Willingness to pay for sheep traits and their heterogeneous effects on prices: Evidence from primary livestock markets in Ethiopia

Abstract

We test the hypothesis whether levels of key traits of sheep heterogeneously affect market prices of sheep in a rural setting. Feasible generalized least squares and (un)conditional quantile regression estimations were made on a dataset of 1153 sheep transactions in two primary small ruminant markets in the Amhara region of Ethiopia. The empirical results show that animal traits affect the observed prices of sheep differently, but only partly explain the sheep price differences. Our results also reveal that in addition to animal traits, the type of buyers and seasonality of sheep marketing cause heterogeneity in the observed prices. These findings imply that targeting the animal traits demanded by the market and access to price information that enables farmers to respond to the seasonal changes in livestock markets are essential to increase the income of sheep keepers.