Accurate assessment of farmers' credit constraint condition is important in order to understand the circumstances under which credit would have its greatest impact. In this study a switching regression model was used to determine the impact of credit on smallholder dairy farms in the East African highlands using farm level data from Ethiopia and Kenya. Farmers were classified as credit constrained or credit non-constrained based on their responses from the farm level surveys. No consistent relationship was found between farmers' credit constraint condition and their borrowing status. Most of the variation in milk output per farm was explained by the number of crossbred milking cows in the dairy herd. As credit is likely to facilitate investment in crossbred dairy cows it will have substantial impacts on smallholder dairy farms especially if it is targeted to credit constrained farms.

Previous farm-level studies have shown that adopting improved feeding and management strategies improves livestock productivity and, in particular, increases the milk production and income of resource-poor smallholder mixed-crop and livestock farmers. This paper analyses the impact of the introduction of crossbred cow and improved feeding and management technologies in the Ethiopian highlands in terms of direct changes in household income, patterns of food and non-food expenditure, and caloric intake. Using a recursive econometric model that takes into account the seasonal variability of consumption patterns, the analysis indicates a positive relationship between household income and adoption of the improved dairy technologies. The incremental increase in household income translates directly into higher expenditure on food and non-food items. Caloric intake is also positively related to adoption of crossbred cows and improved feed technologies. This indicates the significant role that improved smallholder livestock technologies can play in improving food security and nutrition as well as alleviating poverty.

Based on analysis of credit supply in Ethiopia, Kenya, Uganda and Nigeria, it is shown that public credit institutions do not have sufficient funds to meet the demand for livestock credit and cannot mobilize savings from their clients or other commercial sources for one reason or another. In addition, available credit does not reach those who need it the most and with whom it could have the greatest impact due to the application of inappropriate screening procedures and criteria to determine creditworthiness. The analysis of demand based on borrowing and nonborrowing sample households using improved dairy technology, it is shown that not all borrowers borrowed due to liquidity constraint while some borrowers and some nonborrowers had liquidity constraint but did not have access to adequate credit. Logistic regression analysis show that sex and education of the household head, training in dairy, prevalence of outstanding loan and the number of improved cattle on the farm had significant influence on both borrowing and liquidity status of a household, though the degree and direction of influence were not always the same in each study country. Based on the findings it is suggested that combining public and commercial finance could solve the problem of inadequate credit supply while inventory finance to community level input suppliers and service providers might help in getting credit to worthy and needy smallholders at lower cost than providing credit to smallholders directly. Ó 2002 Published by Elsevier Science Ltd.

Hedonic price models were fitted to a sample of 1397 sheep and 1293 goats respectively for which data were collected from nine markets in Ethiopia over a 12 month period. The objective was to determine seasonal and inter-market differences in prices after controlling for the effects of different attributes of the animals, the buyers and the sellers. Results indicate that, controlling for attributes of the animals and of the buyers and sellers, there were significant differences in prices between seasons and markets. Seasons in which farmers faced severe cash shortages exhibited the lowest adjusted prices for animals they sold, indicating that although livestock may provide a fall back position for cash in times of crisis, terms of trade may be worst when farmers need cash the most. In general, there was no clear progression in price of sheep along the primary to terminal market chain ending in Addis Ababa as would be normally expected except that the farthest market had the lowest price. The reason for higher prices in some intermediate terminal markets could be partly explained by the fact that exporters and processors buy animals in these markets and they pay premium prices for best quality animals, and left over second or third grade animals may end up in Addis Ababa market, which then virtually becomes a sink market. In case of goats, price differences between markets followed to some extent the expected differences between primary, secondary and terminal markets. One possible reason is that in general highland is not a major production or consumption area for goats, so supplies come mainly from the lowlands, so the price movement followed the market chain from primary markets in pastoral areas to the terminal market in Addis Ababa,.

A survey of two rural markets in southwest Nigeria over 14 months showed that supplies, sales and prices of sheep and goats varied widely during the period with a sharp peak during the Muslim festival of' Eid‐el‐Kabir and a smaller peak during the Christmas‐New Year period. Local West African Dwarf (WAD) sheep and goats and northern Y'ankasa sheep and Red Sokoto goats were traded in the markets and animals were purchased for rearing, trading, ceremonies, butchering/catering, sacrifice, and festivals. There were significant differences between species/breeds purchased for various purposes. A hedonic price model was fitted to determine factors influencing price. After adjustments were made for age, weight, sex, time of transaction and market, WAD sheep commanded higher prices than WAD goats and Red Sokoto goats for all purposes except for butchering/catering; Red Sokoto goats commanded similar or lower prices than WAD goats depending on the purpose for purchase; and Y'ankasa sheep, principally purchased for the Eid‐el‐Kabir festival, commanded marginally higher prices than WAD sheep. The market share of WAD sheep is currently small and is under competition from northern sheep and goats, so increased production of WAD sheep in the south will benefit both producers and consumers in the area. In general, the results indicate that buyers have preferences for specific breeds and species for specific purposes, so producers and sellers may benefit by targeting specific buyer categories and times of the year.