Why the Price of Meat Has Become Damn Expensive to the Consumer
On January 6, 2011, on the eve of Ethiopian Christmas, the Ministry of Trade imposed price caps on selected basic commodities including meat. The decision was meant to curb the ever skyrocketing prices of basic food items. High government officials affirmed that the price caps were a retort to price gouging by merchants taking advantage on consumers and vowed to put a stop to this “market disorder.”The price cap for a kilo of meat set in Addis Ababa was ETB52, almost half the price before the price cap. People were stunned by this price, imagining the ‘fat profits’ the butcheries were making before the state intervention. The public was sure that the butchers were making profits even after the price cap. This assumption was however, proven wrong in few months. The required quality and quantity of meat by consumers couldn’t be available in butcheries. Though the price capping generally reduced the household expenses for many low-income families, butcheries were upset and even some reported to have been victims of bankruptcy and closure as a result of the price cap.
The price caps were lifted in June the same year following the chaos correlated to it. Critics said the measure was taken without any careful study about the real economic causes of the rampant inflation. Some political observers argue that the government took the measures to distract public anger and potential unrest. The price cap was done in a way it look arbitrarily, as the Ministry of Trade was unable to provide a study to EBR based on which the price caps, particularly the prices of meat was imposed back in 2011.
Currently, the price of meat has reached up to ETB200 a kilo in some high-toned places in Addis Ababa. Public recreation centers also provide a kilo of meat with ETB80-100. The quality of such meat is however a second rare. People again wonder and ask how profitable the business could be, simply by calculating the difference in the selling prices between these two places. Do the butcheries sell meat with higher profit margins? What does the supply and market chain of meat look like? Is there any problem in the supply chain of the sector? EBR has assessed the market chain from the live animal market to the butcheries to see this public assumptions and inquisition; and have found attention-grabbing facts.
The Live Animal Market
There are five live animal markets in Addis Ababa, namely the Akaki, Birchiko, Kara, Kera, and Shegole Live Animal Markets. At Kera, the biggest of all, well fed and fattened cattle from Harar, Jimma, Borena and other places are sold in a traditional way in an open market. Although the market is open everyday, Wednesday, Friday and Sunday are the biggest market days. An average of 400 -500 cattle are sold in those days. A rare and the finest of the cattle are sold from 20,000-26,000 Birr whereas ‘run of the mill’ type cattle supplied to most of the butcheries in town are sold between ETB14,000-20,000. Relatively small ones are sold from ETB8,000-14,0000, according to estimations given jointly by Tekea Gidey, Coordinator of the Kera Live Animal Market and Hialemicheal Geremew, Market Research and Link Information Officer at Nifas Silk Lafto Subcity Trade and Industry Bureau. In fact, some may find small cattle with ETB4,000 for occasional and personal consumptions.
But this price is not the amount of money that farmers who fattened the cattle or even merchants of the cattle are going to put in their pockets. This is the price the butcheries and other consumers pay after the animals are transferred through a chain of middle men who call themselves “agents” of the farmers and traders.
These middle men take delivery of the cattle from the farmers and traders at their places or while they were onboard on the tracks. They decide the prices of the cattle, verbally without any negotiations. The cattle reach finally to the most powerful of the middle men who have absolute control of the market after transferred through a couple of agents. These transfers are done without any receipts or legal agreements rather by connections. The final middle man will decide the last price of the cattle by adding whatsoever he wishes.
“These middle men are well organized illegal groups who are working above the law” Ayele Sahile, head of Legal Affairs Department at the Addis Ababa Butcheries Association told EBR. “The cattle reach to the butcheries after they are sold three or four times without adding any value but hiking price by these middle men”. For example, “a farmer whose cattle if sold over ETB15,000 in Addis Ababa may not even get ETB12,000”he added.
Though the burden of the price increment at various levels is eventually shouldered by the final consumers, Tesfaye Abibe the general manager of the Butcheries Association asserts that butcheries have also a problem to share. They are “between the rocks” he said. “They are neither profitable as said nor understood by the government and their customers” he added.
But the middle men who are blamed to have complicated the problems deny the allegation. Getnet Abera, one of the middle men at the Kera Live Animals Market told EBR that the role of the middle men like him play for the smooth functioning of the market is rather ‘vital’. “The farmers and traders are tired of the long journey which usually takes place at night for it is convenient for the cattle, they therefore need a rest while we take care of selling these cattle immediately after they reach at the market” he said. Besides, the association the middle men have established, keeps the safety and security of farmers and traders in and around the market area, he added.
Getnet, ignorant of factors affecting price in free market economy, conclude that “buyers are not forced to buy, if they found the cattle expensive; it is just a free market and only those who want the cattle pay the price and buy; those who don’t want to buy aren’t forced”.
The Profit Fable
Alemsefa Ermacho who owns two butcheries, one around Kazanchis and the other on Bole Medhanealem Road (the later has been demolished for construction purposes recently) says the pressure is immense on him in pleasing his customers and getting profits. “Buying cattle for ETB15,000-20,000 and getting ‘fat profits’ as people guess is very difficult and even impossible” he told EBR. “We are still in the business because dishing up meat is a complementary to sell drinks which have certain profits”.
In fact, recently, many butcheries including Alemsefa have stopped purchasing cattle at the Kera Live Animal Market. They rather buy from Kara and Shegole where the pressure of the middle men is less. And even they sometimes go out of Addis Ababa such as to the Oromia Zone around Addis Ababa and North Shewa Zone of the Amhara Regional State. Alemsefa says these middle men other than asking unfair price abuse the butchers who refuse or question the prices they ask.
Amide Sisay, the owner of Sisay Butchery in Bole Sub city around Imperial Hotel explains that profit ripped from meat is not as high as what consumers think. “Hadn’t it been the drink which usually goes with the meat I may think of other business” he added.
The City Trade and Industry Bureau: Is it doing anything to solve the Problem?
All the butcheries and officials of their association and even people from the Addis Ababa Abattoirs Enterprise wonder why the middle men arbitrarily set the price of cattle in the city’s live animal market. These middle men, whom neither the city trade and industry bureau nor the revenue and custom authority supervise, are manipulating the business at the expense of the public who finally bear the burden of inflated meat price. As if there is no law and order in the country, the middle men seem to have the means to do anything unlawfully.
To curb this unregulated chain of live animal market in Addis Ababa, the City Trade and Industry Bureau, in consultation with relevant stakeholders on the matter, drafted a regulation on the marketing chain of live animals. The regulation 001/2004, articulated two years ago, clearly states the market chain by taking out several of the middle men. “However, for reasons unclear the regulation has never been implemented until now” says Ayele Sahile, head of the Legal Affairs Department at the Addis Ababa Butcheries Association.
A number of butchers and their association that EBR approached feel that these powerful middle men who are making a good sum of money easily might have bribed authorities at the city trade and industry bureau that the regulation enacted a year ago remain in the shelf.
Officials at the trade and industry bureau however dismiss the above accusations. “The regulation has been implemented; however, it didn’t achieve its intended goal of removing the middle men in the market chain because parties that have a stake in the affairs such as revenue and customs authority, the justice bureau and the police have not participated effectively and harmoniously.” Says Gemechisa Melaku Trade Inspection and Regulation head of the Bureau.
As most cattle traders and their middle men do not have business license, even those few licensed middle men are weakly supervised, the revenue they collect is not properly documented and taxed. As a result the city losses a good sum of revenue.
Is it a kilo or less?
Eating raw meat and tibis at butcheries has become very common these days. In some butchery such as Yilma and Kebede Gebrewold Butcheries around Chichinya, Chercher around Kazanchis, Be’emnet and Ashu butcheries on the Debre Ziet road and elsewhere around Hayahulet, Stadium, Piazza, Addisu Gebya and many other places in Addis Ababa and regional towns, young men and women come in group to eat and drink. On weekends, the places will be full to their brims that getting a seat is usually a challenge.
Michele Asfaw and his friends have regular programmes to enjoy raw meat and the drink that accompanies; a bottle of Awash wine cocktailed with a bottle of beer, Sprite or Flavoured Ambo in a jug with ice and lemon. This combination is popularly referred to as “Turbo”. Michele and his friends don’t trust the measurement of the meat the butcheries serve them. “I think the main source of their profit comes with the measurements” Michele told EBR. It is a known fact and no one requests the appropriateness of the measurement considering they are served with the best quality” he added.
Many of the butcheries however deny the accusation that they cheat on measurement of meat. Alemsefa, who argues that some may cheat, strongly oppose that it is not right to see all butchers as one and same. In some instance some people who eat kurt [raw meat] for instance ask butcheries to give them the best meats; so you have to avoid unnecessary parts to get the neat meat. Such incidents may create a sense that we cheat. He added. In fact customers who order the best meat do not care about the weight; they only need to get the quality meat, he concluded.
The City administration is working on correcting the measurements. The first measure taken according to Gemechisa is to help butcheries use the right measurement devices. Importing standardized measurement equipments which are digital and unadjustable balance will be used in the future. The city administration has already started to check the balances and take measure. Last October for example, the department for inspection and regulation checked 2,750 places and found 471 measurement devices (balances, Scales) with problems. It confiscated 124 of the equipment with defaults. A large number of butchers were reprimanded to use the right equipment.
Raw or cooked in different forms, Ethiopians enjoy meat very much. The business chain however, from cattle trading to selling the meat to the final consumer, is filled with problems that emanate mainly from the lack of appropriate regulatory and enforcement mechanisms. As a result, the sector has been left to illegal gangsters who abuse and manipulate the healthy business chain. Because of this the public is paying undue prices, while the state is losing a good deal of tax revenue. EBR
2nd Year • December 2013 • No 10