Us Trade With Europe Beef Simulation

Introduction

In W Africa, at that place has been a recent renewal of the policy debates associated with the promotion of value-added beef exports in lieu of traditional, largely pastoral-based, merchandise in live animals from the Sahel to coastal West African countries. These pressures have emerged in part from increased force per unit area and tensions between pastoral and agricultural communities over state and resource that are exacerbated further past climatic stress. At the aforementioned time, the increased dynamism of red meat demand along coastal countries in West Africa has driven a number of planned investments in Sahelian countries (Republic of chad, Mali, Niger, Burkina Faso, Mauritania) to develop consign-oriented slaughterhouses that ostensibly will enable these countries to capture more of the value-added associated with the production of livestock.

Demand for reddish meat is expected to remain strong in Due west Africa. While this provides an opportunity for African suppliers, it could besides pose a major threat if issues of productivity, infrastructure, and quality are not addressed. Equally noted by Hollinger and Staatz (1), the capacity of ruminant livestock value chains (cattle, sheep, goats) to reply to growing demand for red meat is likely to be constrained by low herd productivity due to poor nutrition resulting from seasonal variation in pasture resources and a weak animal feed industry. Poor productivity is also linked to express investments by farmers on feed, fodder, and other inputs because of depression expected returns from undeveloped markets and poor market integration. More generally, depression offtake rates coupled with productivity losses due to beast diseases and seasonal feed shortages compromise the long-term capacity of the livestock sector to meet marketplace expectations. Moreover, with growing demand has come increased competition from exports from not-African sources, often at prices well-below what Sahelian suppliers can provide.

In this paper, nosotros examine these issues and opportunities from a simulation analysis that explores the prospective competitiveness of exporting beef from Burkina Faso to Ghana rather than live animals. We combine the use of system dynamics modeling techniques (2, iii) of upstream and downstream marketing and trade of animals and meat in each state with the use of a social accounting matrix to look more carefully at macroeconomic and especially projected employment effects associated with alternative trading models. The paper begins with a review of trading patterns in alive animals along the corridor and meat imports from overseas destinations to Republic of ghana. A discussion of the methodology used to assess the prospects of beef exports from Burkina Faso follows, including model assumptions and data used to calibrate the model. We then written report the results of our scenario assay with the model and provide some insights to better interpret model findings.

The Mural of Cattle and Beef Production and Trade in Burkina Faso and Ghana

Burkina Faso is 1 of the largest producers of live cattle in the Sahel. Official statistics of cattle numbers are somewhat dated, only the nearly contempo figures from DGRESS/MRA (4) revealed cattle stocks of just over 9 million caput in 2014, growing from 7.half dozen million caput in 2005. Exports of live animals in the same year were estimated at 344,400 (Table ane). Some 267,000 caput of cattle were slaughtered in the formal sector in 2014, yielding xxx,137 tons of beefiness. Given official statistics that guess offtake rates of almost 12%, this suggests over 479,000 animals are either slaughtered for domestic consumption and/or exported informally.

Tabular array one. Exports of live animals from Burkina Faso to regional markets, 2005–2014 (m heads).

Movements of cattle between Burkina Faso and Ghana have long been established, with Ghana serving as an important destination market for Burkinabe cattle. Table 1 illustrates the evolution of this trade as reported past official national statistics on animal merchandise through 2014. Ghana has historically comprised roughly 35–40% of Burkina Faso's exports of cattle, though this share declined propitiously in 2013 and 2014, due in role to the recovery of the market in Cote d'Ivoire afterwards its political crisis in 2011 and an increase in need from Nigeria.

Despite long-standing merchandise patterns in animals between Burkina Faso and Republic of ghana, trade in beef has been negligible. Exports of all meats by Burkina Faso (including but not exclusively beef) in the most recent year available from national statistics for disaggregated trade data (2012) reveal exports of just under 143,000 kg, with sales to Ghana only 738 kg (DGESS/MRA).

While imports of beef from Burkina Faso are a negligible portion of consumption in Ghana, imports from other international destinations are particularly important equally Republic of ghana is deficit in red meat. Information technology is instructive to beginning derive consumption volumes in Republic of ghana to contextualize the scale and nature of these imports. MoFA (five) reports animal stocks in Ghana in 2015 of 1.734 one thousand thousand cattle. Simulation results conducted by the authors using DynMod (vi) to project herd dynamics in Republic of ghana gauge domestic offtakes of 153,600 animals, which when combined with by imports (82,700 animals) reported in Tabular array 1 propose total animals available for consumption at 236,300 head of cattle based on older data (2014/2015). According to Suleman (7), around 80–90% of imported animals were from Burkina Faso, while breezy reports suggest that total volumes of cattle imports past Ghana are effectually 100,000 animals per twelvemonth. These figures would imply that up to a tertiary of animals processed in Ghana for consumption are of Burkinabe origin.¹ In Republic of ghana and in West Africa in general, it is further of import to differentiate between cuts and offals in agreement consumption patterns, every bit the latter are highly demanded in the region. Using an boilerplate carcass weight of 165 kg (based on an boilerplate traded creature of 300 kg and carcass yield of 55%), offals comprising 10.iv% of the live animal weight, and Earth Bank estimates of population (29.5 million), national consumption of domestically candy beefiness cuts is estimated at nearly 39 million kg, while another vii.4 meg kg of offals are produced.

International trade information for beef imports by Ghana are inconsistent, with wide variations in the volumes of imports reported by Ghana and exports to Republic of ghana reported by trading partners in the UN Comtrade database. For case, in 2017, Republic of ghana itself reported imports of frozen beef (HS 0202 of three.26 1000000 kg, while full exports of global partners to Ghana in that same tariff code were nearly three times this book (9.13 one thousand thousand kg). Given that the majority of exporters to Ghana in beef are European suppliers with by and large reliable statistics, nosotros utilize this data to estimate Ghana'south imports of beef rather than that reported past Republic of ghana to UN Comtrade. This information is summarized in Table 2 during the period 2014–2018 for fresh beef (HS 0201), frozen beefiness (HS 0202), and offals (HS 0206). While erratic, trends in imports past Ghana are rising, with steady imports of offals (over 30 one thousand thousand kg) during this menses and rise imports of frozen beef since 2016.

Table 2. Exports of fresh and frozen beefiness products to Ghana, 2014–2018.

International trade data in meat products do not distinguish between private cuts in which at that place tin be broad variation in both price and quality. Even so, unsaid unit values from individual export suppliers tin shed some light on whether imported beef is a key cut, a low-value cut, a byproduct, or offals. Offals, such as hearts, livers, kidneys, tripe, sinews, etc., are typically priced between The states$0.80-U.s.a.$1.50/kg (f.o.b or c.i.f. depending on product and country of origin). As UN Comtrade data allows the computation of private supplier unit of measurement values for meat exports to Ghana, we can surmise that for beef cuts found in HS 0201 or 0202 where unit values are lower than US$ane.fifty/kg, there is a very high likelihood that such products are some type of by-product and probable sold/consumed alongside offals. In Tabular array 3, we provide disaggregated data from 2018 to derive the share of these products in the import basket of beef imports by Ghana. The data frequently highlight significant variation in unit value depending on the type of cutting (or cuts) sold, though the trade data are non sufficiently granular to tease out specific cuts traded. Those imports that are causeless to be by-products are shaded in grey in Table 3. Our analysis shows that 98% of the volume of beefiness imports by Ghana was in the form of either low-value byproducts or offals in 2018; while not reported here, a similar analysis of 2017 data shows similar results.

Tabular array 3. Disaggregation of beefiness exports to Republic of ghana by country of origin, 2018.

Materials and Methods

In this paper, nosotros conducted three types of analyses, using data derived from rapid value chain assessments of the trade and marketing dynamics between Burkina Faso and Ghana (7, eight). First, nosotros looked at price gaps and marketing costs between the 2 countries to explore baseline competitiveness vs. third countries. Second, and expanding on the get-go analysis, nosotros constructed a organization dynamics model of the trade corridor betwixt Burkina Faso and Ghana to explore the long-term marketing and trade dynamics in live animal and meat markets in each country to assess whether value-added sales of meat from Burkina Faso could be competitive vis-à-vis 3rd markets, and nether what conditions/scenarios. Third, to explore the broader macroeconomic and employment effects of these different trading alternatives, nosotros employed the near contempo social accounting matrix (2013) of Burkina Faso (nine) to run multiplier analyses. The latter ii methods are described in detail beneath in plow.

System Dynamics Model of the Livestock Trade Corridor Betwixt Burkina Faso and Ghana

System dynamics (SD) models are simulation approaches used in the assay of complex systems. Originally developed in the context of industrial engineering systems, they have been more widely used in a variety of management, ecological, environmental, and social scientific discipline applications in the last xx years. SD models move beyond narratives of value chain processes toward frameworks that can provide ex-ante impacts of dissimilar investment scenarios associated with technical, marketing, and institutional changes (2). In particular, in that location could be important feedback furnishings between the interactions of market dynamics, state use patterns, climate alter, institutions, gender dynamics, and socio-economic factors that could influence the uptake and success of any proposed intervention that traditional economic methods or statistical analysis may not choice up or lack local level data to rigorously analyze. In the context of beef trade, such models take been applied in a number of previous analyses including (10) which assessed the viability of a proposed two-phase export certification process in Federal democratic republic of ethiopia using quarantine stations and feedlots to ensure affliction-costless status and higher quality of beefiness for consign to markets in the Middle East; a report on commodity-based trade and consign feasibility from communal areas of Namibia (11); and an analysis of reforms to better competitiveness in the beef sector in Republic of botswana (3).

System dynamics models are a set of non-linear differential equations that employ a graphical programming structure to represent system behavior. They employ core concepts of stocks, flows, and feedbacks in modeling non-linear systems. Stocks represent an aggregating of tangible or intangible goods at time t. Flows represent the rate of modify of a stock. The cyberspace level of a stock changes through flows, either from an inflow into the stock or an outflow out of it. Flows are mediated by parameters which can exist a combination of numbers, equations, or graphical functions that regulate the rate of change of inflows or outflows. Feedback denotes the dynamic behavior of a system induced by combinations and interactions of stocks, flows, and parameters. Feedback loops that are reinforcing magnify change in a system, causing either exponential growth or delay, whereas balancing feedback loops converge onto a steady state. SD models typically combine a fix of reinforcing and balancing loops. While qualitative archetypes can deliver some intuition about the beliefs of simple interactions betwixt combinations of feedback loops, calculator simulation is necessary for more than circuitous models (12).

The organization dynamics model used in this analysis integrates a herd model of animal population dynamics in each country combined with trade dynamics of live animals given excess supply in Burkina Faso and excess demand in Republic of ghana. Downstream, sold animals are then farther processed into low-value cuts, loftier-value cuts, and offals in each market with sales of each depending on consumer demand. Imports of offals into Ghana are as well modeled. In Effigy 1, the interactions of the different modules of the model are provided. Herd population growth in each country determines the book of merchandise in each period, which in plough specifies the price at which merchandise takes place given backlog supply and demand for animals based on the need for meat in each state. These prices in turn influence the decision of farmers in each country to sell or retain animals in subsequent periods. They also determine how much is traded with other Westward African countries and, in the case of Ghana, need for imports from third countries. The specifics of each of these modules is discussed in turn below, with core modules and model equations constitute in the Supplementary Materials.

Figure 1. Modules of the simulation model.

The herd model quantifies the supply of animals bachelor in each market. The herd model is based on DynMod (6), a model developed by CIRAD and ILRI to examine the evolution of herd growth based on parameters of herd demographics, birth and bloodshed rates, and offtakes for sale. Animals in the herd model are divided into demographic cohorts (juvenile animals, sub-adults, and adults) split by gender; each accomplice is represented as a stock in organisation dynamics. Flows between stocks depend on a set of fixed transition probabilities associated with survival and whether an animal is sold or purchased. The herd model used in this application extends that of Lesnoff (half-dozen) in ii means. Commencement, we brand offtake rates in both countries price-endogenous to business relationship for supply response based on price changes. We apply a simple double-log functional course with the probability of sales a function of the alive animal price. Given that livestock are both consumption (i.e., through their auction) and production (i.e., as inputs for breeding) appurtenances (xiii), we differentiate our toll responsiveness based on age/sexual activity cohorts². For male animals, we assumed elasticities of 0.05 for juvenile animals and 0.1 for sub-adult and adult males, with price elasticities of supply set in proportion to the frequency of auction. For female animals, juveniles are not sold so we ready an elasticity of naught for this cohort. Sub-adult females were assumed to have an offtake elasticity of 0.05, while adult females, used for breeding, accept an offtake elasticity of −0.05. The latter implies that an increase in price reduces the number of developed females sold then as to brood more animals in time to come. These low supply elasticity assumptions marshal with other estimates of alive beast figures [run into (14)]. Second, we model seasonal offtakes directly based on information reported in Ouedraogo (8). In the original DynMod model, monthly offtake rates are causeless constant and annualized to simulate herd trends on an almanac basis. In this version, as the system dynamics model is run on a monthly-fourth dimension pace, nosotros can straight apply a monthly seasonal trend to our cost-endogenized offtake equation based on trading patterns from Burkina Faso to Ghana during 2015–2018 (Figure 2).

Figure 2. Average seasonality of animal offtakes from Burkina Faso to Ghana, 2014–2018. Ouedraogo (8).

Net brute offtakes from both countries (representing supply), combined with derived demand for animals based on meat production, define the volumes of animals traded and their cost based on an equilibrium human relationship between excess supply from Burkina Faso and excess need from Republic of ghana; in international trade parlance, this is coordinating to using a "three-console" graph [see (15)]. For simplicity, residuum live animate being sales from Burkina Faso to the rest of W Africa are based on a simple need function calibrated to derived need and income growth for Ivory coast. While Nigeria is an important destination market, a lack of data and fairly stable macroeconomic policy (commutation rate fluctuations) since the large depreciation in 2016 motivated our utilize of Cote d'ivoire as a proxy.

The module of live beast trade follows the approach of Sterman (16) which uses inventory relationships to calibrate alive brute excess supply and excess demand. Organization dynamics models of supply and need derive price and quantity relationships based on the gaps between actual and desired inventory levels, which in turn drive whether prices rise or autumn in a item menstruum. For example, if actual inventory is greater than desired inventory, this causes pressure to liquidate inventories and reduces the traded toll. These prices are transmitted to the model's live animal supply and derived animal demand (marginal cost of meat) functions which then (in the next menses) make up one's mind a new prepare of inventory relationships that fix subsequent prices (16, 17).

In downstream meat markets, nosotros adopted a long-standing model of articulation product pricing under monopoly equally get-go characterized past Colberg (18) in full general settings, and Ciriacy-Wantrup (19) in agronomics. This model has been further analyzed by Houck (xx), Jensen (21), Manes and Smith (22), and more recently past Shastitko and Shastitko (23), while Piggott and Wohlgenant (24) practical this framework in an international trade setting.

Nosotros consider a model of monopoly given that formal sector processing of beefiness in Due west Africa tends to be dominated by a very small set of actors (mainly in majuscule cities) whose actions influence the prices of other informal actors. The motivation for using a monopoly assumption is to address the market power that larger, formal actors have to set prices for animals and meat, which are then transmitted and adopted past smaller, informal actors in both countries. Previous research by Sesay (25) has noted that butcher associations in West Africa typically act as monopolies, and public intervention, particularly downstream in the livestock value chain, has been commonplace. Production and marketing data further eternalize this argument. In Burkina Faso, for instance, according to the most recent yr (2014) of livestock sector statistics, sales of live animals to the Ouagadougou abattoir averaged 195 head of cattle per day. Assuming 300 days of throughput, this yields 58,500 cattle processed annually, or 6,611 tons of meat [based on a reported 113 kg/animal carcass weight from Ouedraogo (8)]. National statistics further reveal some 102,400 animals were slaughtered in registered slaughter facilities in Ouagadougou in 2014, suggesting that over 57% of animals pass through the main slaughterhouse. In the Accra surface area of Ghana, Suleman (vii) reports that 40% of daily cattle slaughter occurs at the master Accra slaughterhouse. These figures suggest some caste of market place ability by the main slaughterhouses which justify deviating from a perfect competition assumption. Nosotros recognize that while meat processing does non operate as a pure monopoly, neither does it exhibit perfect competition and that a monopoly supposition is a more realistic representation of the actions taken by larger entities with pricing power. An oligopoly representation would be an alternative ways of looking at meat markets, though nosotros did not have data to model problems of strategic interaction between firms; this is an expanse for future research.

The basic model is presented in Figure 3 whereby a monopoly produces ii products (here, H denoting high-quality beef and L denoting low-quality beef) in stock-still proportions and whereby the marginal costs between them cannot exist allocated between their production. In such a model, the monopolist produces where the sum of marginal revenue equals marginal toll, with prices in each market where such quantity intersects the corresponding demand curve.

Effigy 3. Pricing of joint products under monopoly pricing. Adapted from (xviii).

An important consequence of this model, as denoted in Figure four, is the implication of a change in need in one of the two products. A shift in the demand curve of H to the right induces a shift of total marginal revenue to the right, causing a rise in the toll of H and a fall in the toll of L (see the left-panel in Figure 4). Much of the assay in the manufactures cited above study the implications whereby such a shift is large enough to cause a glut in the low-value production (L) past virtue of producing where MR_L is negative, meaning that a portion of L would be thrown abroad to maximize monopoly profits.

Figure 4. Pricing of articulation products under monopoly pricing under scenarios of increased demand (A) and increased demand and marginal cost (B). Adjusted from (18).

Our focus with this model is non to consider issues of gluts, but rather to consider the potential tradeoffs that might exist in pursuing higher-value markets. Figure 4A indicates that greater product differentiation would provide more pricing flexibility for 50 relative to the status quo, only but if the marginal costs of targeting new markets do not modify. In Figure 4B, we illustrate that a combination of a shift in demand and a rise in marginal price to meet such demand may enhance the price of the lower-value product, and reduce the pricing flexibility that a monopolist might have. Should scale economies result from greater efficiencies in production that beginning the ascension in SPS costs, information technology is possible that marginal costs could fall, providing an opposite effect every bit that illustrated in Effigy 4B.

In the case of Ghana, we likewise assume the import of offals from third countries. We modeled a simple import need curve of offals that is a function of the globe cost of offals, the domestic price of offals, and income. Nosotros presume imperfect substitutability of domestic and foreign offals, as the former tend to be fresh and the latter frozen. Earth prices were assumed to exogenously grow by two% per year based on the chemical compound almanac growth rate of price changes for offals from Tabular array two over 2014–2018. We also modeled a modest exchange depreciation of the Cedi confronting the U.South. dollar and CFA (v% for each), which is lower than the average over 2009–2017 (sixteen% against the USD, xiii% confronting the Euro (CFA).

The model was run monthly over a 10-twelvemonth period to simulate how herd dynamics influence marketing dynamics, given assumptions on income and demand growth, and to see what options (if whatsoever) exist for trade in beef products from Burkina Faso to Ghana. As a system dynamics model, the model does not notice an equilibrium in a neoclassical sense, but rather highlights the dynamic evolution of prices, production, and merchandise on a monthly basis.³ Every bit noted below, the model farther considers the influence of macroeconomic variables, particularly exchange rate movements, on trade. Supplementary Table 1 summarizes the information and assumptions used in the model and can be found in the Supplementary Materials. The equations for the model can also be found in the Supplementary Materials.

The SD model was used to run the post-obit scenarios. Our first scenario explores the possibility of pursuing higher-value markets to meliorate pricing flexibility of different cuts to maximize carcass value. The other scenarios chosen highlight some of the primal constraints in the beefiness value chain, that is, low productivity, relatively high marginal costs, and exchange rate volatility as noted in Ouedraogo (8) and Suleman (7).

1. A market segmentation strategy in Burkina Faso, whereby alternative loftier-value markets are institute for higher quality cuts to allow greater pricing flexibility of offals into Ghana;

2. Improving animate being productivity past increasing the weight of domestic animals slaughtered in Burkina Faso from 240 to 300 kg;

iii. Improving meat processing efficiency through a reduction in the marginal costs of processing in Burkina Faso by 20%;

4. Combinations of the first three scenarios;

v. Scenarios looking at macroeconomic factors, by assuming no depreciation of the Ghanian Cedi against the CFA (only depreciating against the U.S. dollar) – this could be interpreted as both countries adopting the proposed Eco currency.

6. Considering the competitiveness of Burkinabe offals in Northern Ghana, where lower transportation costs would reduce the landed cost of Burkinabe exports and increment the costs of send of third market offals from the declension to inland markets in Ghana.

Transport Costs and Margins

To complement the information generated by the SD model, we estimated transport costs betwixt Burkina Faso and Ghana to assess whether prices for offals from Burkina Faso generated by the SD model would exist competitive in Ghana with third-state imports after accounting for transportation costs. Teravaninthorn and Raballand (26) estimated send costs from Ouagadougou to Tema at US$iii.53 per km, or US$3,530 given the 1,000 km altitude between the ii cities. Assuming a 25-ton container of offals at one,000 CFA⁴/kg (United states$i.74/kg at the prevailing substitution charge per unit in 2018), this implies a transportation cost of about 8% of the container value. However, the study past Teravaninthorn and Raballand (26) did not specify whether such costs were for refrigerated transport or not, which would exist needed to facilitate such trade. Vilakazi (27) estimated refrigerated transport costs for selected routes in Southern Africa, which ranged from US$0.06/ton/km from Johannesburg to Cape Town to The states$0.xiii/ton/km from Johannesburg to Harare. Braun (28) notes like costs in South Africa for container send (US$0.05/ton/km) but small loads accept much higher costs (a 5.5-ton van would price United states$0.23/ton/km). Taking the highest of these figures (US$0.thirteen/ton/km) and applying the difference in transport costs betwixt those found by Teravaninthorn and Raballand (26) in Due west and Southern Africa (52% higher costs in Westward Africa) yields transport costs of U.s.$iv,940 for a 25-ton container of offals, or about 11% of container value. From these ranges, we presume transport costs of 10% for our analysis.

Social Bookkeeping Matrix Cess

The other method used in our analysis was the use of a social accounting matrix (or SAM) to quantify prospective macroeconomic and employment furnishings associated with (a) an expansion of current types of live beast trade and (b) a shift toward meat exports in lieu of alive beast exports. A SAM represents a ledger of economic activities inside an economy, with such activities specified into accounts that represent aggregates of different sectors, factors of product (labor, capital), and households (29). A SAM is an bookkeeping model whereby the rows of a SAM represent the income received past an account from other accounts, while columns represent expenditures on dissimilar accounts; past principles of double-entry accounting, full revenues must equal full expenditures.

SAMs tin can be transformed into a platform for scenario analysis through the computation of multipliers. A SAM multiplier denotes the economy-wide impact of a one-unit increment in exogenous government spending, investment, or consign demand. These multipliers tin can exist aggregated to quantify the total impacts on the value of production output, Gdp, or household income. To quantify the impacts of a more specific stupor, a matrix of multipliers can be derived. The matrix of multipliers is generated by start computing the SAM'south A matrix, where the A matrix comprises the input-output coefficients of the SAM for its endogenous accounts (activities, commodities, factors, and households). Each element of the A matrix, a _ij , comes from dividing the corresponding ij element of the SAM by the cavalcade (j) sum. Then, the A matrix is subtracted from an n 10 northward identity matrix to generate a matrix (I-A), which is inverted to create a matrix of multipliers, or Leontief changed (29). Changes to concluding output tin be computed by multiplying the multiplier matrix by an northward 10 1 column matrix of final demand (regime spending, investment, or consign demand) and seeding that matrix with shocks to the advisable row. To compute changes in export demand for alive animals or meat, this entails inputting a value in the relevant commodity row and multiplying that matrix past the multiplier matrix.⁵

In addition, the SAM tin be used to compute employment multipliers which show the number of jobs resulting from similar exogenous shocks (30). To do this, we used employment data for Burkina Faso reported past Zidouemba (31) that specified employment past sector aggregate (agriculture, industry, etc.). From the Burkina SAM, we calculated the total wage bill for these aggregated categories and estimated an average amass wage by dividing the total wage bill by the number of employees per aggregate category. We then practical the appropriate boilerplate wage to the disaggregated SAM accounts to estimate the number of jobs per SAM account. Following ILO (xxx), we so computed a matrix of employment-output ratios from the SAM accounts (using commodity rows and activity columns of the SAM), which are the number of workers needed to generate i million CFA of output. The matrix was multiplied by the relevant sectionalisation of the SAM multiplier matrix (commodity rows and activeness columns) to generate an employment multiplier matrix, to which our scenarios were practical.

In our SAM analysis, we derived two export demand shocks. We first considered a doubling in the value of live animal exports based on the value found in the 2013 SAM. In the SAM, live cattle exports were estimated at 19.17 billion CFA in 2013, which assuming a value of a live beast of 300,000 CFA suggests alive brute exports of nearly 64,000 animals. Past contrast, official statistics from Table 1 signal merchandise volumes in 2013 were more than five times this figure. To obtain a more than realistic indication of an increase in live cattle exports, we took the figure in the SAM and doubled it for exposition. 2d, we compute a similar shock for meat, where we took an equivalent value of alive cattle exports converted to meat based on the yield of products derived from the carcass. We estimated that a 19.17 billion CFA increase in live cattle exports was coordinating to 23.09 billion CFA in meat equivalent, based on the value of meat and offals. We used figures from Ouedraogo (eight) for live cattle, carcass yield, and offals to estimate these conversion factors.

Results

Baseline Competitiveness Cess

Our results on baseline competitiveness tin can be found in Tables 4, 5. Our focus is on offals, non cuts, given high demand for such products in Ghana. Nosotros estimated the ability of Burkinabe offals to be competitive in Republic of ghana, based on current sales prices, transport prices, and an cess of competitors. In Table four, we first gauge the wholesale price of offals from non-Sahel sources based on the Play a joke on prices reported in Tabular array 3 and transport costs, taxes, and margins obtained from Ouedraogo (viii) and Suleman (7). Depending on the margin received past the trader, we estimate that boilerplate wholesale prices of offals range between US$ane.81–one.86/kg (one,043–1,073 CFA/kg); nosotros note this range hides considerable diversity in pricing of different types of offals just gives a plausible indication of the prices for such products.⁶

Table four. Estimates of prices of imported offals in the domestic Ghanaian market place.

Table five. Comparing of potential Burkinabe offal export prices and Ghanaian domestic prices.

In Table five, nosotros then posit the consign of Burkinabe offals to Ghana, based on electric current, ex-abattoir prices of offals (one,000 CFA/kg) and an estimate of transportation costs derived from data from Vilakazi (27), Braun (28), and Teravaninthorn and Raballand (26) every bit noted earlier. Based on these estimates, and informal fees reported in Suleman (7) and Ouedraogo (8), we estimate that the landed wholesale price of fresh Burkinabe offals would be around i,111 CFA/kg, lower than the toll of domestically-produced fresh offals in Ghana (1,416 CFA/kg) merely higher than the world prices ranging from 1,043–1,073 CFA/kg reported in Table 4. Even if these Burkinabe prices could be lowered, a number of caveats need to be pointed out, however. Offset, the acceptability of chilled offals vs. fresh offals in the market is not clear—indications from Suleman (7) and Delavigne (32) are that at that place is a strong preference for fresh offals and that chilled/frozen products would sell at a discount. 2d, the logistical viability of selling chilled offals needs to be explored more than thoroughly—Meat and Livestock Australia^seven note that the shelf life for chilled offals is merely about vii days, and thus exports of chilled offals would require capable logistics that would add costs. Finally, if we consider the potential competitiveness in frozen offals (where such exports are likely more than viable), our initial estimates do non consider the added costs of infrastructure (particularly freezing engineering science) that would be needed for such trade. Given the slight deviation in current price gaps, the viability of such trade in frozen offals seems marginal at present, and sensitive to a variety of potential shocks (exchange rates, etc.) that we address in the scenario assay.

Scenario Analysis of Alternative Marketing and Merchandise Protocols

In Figure five through 7, we provide results from our scenario assay with our SD model. We present results starting from yr 3 (month 36) to highlight the steady-state of animal herd dynamics^eight. Figure 5A extrapolates the status-quo scenario given in Tables 4, 5 over the 10-year simulation period, taking into account the adjustment of alive animal and meat markets. While Figure 5A shows large gaps in prices between domestically produced offals in Ghana and prospective fresh offals from Burkina Faso, the price of Burkinabe offals is consistently to a higher place the price of third-land imports. These gaps widen over time given the relative influences of exchange rate fluctuations, demand growth in both countries, and world price changes.

Figure 5. Evolution of offal prices in Burkina Faso, Republic of ghana, and earth markets (Cedi/kg) under alternative strategies. (A) Baseline. (B) A price segmentation strategy. (C) Improved creature productivity. (D) A reduction in marginal costs in processing in Burkina Faso. (Due east) A combination of strategies (B), (C), and (D). Model simulations.

In Figure 5B through 7, we consider a number of alternative scenarios to explore whether various technical or marketing interventions may improve the status quo situation, with results illustrated against the baseline scenario of Figure 5A.

In the first scenario, we consider the development of loftier-value markets for high-quality cuts in Burkina Faso. This could be accomplished either domestically and/or by sales to 3rd markets. We consider an extreme scenario where Burkina Faso can achieve a price of iv,000 CFA/kg for its high-value cuts (compared to 2,000 CFA/kg in the baseline). Figure 5B reveals that this strategy slightly raises the domestic price in Ghana for offals, every bit greater demand for meat induced by market segmentation in Burkina Faso reduces the available supply of animals for trade. On the other hand, the price of Burkinabe offals is simply slightly lower throughout the simulation catamenia relative to the baseline, thus increasing the price gap between Burkinabe and Ghanaian sourced products. Yet, as the reduction in the Burkinabe cost is modest, it fails to achieve more competitive prices with third-country markets.

Improvements in animal productivity result in small reductions in the domestic price of offals in Ghana but have pocket-size effects on the price of Burkinabe offals in the Ghanaian marketplace (Figure 5C). Such a policy has benefits for domestic consumers in both countries for local products, only imported third-country products remain more than affordable. Reducing the marginal costs of processing in Burkina Faso (Effigy 5D) has slightly counter-intuitive effects. While it lowers the price of Burkinabe offals into Ghana, it very slightly raises the toll of domestically produced offals through a like mechanism as the marketplace segmentation strategy. Namely, reducing marginal costs increases need for animals in Burkina Faso for processing, lowering availability for trade, and raising the price of live animals. A combined strategy (Figure 5E) reduces prices in both Ghana and Burkina Faso and brings Burkinabe prices closer to third-country prices, but a significant gap still remains.

The macroeconomic scenarios in Figure half-dozen produce perhaps the most interesting results. A stronger Cedi against the CFA brings Burkinabe prices on its own much closer to third-land prices in Cedi terms (Figure 6A). Combining this with the scenarios described above (Figure 6B) enhances Burkina Faso's competitiveness, though policies to make this actionable are largely out of the remit for agricultural ministries. Finally, while Burkinabe offals would be cheaper in Northern Republic of ghana than on the coast, results from Figure 7 highlight a like, albeit smaller competitiveness gap with 3rd country imports.

Effigy 6. Evolution of offal prices in Burkina Faso, Republic of ghana, and world markets (Cedi/kg) under alternative macroeconomic regimes. (A) Baseline plus no depreciation of the Cedi vs. the CFA. (B) Macroeconomic changes from (A) + combinations of strategies (from Figure 5E). Model simulations.

Effigy seven. Evolution of offal prices in Burkina Faso, Ghana, and world markets (Cedi/kg) nether a combination of strategies—focus on Northern Republic of ghana. Model simulations.

Macroeconomic Impacts of Alternative Trading Scenarios

Results from the SAM analysis can be constitute in Tabular array vi. We remark that the CFA value of reported findings reverberate conditions prevailing in 2013. However, as SAM multipliers are typically robust over several years, using the percent change of different indicators provides a more than interpretable metric that is invariant to the specific base year of the SAM, and will be the focus on the narrative beneath.

Table half-dozen. Scenario analysis of live creature vs. meat exports of output, GDP, employment, and household income.

The SAM results indicate that higher export demand for meat generates more gross production, Gdp, and household income than a similar stupor in alive animal export demand. Notwithstanding, the deviation between the 2 scenarios is fairly small-scale. For case, GDP rises by 0.09% more and household incomes by 0.06% under increased meat demand compared to increased cattle demand. On the other hand, the value of production output rises considerably more (by 0.3%) nether a scenario of increase meat export demand, ostensibly given higher multipliers for meat as compared to alive cattle. Employment effects are fairly modest in each case. Using 2013 figures, the number of jobs rise by 23,403 nether increased live fauna demand, and by 26,940 under increased meat demand, a departure of just 3,537 jobs.

Discussion

From a meso and macroeconomic betoken of view, competitiveness refers to a broader concept. It is relative to the ready of factors enabling a sector to generate growth, contribute to national wealth and amend the standard of living of its inhabitants. This is peculiarly relevant in the livestock sector in West Africa whose economic contribution, although often underestimated, remains very important. From a value chain perspective, live ruminant exports have shown their resistance to multiple barriers and an adaptability to multifaceted changes. All the same, very few quantitative studies of regional merchandise and its relative competitiveness exist for Westward Africa. This instance study on the Burkina Faso-Ghana trade corridor addresses this gap and reveals a number of of import findings.

In the context of the long-standing trade between Sahelian and the coastal countries of West Africa, our analysis highlights the persistent lack of competitiveness in prospectively traded beef products (offals) vs. third markets. While at that place are articulate price gaps betwixt the prices of fresh/chilled Burkinabe offals and fresh Ghanaian offals that in the absenteeism of external competition would warrant further promotion, tertiary country imports remain cheaper in littoral markets. None of our proposed scenarios—improved market place segmentation, enhanced animal productivity, or reduced processing costs—significantly address those gaps. Those policies are not without merit on their accordance. For instance, greater market sectionalization will requite Burkina Faso more pricing flexibility for its beef in the futurity, while there are clear upstream benefits to producers and processors in better animal and herd productivity through improved feeding techniques; eradication and control of animal diseases and reduction of pre- and post-production losses. But these policies should be looked at more holistically from the standpoint of improving the livestock and meat sector more generally, and not as a "silver bullet" that yield immediate gains.

If nosotros take the assay a footstep further, toll differentials may encourage both littoral and Sahelian countries to engage in a not-cooperative game of pursuing infrastructure evolution. The idea of building slaughterhouses in Sahelian countries is attractive for several reasons. In addition to capturing added value, it makes possible a means to reduce conflicts and potential losses linked to pastoral displacement, better fiscal management ratios, create jobs (directly and indirectly in coincident services), allow countries to converge toward reference wellness standards, and improve the capacities of actors in the sector. However, this modify of paradigm should be carried out in a reasoned mode. Otherwise, their effectiveness and relevance could be severely hampered by bereft and inadequate supporting infrastructure (poor roads and connectivity; trucks that practise not encounter standards for the proper conservation and transport of chilled and frozen meat) also every bit by governance issues on in the value chain. With such a shift in epitome, new governance issues sally including road hassles; changes in sanitary standards for live animals; changes in pricing and marketing mechanisms; the potential transfer of jobs from coastal countries to Sahelian countries; and destruction of other service jobs along the live cattle marketing chain.

Our case study highlights the "curse" of borders in the context of the livestock trade across West Africa. The arrangement and spatial dimensions of this merchandise reverberate a rational and intrinsic logic based on the resource base and demand amongst participating countries. Similar marketing patterns are constitute elsewhere amongst major beef suppliers globally. In Argentina, for instance, the marketing of cattle has a distinct spatial dimension whereby animals are bred in the drier parts of the north of the country, fattened in the Pampas, and slaughtered in major cities (Buenos Aires, Rosario). The divergence in the Argentine case is that the value added of production remains in ane country and is not competed with our fought over every bit information technology is increasingly in the Sahel and W Africa. The evolution of innovative institutions fostered past greater regional integration and governance structures that share the benefits of this trade could be one mode to better link and foster collaborative deportment that sustainably build and abound this value chain.

Although our example study of the Burkina Faso—Ghana merchandise corridor provides very interesting findings, a broader report of trade dynamics beyond West Africa would be a useful surface area for time to come research. In particular, greater work on the dynamics of markets in and those that serve Nigeria would be critical given its importance as the largest consumption market for the region. Linking such modeling platforms at pan-Sahel level to address substitution effects within and across markets and their dynamics would also exist a valuable mode frontward.

Conclusions

In this paper, we adult a comprehensive approach to better understand the prospective gains of exporting beefiness from Burkina Faso to Ghana rather than live animals. Our analysis indicated that while Burkina Faso would be directly competitive in Ghana in meat (offals) given lower prices for offals produced in Burkina Faso, these prices remain higher than tertiary land suppliers, equally live animal prices and production costs are generally higher in West Africa. Market sectionalisation strategies, infrastructure development, and animate being productivity all generate marginal improvements in competitiveness, just not enough to displace competitors. Alive animal exports remain an important pathway for trade for Sahelian countries like Burkina Faso, and general investments in the sector can both enhance those exports and lead toward a path of greater regional integration to foster value-adding in the sector.

Data Availability Statement

The original contributions presented in the report are included in the article/Supplementary Fabric, further inquiries can be directed to the corresponding author/s.

Author Contributions

KR and AW jointly adult the report blueprint, nerveless data, and drafted the manuscript. KR constructed the system dynamics model used in the written report and conducted the SD and SAM analyses. Both authors contributed to the article and approved the submitted version.

Funding

This research was supported in part by a projection funded past the World Bank initiative PRAPS (Projet Régional d'Appui au Pastoralisme au Sahel), Marche #2018-000006: CILSS/SE/UAM-AFC/SPM/PRAPS du 28 Mai 2018, and from the CGIAR Inquiry Programs on Livestock and Policies, Institutions, and Markets.

Conflict of Interest

The authors declare that the inquiry was conducted in the absence of whatsoever commercial or financial relationships that could be construed as a potential disharmonize of interest.

Publisher's Note

All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Whatever product that may be evaluated in this commodity, or claim that may be made by its manufacturer, is not guaranteed or endorsed past the publisher.

Acknowledgments

The authors admit and appreciate the very useful comments on a previous version of this analysis from participants at a PRAPS workshop on this topic held on 12 Dec 2018 in Saly, Senegal. Nosotros as well acknowledge useful feedback on the organisation dynamics model made past Dr. Kanar Dizyee from ILRI.

Supplementary Material

The Supplementary Material for this article can be constitute online at: https://www.frontiersin.org/articles/10.3389/fvets.2021.619044/full#supplementary-material

Footnotes

1. ^It is likely Ghana imports animals from Mali and/or Niger, only data are not bachelor from these markets.

ii. ^Initial offtake rates based on (6) are 0.1 for juvenile males, 0.2 for subadult males, 0.21 for adult males, null for juvenile females, and 0.05 for subadult and adult females based on a generic West African herd profile.

iii. ^In the absence of population or other growth, the model would (and does) converge to a steady state. All the same, system dynamics models model the price formation process somewhat differently than a neoclassical economic model as noted above.

4. ^CFA stands for Communauté Financière Africaine (African Financial Community) and is the predominant currency used in Francophone Due west Africa. It is pegged to the Euro at i Euro = 655.957 CFA.

5. ^More details can be plant in Sadoulet and de Janvry (29).

6. ^VAT of 18% was non applied in our scenarios every bit it applies equally to Burkinabe and not-Burkinabe sourced products.

7. ^https://www.mla.com.au/globalassets/mla-corporate/enquiry-and-development/plan-areas/food-safety/pdfs/shelf-life-of-australian-red-meat-2nd-edition.pdfcombinations of strategies.

viii. ^Typically, from a given set of herd demographic parameters, it takes two to three years in the model for herd growth patterns to attain a steady country, with product figures (and corresponding impacts on prices and trade) reflecting the racket of adjustment in those get-go few years. In gild to focus on the steady state, we nowadays results starting from year three.

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Source: https://www.frontiersin.org/articles/10.3389/fvets.2021.619044/full

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