Health services, facilities and delivery system Today’s primary policy focus is on livestock for trade and export – relating to a general concern to ‘modernize’ the sector, and boost production. This entails adopting a new approach to both livestock production and management and the delivery of animal health care and veterinary services. Potentially, this comes at the expense of more simple initiatives to support productivity, breeding and disease management (Ian et.al, 2006). The local veterinary authority is the agency responsible for health certification in primary and secondary markets. But in 52% of the primary markets there is such service. The percentage of rejected animals from sale due to diseases during 2005 ranged from 1% to 5% in Gedarif and West Kordofan States and up to 10% in the Blue Nile State. These animals are sold at a lower price due to disease or defects by market in surveyed States. Some traders' response to the question on suggestions to improve veterinary services (inspection procedures and issuing health certificates) in the market included a need for veterinary clinics, drugs, inspection, and extension services. Others demanded vaccination and inspection units. In Gedarif State they demanded that the vaccination and inspection should be done in Gedarif instead of El Showak where there is quarantine for export animals. In terms of facilities and effectiveness of Local Government veterinary authorities at the state level the survey revealed that about 80% of the veterinary centers have microscopes and autoclaves, 70% have field treatment kits, 40% did not have stethoscopes and 80% of veterinary centers, did not have liquid nitrogen containers (for artificial insemination). The laboratory facilities in the government veterinary centers are also deficient. No bacteriological, parasitological, toxicology, biochemistry or pathology tests were performed during 2005. Almost all the veterinary staff was fully aware of the rules and regulations with regard to animal health, food safety and quality, and that these rules and regulations are adequate and clear to allow proper inspection to ensure health and safety. However, only about 50% of them undertook livestock market inspections during 2005 and 90% issued certification to animals prior to slaughtering. The most frequent sheep diseases outbreaks, according to veterinary center’s reports during 2005, were internal parasite, PPR and sheep pox. Suggested interventions include more vaccination cover, improved diagnostic facilities and extension services.

69 From local veterinary authorities' point of view, improvement of veterinary services, infrastructure improvement and training. With regard to veterinary quarantine centers during the 2005, the most important diseases or conditions for which animals were excluded from inspection were; sheep abscess, local inflammation, mange, sheep pox and Brucellosis. Rejected animals from the livestock markets were either sold outside markets at less than 50% of their market price, or were treated, if the cost was low, with veterinary drugs or local medicine plus additional feeding. Otherwise they were condemned by veterinary inspectors if slaughtered. 4.1.7. Sanitary measures in export slaughterhouses All animals need certification prior to slaughtering at the export slaughterhouses. The certificates are issued by Federal veterinary authorities, the Quarantine and Meat Hygiene General Department. If certified animals have health abnormality at the anti mortem inspection, the procedure to be followed is rejection and condemnation at post mortem inspection. The waste is managed at the slaughterhouses and drained through the drainage system. First they are filtered to extract ruminal contents and dispose them out of premises. Blood is collected in tanks and disposed of in Kadaro, Ghanawa and Sabalogha, but in GIMCO it is treated to be ready for use as poultry feed. The rest of the fluids is drained and treated in bonds (system of water recycle) ending with clean water ready for agriculture, but usually wasted. Health and sanitary condition of export slaughterhouses are well looked after. Regular cleaning and flushing with water after each patch to be slaughtered and disinfected with safe chemicals (e.g. quadrate ammonia) and, in some slaughterhouses fumigation are routine practice. The reasons for rejection at anti-mortem of sheep are mainly because of the inflammation of lymph nodes, wounds, fractures and emaciation. The reason for total condemnation of sheep carcasses are mainly jaundice, generalized abscesses or spots and contusions. Recommended animal health related improvements to meet domestic market demand are the availability of water sources in some slaughterhouses and proper means of

transport for live animals.

70 For export slaughterhouses, the most important sanitary measures to be met according to importers needs is the infra structure rehabilitation (additional cold stores and vacuum packing machines). 4.2. Domestic Marketing System 4.2.1. Marketing chain Marketing is a social and managerial function associated with the process of researching, developing, promoting, selling, and distributing a product, service, or intellectual property, or as suggested by the American Marketing Association, is "an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders". (Wikipedia, the free encyclopedia – internet 2006). Also marketing has been defined as the ongoing process of moving people closer to making a decision to purchase, use, follow...or conform to someone else's products, services or values. Simply, if it doesn't facilitate a "sale" then it's not marketing. Kotler (2006) in his earlier book defines marketing as a human activity directed at satisfying needs and wants through exchange processes". Add to Kotler's and Norris' definitions, a response from the Chartered Institute of Marketing (CIM). The association's definition claims marketing to be the "management process of anticipating, identifying and satisfying customer requirements profitably". Thus, operative marketing involves the processes of market research, new product development, product life cycle management, pricing, channel management as well as promotion. Market chain concept: A market chain is the sequence of actions necessary to take a

product from raw material to a deliverable customer item. It involves all businesses in the selected chain (e.g. participation of producers, processors and retailers). The supply chain in the sheep sector has six functional stages, made up of: 1- Inputs the provision of inputs to livestock production (suppliers of feed, water, veterinary products etc...). 2. Livestock production (breeders, feedlotters for finishing). 3. Livestock marketing (marketing groups, dealers and buying agents, individual producers' private sale, livestock markets. 4. Primary processing (abattoirs, minced meat and meat preparation plants.

71 5. Secondary processing (retail packers, plants preparing meats and recipe products e.g. sausages, burgers, reformed products, catering). 6. Distribution (meat wholesalers e.g. meat suppliers, depots, traders, importers, exporters, specialist foodservice suppliers, traditional butchers, independent grocers. It would show improvement opportunities across the chain for all parties as well as the key performance indicators that will help measure improvements in cost, quality and delivery. The majority of livestock production areas are far and remote from the main consumption or export centers. Major livestock production areas are scattered out the range of some 600-1,200 km. From the terminal markets. Migration patterns alternate in south-north and north-south directions bringing the herders close to the primary markets during the wet season and vice versa during the dry season. The efficiency of the marketing system is correlated with the distance of production areas and the seasonality of supplies (due to migrations), which in turn have led to the development of a unique internal livestock market system in Sudan (Aklilu, 2002).This has resulted in a marketing chain that comprises four tiers (Figure 4.4): 1. Individual sales direct from the farm or the pastoral herd; 2. Primary markets located in the main production areas where individual or small groups of animals are brought to be sold and bulked into larger lots beside the local sale for slaughter; 3. Secondary markets in the larger towns in or near to the areas of production where animals are bulked into yet larger groups beside the local sale for slaughter and; 4. Terminal markets that represent the final point of sale.

72 Producer Flock/Herd G B

Ghelaja (Bush G * Trader) B G

B G G G Sub-agent Sebaba Jelaba Primary Market (Local Broker) Local G B Sales B G B B

For Agent (Wakil) Local Slaughter Butcher Secondary Market -ing B (Rural) Auctioneers B (Commission men)

B B

Wholesale Trader/ Wholesale Terminal Market Exporter Slaughterhouse -Urban

Live and meat exports Retailers

Consumers

G Guarantor (Damin) B Broker

Source: Modified and adapted by the author from different sources (e.g. AAADC, 1997; Aklilu, 2002)

73 Figure: 4.4. Schematic diagram of the sheep and goat marketing chain in Sudan The livestock markets of Sudan are highly broker-dominated and without any parallel in the region. For example there are 550 licensed livestock traders/brokers operating in the secondary market of Kosti alone in the small White Nile State (Aklilu, 2002). The chain is characterized by many intermediate costs including herding, trekking, watering and feeding costs, taxes, weight losses, mortality and the margins taken by intermediate traders and brokers (FAO/AAADC, 1997). Most selling and buying is done by private treaty, with the exception of large numbers of sheep intended for export by secret auction, at primary, secondary or terminal markets when there are more than one buyer to bid for them. Stocks change hands and reselling is prevailing in the same market within the same day. Sometimes additional fattening or reconditioning or treatment occurs before reselling with value added to the animal. 4.2.2. The transportation Transportation of livestock in the Sudan takes place basically by roads, Transportation system for livestock in the Sudan depends basically on roads, rail and by trekking on hoof. The roads and railroad networks are relatively well established throughout the country. The paved road from El Nihood through El Khowei to El Obeid is connected to Omdurman and up to Port Sudan and Sawakin (export outlets). However, transportation of animals from production to consumption areas is still one of the major constraints facing the sheep industry, basically in relation to the transport cost. Gasoline is relatively very expensive and the cost of transport is high by road or rail. During the Ex- Livestock and Meat Marketing Corporation (LMMC), block trains were extensively used to move animals between production areas (in Darfur and Kordofan) to consumption and export markets at a relatively lower cost. Since the dissolution of the LMMC in April 1992, the block trains operations have not been used extensively for animal transport and if used, it is done at a very high cost. The lowest cost route for livestock transport is via trekking on hoof during winter and the rainy season but not in the dry season when there is high mortality and weight loss. The reintroduction or developing the railway system by introducing additional locomotive powers and providing double deck wagons as a means of animal transport, if supply is flexible, would pull out additional production that is not currently realized because of the poor marketing infrastructure.

4.2.3. Marketing actors In general, marketing chain is dominated by livestock traders and exporters who operate through a network of agents (Wakil), sub-agents, small traders and brokers. The following description of functions dealt with by each group is based on personal observations and surveys in 2005 - 2006.

4.2.3.1. Producers Although producers are selling and supplying markets with animals but it is common to find some of them purchasing animals as well (either for replenishing the herds, for breeding purposes or commercial fattening). Usually they sell their animals in primary and sometimes in secondary markets and recently in terminal markets which originally were either primary markets and have become terminal like El Khowei (in West Kordofan) or El Showak (in Gedarif State) after the establishment of veterinary quarantines there or secondary markets that have become terminal as Rabak (in the White Nile State). But it is very rare for producers to sell at Omdurman terminal market.

4.2.3.2. Ghelaja (Bush Traders) They are the second in the marketing chain. They purchase animals from producers directly either from stocks in grazing areas or in villages or in Farique (temporary nomadic encampment) or in primary markets. They sell at the primary markets to local brokers (Sebaba).The revolving funds they have for their purchases do not normally exceed 100,000 Sudanese Dinnars ($435), enough to buy only about 10 heads of sheep.

4.2.3.3. Sebbaba (Local Brokers) The term broker is applied to those who usually do not have physical control or ownership of goods but they bring together sellers and buyers. They follow the instructions of buyers and sellers and have less power in negotiating deals (Idris, 2005). They may function in all transaction points or nodes along the market chain from producers to consumers.

75 There are three categories of sheep sebbaba in Sudanese livestock markets, according to their function and the role they play in the transaction. The first group of sebaba purchase either from Ghelaja (Bush Traders) or from producers directly at the primary market level. They sell either in another primary market or at secondary market. Their capital is within the range of 500,000 Sudanese Dinnars ($ 2174). Although they are called local brokers but they are traders in the sense that they purchase animals from a market and sell in another and sometimes at the same primary market. They are merchant middlemen as they buy and sell for their own gain. But at the primary market level they are called Sebbaba (or local brokers) because most of the time they act as brokers i.e. bridge the gap between sellers and buyers. They play two functions: brokering as well as trading. The second group of sebbaba operates at primary, secondary or terminal markets. They are classical brokers or typical middlemen involved in all transactions between sellers and buyers along the market chain, each one of them is called Samsar, or sometimes called dellal (or auctioneer) where secret auction is performed. The majority of them don’t have capital and they work on commission basis per head or per mob (group of animals). Some of them, however, have capital and this sub-group is very powerful and can affect negatively export trade. Their negative role was noticed twice in the last decade: the first was in1998 when they affected the flow of live sheep exports to Saudi Arabia by convincing sheep suppliers to seize supplying terminal market with sheep because live sheep exporters attempted to reduce prices sharply (from 25000 S.D to 20000 S.D.) then announcing that suppliers would loose if they sold at the prevailing low prices. During that period exporters were confronted with reduction of prices in the Saudi Arabia market and they would not be able to compete if they continued to purchase sheep at high prices. During that year the majority of exporters went bankrupt. The second negative effect was created in 2002 for lamb meat exports to Jordan. That phenomena appeared after the ban of sheep exports to Saudi Arabia and domestic lamb meat prices were very low (400 S.D per kg carcass weight) . They induced suppliers to seize supplying Jordan export market. Jordan market by then was monopolized by one importer (multinational company) and meat exports from Sudan were through two companies (Doha and Ayatt companies), supplying the importer. Those brokers, in an attempt to gain better prices

76 for local traders (who were supplying exporters), convinced them to seize supplying Jordan market which affected exports to Jordan. The third group of sebaba called Kaggir (sticking with the animal) don’t have capital and their role is to acquire the animal without paying the price, or sometimes paying a nominal amount of money which is lost by the end of the day if he couldn’t sell the animal(s).Transactions conducted by this category is relatively small and basically for domestic demand.

4.2.3.4. Jellaba (Suppliers) Jellaba is plural of the Arabic word Jellabi which means delivery man. They purchase and bring animals from remote production areas to consumption areas. They play a major role in supplying heavy weight sheep to live sheep export terminal market. Sometimes they perform their activities as partners or shareholders to exporters or wholesalers. An appropriate name for Jellaba is "speculative middlemen"; since they buy and sell livestock with the major purpose of profiting from price movements. Unlike merchant middlemen who try to keep risk to a minimum, speculators specialize in taking risks.

4.2.3.5. Damin (Guarantor) The guarantor (Damin) guarantees the buyer that animals offered for sale are not stolen and that he knows the seller by tribe. Each tribe or sometimes a branch of the tribe (or sub-tribe) has a guarantor. They are present in all livestock markets in the Sudan with high concentration in production areas. They also provide services for livestock owners, providing small credits for managing animals, accommodation, and sometimes advice producers as to whom they can sell on credit basis. To operate in the market they must have a valid license from local authority as Guarantor (Damin) for a license fee similar to traders. They charge fees within 100 S.D. per head ($ 0.4).

4.2.3.6. Wakil (Agent) The role of agent middlemen is supposed to be that they act only as representatives of their clients. They do not own the product they handle. They receive their incomes in the form of fees and commissions. They provide services to buyers and sellers. In many instances the principal service of the agent middlemen is market knowledge and the know-how they use in bringing the buyers and sellers together.

77 Agent middlemen can be divided into commission men and brokers (Idris, 2005). But recent developments in the live sheep export market shows that some of the agent middlemen are share holders with their clients. Because the risk and effort is high so they demand more than the commission e.g. agents working with Mr. Siding Hadoub, one of the largest live sheep exporters. Usually he is an urban trader but also could be rural, working for another big trader or exporter or for himself; with more than one assistant or sub-agent (small trader stationed in rural areas), they assist in purchases, collection, management and transportation (trekking or trucking) of sheep. The agent works either for a commission per head ($ 2.2), or as a partner with exporter or wholesaler. A sub-agent works for a commission per head which doesn’t exceed ($

0.9) at present. 4.2.3.7. Dallallein (Big Auctioneers) Big auctioneers are locally called (Dallallein) or commission men. Their function at the terminal live sheep export market is that they are usually granted broad powers by those who consign goods to them. They handle goods physically, arrange for terms of sale, receive value, deduct fees and transfer the balance. They are very powerful in determining sheep supply to Omdurman terminal market as well as in price determination. At secondary markets they have the same function but with less powers and influence.

4.2.3.8. Role of livestock actors at different levels Functions of livestock actors at different levels are indicated in tables 4.40.

78 Table 4.40. Livestock marketing actors and functions by type of market in the Sudan Type of market actors Function market Primary Producers Sell, purchase and resell Ghelagi (bush trader) Sell, purchase and resell local butchers Purchase for local slaughter Wakil (Agent)/subagent Purchase for export Jellaba (Suppliers) Purchase and assemble Sebaba (Local Broker) Purchase, sell or mediate Brokers (Semsar) Commissioned middlemen Secondary local butchers Purchase for local slaughter Wakil(Agent)/subagent Purchase for local slaughter and/or export Jelaba (Suppliers) Sell/or Purchase and assemble Sebaba (Local Broker) Purchase, sell or mediate Brokers (Semsar) commissioned middlemen Terminal local butchers Purchase for local slaughter Wakil (Agent)/subagent Purchase for sheep export Jellaba (Suppliers) Sell for domestic consumption export Brokers (Semsar) commissioned middlemen Sebaba (Local Broker) Purchase, sell or mediate Small traders Purchase and sell to big traders/consumers Big traders Purchase and sell to live sheep exporters Big Auctioneers(Dallal) Sell to live sheep exporters Source: Adapted and modified by the author from: Solomon and Nigussie. (www.fao.org/wairdocs/ilri/)

4.2.4. Livestock markets

79 Before April 1992, The ex- Livestock and Meat Marketing Corporation (LMMC ) attempted to improve the efficiency of the livestock markets in Sudan by establishing two terminal markets at Omdurman, and 10 major secondary markets (namely Wad Medani, Sinnar, Kosti, Rabak, El Obeid, Kadogly, El daein, Nayala, El Fashir and Melliet ) with weighing scale facilities and auction yards, holding grounds , boreholes along traditional trekking routes and the provision of block trains (with 100 triple deck wagons) for livestock transport 4 .Also the government tried to introduce open auction systems in the markets along with collecting weekly price information. The open auction system could not succeed due to the sabotage of brokers and because livestock purchases are based on the trust (credit) system (open auction entails immediate cash payment). Government determined fixed domestic meat prices and fixed exchange rates at the time were also barriers to the LMMC achieving its objectives. The industry is fraught with shortage of working capital (cash flow) from bottom to the top. Characterization of livestock markets in the Sudan, with particular reference to surveyed states would have the following feature:

4 Contrary to what was reported by Aklilu (2002), the rail way wagons were not subsidized In fact the government represented by the Railway Corporation used to charge LMMC all costs involved even the utilization of the railway line or track.

80 4.2.4.1. Primary markets (A) Usually a part of a village market or around a village in production areas where selling and buying takes place in specified or unspecified date or time (as could be anywhere around Ankoesh area West Kordofan at any day). (B) Have no physical infrastructure (such as fencing, water and feed for animals) or market information. (C) Animals do not stay over night; usually market day ends at 4:00 P.M. (D) Market days are mainly once per week but also could be twice a week or daily, and some primary markets operate only seasonally (during wet or dry season). (E) Number of sheep supplied per market day in peak period ranged between 188 and 2300 heads in primary markets. In lean period, number of sheep supplied per market day ranged between 75 and 787 heads. Table 4.41. (F) Selling and buying may be by direct negotiation between sellers and buyers or sometimes through a broker. (G) There was no specialization of traders for their purchases in the surveyed states, with the exception of W. Kordofan primary markets. Average number of traders specialized in sheep trade were 18 in primary markets, 20 traders in sheep and goats. (H) No veterinary certificates are issued by authorised individuals (veterinarians, paraprofessional, or public health staff) for movement of purchased animals to the next destination except in El Showak (Gedarif State) or El Khowei (W.Kordofan State) where they have vaccination and inspection centres. 4.2.4.2. Secondary Markets (A) Some have facilities and infrastructure such as fencing, water and feed for animals (Gedarif and El Nihood) but others may not have them as in El Damazeen secondary market. (B) Animals may stay overnight before they are moved to the next destination. (C) Inspection and issuance of veterinary health certificates are done. (D) There may be larriage facilities (Mannama) or fenced area for animals to be kept overnight and even for few days , as in Gedarif but others may not have such facilities as in El Nihood or El Damazeen where animals are driven back to pasture. (E) Relatively better market management with the presence of local authority officer, police and market guards for security (Gedarif, El Nihood). (F) Number of sheep supplied per market day in peak period ranged between 200 and 1800 heads in secondary markets. The low number was in El Damazeen livestock

81 market and it was during the wet season. In lean period, number of sheep supplied per market day ranged between 130 and 500 heads. Table 4.41 (G) There was no specialization of traders for their purchases in the surveyed states, with the exception of Gedarif secondary market. Average number of traders specialized in sheep and goats' trade were 40 traders. 4.2.4.3. Terminal Markets (A) Have infrastructure facilities, proper fencing, water and feed, veterinary clinic and pharmacy, loading and unloading rams, federal veterinary authority and certification, staff for market management and better facilities than primary and secondary markets. As an example is El Salaam terminal market (at Omdurman). (B) A terminal market could have proper fencing, water and feed facilities, market manager, but utilized only for selling sheep rejected from the live sheep exports for domestic consumption. The example for this type is the sheep export market at Omdurman (Mweilih), north to El Huda slaughterhouse. (C) A terminal market may exist without infrastructure or authority, with sheep sales up to 5000 heads/market day twice weekly in specified date or time, as Western Omdurman Market in El Meiweilih area. (D) Recently and due to the establishment veterinary quarantines for export, some of the primary market areas have been turned into terminal markets, but still selling and buying takes place on unspecified dates or times without market infrastructure or facilities as in El Khowei area (W. Kordofan State) and El Showak (Gedarif). (E) Live sheep at terminal markets destined for export are inspected, vaccinated and accompanied by health certificates issued by Federal Veterinary Authorities. For sheep intended for meat export there is no vaccination, only anti-mortem and post- mortem inspection. (F) Some of the meat terminal markets are located beside export abattoirs and supplied directly from production areas (like El Kadaro and Ghanawa); or sometimes from EL Salam terminal market as the case of Sabaloka or Ghanawa Abattoirs. Sudan is expanding the number of its terminal markets. Currently, livestock are exported directly from El Muwelih in Omdurman, El Khowei, El Rahad in North Kordofan and El Showak through Port Sudan. El Muwelih in west Omdurman is the largest terminal market in Khartoum State operating on Wednesdays and Saturdays, serving both the domestic and the export markets.

82 Table 4.41. Number of animals traded and specializtion of traders in the surveyed states State Market Number of sheep Average number of traders Type supplied/market day in specialized in Peak Lean sheep Sheep&goats Sheep, period period goats & cattle Gedarif Primary 925 107 0 20 18 Secondary 1800 500 0 40 30 B. Nile Primary 188 75 0 0 18 Secondary 200 130 0 0 92 W. Primary 2300 787 18 0 48 Kordofan Secondary 700 400 0 0 400

Source: Livestock markets survey 2005.

4.2.4.4. Physical Movements of traded sheep from producers to marketing outlets

The flow of traded sheep from producers (or breeders) to marketing outlets follow different patterns. There are variations in terms of age, sex and condition, quality (young, mature, fat) and season as indicated in figure 4.5 for the whole country. There are differences between states as shown for Gedarif in Fig 4.6, for Blue Nile State in Fig 4.7, for West Kordofan in 4.8. Marketing outlets could be domestic consumption or export markets at terminal markets or export slaughterhouses. In between there are some activities involving fattening or reconditioning of animals with periods of time varying from a few days to several months.

Producer Breeder

B A C Broker/Agent

(Gel agi/Se babi) Livestock market

Butchers/ Traders Slaughter houses Live animals

Domestic Exporters Consumer

A, B and C arrows indicate sizes or magnitudes of sheep flow. Figure 4.5. Distribution channels in the Sudan for traded live sheep and lamb meat

Meat Export Live Sheep Export

Export Slaughterhouses Omdurman Port Sudan 1- Kadaro slaughter house termainal And Sawakin Markets Quarantine 2-Ghanawa slaughter house

El Showak Vet. Inspection center

Gedarif Secondary Market

Elmagata El Hawata Bazoora Abu Rukhum El Shwak

Primary Market Primary Market Primary Market Primary Market Primary Market

Gadorra , Kamer Wed El Heleo, Gedaref Village producers Mountain area, Geteifa Elhoge Bazoora Beshir, El Hoge Tineidba El magata

Figure 4.6. Sheep marketing channels in Gedarif Stat

84 Meat Export Live Sheep Export Export Slaughterhouses Omdurman 1- Kadaro slaughter house termainal Port Sudan 2-Ghanawa slaughter house Markets And Sawakin Quarantine

Medani (Gezira State) Damazeen Secondary Market

Boought Aboghmy Badows Ofod Wad Abook Primary Market Primary Market Primary Market Primary Market Primary Market

Wadabook, Faloge(U.Nile) Teira , Dendena , Hamada, Shanfoor , Nomadic Forgan, Local Producers Karo(U.Nile), Elgamam , Absheneina, Khor Ofod, Elkarori , Nomads Sibeihab, Wdkhoty, and Nomads El Banshory Khor Makho

Figure 4.7. Sheep marketing channels in Blue Nile State

Meat Export Live Sheep Export

Port Sudan Export Slaughterhouses Omdurman And Sawakin 1- Kadaro slaughter house termainal Quarantine Markets 2-Ghanawa slaughter house El Khowei Vet. Inspection Ghibeish center Secondary Market El Obeid Sec.Market Eyal Bakheit El Nihood Kosti Primary Market Sec.Market Secondary Market

El Migesim Shalota Morkab Ankowsh El Khowei Om khirein Primary Market Primary Market Primary Market Primary Market Primary Market

Ghibeish, N.& Ghibeish,El Nihood,El Nomadic Fareigh Khamas(Elzeleita,Elhagar), Nomadic Fareigh, S.Darfur, Wed Mazroob,Local Om El Badri,Local Producers Benda, El Nihood Producers

Figure 4.8. Sheep marketing channels in W. Kordofan State

In the three states the main means of transport of supplied livestock were 81.0% on hoof, 14.3% by trucks and 4.8% by boat across the river.

85 The Saudi Arabian Standards Organization (SASO) is responsible for establishing labeling guidance and these guidelines which are strictly enforced. There are specific requirements for all exporting countries to Saudi Arabia, Jordan, Egypt and Syria which are mentioned in Appendix 6. Whole shipments are sometimes rejected even though disease symptoms have been confirmed to a few animals. A reason for this is that Jeddah port has no quarantine holding facilities where animals can be held under observation (Ibrahim, 2004). Only in 2006 Australia established quarantine in Jeddah for their animals. The rejection issue is not always related to health and hygiene but also as a marketing problem or Technical Barrier to trade (TBT). Rejected Sudanese sheep did not exceed 4.6% from total exports for the last six years, goats 12% and camels 3% from total exports as shown in Table 4.42.Table 4.43, were focusing on the internal rejection issue which was 31.6%.

Table 4.42. Rejected vessels of Sudanese sheep from Jeddah sea port Year Number of Rejected Vessels Type and number of rejected animals (heads) and % from total exports Sheep Goats Camels Number % Number % Number % 2000 9 33513 4.6 2000 12.1 19 0.01 2001 * 2002 6 17369 1.1 0 0 1012 0.7 2003 14 29114 2.2 3558 6.2 1361 3.0 2004 7 15106 0.9 0 0 995 0.7 2005 17 40428 3.2 5334 4.9 2298 1.8 * Export ban on live sheep to Saudi Arabia and other Gulf countries. Source: Calculated from MARF- Quarantine and Meat Hygiene General Department (monthly and annual reports) 2006.

86 Table 4.43.Rejected sheep from veterinary quarantines and inspection centers in Sudan Number of Number of sheep exported % of Year sheep Live Heads Total number Exported Internal inspected as meat of sheep from rejections inspected 1997 2103292 1070941 679292 1750233 83.2 16.8 1998 2783188 1584858 985930 2570788 92.4 7.6 1999 3136498 1616363 516706 2133069 68.0 32.0 2000 2057262 731242 531812 1263054 61.4 38.6 2001 399972 15417 0 15417 3.9 96.1 2002 3517230 1602638 653401 2256039 64.1 35.9 2003 3517230 1315399 700276 2105675 57.3 42.7 2004 3092182 1703562 513111 2216673 71.7 28.3 2005 2678069 1271787 428796 1700583 63.5 36.5 Total 23284923 15921531 68. 4* 31.6 * weighted average for nine years. Source: Calculated from MARF figures, (monthly and annual reports) 2006. In addition to the exported numbers of sheep there were rejections from export that amounted to 32.9 % of total exports as an average during 1997 -2005 as shown in Table 4.38. Those rejections could be considered as leakages in sheep exports. Sheep rejections were of two categories. The first category is the internal rejections of sheep exports. Rejected sheep from Veterinary Quarantines and Inspection centers averaged 30.5% of total exports. The abnormal figures in 2001 were due to the export ban on live sheep to Saudi Arabia and other Gulf countries. Sheep had been vaccinated and inspected in veterinary quarantines ready for export but were not exported. The second category is the external rejections of vessels from Jeddah Sea Port with an average of 2.4%. These rejections cumulatively amounted to 32.9%. That would indicate the volume of losses encountered in the export system. The high figure of rejections affected negatively the competitiveness of sheep exports. Understanding the causes of rejection and finding solution would require further research work to identify etiologies and remedies to counteract losses in sheep export. Inspected sheep for 2001, 2003, 2004 and 2005 were 3.9 million heads, 3.5, 3.5, 3.0 and 2.6 million heads where as exported sheep were 15 thousands, 1.6 millions, 1.3, 1.7 and 1.2 million heads. The high rejection rate is one constrain along the chain. It requires further investigations from veterinary authorities to identify causes and treatments. If causes of rejections were treated it would increase export figures by more than 50%, since the inspected sheep available for export was more that 50% of the actually exported figures.

87 4.3. Export Markets 4.3.1. Description of the flow of sheep export trade The flow chart for Sudanese live sheep and lamb meat export for 2006 is shown in Figures 3.2 and 3.3 to reflect the prevailing system. Also as indicated in Appendix six. Appendix seven shows the major constraints along the Sudanese Marketing Chain (2006). The chart could be read from bottom to top. This flow chart could be used as diagnostic tool for live sheep and sheep meat export constraints and as an analytical approach for quality assurance. Along the chain there are stages from production to export market as well as there are activities, arrangements and requirements. At each stage or level, as presented in a box, there are observations and constraints to be dealt with for intervention. The intervention is basically for developing the sheep export sector. For example, for utilizing this chart for intervention, the issue of rejection issue, which is mentioned in more than one stage along the chain. Rejected animals at inspection centers and veterinary quarantines amounts up to 33% of animals offered for exports, and if other rejections at purchase level (rejections by traders) are added, then it will add up to more than 50% of animals offered for exports, as mentioned in Table 3.7.The table is focusing on rejected sheep, and the wasted resources or potentials for export is the difference between inspected and exported animals. 4.3.2. Producers policy in selling sheep for export market The majority of producers offer sheep for sale according to their urgent needs and requirements. That is at any time during the year upon request or according to emergency situation as indicated in Figure 3.4. Recently some producers have started to supply sheep according to seasonal variation in demand and select the appropriate type of sheep according to function (Hajj, Ramadan or vacations). Although they are not market oriented and do not produce for the market, yet they select from their herds based on their need for money, and the type for demanded animal. Recently some producers of sheep in Kordofan have developed the system of purchasing small lambs (50-100 heads at a time), maintain them for 2-4 months within the breeding herd and offer them for sale .Some of them are self financed (usually by selling culled stocks), others by obtaining loans from traders (and sharing 50% of the profits).

88 4.3.3. Exporter's systems of purchases Well - established traditional exporters tend to purchase and manage animals through three channels. The first channel involves purchase of mature stock either from commercial herds or from local traders or collection through agents from Nomadic encampment or primary or secondary markets. The second channel involves purchase from Omdurman terminal market either ready for sheep or need few days for finishing. The third channel involves purchase by a system called (Tabbieet) (or keeping animals for more than one season).There are two categories of sheep handled by (Tabbieet), the first is the purchase of young lambs (4-6 month of age) at a very low price after the rainy season and keep them for 6 months at the natural grazing, areas then export them. The second type of purchase is the emaciated export quality sheep during the dry season and keeping them till the rainy season. Exporters' arrangements are basically to fulfill the importers seasonal demand as shown in Figure 4.9, shows monthly live sheep exports from Sudan for 2004 in heads. The peak season usually starts from December up to March.

Fig.4.9. Monthly live sheep Exports from Sudan for 2004 (Heads)

4.3.4. Inspection and selection criteria for quality assurance and certifications of Sudanese export sheep Different levels and actors are involved in inspection and selection criteria for quality assurance and certification, at Saudi Arabia ports and at Port Sudan and Sawakin for live sheep exports. At each level there is inspection and selection criteria, indicated in terms of phonotypical characteristics of sheep, diseases related requirements and regulatory requirements Table 4.44.Other levels not presented in the table are: Khartoum air port for meat export, other export ports for meat (e.g. Nayala), live sheep exporters level, export slaughterhouses, inspection and vaccination centers, livestock terminal market, secondary market, primary market and producer level.

90 Table 4.44. Inspection and Selection Criteria for Quality Assurance and Certification of Sudanese Sheep Exports Inspection /Selection Criteria Phenotypical Diseases related Regulatory requirements characteristics requirements Saudi Arabia ports 1-During Hajj :- 1-Healthy and fulfilling 1- Slaughtered by Muslims and A- Healthy and fat. veterinary requirements approved by accredited certifying B- No abnormalities or (vaccination and testing for authorities (certified Halal meat). deformities. Brucella ovis).This includes a 2- Must have the following C- No tail docking. list of epidemic and documents: D- No ear cut more contagious diseases from a- Authorized certificate of origin that one third. which livestock must be free. authenticated at the Saudi E- Not less than 6 2- Imported animals are diplomatic mission and local month old subjected to inspection at the chamber of commerce. F- Average live weight major ports of entry and health b- Authenticated invoice (in 35 to 45 Kg All checks on every animal are triplicate) stating the country of colours very rigorous. Both physical origin, name of the carrier, brand 2- Rest of the year and laboratory tests are and number of goods, along with a A- Should be under 3 performed. description including weight and years of age. value; a packing list. B- Castrated males. c- Bill of lading. C- Preferred colour is d- Documents indicating red or brick, but not compliance with health white or black regulations.

Port Sudan and Sawakin Ports for live sheep 1- Veterinary Veterinary authority in 1-Veterinary inspectors issue inspectors isolate quarantine to ensure international health certificates emaciated and small completion of quarantine endorsed by higher vet. official animals. period. Veterinary inspectors 2-Sudanese Standards & 2-Exporters agent with technicians perform Meteorological Organization performs their own inspection and checking 4 (SSMO) issues quality certificates judgment in isolating times, at entrance and for sheep. unsuitable quality. departure of quarantine premises. During entrance to sea port prior to weighing and during loading inside vessels.

There are two major bodies through which inspection and selection for quality assurance and certification of Sudanese export sheep is performed. The first is the exporting body (or company).The second is the Federal Ministry of Animal Resources and Fisheries (General Department of Quarantines and Meat Hygiene) through inspection and vaccination centers and veterinary quarantines.

91 The first body or Exporting companies use the following criteria for quality assurance:5 1- Sheep purchase system 1. Method of selection and classification: The purchasing team stands apart on both sides of the sheep herd offered for sale and letting them to come through for inspection individually by visual assessment (the action for inspection and individual observation is called (Yarrigh).To observe and avoid the following: Garage (inferior quality), over aged (full permanent teeth > 4 years) or uncastrated, enlarged lymph nodes and abscesses, mange on nostrils or anywhere, infected wounds, scratches, diarrhea, or any disease which can not respond to fast treatment, or will leave a scar on the body, phenotypical abnormalities on sheep body or its limbs, and finally isolate females (ewes) immediately when observed. 2. Heath specifications and good quality animals. The most important instruction guide here is to avoid purchases from infected areas or markets with diseases that affect the export flow. After the first visual assessment and in cases of inflamed lymph nodes exceeding 5%, there should be individual checking for the whole herd (this situation in case of large numbers of sheep offered for sale e.g. 2000 to 5000 heads or more). In inspecting inflamed lymph nodes certain sites should be considered; on the head (sub-mandibles), in front of the fore legs (supra scapular), genital organs, or any abnormal apparent swallowing on the body. The degree of good quality animals is by the degree of fatness visually assessed as 85% or above of the herd is fat or according to instructions from the company in each operation. Selection of the preferred colour to Saudians which are red, brick, white and red, and avoid colure which are not demanded like the black or white and black 2- Management and supervision indicators: Before purchases there are preliminary arrangements such as the selection of a collection center with water and pasture, away from agricultural crops and farms, selection of good shepherds and drovers (honest and experienced), provision of some essential veterinary drugs 3- Price indicators and evaluation of weight by price: The purchasing team or purchasing officer should be acquainted with the cost of export quality sheep from purchase area to export market and the expected revenue after considering mortality and rejections. They should be acquainted with the prevailing prices in the

5 The criterion was adopted by Mawasheina Company (affiliated company of Animal Resources Bank). Most companies have more or less the same system for inspection.

92 purchase area, and also with supply and demand and movements of commercial herd, the presence of other traders and their intentions and purchase policy and to treat competitors wisely. 4- Accounting system: Purchasing team should be very strict in obeying the company instructions especially quantities to be purchased, prices and quality, together with keeping documents of each patch of purchases. The second body for inspection and selection criteria for quality assurance and certifications of Sudanese export sheep is the Ministry of Animal Resources and Fisheries (MAR F) through the General Department of Quarantines and Meat Hygiene inspection and vaccination centers and veterinary quarantines. Their role at the entry point of secondary quarantine facilities is the inspection of modifiable or non modifiable diseases or uncasaturated males, rejection of emaciated and poor quality animals, and then vaccination. Finally Brucella testing and certification, and rejection of unfit animal for export. Animals are ear tagged to identify state of origin and to ensure good quality animal ready for export. Their role is to apply quarantine measures, adopted from Codex Alimentaris (Sudan is a member since 1965), OIE, FAO/WHO measures and HAACP requirements with the appropriate facilities. This is implemented by trained veterinarians. They continue re- inspection till the export terminal point at Port Sudan and Swakin Vet. Quarantine. They isolate and reject animals at all levels till the point of loading vessels. Their activities is not only related to the health and veterinary requirements but also market requirements such as the religious requirements in Saudi Arabia especially during Hajj period, basically to fulfill strict Islamic or Shariah law to be healthy and fat not disease, not emaciated, no abnormalities or deformities, no tail docking, no ear cut more that one third of the ear and not less than 6 month age. For live sheep exports, there are pre-purchase arrangements and requirements. The initial activity starts by a team work of traders (who receive various services at cost ), agents (Wakil) or sub-agents (who perform selection) and brokers (Sebbabi) for brokerage services and guaranteeing the animals ownership) .The team work for the identification and selection of export quality sheep , based on quality assurance (breed, sex, age, weight, and nutritional status) and avoidance of localities with disease outbreaks .Then they practice the visual inspection / screening for diseases to fulfill the requirements of exporters and Saudi Arabia certification requirements. Then comes the purchase stage of stock, either from commercial herds or from local traders or collection through agents from Nomadic

93 encampment or primary markets. Animals are collected into groups and trekked on hoof by shepherds to inspection centers with quarantine facilities. This is done by traders, agents

(Wakil) or sub-agents and brokers (Sebbabi). Within this stage some exporters have additional efforts in completion of sheep purchases from Omdurman terminal market and sometimes start Feedlotting to avoid weight loss so as to reach standards requirements for export (health, weight and quality). This is subjected to seasonal variation in supply of the appropriate type of sheep and according to season and function (Hajj, Ramadan or vacations in Saudi Arabia) and the quantity and quality of stored feed stuffs at any season .Health control measures were adopted in compliance with Codex Alimentaris standards. During this activity local authorities collect taxes and market fees. The next activity is the entry of secondary quarantine facilities by public veterinary services. Inspection and certification at a fee for notifiable or non notifiable diseases, uncastrated males and then vaccination. Finally, testing Brucella ovis and certification. This is as movement permition rejection of sick or unfit animals for export. Ear tagged ready for export. At this stage short term in inspection and vaccination centers (secondary quarantine) such as El Kadaro Quarantine (Khartoum State) or El Khowei (W.Kordofan) or El Showak (Gedarif).Then trucked to Port Sudan. Then along the road or rail transport from secondary quarantines to terminal quarantines at Port Sudan and Swakin.The activity involve during this stage: transporters for loading and unloading and trucking against fees together with the efforts of the accompanying labour (gellab) to take care of the animals during the trip and keeping them in the upright or standing position all the time, to avoid fractures and morbidity. At the terminal export point there is the veterinary quarantine measures at Port Sudan and Swakin. Rejections of sheep takes place by Federal Veterinary Quarantine authorities they inspect check Brucella and reject of unfit animals for export. Clearance of the shipment is done by presenting all the official documents of the concerned government bodies Ministry of foreign trade, health certificate from veterinary quarantine, quality assurance from SSMO, certificate of origin from chamber of commerce, Port Corporation counting providing weighting facilities fee a fee. Then other cost involves during this stage including water and feed, shipping agents for the preparation of appropriate sea transportation

94 Stages from production Current activities, arrangements to export market and requirements

Jeddah (Saudi Arabia) Import regulations & specifications; inspection, Brucella test, clearance;

Loading of sheep inside Inspection, Brucella test clearance vessels, during sea trip and or rejections of sheep at Jeddah port before unloading at Jeddah by Saudi Veterinary Authorities.

Road or rail transport from Vet. Quarantine measures at Port secondary quarantines to Sudan and Swakin.Rejections by terminal quarantines at Port Federal Vet. Quarantine authorities Sudan & Swakin.

Codex Alimentaris, OIE, FAO/WHO and El Kadaro Quarantine HAACP requirements with appropriate (Khartoum State) facilities implemented with trained veterinarians and staff with quarantine measures.

Seasonal variation in supply of Completion of sheep appropriate type of sheep according to purchases from Omdurman season and function (Hajj, Ramadan or and start Feedlotting to avoid vacations) and quantity and quality of weight loss to reach standard stored feed at any season .Health control requirements for export in compliance with Codex Alimentaris. (health, weight and quality) Entry of secondary quarantine facilities. Short term in inspection Inspection of notifiable or non notifiable and vaccination centers diseases or uncastrated males and then (secondary quarantine) vaccination. Finally Brucella testing and and trucked to Port Sudan certification. Rejection of unfit animals for export. Ear tagged ready for export.

Purchase of stock either from Pre-purchase: Identification and commercial herds or from local selection of quality (breed, weight, traders or collection through age, sex) and inspection for diseases agents from Nomadic to fulfill Saudi Arabia certification encampment or primary markets requirements, by traders and trekked on hoof to inspection centers (with quarantine facilities)

Figure 4.10. Flow chart for Sudanese live sheep exports 2006 95 Stages from production to Current activities, arrangements and export market requirements

Buyers in Saudi Arabia (private Import regulations; inspection, clearance; companies, agencies, private customs, taxes and fees; seasonal changes buyers for supermarkets, hotels, in demand. restaurants). Refrigerated trucks; thermo king switched on an hour prior loading .Unloading of carcasses Road transport by refrigerated at the air port into containers for transport; trucks from abattoirs to chilling capacity at port; vet. Inspection, Khartoum air port. clearance at Khartoum air port scheduling for direct flights & ensuring product is delivered in the required temperature. Chilled to zero degrees centigrade. Export Abattoirs: Halal slaughter, Skinning, SPS, HAACP; appropriate facilities, evisceration, washing, inspection equipment and trained staff for slaughter, (anti-mortem exam.) Chilling for and meat inspectors. Packaging with 24 hours, re-inspection, labeling cotton wrappings, adequate chilling packing &loading. facilities and slaughtering capacity

Seasonal variation in supply of Feedlot – additional appropriate quality lambs; Quantity and concentrates to reach export quality depending on seasonal basis; market requirements for requirements for buffer areas and animal weight and quality required control around; transport to abattoir by to meet SPS Certification trucks, lorries or trailers

Short term quarantine Anti-mortem inspection for diseases, and full screening for inflamed lymph nodes, wound infections diseases as Anti-mortem & fractures and parasites; weight and examination prior to body condition which will meet health slaughtering certification requirements.

Purchase of Purchase from Pre-purchase inspection for sheep from markets and diseases and parasites; weight suppliers at the transport to short and condition to meet SPS slaughterhouse term quarantine certification requirements by premises facilities traders (market actors) and State Veterinary Authorities

Figure 4.11. Flow chart for Sudanese lamb meat exports 2006

96 and preparation of loading manifest and bill of lading cost, the private clearance office fees, the drovers (Kullah) cost to load the vessel. During this stage there are some Rejections of sheep .After loading sheep inside vessels, some exporters load with them feed during sea trip and before unloading at Jeddah to minimize losses in case the vessel rejected especially during the peak season (November-February) Finally at Jeddah port in Saudi Arabia the shipment will be subjected to vet. Authorities and import regulations and specifications; then inspection and Brucella ovis test then clearance. As for Sudanese lamb meat export, the same system at the pre-purchase period with the exception of the short time and distances from purchase to export outlets. They usually purchase sheep from suppliers at the export slaughterhouses premises and sometimes they Purchase from markets and transport to short term quarantine facilities to export abattoirs At the stage of export Abattoirs: there will be Halal slaughtering, skinning, evisceration, washing, inspection anti-mortem exam. Then chilling for 24 hours, re- inspected, labeled, packed and loaded inside Refrigerated trucks; with thermo king switched on an hour prior loading .Unloading of carcasses at the air port into containers for transport, final vet. Inspection at the air port, clearance. At Khartoum air port scheduling for direct flights and ensuring that the product is delivered in the required temperature. Chilled to zero degrees centigrade. Before the shipment reach Buyers in Saudi Arabia (private companies, agencies, private buyers for supermarkets, hotels, restaurants), it is subjected to Import regulations; inspection, clearance.

97 CHAPTER FIVE ECONOMETRIC ANALYSIS REGRESSION AND COINTEGRATION

5.1. Main factors that determine the trader's profit margins from sheep trade The sheep considered for econometric analyses in the following model are adult sheep destined for export. To formulate a model for describing economic relationships between the variables that determine a trader's profits a number of steps were followed. First, the theory or hypothesis behind the relationships is stated. Theoretically, profit from the activity depends on the number of steps involved in any transaction. The relationship here is positive in the sense that profit increases with the increase of volume or number traded. This is measured in Sudanese Dinnars. Second, the price per unit purchased and the price per unit sold. The relationship is negative in case of the first and positive in case of the latter. The statement of theory was followed by specification of the model. Although the theory as stated above postulated the relationships, positive or negative, it did not specify the precise form of the functional relationship between them. The functional relationship could be stated as follows:

Y = BO + B1 X1 + B2 X2 + B3 X3 + B4 X4 Where: Y = Trader's profit (dependant variable)

X1 = Price per adult sheep purchased.

X2 = Price per adult sheep sold.

X3 = Number of adult sheep purchased.

X4 = Number of adult sheep sold.

BO = Constant.

B1, B2, B3 and B4 are parameters to be estimated. Next comes the specification of the econometric model. The mathematical model above has to be modified to cater for the inexact relationship as follows:

98 Y = BO + B1 X1 + B2 X2 + B3 X3 + B4 X4 + U Where U = disturbance or error term (variable) that may well represent all those variables that affect the trader's profit but not included in the model. Lastly is the estimation of the model. For estimation, the regression technique of analysis was used as a main tool (Appendix 5). The least squares linear regression method was used to estimate the parameters of the model. The linear form was chosen after using different logarithmic forms without giving good results. The results of the linear form are shown in Table 5. 1. Table 5. 1. The regression equation for trader's profit margins from sheep trade Dependant variable: traders' profit margin (S.D/head) Variable Coefficient T. Value Constant 1.257 6.503 * Price per sheep purchased 0.912 - 2.912*

(0.313)1 Price per sheep sold 1.221 4.271* (0.286) Number of adult sheep purchased 2.877 - 2.5* (1.188) Number of adult sheep sold 2.989 2.522* (1.185) R - squared 0.513 F - ratio 27.879 * Statistically significant at 0.05 level

1 Values in parenthesis are standard errors. Source: Computed using data from livestock trader's survey of 2005. From the results it is clear that the signs of the model coefficients are as expected a priori except for the coefficient of the variable showing the numbers of sheep purchased. The explanation for this discrepancy is probably because there is usually an optimum in the number of animals purchased at any one time. If that number is exceeded the management will be spread very thin and losses incurred. Moreover, some traders often commit themselves to purchases beyond their financial abilities which negatively impact their profit. The correlation matrix between numbers purchased and sold and prices does show autocorrelation, Table 5. 2. Hence the model is statistically valid.

Table 5. 2. Correlation between number of animals purchased and sold and their prices Price per adult Price per Number of Number of sheep purchased adult sheep adult sheep adult sheep (in S.D.) sold (in purchased sold S.D.) Price per Pearson 1 .944(**) .800(**) .801(**) adult sheep Correlation purchased Sig. . .000 .000 .000 (in S.D.) (2-tailed) N 56 56 56 56 Price per Pearson .944(**) 1 .833(**) .829(**) adult sheep Correlation sold (in S.D.) Sig. .000 . .000 .000 (2-tailed) N 56 56 56 56 Number of Pearson .800(**) .833(**) 1 .999(**) adult sheep Correlation purchased Sig. .000 .000 . .000 (2-tailed) N 56 56 56 56

Number of Pearson .801(**) .829(**) .999(**) 1 adult sheep Correlation sold Sig. .000 .000 .000 . (2-tailed) N 56 56 56 56 ** Correlation is significant at the 0.01 level (2-tailed).

Source: Computed using data from livestock trader's survey of 2005.

It is also clear from the table that all the variable significant at 0.01 level.

100 5.2. Cointegration Based on survey results in chapter 4, traders conduct their activities in more than one market at primary and secondary markets levels and 12.5% of the traders from primary and secondary markets work in one terminal market and only 1.8% operates in two terminal markets. There were no formal barriers to enter any market for any livestock trader, most traders operated in known local markets or market routes about which they had good knowledge, and might not generally venture into unknown territory like terminal market. This raised the issue of sheep markets integration and the co-integration between supply markets and the terminal markets. Based on the fact that if two markets had tight price relationship, then the two markets would be in co integration (Stigler, 1969). Hence cointegration method will be used to test the relationship between Omdurman terminal market and El Damazeen and El Obeid (North Kordofan State) livestock markets. One widely used method to test for market integration is to apply cointegration test, a time-series technique of econometrics, on price data series. This method tests for co- movement of prices from different places and searches for long-run relationships between them. When prices of the same commodity from different places move together in the long run, the information of local surplus and deficit is considered to be well transmitted across space (WWW://glcrsp.ucdavis.edu). Therefore, the market for that good is well integrated. Market integration occurs when product flows between markets are on the same terms and conditions as within markets. A highly integrated commodity market is likely to increase market efficiency through efficient resource allocation and price transmission, which is likely to lower transaction costs and increase incomes to actors (Bridget, et al.2006). Cointegration is an econometric technique for testing the correlation between non- stationary time series variables. If two or more series are themselves non-stationary, but a linear combination of them is stationary, then the series are said to be cointegrated. Before the 1980s many economists used linear regressions on (de-trended) non-stationary time series data, which Clive Granger and others showed to be an inappropriate approach, that could produce spurious correlation. His 1987 paper with Robert Engle, formalized the cointegrating vector approach, and coined the term. For his contribution to the technique's development Clive Granger shared the 2003 Nobel Prize in Economics. It is often said that cointegration is a means of valid hypothesis testing between two variables having unit roots (integrated of order one). That means a series is said to be integrated of order d if one can get a stationary series by "differencing" the term d times. The

101 usual procedure for hypothesis testing between non-stationary variables is to run OLS regressions on data which had initially been differenced. Although this method is correct in large samples, cointegration provides more powerful tools when the data sets are limited, as most time-series are. The two main most common methods for testing for cointegration are: 1. The Engle-Granger two-step method. 2. The Johansen procedure. In practice, cointegration is used for such series in typical econometric tests, but it is more generally applicable and can be used for variables integrated of higher order (to detect correlated accelerations or other second differencing effects), (Internet, Wikipedia.2006).

5.2.1. Methods and models A good number of studies have employed various models to investigate the price cointegration of spatially differentiated markets. Johansen (Johansen. and Juselius, 1990) Cointegration analysis and error correction models (ECM) have become the widely adopted techniques for studying price cointegration since their formal development by Engle and Granger (1987). Johansen model identifies potential long run cointegration relation between different markets while error-correction approach to modeling deal with short term cointegration relationships, market adjusting process and mechanism after an impact happened. Johansen Cointegration analysis technique was adopted for studying price cointegration, between the three livestock markets because it identifies long run cointegration relationship. To preview the methodology, the approach helps to determine the market structure supported by the data without imposing ad hoc restrictions on the econometric specification. The test for a long-run or steady state equilibrium via cointegration indicates that output levels share a long-run equilibrium, a necessary condition for the producers to be in the “same” market. A negative cointegrating relationship precludes cooperative oligopoly, yet a positive cointegrating relationship is consistent with various market structures: competition, noncooperative oligopoly and cooperative oligopoly. Johansson cointegration method was applied for data analysis in this study, because it is a multivariate method – a multivariate method for testing Association between different markets up to 5 markets at a time. That is why it was preferred and used in recent years. Unlike other methods like Engle Granger method which is bivariate method – for testing

102 association between two markets at a time. Econometric Views (E Views) software computer programme was used to analyse price time series data for Cointegration. Unit root In autoregressive models in econometrics a unit root is present if the coefficient | b | = 1 in

Yt = b t-1 + Et, where: yt is the variable of interest at time t, b is the slope coefficient, and

Et is the error component. If the unit root is present, the time series is said to have a stochastic trend, or being integrated of order one or I (1). Augmented Dickey-Fuller test (ADF) In statistics, an Augmented Dickey-Fuller test is a test for a unit root in a time series sample. It is a version of the Dickey-Fuller test for a larger and more complicated set of time series models. The augmented Dickey-Fuller (ADF) statistic, used in the test, is a negative number. The more negative it is, the stronger the rejections of the hypothesis that there is a unit root at some level of confidence (Said and Dickey. 1984). 5.2.2. Data Description For testing cointegration relationship in the three livestock markets, the adopted price dates were the monthly average prices. Price depends on its category (as male sheep) and divided into two categories in terms of trade, whether for domestic consumption or for export. For males no price differential by grade, quality or breed. The two markets’ Omdurman and El Obeid prices data were derived from the daily average prices collected by Animal Resources Services Company and calculated as weighted monthly average. The same was done by El Damazeen Animal Resources authorities. 5.3. Empirical Results The empirical study followed three steps: The first stage involves testing for the order of integration, with each livestock market’s price time series data defined as the logarithm of the levels of the variables, using the Augmented Dickey-Fuller (ADF) statistic, it illustrated in Table 5.3. Unit root test. The outcome of the tests, The (ADF) statistic, used in the test, was a negative number. The more negative it is, the stronger the rejection of the hypothesis. The second stage involved investigating pair-wise livestock market time series prices cointegration utilizing the Johansen maximum likelihood approach. The pair wise markets cointegration exists. Illustrated in Table 5.3.

103 Table 5.3. Unit root test: Series in log ADF series test ADF series first Difference

Omdurman -1.6209 -3.9127 El Obeid -0.9458 -3.8883 El Damazeen -2.1694 -4.5775 Series H0: Unit root; H1: Stationarity around a constant. Critical values -2.89 (5%) and - 2.58 (10%). First difference H0: Unit root with drift; H1: Linear trend stationarity. Critical values -3.40 (5%) and -3.13 (10%). The series test of prices of Omdurman, El Obeid and El Damazeen showed cointegration between the three livestock markets. As indicated in Table 5.2, by the unit root test. In this test the calculated absolute value for Omdurman series test is│1.6209│, El Obeid is │0.9458│ and El Damazeen is │2.1694│, Then compared with the critical value -2.89 (5%) and -2.58 (10%).The calculated absolute values are less than the critical value -2.89 (5%) and -2.58 (10%). Then we accept the Null hypothesis (H0), that there is a unit root. If unit root test is rejected that means that the series of prices is stationary, and then it is not applicable to be tested by cointegration. Also for the alternative hypothesis (H1) Series first Difference stationary, Critical values are -3.40 (5%) and -3.13 (10%), are less than the calculated values. So we reject the alternative hypothesis (H1) and it is O.K. for the cointegration. For the Johansen’s cointegration test results Table 5.4. R is the number of cointegrated vectors (in matrix), if r = n it is stationary and if r = 0 there is no integration. Hence markets are countegrated. Also Lambda-max test (Eagen value) is less than critical values 3.7< 8.1, 4.3<9.1, 2.7<8.1, 6.8<9.1, and trace test (value in matrix) figures are less than the critical values 3.7<8.1, 4.3<9.1 etc, which identified potential long run cointegration relation between the livestock markets.

104 Table 5.4. Johansen’s cointegration test results; number of cointegrated vectors Series in Null Lambda- Critical* trace Critical* VAR(p) log hypothesis max test values test values order Om Durman Ed Damazine r=2 3.7 8.1 3.7 8.1 1 & El Obeid Om Durman** r=1 4.3 9.1 4.3 9.1 1 El Obeid Om Durman Ed Damazine r=1 2.7 8.1 2.7 8.1 2 Ed Damazine** r=1 6.8 9.1 6.8 9.1 1 El Obeid * at 5% **Restrictions on intercept imposed.

Figure 5.1. Impulse response Function:

105

The cointegration tests using Johansen procedure (Table 5.3) show that there is cointegration between Omdurman and El Obeid sheep markets as well as Omdurman

106 and El Damazeen markets and between El Damazeen and El Obeid sheep markets. The presence of cointegration indicates a long run price relationship in the markets, revealing that the prices will move together overtime and converge towards equilibrium in the long run. The results also show that a shock to the price in one market will manifest in the other market as well. Impulse response Function was illustrated in Table 5.3., Figures from 1 to 6. As illustrated in the Impulse response Function, Figures from 1 to 6. Every two Figures will be compared together. In Fig.1, and Fig.2. The two figures illustrate presence of cointegration between Omdurman and El Obeid sheep markets and indicate that, the two markets are dependent on each other. A price shock in El Obeid sheep market will be reflected in Omdurman sheep market. That is any increase of sheep prices in El Obeid market will have the response of price increase in Omdurman as shown in Fig.1. It starts sharply then gradually becomes stationary (during four periods or months). Fig.2. illustrates the effect of Omdurman sheep market prices on El Obeid market prices. The response is gradual and not sharp as in the case of Omdurman on El Obeid prices (in Fig.1). According to Granger Causality tests which were done on the market prices, it involved examining whether lagged values of one series have significant in-sample explanatory power for another variable. This provides a proof of the direction of price flow from the major source market to the terminal market as it implies that whenever there is a positive change in El Obeid sheep market, the Omdurman sheep market reacts to that change positively. Fig.3 and 4 Illustrate presence of cointegration between Omdurman and El Damazeen sheep markets. Also it illustrates the effect of Omdurman sheep market prices on El Damazeen market prices that is any increase of sheep prices in El Damazeen market will have the response of slight price decrease in Omdurman as shown in Fig.3. Also a price shock in Omdurman will reduce El Damazeen market prices. Fig.4.That could be due to the sheep volumes from El Damazeen market is not large enough to affect Omdurman market prices. Fig.5 and 6 Illustrate presence of cointegration between El Obeid and El Damazeen sheep markets. A price shock in El Obeid will reduce El Damazeen market prices. Fig.5. and vice versa A price shock in El Damazeen will reduce El Obeid market prices even further. Fig.6 this would imply that increase of sheep prices in El Damazeen would decrease sheep prices in Omdurman too.

107 Conclusions Johansen co-integration method was used to examine whether a long-run cointegration relationship exists between three domestic sheep markets and between Omdurman terminal sheep market and El Obeid and El Damazeen sheep markets. We then use the error correction models (ECM) to analyses the likely short-run impacts of sheep price fluctuations on domestic market. Our study shows that there is a long- run co-integration relationship between the three domestic sheep markets. El Obeid sheep market price tends to lead price changes in Omdurman Sheep market. The main conclusions from this study are that Omdurman and El Obeid sheep markets, Omdurman and El Damazeen sheep markets and El Obeid and El Damazeen sheep markets are cointegrated and have a long run price relationship. However, the direction of the relation differs. Omdurman and El Obeid have a positive long run relationship while Omdurman and El Damazeen, El Obeid and El Damazeen have a negative long run relationship. Consequently, whenever there is shock to the price in one market it will be manifested in the other market as well, in case of + ve or – ve long run relationship.

108 CHAPTER SIX DISCUSSIONS, SUMMARY AND RECOMMENDATIONS 6.1. Summary and Discussions Activities associated with the market and traders that could either promote or constrain market access and flow were identified along the sheep market chain. The chain description was started with producers' characteristics. Production is not adequately market-oriented, and there is little strategic production of sheep for marketing except in some localities. The efficiency of the marketing system is correlated with the distance of production areas and the seasonality of supplies (due to the seasonal migratory pattern). The marketing chain is characterized by many intermediate costs including herding, trekking, watering and feeding costs, taxes, weight losses, mortality and the margins taken by intermediate traders and brokers. This costly, time consuming channel, reduces producers' profits and increase consumers expenditure. Also it weakens the competitive position of Sudanese sheep. The role of livestock actors at different levels along the chain was identified. The flow of sheep export trade along the chain with stages from production to export market as well as the identification of activities, arrangements and requirements have been described. The household seasonal movement systems of management were impeding the continuous stable sheep supply throughout the year. That is why sheep meat production sector is not strongly export orientated. Based on the survey results, producers selling prices of export quality sheep (heavy weight), were 75%, 71.2%, 69.2% from the export prices in Blue Nile, Gedarif and West Kordofan State respectively. That was a good indication of the increased awareness between producers and that there was a fast flow of market information which led to a better bargaining for good prices. In relation to the livestock markets characteristics, there is inadequate information on livestock markets, inadequate infrastructure, except Omdurman (El Salam) terminal market, and ineffective and inadequate institutional set-ups. Therefore infrastructural development and trade reform will boost access to new markets. For traders' business characteristics; human capital, physical and financial capital were lacking as source of finance was from own resources of traders. Informal credit for sheep traders was from other traders and it is often the only source of capital with very high interest

109 rates (10% per month and sometimes sharing 50% of the profits). Many traders as well as producers, who live in the rural areas, have no or little landholdings, which make them ineligible for credit from formal sources. Social capital plays a critical role in facilitating market exchange especially when various market information (price, supply, demand) are not easily and readily available in the public domain. Common diseases for which animals were excluded from the primary and secondary markets in the three states were heart water, PPR, jaundice, sheep pox, severe emaciation, heavy pneumonia, generalized mange, trypanosomiasis and foreign bodies in export quality sheep. The laboratory facilities in the government veterinary centers are deficient. So privatization policy should be enforced and motivated to fill the gap. Information on supply, demand and prices for traders' purchase, at the primary and secondary markets, was personal observation as first source (88.9%), the second was by speaking with brokers or agents (37%) and the third by speaking with other traders (36.2%). The major sheep marketing problems, from traders' point of view in primary and secondary markets in the three states, was unstable prices (22.6%), unauthorized road taxes (15.1%) and multiple taxes (1.3%). Trader's performance was assessed, through recently completed transactions in the three states, in terms of trader's profit margins in sheep. However, predicted model for assessment was only for adult sheep, since it was the bulk of traders' purchases. A multiple linear regression model was used to examine the relationship between the dependant variable (traders profit margin in adult sheep) and a set of independent variables (number of adult sheep purchased, number of adult sheep sold, price per adult sheep sold and price per adult sheep purchased). Export market for live sheep exhibited an oligopoly structure. The total numbers of registered live sheep exporters were 72 companies and business names. Five out of the 72 exporters exported 59.2% of the total live sheep exports during the period 2003 – 2006. Only one company (Fadous) exported 23.9%, while the other four companies exported 35.3%. The major importers in Saudi Arabia were 6 companies. Rejected vessels of Sudanese sheep from Jeddah Sea Port together with the rejected sheep from internal Veterinary Quarantines and Inspection Centers amounted to 31.6% of total exports as an average for 9 years. Cointegration test was applied on price data series to assess price coordination among three livestock markets, namely between Omdurman terminal, El Obeid and El Damazeen secondary markets. Omdurman and El Obeid have a positive long run relationship which provides a proof of the direction of price flow from the major source market to the terminal

110 market; it also implies that, whenever there is a positive change in El Obeid sheep market, Omdurman sheep market reacts to that change positively. Consequently, whenever there is shock to the price in one market it will be manifested in the other market as well. Highly integrated commodity markets are likely to increase market efficiency through efficient resource allocation and price transmission, which is likely to lower transaction costs and increase incomes to actors.

6.2. Recommendations Sudan should capitalise on its enormous wealth in sheep, stabilise nearby Middle East markets and gain access to new markets. In order to achieve that goal, the following recommendations can be made based on the results of this study: 1- Government policies need to facilitate livestock trade through supporting and enabling legislation, infrastructural development and trade reform, protecting the disease-free status and improving the internal marketing system to enhance its efficiency. 2- Provision of credit facilities with low cost of finance, for sheep production programmes oriented for export. 3- Research and development (R&D) and extension programmes (oriented towards importing Middle East countries demands). Promote and Demonstrate effectiveness of the disease-free zones and disease-free status. 4- Brand recognition of sheep and sheep meat as organic product and designing programmes to stimulate demand in Middle East countries. 5- Recommendations for further research work: 1- Examination of the sensitivity of prices to external shocks in El Obeid sheep market caused by droughts, or epidemics among sheep flocks, or high demand in Saudi Arabia market. 2- Examination of the Sudanese sheep meat industry as a cointegrated system (retail, wholesale and farm prices), short and long run relationships. The role of the retail, wholesale and producers prices in the sector and whether it is a result of market inefficiency. 3- Study the causes of sheep rejections at all levels along the market chain. 4- Market share analysis. 5- Market information. 6- Impact of the WTO Sudanese expected accession on sheep export

111

Appendix 1

1:109 4 486

Port Sudan

Sawakin Khartoum State

Omdurman

Gedarif State

Blue Nile State

West Kordofan State

Sudan Map showing Selected Surveyed States

112 Appendix 2

20 Numbers Millions in 10

3 75 9 3 3 7 1 03 1971 197 19 1977 197 1981 198 1985 1987 1989 1991 199 1995 199 1999 200 20 2005 Ye ars

Histogram for Sudanese Sheep Numbers for the period 1971-2005 Appendix 3

1800000

1600000

1400000

1200000 Sheep 1000000 Cattle

800000 Goats Camels

Number in Heads 600000

400000

200000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Years

Sudanese livestock exports for 16 years from 1990 to 2005

113

Appendix 4

Figure 4.1. Domestic, Cross-border and Official Export Trade Routes. Source: Aklilu (2002).

114 Appendix 5

Regression figures: Model Summary, ANOVA, Coefficients, Casewise diagnostics and Residuals statistics

Model Summaryb

Adjusted Std. Error of Model R R Square R Square the Estimate 1 .761a .579 .546 1.088 a. Predictors: (Constant), price per adult sheep sold (in Sd. pounds), Number of adult sheep sold, price per adult sheep purchased (in Sd. pounds), Number of adult sheep purchased b. Dependent Variable: Traders profit margin of adult sheep in Sd. pounds

ANOVAb

Sum of Model Squares df Mean Square F Sig. 1 Regression 83.054 4 20.763 17.539 .000a Residual 60.375 51 1.184 Total 143.429 55 a. Predictors: (Constant), price per adult sheep sold (in Sd. pounds), Number of adul sheep sold, price per adult sheep purchased (in Sd. pounds), Number of adult sheep purchased b. Dependent Variable: Traders profit margin of adult sheep in Sd. pounds

Coefficientsa

Unstandardized Standardized Coefficients Coefficients Model B Std. Error Beta t Sig. 1 (Constant) 1.257 .193 6.503 .000 Number of adult -2.877 1.188 -5.548 -2.423 .019 sheep purchased price per adult sheep purchased (in Sd. -.912 .313 -.851 -2.912 .005 pounds) Number of adult 2.989 1.185 5.733 2.522 .015 sheep sold price per adult sheep 1.221 .286 1.360 4.271 .000 sold (in Sd. pounds) a. Dependent Variable: Traders profit margin of adult sheep in Sd. pounds

115 Casewise Diagnosticsa

Traders profit margin of adult sheep in Case Number Std. Residual Sd. pounds 46 -3.053 3 54 3.076 8 a. Dependent Variable: Traders profit margin of adult sheep in Sd. pounds

Residuals Statisticsa

Minimum Maximum Mean Std. Deviation N Predicted Value 1.26 6.32 2.21 1.229 56 Residual -3.32 3.35 .00 1.048 56 Std. Predicted Value -.779 3.343 .000 1.000 56 Std. Residual -3.053 3.076 .000 .963 56 a. Dependent Variable: Traders profit margin of adult sheep in Sudanese pounds

116 Appendix 6

Imports regulations and requirements by country 1. Saudi Arabia imports do not use hyphens, use dots for numbering 1. The import custom duty on food products is 12 per cent and all goods imported into Saudi Arabia must have the following documents: a notarised certificate of origin authenticated at the Saudi diplomatic missions and local chamber of commerce; a similarly authenticated invoice (in triplicate) stating the country of origin, name of the carrier, brand and number of goods, along with a description including weight and value; a packing list; bill of lading; and documents indicating compliance with health regulations(Ibrahim, 2004). Regulations and their implementation in respect to live animals come under the Ministry of Agriculture and Water. These include a list of epidemic and contagious diseases from which livestock must be free. 2. Imported animals are subjected to inspection at the major ports of entry and health checks on every animal are very rigorous. Both physical and laboratory tests are performed. 3. Documents needed for the import of live animals, provided by the exporter: • Veterinary health certificate, stating that animals have been examined before shipment and have been certified free from epidemic or contagious diseases. The certificate has to be singed by a qualified veterinary officer from the Federal MAR and endorsed by a senior veterinarian. • Certificate of origin authorized by the Sudan Chamber of Commerce and counter- signed by the Saudi embassy in Khartoum; • Commercial invoice giving details of the shipment; and • Bill of lading. • The three certificates are counter-signed by the Saudi embassy in Khartoum (Health certificate, certificate of origin and the commercial invoice). 4. Documents needed for the import of meat in Saudi Arabia include: • Health Certificate from the Federal veterinary authorities similar to that for live animals anti-mortum examination is performed within 12 hours before slaughtering and post- mortum examination after slaughtering, indicating that meat as from disease free animals and fit for human consumption. • Certificate of origin authorized by the Sudan Chamber of Commerce and counter- signed by the Saudi embassy in Khartoum;

117 • Commercial invoice giving details of the shipment; and • Bill of lading. • The three certificates (Health, certificate of origin and the Halal meat).are counter- signed by the Saudi embassy in Khartoum • Carcasses must be labeled by stickers showing: names and addresses of exporting and importing companies or business names, the date of slaughter, types of meat, carcass temperature (Table 3.7) usually at zero degrees centigrade), the label should also include a statement of slaughtering according to Sharia Law. • A certificate ratified by the Saudi consulate or its authorized representative or issued by an officially recognized Islamic center or organization that the animal have been slaughtered in a licensed abattoir and in accordance with Islamic procedures and each carcass or container must be stamped indicating that it has been slaughtered under the supervision of that center or organization; Regulations Governing Dates of Arrival and Expiry and Storage Conditions of Meat Imported to Saudi Arabia Product Date of arrival Date of expiry Storage conditions (a) (a) Chilled meat Carcasses 10 days 4 weeks -20 C to 0o C Vacuum packed 40 days 10 weeks -20 C to 00 C Frozen meat 4 months 10 months below –180 C a from date of slaughter or production. Source: Ibrahim, 2004. 2. Jordanian market: It is not allowed to export live sheep from Sudan to Jordan but they accept sheep and lamb meat together with beef. Recently, they allowed live cattle exports with the following regulations from the Jordanian Ministry of Agriculture: 1.The shipment should be accompanied by veterinary health certificate to guarantee that animals are free from contagious and infectious diseases. 2. Accompanied by Certificate of origin from Sudan & from a disease free zone. 3. Cattle should be in good health conditions and free from disease from the List of Group (A +B) according to OIE regulations, with no reported cases of FMD during the last previous three months: 4. Cattle should be kept for 30 days prior to shipment in official

118 veterinary quarantine, during which there should be: A - A Serological test for cattle brucellosis and a negative result obtained. B - Laboratory examination of cattle FMD for strain 3ABC at the end of the quarantine period from a statistically representative sample (by Jordanian and Sudanese veterinarians) and obtaining a negative result. C - Dipping or spraying of cattle twice to insure being free from external parasites. 5. Cattle should not be vaccinated against FMD and should not be exposed to any infection during transport from quarantine to port of shipment and should be vaccinated against Hemorrhagic Septicemia (H.S.) 6. Should not be vaccinated against (LSD) or (CBPP). 7. Animals should be from premises free from anthrax and no symptoms of disease on the shipment day. 8. Animals should be quarantined after arrival in the Kingdom of Jordan for at least 14 days and will be subjected to all veterinary quarantine Measures. 9. Transportation, loading and unloading should be according to Jordanian standards. 10. Samples for examination should be according to authorized statistical methods and representing the size of shipment. 11. Jordanian authorities should be informed with numbers of animals intended for export while they are at the Sudanese quarantine. 12. Jordanian Ministry of Agriculture is not responsible for any cost involved in implementing tests and examinations and all requirements & equipments for laboratory examinations should be tackled by Sudanese counterparts. 3. Egyptian Market: The Egyptian market demands cattle meat beside live camels, but in November 2005, they issued regulations and requirements for sheep importation from Sudan. They include: Requirements for chilled bone-in beef from Sudan: 1. The importing company should request a technical committee to travel to Sudan (from the Ministry of Agriculture Public Corporation for Veterinary Services, and Animal Health Research Institute) and to bear all costs and expenses for the committee travel and cost of diagnostic materials and equipments.

119 2. Animals intended for slaughter should be in veterinary quarantined for 21 days and start testing from the 16th day. 3. For animals tested negative, slaughtering should be started. Positive tested cases should be eliminated and retested after 48 hours. 4. In case all animals tested negative, slaughtering should be started. But in case there is a positive case, the whole flock should be eliminated. 5. Animals with negative results should be slaughtered in slaughter houses checked and approved by Public Corporation for Veterinary Services staff. After slaughtering, heads and offal will be excluded. 6. Import is only limited to fore and hind quarters, and each quarter should be rapped by cotton packaging and inserted labels (stickers) indicating all slaughtering data. Quarters should be kept under 0 to +2 degrees centigrade. 7. Chilled bone-in beef will be deboned immediately after arrival at Cairo air port in one of the government deboning halls under supervision of veterinarians belonging to Public Corporation for Veterinary Services. 8. The concerned importing body should submit a request with satisfactory information and attaching origin and copy of pro-forma invoice to obtain the approval of veterinary authorities. Requirements for importing live animals from Sudan: 1. Live cattle: _Only male cattle would be imported and it should not be more than three years old and not less than 300 Kg live weight. _Animals should be from contagious diseases free regions and farms, especially FMD, Rinderpest and CBPP for cattle. _ Animals should be quarantined at the shipping port for not less than 30 days in the Sudan. _ Veterinary Quarantine in Wadi Halfa should be for 30 days and a slaughterhouse to be constructed for slaughtering animals 6 _ After Quarantine period animals will be transported to Halayib in Arab Republic of Egypt where it will be slaughtered in Haleyib Quarantine; that is after constructing Quarantine and slaughterhouse in the region. _ Quarantine in Port Sudan for 30 days then to be transported to Haleyib and El Swiss to be slaughtered in El Swiss slaughterhouse after 72 hours rest.

It requires planning for the future for the Sudan to construct slaughterhouse if Sudan intends to export meat from Wadi Halfa in the far North ..6

120 _ Animals should be drenched, injected and sprayed against internal and external parasites. _ Serological testing for animals should be done during the quarantine period and after admission in the quarantine for: FMD, rinderpest and CBPP and eliminating positive cases. _ Animals should be slaughtered after 72 hours of rest. _ by products or non-edible offal should be disposed with hygienic safety measures. _ Disposal of dung is by fermentation as organic fertilizer. 2. Live sheep: _ Imports would be only for male sheep. _ Veterinary quarantine at Port of shipping should not be less than 30 days in the Sudan. _ Serological testing for sheep should be during the quarantine period and after admission in the quarantine for: Foot and Mouth Disease (FMD) and eliminating positive cases. _ Sheep should be slaughtered after 72 hours of rest. _ Sheep should not be handled at markets. 4. Syrian Market: The Syrian sheep market is an excellent example of high efficiency of production and marketing. Syria exported 2.2 million heads in 2004 from the Awasi local breed (the highest price in the Middle East) and imports only 0.1 million heads of cheap live sheep from Romania, Moldavia and Okrania as indicated in the following tables 1, 2, 3. Exports by destination, Imports by origin and re-export in 2004: 1. Exports of Live sheep and goats from Syria: Type Number in heads Importing countries Sheep (Awasi) 2228140 Lebanon-Saudi Arabia-Qatar-Kuwait Goats 392059 Saudi Arabia-UAE-Jordan

2. Imports of Live sheep and cattle from Syria: Type Number in heads Countries of Origin Sheep 109798 Romania-Moldavia Cattle 32826 Romania-Moldavia-Okrania Source: Arab Republic of Syria- Ministry of Agriculture And Agrarian Reform-Animal Health Dept.2005.

3. Transit (Re-export) of live sheep and cattle from Syria: Type Number in heads Countries of Origin Importing countries Sheep 109798 Romania- Okrania -Russia Jordan Cattle 32826 Romania- Russia- Moldavia. Jordan Source: Arab Republic of Syria- Ministry of Agriculture and Agrarian Reform-Animal Health Dept.2005.

121 Appendix 7

The three most important problems facing sheep and goats in the primary and secondary markets by market type and State State Market Number one Number two Number three

Gedaref Abu weak legal system to weak demand for weak demand Rukhum contract enforcement agricultural products for (Primary) agricultural products Bazoora non-transparent absence of weak legal (Primary) taxation system Government support system to to improve marketing contract enforcement El Hawata limited access to inadequate market absence of (Primary) credit infrastructure Government support to improve marketing El Shwak absence of prices are unstable absence of (Primary) Government support Government to improve marketing support to improve marketing Elmagata absence of weak access to inadequate (Primary) Government support market information market to improve marketing infrastructure Gedaref prices are high multiple non- (Secondary) taxes(between transparent regions,woredas,and taxation zones system Blue Nile Aboghmy limited access to inadequate market weak demand (Primary) credit infrastructure for agricultural products Badows weak legal system to inadequate market weak demand (Primary) contract enforcement infrastructure for agricultural products Boought limited access to inadequate market absence of (Primary) credit infrastructure Government support to improve marketing El multiple inadequate market absence of Damazeen taxes(between infrastructure Government regions,woredas,and support to zones improve marketing

122 Midiem absence of No Administration for System (Primary) Government support the market or market to improve marketing fees Ofod weak demand for prices are low poor quality (Primary) agricultural products of goods Wada book inadequate market absence of weak demand (Primary) infrastructure Government support for to improve marketing agricultural products

W.Kordofan Ankowsh prices are low absence of inadequate (Primary) Government support market to improve marketing infrastructure Eial Bakheit No Administration for limited access to absence of (Primary) the market or market credit Government fees support to improve marketing El Khowei inadequate market multiple limited access (Primary) infrastructure taxes(between to credit regions,woredas,and zones El Nihood weak demand for prices are unstable non- (Primary) agricultural products transparent taxation system Elmigeisim prices are unstable limited access to absence of Omkhirain credit Government (Primary) support to improve marketing Morkab prices are unstable non-transparent inadequate (Primary) taxation system market infrastructure Omlobana prices are unstable weak legal system to limited access (Primary) contract enforcement to credit Shallotta prices are low limited access to absence of (Primary) credit Government support to improve marketing Source: Livestock markets survey data, 2005.

123 Appendix 8 Traders Profit margins in sheep Table 8.1.Traders profit Margin of adult sheep in the three states in Sudanese Dinnars S/N Number Price of adult sheep Number Price/animal sold Margin purchased purchased(S.D.) sold (S.D.) in S.D. 1 1 5000 1 10000 5000 2 2 5830 2 6000 170 3 5 6800 5 7000 200 4 6 7000 6 7560 560 5 7 7500 7 7600 100 6 8 8000 8 7800 -200 7 9 9500 9 10000 500 8 10 9750 10 10500 750 9 12 10000 12 11000 1000 10 13 11000 13 11500 500 11 50 11500 50 11970 470 12 100 12000 100 12000 0 13 120 13000 119 13500 500 14 200 13800 120 14000 200 15 210 14600 195 15400 1800 16 220 15300 198 16700 1400 17 300 16000 200 17000 1000 18 360 17000 210 17500 500 19 700 18500 300 18000 500 20 1000 19500 357 21000 1500 21 2000 20000 700 21200 1200 Source: Traders survey data, 2005.

Table 8. 2. Traders profit Margin of young sheep male in the three states in Sudanese Dinnars S/N Number Price of young sheep male Number Price/animal sold Margin purchased purchased(S.D.) sold (S.D.) in S.D. 1 3 6000 3 8000 200 2 7 6500 7 8500 2000 3 8 7500 8 9090 1590 4 11 7730 10 10000 2270 5 12 8000 11 10250 2250 6 17 10000 17 10900 900 7 20 10600 20 11400 800 8 40 11000 35 12000 1000 9 100 11300 100 12174 874 10 110 11500 110 12500 1000 11 120 11670 120 13500 1730 12 160 12000 160 14000 2000 13 200 13800 200 14900 1100 14 220 14000 219 16000 2000 Source: Traders survey data, 2005.

124 Table 8.3. Traders profit Margin of adult culled female sheep in the three states in Sudanese Dinnars S/N Number Price of adult culled Number Price/animal sold Margin purchased female purchased (S.D.) sold (S.D.) in S.D. 1 3 8000 3 9000 1000 2 8 10000 8 13000 3000 3 35 16000 35 16600 600 Source: Traders survey data, 2005. Table 8.4. Traders profit Margin of adult breeding female in the three states in Sudanese Dinnars S/N Number Price of adult breeding Number Price/animal sold Margin purchased female purchased (S.D.) sold (S.D.) in S.D. 1 1 7000 1 7250 250 2 2 8000 2 8500 500 3 7 10500 7 11500 1000 4 90 19000 90 20000 1000 Source: Traders survey data, 2005. Table 8.5. Traders profit Margin of young female sheep in the three states in Sudanese Dinnars S/N Number Price of young female Number Price/animal sold Margin purchased purchased (S.D.) sold (S.D.) in S.D. 1 2 7500 2 9000 1500 2 100 8000 100 9650 1650 Source: Traders survey data, 2005.

Appendix 9 Sheep Sales and Average Prices in Omdurman livestock market from 2001 to 2006 (Sales in heads, average prices in Sudanese Dinnars) Omdurman livestock market 2001 Omdurman livestock market 2002 Month Sales Av.Price Month Sales Av.Price January 5512 9300 January NA NA February 7209 8800 February 9697 12000 March 9705 9500 March 10700 13000 April 6525 8700 April 14645 11500 May 6049 8750 May 18532 16750 June 7045 9600 June 19382 10250 July 7583 9900 July 19320 12000 August 8657 9600 August 21566 12500 September 8909 9100 September 32000 11000 October 11347 8700 October 25017 10000 November 13535 8300 November 30161 10500 December 12836 8100 December 28219 10000 Total 104912 Total 220239 Annual Av.Price 9029 Annual Av.Price 11770

125 Omdurman livestock market 2003 Omdurman livestock market 2004 Month Sales Av.Price Month Sales Av.Price January 31711 11500 January 31125 12500 February 22605 12000 February 21887 21000 March 28231 11000 March 25346 17000 April 30244 12000 April 21217 12500 May 29696 12000 May 21356 20000 June 26506 15000 June 21399 21000 July 30890 16000 July 20373 27000 August 29598 17000 August 21940 25000 September 39663 16500 September 27384 23000 October 36307 13500 October 29476 26000 November 32631 13500 November 29330 16500 December 33285 14500 December 41324 25000 Total 371367 Total 312157 Annual Av.Price 13708 Annual Av.Price 20542

Omdurman livestock market 2005 Omdurman livestock market 2006 Month Sales Av.Price Month Sales Av.Price January 41324 25000 January 32559 22000 February 51483 21000 February 26062 21000 March 31777 20000 March 29333 22000 April 24049 20000 April 30094 27000 May 31135 19500 May 27420 27000 June 24118 22000 June 19886 29000 July 20427 24000 July 29292 22000 August 29409 26000 August 34508 21000 September 32217 20000 September 36551 22000 October 38566 27000 October 32257 21000 November 31970 19000 November 36577 20000 December 48455 28000 December 44021 22000 Total 404929 Total 378560 Annual Av.Price 22625 Annual Av.Price 23000

Sheep Sales and Average Prices in El Obeid livestock market

126 from 2001 to 2006 (Sales in heads, average prices in Sudanese Dinnars) El Obeid livestock market 2001 El Obeid livestock market 2002 Month Sales Av.Price Month Sales Av.Price January 1088 8750 January 10562 12500 February 1742 8700 February 9208 8300 March 1970 7650 March 2965 5750 April 2056 7600 April 3583 6350 May 2340 7600 May 3150 5650 June 1717 7350 June 2494 6500 July 2103 6900 July 3650 8500 August 3028 5900 August 10728 8350 September 4550 5750 September 6712 8500 October 2383 5500 October 4352 5600 November 6090 6250 November 3094 7350 December 2721 7250 December 1482 8250 Total 31786 Total 61980 Annual Av.Price 7100 Annual Av.Price 7633

El Obeid livestock market 2003 El Obeid livestock market 2004 Month Sales Av.Price Month Sales Av.Price January 4699 7350 January 3441 14500 February 2108 7565 February 2191 11500 March 2628 6350 March 2889 12000 April 3263 7500 April 1255 12500 May 1941 9500 May 844 13250 June 556 11000 June 1357 13000 July 3353 11500 July 939 13500 August 1581 10000 August 1584 13000 September 2128 9500 September 1776 13000 October 5633 11000 October 1466 13500 November 2567 9000 November 1715 13500 December 2734 12500 December 6738 13500 Total 31637 Total 26195 Annual Av.Price 9397 Annual Av.Price 13063

127

El Obeid livestock market 2005 El Obeid livestock market 2006 Month Sales Av.Price Month Sales Av.Price January 8297 18000 January 4758 16000 February 779 12750 February 1506 15500 March 1492 14000 March 1785 15500 April 1797 5500 April 1774 15750 May 1101 12500 May 1785 18750 June 1577 15000 June 2215 18250 July 1323 14000 July 2411 16250 August 2819 14000 August 4467 15750 September 2195 13500 September 3896 15250 October 1854 14500 October 2605 15750 November 2128 14500 November 2880 16500 December 2176 16000 December 5123 19000 Total 27538 Total 35207 Annual Av.Price 13688 Annual Av.Price 16521

Sheep Sales and Average Prices in El Damazeen livestock market from 2001 to 2006 (Sales in heads, average prices in Sudanese Dinnars)

El Damazeen livestock market 2001 El Damazeen livestock market 2002 Month Sales Av.Price Month Sales Av.Price January 2380 16500 January 2310 14500 February 3000 19750 February 3100 17500 March 2370 13500 March 3425 17500 April 2300 13500 April 2375 16500 May 2820 14500 May 2900 19000 June 2200 15500 June 2070 14000 July 2000 13500 July 1300 16500 August 2900 14750 August 1200 16500 September 2200 14000 September 1500 14750 October 2315 17000 October 1900 13500 November 2500 17000 November 2800 16500 December 1800 15750 December 2917 16500 28785 27797 Total Total Annual Av.Price 14437 Annual Av.Price 16104

128 El Damazeen livestock market 2003 El Damazeen livestock market 2004 Month Sales Av.Price Month Sales Av.Price January 3600 14500 January 4700 12500 February 3900 16250 February 3450 12500 March 4150 19250 March 2850 13250 April 3970 18000 April 2000 13500 May 3200 17000 May 2005 13250 June 2870 15500 June 1005 14000 July 2807 13500 July 615 16750 August 2300 13500 August 573 16750 September 1930 13500 September 620 16750 October 2107 14750 October 413 19750 November 2215 14500 November 1220 19750 December 2317 14000 December 1816 18250 Total 35366 Total 21267 Annual Av.Price 15354 Annual Av.Price 15584

El Damazeen livestock market 2005 El Damazeen livestock market 2006 Month Sales Av.Price Month Sales Av.Price January 4500 16000 January 2610 16500 February 3100 12750 February 1200 14000 March 4200 12750 March 700 13250 April 3270 14250 April 3100 13500 May 2800 17000 May 4000 13750 June 7200 16250 June 5200 14600 July 1613 16750 July 786 17600 August 653 16500 August 747 17500 September 1100 18000 September 489 17500 October 1250 15000 October 5030 18000 November 1300 17000 November 9500 16500 December 2300 20000 December 3200 13500 Total 33286 Total 36562 Annual Av.Price 16021 Annual Av.Price 15517

129 Appendix 10 Current Activities, Arrangements and Requirements along the Sudanese Marketing Chain (2006)

Terminal Markets Saudi Arabia (Omdurman, Khowei, Ankowsh areas, Showak, export Entry Point slaughterhouses) Market: Federal Veterinary Office: Sanitary regulations and specifications 1-For Live sheep; for slaughtering (ante and post mortem examinations and testing in from Sawakin Port investigative laboratories). to Jeddah. Local Council, Khartoum State Ministry of agriculture, Animal 2-For Meat; From Resources Services Company: transaction fees; marketing fees Export Abattoirs Brokers: Brokerage service for transactions taking place at to destination. particular livestock market or export slaughterhouses. Exporters: Receive various services at a cost (labour, trekking trucking, and minor treatment and prophylaxes).

Secondary Markets Extra market purchases Brokers and Traders (Dallallein /Ghelaja / Sebbaba / Jelaba/ Direct purchase of sheep from Wakil): Informal pre-purchase visual inspection/screening by for clinical symptoms of disease or avoidance of animals whose producing areas (watering points, provenance are outbreak areas. They also perform selection grazing areas, villages) during based on quality assurance (breed, sex, age and nutritional status) periods of peak demand with the fulfilling requirements of agents and exporters. assistance of brokers who belong Brokers and guarantor: Brokerage services of provenance of to the local community. animal and ownership (enforcement of informal contracts and Brokers and Traders: Informal property rights). pre-purchase visual Traders: Receive various services at cost (partially fodder, water, inspection/screening by for livestock marking, trekking and trucking). clinical symptoms of disease or Local Council: Tax and fees collection sometimes for providing avoidance of animals whose marketing services. Also Range and pasture fees; allow grazing provenance are outbreak areas. against fee in Gebesh, Nihood and Kowei areas. They also perform selection based on quality assurance (breed, sex, age and nutritional

status) fulfilling requirements of Primary Markets agents and exporters. Brokers and Traders (Dallallein /Ghelaja / Sebbaba / Jelaba): Brokers: Brokerage service and Pre-purchase visual inspection/screening for clinical guarantee of provenance of symptoms of disease or avoidance of animals from outbreak livestock and ownership areas. Perform selection based on quality assurance (breed, (enforcement of informal sex, age and nutritional status) fulfilling requirements of contracts and property rights). agents and exporters. Exporters: Receive various Brokers (Sebbaba, Dallallein)): Brokerage and guarantor services at a cost (use of their services, guarantee of provenance of animal and ownership own enclosure/s, labour, trekking (enforcement of informal contracts and property rights). and trucking, minor treatment Local Council: Tax and fees collection. and prophylaxes). Traders (Ghelaja / Exporters agents / Jelaba): Receive services at a cost (sometimes fodder, in additionAppendix to the free 11 natural pasture, water, minor treatments of sick animals).

130 Major Constraints along the Sudanese Marketing Chain (2006)

Saudi Arabia Terminal Markets Entry Point Omdurman livestock markets and export slaughterhouse, GIMCO Market: and Nyala slaughterhouses. 1- Rejection of Absence of regulation for the provision of brokerage services: At live sheep from livestock markets or at slaughterhouses. Jeddah Port. Absence of a formal quality assurance system: Few actors 2- Short shelf life benefiting from the informal grading system. For Meat; and Absence of a formal traceability system. poor packaging Lack of especialised vessels for live sheep transport by sea. Lack of refrigeration facilities at Khartoum air port and especialised containers and airplanes with chilling facilities.

Secondary Markets During purchases or Extra Meager veterinary service provision: Only Animal health market purchases inspection and vaccination, priority for trans-boundary diseases - Risk of lost and theft for (TBDs) and screening of export trade animals. Weak purchases of sheep from enforcement of animal welfare standards and isolation for sick producing areas (watering and suspected animals. points, grazing areas, villages). Absence of a formal quality assurance system. Few actors -Brokers and agents: Possibility benefiting from the informal grading system in use. Limited of defects in purchases by provision of services and infrastructures by local authorities: visual inspection/screening for Water and troughs, treatment/vaccination crushes, isolation clinical symptoms of disease or facilities, loading ramps, fencing and lack of accurate record selection of quality assurance keeping system, unregulated tax collection system. (breed, sex, age and nutritional Absence of regulation for the provision of brokerage services. status) Absence of a formal traceability system. Brokers: Overestimated Brokerage services cost. Or leakages in the enforcement of informal contracts and property rights. Primary Markets Exporters: High cost of various Lack of veterinary service provision. services in peak season (labour, Absence of a formal quality assurance system: Few actors trekking and trucking,). benefiting from the informal grading system in use because of monopoly of relevant knowledge and information. Limited provision of services and infrastructures by local authorities: Availability of water and troughs, treatment/vaccination crushes, fencing and lack of an accurate and comprehensive record keeping system. Absence of regulation for the provision of brokerage services. Absence of a formal traceability system. Insecurity for sheep from Greater Darfur States Leading to increased transaction costs (road blocks, tips, and unofficial taxes).

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