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This is to certify that the thesis entitled A 'lePORAL AND SPATIAL MODLL TO ASSIST IN LVALUA"LJG LNL‘S'll-HNI‘S IN THE NIGMIAg-l ELLE UlS’l‘RIisUl‘ION SYSTEM presented by Larl Duane Kellogg has been accepted towards fulfillment of the requirements for Ph.D. AW v m‘n' n. .005] \ Date 8/25/71 0-7639 LIBRARY Mit éigan State UDW‘n- y " ." degreein Agricultural Economics A TEMPORAL AND SPATIAL MODEL TO ASSIST IN EVALUATING INVESTMENTS IN THE NIGERIAN BEEF DISTRIBUTION SYSTEM BY Earl Duane Kellogg AN ABSTRACT OF A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Agricultural Economics 1971 ABSTRACT A TEMPORAL AND SPATIAL MODEL TO ASSIST IN EVALUATING INVESTMENTS IN THE NIGERIAN BEEF DISTRIBUTION SYSTEM 33' Earl Duane Kellogg The purpose of this study was to develop and illustrate the use of a model that would help evaluate the consequences of alternative investments that might be made in the Nigerian beef distribution system. These investments are needed to reduce the large shrinkage, salvage, and death losses that are presently incurred in the distri- bution of beef from producers to consumers in Nigeria. The model developed contains three basic components. The first component (TRNSCST) estimates the distribution costs per animal between each pair of 15 areas in Nigeria. These costs were calculated for rail, truck, and trek methods of moving live cattle and refrigerated rail and truck movement of frozen carcasses. The total distribution charge for each method was divided into important sub-categories so the impact of various policies on the distribution charge could be treated explicitly. The effects on distribution charges of programs to control trypanosomiasis and increase the speed of rail service were calculated. The second component is a transhipment linear program which was utilized to calculate the least cost configuration of beef transporta- tion facilities among the 15 areas in Nigeria using tranSportation costs estimated by the TRNSCST component in the objective function. The results given by this component are the quantity of both meat and . n-O" . ”do“. MLLIC Ssug‘uc 0-. -ep‘, 3“; Cdusac, C. - . v.“ ; ~r6»...v..di . n. ‘Cn..o 6......“ :1 :0 E: :c:pcr.e:t to a.: fuzzy-'9. 2: PM.“ a‘q . fl . a - mbtthACIO‘ “$3 I.‘ ‘PwJ. ' ’V a. U.“ 5UA.~.“‘U: ..1 ‘ avk‘yfl‘ng e. : . 3:» m. C; V.. ‘ ‘ “a cars V .. ep‘pd'flnsfi"; A . “VDVH‘ : .\;"‘v., ‘. scnkq l‘recrt Dig A . Earl Duane Kellogg cattle shipped between areas, method of shipment used for both meat and cattle, quantity slaughtered in each area at both modern and traditional facilities, and the number of rail cars to be allocated annually to each route. Several experiments were conducted with this component to analyze the effects on beef distribution activities of alternative model assumptions and policies. The first run on this component was made to find the optimum transportation configuration for conditions as they exist in Nigeria at the present time. The following experiments were conducted to estimate the effects on the optimum transportation configuration of: (l) expanding the number of rail cars available for live cattle shipment, (2) instituting a trypanosomiasis control program for cattle that are trekked, (3) assuming the prOportion of "cold" meat demanded in southern Nigeria increased relative to "hot" meat demanded, (4) increasing the speed of turnaround time for rail cars, (5) furnishing an unlimited number of rail cars and increasing the speed of turnaround times, (6) assuming consumers make no differentiation between "hot" and "cold" meat in southern Nigeria, and (7) instituting a trypanosomiasis control program for trekking cattle and assuming consumers in the southern part of Nigeria do not differentiate between "hot" and "cold” meat. The third component of the total model framework is a spatial equilibrium component which was run through 20 years of simulated time. Supply and demand functions were derived for each area and updated through time in accordance with assumptions regarding income and population growth. Using these functions and interarea transfer .~" I ".- ‘Q ‘-.- “fl“..I‘.“ ‘ A. Cook ‘“':Sh~ - ‘qua . . Q a ...: COTS e aag st. Earl Duane Kellogg costs from the TRNSCST component, this model component calculates the equilibrium prices, quantities supplied and demanded in each area, and the interarea flows of beef through time. In these terms,the effects of various policies that change transfer charges or locations of beef demand and supply can be determined. Three policy Options were explicitly considered. Option I would increase the number of rail cars at about 2 percent per year and continue investments in trek route feed and water supply. Option II would furnish as many rail cars for cattle shipment as are needed as well as continue investing in feed and water provisions along trek routes. The third investment option considered would establish a trypanosomiasis control program for trekking cattle and increase the speed of rail service. The consequences of these three policy examples are reported at 5 year intervals for 20 years of simulated time in terms of interarea flows of beef, equilibrium prices, and quantities supplied and demanded within each area. The last step in the model process was to estimate the require- ments that these interarea flows place on the beef transportation system through time. To do this, the three sets of interarea flows of beef through time (corresponding to the three policy options) were processed by the transhipment linear programming component. The results of this process were the number of rail cars required, allocation of these cars among the various routes, trek route utilization, and total distribution charges through time. Other pcssit :eference to the CI.‘ . -....... «:p I :udabh‘cubs is: t. 32 36:2} in 15 Dr. C n'A__-.F.<' a'.‘ '3 ftVuUb$L0n Lu J4- :eezs i0: resea: - 1 ..~ If-t: mm “Cu. Earl Duane Kellogg Other possible uses of the model framework are discussed with reference to the kinds of problems that can be investigated and the adjustments in the model that would be required. ‘The relationships between this beef distribution model and a simulation model of beef production in Nigeria are explored. Finally, a section discussing the needs for research related to the Nigerian beef distribution system is included. A TEMPORAL AND SPATIAL MODEL TO ASSIST IN EVALUATING INVESTMENTS IN THE NIGERIAN BEEF DISTRIBUTION SYSTEM BY Earl Duane Kellogg A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Agricultural Economics 1971 i;iia2‘.C€ he 8°“ « l’ Xichigan State L is: the tize he draw, as succ Rescues. Or. To: .a: tcouraging tar ‘Eiareciated. P 2.5‘? he ... L ‘ “*4tllor ‘v 1 ' .‘Ms 0f tr‘e : 22;... ““‘kalh C .‘I : ACKNOWLEDGMENTS Gratitude is given to Professor Glenn Johnson for the creative guidance he gave throughout the author's entire graduate program at Michigan State University. Special thanks are due Dr. Marvin Hayenga for' the time he took to discuss and constructively criticize this study. The author is also grateful for the academic atmosphere and financial assistance provided by Professors L. L. Boger and Dale Hathaway as successive Heads of the Department of Agricultural Economics. Dr. Tom Manetsch and Dr. Robert Deans were very helpful and encouraging throughout this study and their assistance was greatly appreciated. Professors Al Halter, Lester Manderscheid, Robert GUS tafson, and Carl Eicher all made special contributions that were appreciated. The author is also indebted 'to Alhaji Hamisu Kano of the Nigerian Livestock and Meat Authority for the multi-faceted assistance he gave. The U.S. Agency for International Development's Mission in Nigeria was also very helpful. The author is grateful to Mrs. Lana Hilton for the careful t3,1511% of the manuscript. Finally, to Jan, Deren, and Kalia, a special debt is due for t 1flair sacrifices, patience, and support. ii CHAPTER II 1211 TABLE OF CONTENTS PAGE SCOPE AND PROCEDURE OF THE STUDY ...................... 1 Introduction ....................................... Need for this Study ................................ Purpose and Objectives ............................. Procedure .......................................... (Dbl-\NH outline 0..O00....IOOOOOOOOOOOOOOOOOOOIO0.0.0.000... A BRIEF DISCRIPTION OF THE CURRENT NIGERIAN BEEF PRODUCTION, DISTRIBUTION, AND CONSUMPTION SYSTEM ...... 10 Production System .................................. 10 Distribution System ................................ 20 Distribution Channels ........................... 21 Transportation Methods .......................... 24 Beef Consumption ................................... 32 Relationship to Beef Production Model .............. 34 SPECIFICATION OF DISTRIBUTION COSTS—TRNSCST ........... 36 Introduction ....................................... 36 The Model Framework ........................... ..... 37 Cost Structure of Shipment of Live Animals by Truck ............................................ 39 Survey for Truck Costs .......................... 39 Freight Cost by Truck ........................... 41 Mortality Cost for Truck Hauling ................ 42 ‘Shrinkage Cost .................................. 44 Total Cost of Shipment by Truck ................. 47 Cost Structure for Shipment of Live Animals by Walking ...... ..... ............................... 48 Drovers Fee ..................................... 49 Salvage Costs ................................... 51 Mortality Costs ................................. 51 Shrinkage Losses ................................ 53 Capital Costs ................................... 54 Total Transportation Charge for Trek ............ 54 Cost Structure for Trekking Animals with a Trypanosomiasis Control Campaign Instituted ....... 55 Cost Structure for Shipment of Live Animals by Rail 0......0....O0.0.000...OIOOOOOOOOOOOOOO0...... 58 iii .... t .. a. a CO 5 "a D. C a l . C C.. a ..l L .2 v. C a. T r. 3.. .Vw .u r “L a. .Q C .1 n... .vu 3m fr.“ flak PW PLO .L e .x r e VF.N An .L E In C “C TA v.-. YA TL \.. T {a : ..w r .L “bk . I S .4“ PL AL. Au 5 4‘ sk an. a t .G at I» “l. C rw .t .5. t I T. .u. .Hu Vt. Ti H... V. R -r #3 ~ u I; Co In «at rv- ' Anubbbt) . ives cock “it 1 I... o ,5. ' .— LAA ‘5 ‘-l\ -..:___ bg‘.v ‘0 J std- CHAPTER I SCOPE AND PROCEDURE OF THE STUDY Introduction Agriculture, including livestock production, is the predominant industry in Nigeria, constituting about half of the value of exports and the gross domestic product (GDP) at factor cost {14,p.19}. While the livestock industry's share of the GDP is only five percent, the beef industry is quite important in the northern part of Nigeria {5,p.137}. The value of the capital stock in the northern beef industry is about £120 million and the annual trade in beef products has been estimated conservatively at between £20 and £25 million {7,p.2}. As a part of development, population increases, per capita incomes rise, producers become more specialized, and consumers more urbanized. During this process, the demand for agricultural marketing services increases. While the percentage contribution of agriculture to GNP usually falls as per capita incomes rise, the percentage contribution of agricultural marketing to the national product seems to be fairly constant over wide ranges of per capita incomes. Simantov {32} found that in most countries studied farm supply sectors comprised about three percent of the national product and the food-processing and marketing services about eight to nine percent, even though their income levels varied substantially. Therefore, agricultural marketing can be identified as a rapidly expanding part of the l > o v» a. .1 -. new. ' 3.5quL‘rG; 3c 5-,. “M5 r -'_ “o5: Etna to l 9 Cat \-‘1: ~r- « 2‘ .- - : ‘ “.c act; I: l . ,1" ‘,JJ“’JUJ Catt. ...; «...--... H“ * .a~sC-.Lca .1 k a ,‘ v. F- I A. s:5§V-.S. (‘Q : p;- ‘ - ...: "f‘ 4U. C . ‘ n ‘ . “*L‘;- - ~‘. -- ‘. a u:\‘ -’ ’ :tHJ‘H‘ \ A ‘ s\:° a“- §"" -I 4‘ .. “=~r~.... s9 ‘ ". ‘4 ._~ . s“ p_‘ sq: SWC-’ H E: \ ~.. .. \ n" " “nr- -, . ‘ ‘\ *‘ x ‘ ,- ‘\‘L.. s ‘~ h“ \“K ”c: t\ agricultural sector in the development process. The same factors that tend to increase the demand for agricultural marketing services in general also apply to beef marketing services in particular. In addition, income expansion not only increases the demand for staples, but may also enable greater consumption of preferred foods such as vegetables, fruit, meat, fish, and poultry. Considering all these factors, one can assume that the demand for beef distribution services in Nigeria is likely to continue to expand rapidly in the future. Need For This Study The beef marketing system annually distributes between 800,000 - 1,000,000 cattle to the country's 56 million people. The system spans distances up to 1,000 miles between important producing and consuming regions. As the cattle are moved (either by walking or railing) from the producing to the distant consuming regions, large losses are incurred through death and live weight shrinkage. As will be shown in Chapter III, these losses constitute 40 - 60 percent of the total transportation charge between some regions. Until the beef distribu- tion system's performance is improved to reduce these wastes, the success of policies to modernize beef production is likely to be limited. Because of its size, probable future demands for its services and the need for improved operation, the Nigerian beef distribution system's performance is and will be an important factor in the success of Nigeria's efforts to foster sound economic growth in agriculture that will support and contribute to the total develop- ment effort. Severa. st; bee: iiSZILDQZLC :32 ezteczs or I... .;‘- ’p; '- :‘Udc‘dd§c leaso. J..- ._ ..---. {..- :oku..‘Ld.tL ‘m- 25:32:33: as... s;e;.f;c: are. \V J: :C.-:. .1 ‘;“-'\ ;"\" ‘_.--> — exams ‘flfi‘c~c. 6““ .- 1 . - " ’ - ‘ s.— . Inboad‘: ‘.‘.:‘ {3. CC. " - Qg_ul s.‘v 8"‘5- ‘ h J 5g “9-1 ‘ \¥d ‘ Several studies have been done on various aspects of the Nigerian beef distribution system. However, policy makers are interested in the effects of various policies through time on the total system. Available information and "guesstimates” should be organized into a framework for evaluating specific policy decisions which may have significant impacts on producers and consumers. Of course, all the parameter values and relationships within the framework cannot be specified accurately. More research on these basic aspects will need to be done. However, planning goes on, decisions continue to be made and strategies for the beef distribution system's development are being implemented. This research is an attempt to integrate the available information into a model that will provide the policy maker with a more informed basis for planning development strategies for the Nigerian beef distribution system. Any current policy research related to Nigeria must at least acknowledge their recent civil war. Some assumptions have been made here to account for changes the war may have caused. They are explic- itly stated in the sections describing the components in which they were used. This study is part of a larger research effort directed at assessing the usefulness of simulation as a tool for planning agri- cultural development in less developed countries. In order to do this, an interdisciplinary research team was organized at Michigan State University to build a simulation model of the Nigerian agricultural economy. Initially, this team constructed a model of the northern Nigerian beef production system {15}. The process of building the production model stimulated this research in beef distribution. y L ‘ a .r " Unta' U ~\5 9» .5 ..nu u.“ r\.. ;a: Lt. ‘ iger “0561 . 5 y~ar —. sewn ->p. s. 54541 3 ofioa‘ Subsequently the research team has developed a simulation model of the total Nigerian agricultural economy {27,28}. This overall model will incorporate the beef production model and a simplified beef distribu- tion model which will utilize many of the basic parameters and structural relationships estimated in this more comprehensive model. Purpose and Objectives The purpose of this thesis is to develop a model to help evaluate policy decisions that might be made in improving the operation of the Nigerian beef distribution system through time. More specifically, the objectives are: 1. To estimate transportation costs among areas for rail, lorry and trek methods of cattle and beef shipment in Nigeria. 2. To estimate the distribution costs that result from imple- menting various policies that are directed at improving the beef distribution system. 3. To develop an optimum transportation plan through time related to these policies. 4. To indicate the equilibrium price, demand and supply quantities in each area that would likely result from these policies through time. Procedure To accomplish these objectives, a multi-component model was developed. Figure 1 illustrates the three components of the model and their interactions. For each of the components, Nigeria was divided into 15 areas all of which produce and consume beef. The transportation L ~....Z:._~:...J ....u .7... C...~e:._._ .... ..e. . :Tt .. 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' CCSI COZPOZé «8; par: 0‘ t "mirage a" .l :Cre, >._ ‘n‘c EC l I“: 011E"; c a. A «x. C cost component calculates the interarea shipping costs for the methods indicated and the changes in these costs as different policies are implemented to improve distribution methods. These interarea distri- bution costs become inputs to the spatial equilibrium component. Using these costs in conjunction with estimated supply and demand functions for the 15 areas, this component calculates the prices, quantities demanded and supplied and the corresponding interarea shipments (under the assumption that shipments will increase until the difference in prices between any two areas is less than or equal to the distribution charge between the two areas). These interarea transport costs depend in part on the prices of beef in the various areas as losses due to shrinkage and death are valued at destination market prices. There- fore, the equilibrium price array calculated by the spatial equilibrium component for year t becomes an input to the transportation cost component which calculates the interarea distribution costs for year t+l. Then, these distribution costs for year t+l become inputs to the spatial equilibrium component that calculates the equilibrium price array for year t+l and the cycle continues for each year through time. If prices increase through time, the transfer charges for year t+l will be underestimated because the prices for year t were used to derive them. The extent of this downward bias is estimated in Chapter V. The transhipment linear program uses the distribution costs calculated by the transportation cost component and the quantities demanded and supplied in the 15 areas furnished by the spatial equilib- rium component to find the optimum transportation methods for beef. w r 14L..- _ v' f. Tue model idem: the required nu: ad trek utiliz. beef distributi frtztions for t their impacts < requirements I: policies cons: L. Furni along 9556: I\) o The model identifies the least cost method of shipment among areas, the required number of rail cars, the most efficient routes for rail and trek utilization, optimum location of slaughter plants, and total beef distribution costs. This process was repeated at five year intervals for 20 years taking into account the growth of population and income on the demand functions for the 15 areas. Three policy examples are explored and their impacts on the demands, supplies, prices, and distribution requirements for the 15 areas of Nigeria are estimated. The three policies considered are: l. Furnishing fewer rail cars than can be economically used along with little investment in trek route improvement-- essentially the existing policy. 2. Furnishing all the rail cars demanded for live cattle distribution. 3. Instituting a large scale trypanosomiasis control program for cattle trekked to market and improving the speed of the rail service. These policies illustrate what might be explored. The basic structure of the model is sufficiently flexible that other prospec- tive policies designed to improve the beef distribution system's operation can be evaluated. qr This out itazeaork vi‘ to attain tr. In Cna; :zszriauuo; Outline This outline is provided to help the reader understand the total framework within which the thesis is developed and the procedures used to attain the stated objectives. In Chapter II, a brief descriptive account of beef production, distribution, and consumption is given to clarify the problems of distribution. Also, the relationships of this model of the beef dis- tribution system to the beef production model will be discussed. Chapter III describes the model that estimates the costs of alternative methods of transportation and the effects of various policies on these costs. The methods of shipment analyzed are trekking, railing and lorry hauling of live cattle and refrigerated rail and lorry transport of meat. The costs of these methods are compared for all possible interarea shipments, and the effects of various policies designed to reduce live weight shrinkage and death losses are analyzed for important interarea routes. In Chapter IV, the transhipment linear program model component is described. This component identifies the least cost method of shipment among areas, the required number of rail cars, the most efficient routes for rail and trek utilization, optimum location of slaughter plants, and total beef distribution costs. Eight static optimum transportation plans are compared and analyzed for alternative policies , and model assumptions. Chapter V presents the dynamic spatial equilibrium.model which estimates the equilibrium structure of interarea prices and quantities demanded and supplied that result from the three policies previously described. The consequences of the policies are traced through a 20 year time period at five year intervals. In Chapter VI, the results of the spatial equilibrium model component are processed by the transhipment linear program component to find theleast cost transportation configuration through time for the three alternative policies. A summary of the conclusions of this study is also presented. A] PR. AD ie V; count .(J a!“ «U at A CHAPTER II A BRIEF DESCRIPTION OF THE CURRENT NIGERIAN BEEF PRODUCTION, DISTRIBUTION, AND CONSUMPTION SYSTEM To better understand the context of Nigeria's beef distribution problems, descriptive knowledge of the production and consumption systems and institutions involved is crucial. This chapter provides that description. Production System The Nigerian beef industry is only a subset of the whole West African beef industry that stretches across about ten West African countries as shown in Figure 2. The fact that cattle are imported into Nigeria from four different West African countries is evidence of this intercountry dimension. These importations account for 1/4 to 1/3 of the total number of cattle slaughtered in Nigeria annually {7,p.97}. One very important influence in beef production within Nigeria is the presence of the tsetse fly in the southern 2/3 of the country. Bites from infected tsetse flies cause trypanosomiasis, a disease that results in loss of weight and vigor and eventually causes death in cattle. Without modern management, including proper nutrition and health care, this disease is devastating to the large range Zebu type cattle that make up a large proportion of the cattle in Nigeria--and are the topic of this study. There are various breeds of tsetse— resistant cattle in Nigeria, but these are generally dwarf types that 10 Green... Go U45?— :...eraucz .....Seaxcuanz l..l.|.l Ingmar-1‘ miHUu-wuv K.fi.--.~.:-.~..~ ! woauu< umus :w mumu< nowuosvoum mauuuo mummy humaaum "N ouswam .om .m .502 .huamuoafica Ham—Coo .mwmonu. .mi vonmwannmas . Ill, \\ / 5%qu «manna. mo orig upwcupoz 325x223 IIII mmwu< wauumo angina § HumsvnH moon 5:0 Hz man. .3309 :52.»qu " oousom <,...rv ,. I ~' :C: M... are Signggdeh been and. 5:111 can be raised 1 lads» and he; The PIESer station, but a; 3&5, in turn, aall'iculture of Vary with the r Er‘":,,R v- 3.55) LKKe Il‘v :':“S‘- ; a.“‘ matron, SOEI =E"A- . Qavvaa‘ :‘g‘ e '5» “TE C‘JE‘ kl .‘I‘.- ~v. Er“ “‘ ‘é ei.‘ ".- , 6:. ~ it"- . “fl"‘ - ‘~¢ qnc t'h’ A.c ha” ‘ ~9‘«:b', 5" ~ ‘ - «a ,‘ . r. e; rlc ‘ . . .'s:". ‘Q‘ ‘ ‘1 r ‘L sq: V _ ”5-33 1“ 5......“ \‘.‘§. 0 I .;.‘ “nib 12 are significantly smaller and less efficient in other respects than the larger Zebu breeds in the northern parts of Nigeria. However, it has been and still is being demonstrated that these large Zebu type cattle can be raised in tsetse-infested areas if proper management, nutrition levels, and health care are present. The presence of tsetse infestation not only influences beef pro- duction, but also limits the use of animal power in farming in Nigeria. This, in turn, influences farm size and input requirements for the agriculture of much of northern Nigeria. Figure 3 shows the areas within Nigeria that are tsetse free all the time. Within the tsetse-infested northern areas, tsetse fly levels vary with the rainy season. As the rains subside and the dry season ensues, the fly levels recede in the north. Because of lessened fly infestation, some cattle migrate to southern areas to graze on the more productive grasslands. As the rains start to move north again, the tsetse level builds up. The Fhlani herdsmen bring the cattle back to the far northern grazing lands to escape the trypanosomiasis disease. The estimated cattle populations in the various areas for the wet and dry seasons (shown in Figure 3) are evidence of this seasonal migration. The overwhelming majority of the estimated 8 million cattle in northern Nigeria are owned by two semi-nomadic tribal groups: the Fulani and the Shuwa. The Fulani are found throughout the savanna country in Africa, from Senegal through to the Sudan. The cattle Fulani are not true nomads, but usually have permanent camps where the young and old live year-round near their wet season grazing 8r0unds. 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Apps: Hmuou mo unmouomv wmaa «mod NmaH «mmH «mad enma new» Hmm.ooa menu; new m~a «me a may»: one mauumu «0 Honesz smoumam magmas: w coma ocmm. canon ouoxom mvsum mo mou< w “Gamay muuommu flammcdn xwouo .um vooaumnm nonu=< mowvaum macaum> 6H vouuomum ovum: amwuomfiz mo coquDHuumHa xmm paw ow< "HIHH manna J‘. I.., [50" III]! QQIQE; l7 Table II-2: Number, Sex and Age Distribution of Cattle Marketed (Bukuru-Jos-Kaduna-Kano-Maidguri—Potiskum-Zaria-Ibadan- Lagos, 1963) Age | Bulls Age Cows (number) (percentage) (number) (percentage) 2 508 .47 2 25 0.09 3 3,822 3.52 3 890 3.30 4 8,666 7.98 ‘4 1,362 5.04 5 13,732 12.65 5 2,319 8.58 6 16,175 14.89 6 3,423 12.67 7 22,119 20.37 7 5,705 21.12 8 24,210 22.29 8 7,009 25.94 9 13,395 12.34 9 3,802 14.07 10 5,702 5.25 10 2,263 - 8.38 11 192 .18 11 216 .80 12 67 .06 12 2} .01 Total 108,588 100.00 Total 27,016 100.00 Percent of Total , 80.1 19.9 Source: Werhahn, g£_gl., The Cattle and Meat Industry in Northern Nigeria, p. 190. tore grazi: Additional These two getenaial 5‘10le CIG Pérennial serio-h-s if. 50! grazi areas. As t 18 more grazing land is transferred to both food and cash crop land. Additionally, the total herd size in northern Nigeria is growing. These two factors have caused a serious prOblem in availability of perennial grass acreage. Some ecologists feel that the Sahara is slowly creeping southward in this area, meaning replacement of the perennial grasses with less productive annuals. It is an extremely' serious matter, as 2/3 of the Nigerian cattle population use this area for grazing in the wet season to escape the tsetse fly in the southern areas. As the dry season ensues, nutritional problems are compounded. Lack of bulk and protein become serious limiting factors on growth, reproductive ability, and lactation for the calves. In order to survive this period, the Fulani graze their cattle on crop residues left over from the harvests taken at the beginning of the dry season. Many times they are paid to do this as the farmers realize the value of the manure left behind. In spite of the increased availability of crop residues, the Fulani cattle often suffer weight losses during the dry season, known as "dry season setback". Because of this setback, weight losses are incurred, mortality losses increase, live birth rates decrease, and calf mortality increases due to insufficient milk from lactating cows. The effect of this dry season setback is illustrated in Figure 4 which indicates the weight of an animal through time. In addition to the serious nutrition problem, disease is an important contributing factor to low productivity. The major diseases of economic importance in Nigeria are trypanosomiasis, contagious bovius pleuropneumonia, rinderpest, streptothricosis, and ... ...z J...:..ii......all1 ; ctr. . 93w ill 63% 13:23: 2‘ s.\~.“ .u5- l9 .wfiuowfiz cuocuuoz ca HmEH:< owamm oaoaom van was: a «0 mafia smoousa usmwoz ammuo>< "e ouomwm . .oooofiom Hoawq< «0 Housman any «0 momma waaaousuuow a :H nonmaansn on ou :.0Huumu sowuowaz mo ousmaoz a“ muoaumwuo> Hmaonoom: .umogz anon .un he Honda mcwaoosuuow m ca vocaouooo soauuauowoa was muwuuo>wo= madam damages: .ouaowom Hmawq< mo uooauumoon .mowon unopom .HG sues cowuouasmdoo a“ wouosuumaoo am3_nqoum many memo» aw om< n o p p 4 .4. q _ 4 A 4 a n 3 o 3 3 on In . .1 OOH l .quOuuo ou wash aouw musooOIIaommom uoz I 3 I and .oash cu muscuuo scum mu=000IIaoowoo he: I a II can I omu com 1 0mm J 03 on.» x 1 can own \ 1 So \1.:.Is . I one 2: one 8» one ooa mvcsom ca unmama q nq’d' -1 9—5:!) Q—II-N Q—(I-H 1 I PT ‘T7 I I 1 *1 “TrrI I \ 7 I I J l T ‘4 ‘\ II \. I I - 1 1 1 l "mousom ." r—s. parasitisor‘s. probably true ii:its to a at :a'xe of fodcer been eszizatec kilometer the 1 223’ cattle as Dr. Sheba azc debility ca £130,000 each y History ha It rinderpest e in controlling outby the Nige| :ar Intemation In General A" Q VI , ~C$:1e. {11$ 3.... “41‘ IISK si 20 parasitisons. 0f trypanosomiasis, Dr. K. J. R. Maclennan says, "It is probably true to state that there is no other disease entity which limits to a greater extent the use which man in tropical Africa can make of fodder resources for the purpose of raising stock. It has been estimated that at a stocking rate of 12 head of cattle per square kilometer the tsetse infested area of Africa could hold over twice as many cattle as now exist" {25,p.1}. Dr. Shebu Bida estimates that the loss through hide damage, death, and debility caused by the skin disease streptothricosis is over £100,000 each year {3,p.l}. History has recorded the devastation of thousands of animals due to rinderpest epidemics. However, significant progress has been made in controlling this disease through mass vaccination campaigns carried out by the Nigerian government, the United Nations, and the U. 8. Agency for International Development. In general, the Fulani is faced with much adversity in raising his cattle. His management practices include the use of informal insurance in high risk Situations. The cattle that do survive the droughts and disease may not be efficient converters of nutrients in comparison to breeds in much more favorable environments, but they are hearty and resistent to adverse conditions. These factors are important to the Fulani as they may mean the difference between existence and starvation. Distribution System The distribution system for moving cattle from producer to consumer is a fascinating study of an indigenous marketing system developec '5k 1 - C ~ er I .a t. or tire I » ... a ... ..§ 21 developed over the years with minimal foreign influence. Because of the nomadic nature of the producers, the great distances involved, and the risks of mortality losses due to disease and low nutrition, the distribution system is divided into small sections in terms of length of time the various participants own the cattle. The whole structure is held together by mutual indebtedness, which, in effect, links all trade levels and is run on mutual trust and fear of personal reprisals with little if any bookkeeping. Distribution Channels Three different channels of distribution will be described to illustrate how the system works. The first channel is from the pro- ducers in the northern parts of Nigeria to the consumers in the north. Petty traders, who buy one to three animals from the semi-nomadic cattle owners are the first link in this chain. They also very often supply the Fulani with household goods on account. This arrangement is made because the grazing areas are usually far removed from markets, making it very costly for the Fulani to acquire information regarding market values at first hand. After the petty trader has visited a few Fulani herds, he collects a small herd of 5 to 10 animals.' This herd is taken to bush markets where independent inter- mediate cattle buyers and buying agents for large wholesale dealers come to purchase cattle. Some of the cattle collected by the petty traders are sold to local butchers who retail the meat in the small markets throughout the north. However, most of the cattle gathered by the petty itinerant traders are sold to the independent intermediaries and wholesale buying agents. The function of this group is to sort the beasts according to market value so that those suitable for the Mum's-w“ wholesale 6 inferior or resident b; the petty t 3.3;“ Q‘ICES 0] q (VI'EI-C' . «4‘ ‘4 .v- t“ LN. -‘ .- 'C“ts in t I. H ~~Ze . C—t:;- Q ~' fl is .- fié " 1 ‘Q' '- “y I ‘5‘ \5‘6 ‘6" ‘(e‘ l ~a:§‘ s‘e A : ‘ESfi; k“ s. 3k:~. \‘e K‘- ‘iQA~ “(E‘- “at: ..\; a“ ‘- ‘H . Q “id 3. 22 wholesale dealers can be sold in the big provincial markets. The inferior ones are driven to the local cattle markets and sold to the resident butchers for sale to the consumer. The exchange made between the petty trader and the intermediaries and consequently the inter- mediaries and butchers is facilitated by middlemen. Their function is not restricted to the sale of the beasts on sellers' behalf only, but often they take over the interim financing by accepting the primary obligation to the cattle owner. Figure 5 indicates this organization as a flow diagram. The second channel to be described is the flow from the producers in the north to the consumers in the southern urban centers such as Lagos, Ibadan, Umuahia, Port Harcourt and Enugu. This large flow of cattle is centered around large wholesale cattle dealers who have buying and selling organizations of their own. As mentioned pre- viously, they may have buying agents gathering cattle in the bush markets to be sorted and consolidated for shipment to the south. The northern wholesale cattle dealers stand the risk of transporting the cattle from the northern provincial markets to the south involving distances of 500-1000 miles. They represent the largest and most powerful link in the distribution system. Usually they have selling agents in the large southern consuming areas who arrange the sale of the cattle in those markets. The distribution of the slaughter stock is usually settled through these local agent dealers residing in the cattle market using the services of the middlemen on the spot. The cattle destined to be consumed in the urban centers are usually purchased by butchers in the city from the wholesalers' agents through the middlemen. The butchers slaughter the cattle daily in the early morning and sell to consumers throughout the day. 23 IFulani Herdsmanl Itinerant l - Intermediate Cattle buyers J cattle buyers I Northern Cattle Dealers] I Local Butcher - North A i » (.-...- j Figure 5: Distribution Channels for Marketing Cattle to Northern Nigerian Consumers I . .3 ._ a I w 1 . i :L 4a. f.» fik AM #5 e W» P; e ea 11 0 4c ,0 e v. . .u e a _C in e 1‘ O S .U a. .. . mu . C S a t w 3 ~. .. Q C m C t w; 1 a I 5 . r S l 3 e . a r. C ... 5 0 W. D» b u k .4 .3 ”a “no. «1 I s . A I. § 3 IA m .m. a. .m .... .... n I : ... I. . p IEI I. is. £62! «eke 5 “e O'Iv Catt‘ 4.6 NI; 0 a z» E F‘ ... S 3 Q s“ _ :x S .n‘t .‘\ ..\ . .Q ~\ is us .nsu 24 The last channel to be discussed involves supplying cattle to consumers in the hinterland of the south. These cattle are purchased by local intermediaries in the south at the large markets from the agents of the wholesale cattle dealer through a middleman. These intermediaries take the cattle out to the local markets and sell in small lots to the local butchers who slaughter them and retail the meat to the final consumer. Figure 6 shows the last two channels discussed and Figure 7 is a summary of all three. Transportation Methods The transportation of live animals from producing areas to consuming areas is accomplished by three different methods. Listed in order of their importance by number of cattle transported, they are walking, rail hauling and truck hauling. The distances involved are considerable. For instance, the rail distance from Maiduguri to Abeokuta is approximately 1000 miles. The trek method of transportation involves hired drovers who walk the cattle along pre-established trek routes. The drovers are fined if cattle are found off these routes. Besides the drovers' wages, the cattle owners must furnish them with money to purchase food. Along part of the trek routes during the dry season, maintenance feed and water must be purchased. The large costs incurred result from mortality, shrinkage, and salvage losses. In order to reach the large southern markets, the cattle must be walked through tsetse infested areas. The percentage of cattle infected with trypanosomiasis varies seasonally as seen in Figure 8. 0n the average, 1/2 of the animals reaching Ibadan by trek are infected by trypanosomiasis. In addition to disease stress, the animals are moved relatively rapidly causing 25 I Fulani Herdsman I l I Itinerant Cattle Buyers I L I Intermediate Cattle Buyers I l I Northern Cattle Dealers I i I Local Intermediaries Southern Agent Buyers I South 1 Local Rural Butcher I Urban Consumer - South I [Rural Consumer - South _ Local Urban Butchers - 6 7 South Figure 6: Distribution Channel for Marketing Cattle to Consumers in Southern Nigeria . .22.... 3.3.." T. ‘II.-I-II-I-...-J\N i U [— FULANI AND SHUWA HERDSMAN Itinerant Intermediate Cattle Buyers Cattle Buyers I NORTHERN CATTLE DEALERS I Local Butchers Corned Dried North Beef Beef . Dried Beef SOUTHERN AGENT BUYERS Wholesaler Local Butchers Hawkers and South Food Sellers CUSTOMER Source: Ferguson, Op. Cit., p. 29. Figure 7: The Nigerian Marketing Pattern for Beef F: -. is A O-l'ir-i 2 Positive Blood Slides . Congolense . vivax . Brucei) 27 NUMBER OF SMEARS EXAMINED In 0 H O N H m OIOInIn N n In N O HHHH OIO 10 I") H H O H H In H '1 Lowest ls—~l Inciden w???) / / -‘-——— 1961 JIJIAlslolNID JlFlmlAlmlJIJlAlslolNlD JIFTMIAIMIJ 1962 ———.I+—- 1963 Time Source: Jones—Davies, W. J., "The Protection of a Small Group of Nigerian Trade Cattle From Trypanosomiasis Using Samorin" Bulletin of Epizootic Disease in Africa (1967), 25, p. 333. Figure 8: Monthly Incidence of Trypanosomes in Thick Blood Smears Taken From Slaughtered Cattle at Ilorin additional :he trek : are the t OI EJéSé 28 additional strain. The drovers will sell animals at a low price along the trek route if it is apparent that the animal will die before reaching the final destination. Other costs involved in trekking are the trade cattle tax, branding fee, and marketing charges. All of these charges will be quantified in the following chapter. The second most important method of transporting cattle to the south is rail hauling. Figure 9 illustrates the rail system in Nigeria with major assembly points indicated. The rail service by advanced rail system standards is relatively slow. The trip from Kano to Lagos is approximately 700 miles, usually taking 3 days. Cattle often travel for several days without adequate food or water. Despite this, rail hauling is generally preferred to trekking because of its lower cost. The Nigerial Railway Corporation tries to dispatch cattle cars efficiently since they are in short supply. In 1961, a committee of cattle dealers was established to help regulate the numbers of cattle railed south in order to prevent past shortages and gluts. Table II-3 shows the number of cattle transported by each method from the north to the south for the years 1952/53 and 1963/64. During the period from 1952/53 to 1961/62, the proportion of cattle shipped to the south by rail service generally increased. However, since 1961/62, the percentage hauled by rail has decreased. This may be due to failure of the railway to increase the number of rail cars in proportion to the increase in cattle being transported to the south. However, there are important production regions that are not served by the rail system. Therefore, until the rail system is expanded, a GUSUA FUNTUA 0 OKUTA JEBBA IBADAN LAGOS 29 NGURU MAIDUGURI ‘ 0 ZARIA GOMBE ZONKWA BAUCHI BUKURU MAKURDI . KATSINA ALA ENUGU UMUAHIA W Railroads I Rail Points A Primary Southern Markets Source: Ferguson, op. Cit., p. 94. Figure 9: Nigeria--Rail Points, Major Interzonal Check Points and Primary Southern Markets for Trade Cattle ‘ Table . Fisc it }.A 30 Table II-3: Nigeria--Export of Cattle From the North to the South by Railway and on Hoof 1952/53 to 1963/64 Fiscal Year Total Rail Hoof Z Hauled by Rail (thousands of cattle) 1952-53 267 109 158 41 1953-54 282 111 171 39 1954-55 288 116 172 40 1955-56 276 120 156 43 1956-57 296 139 157 47 1957-58 293 156 138 53 1958-59 299 158 142 53 1959-60 323 167 155 52 1960-61 363 197 165 54 1961-62 368 204 164 55 1962-63 378 200 179 53 1963-64 397 201 196 51 Source: Northern Nigeria, Ministry of Animal and Forest Resources, Vet. Div. Annual Report, various years. large percent be trekked no Truck ha Large lorries cattle hauleI the large ma 1855 than (jg éIiVing’ aIN evasion. In‘ 31 large percentage of the cattle marketed in the south will continue to be trekked no matter how many rail cars are made available. Truck hauling of cattle has become more important in recent years. Large lorries with capacities of 5 to 15 tons are used. The number of cattle hauled by this method is not known. They are usually loaded in the large markets in the north and driven nonstop to the south. Attendants are used to take care of the cattle during the trip. A typical trip from Kano to Lagos takes about 3 1/2 days. Because of less than desirable road conditions, driver stress from prolonged driving, and poor mechanical condition of the trucks, accidents are common. Individual accounts have been given of carcasses strewn along the main highways resulting from cattle truck mishaps. As will be quantified later, truck transport costs are relatively high compared to trekking or railing. However, it continues to be used as a means of reacting quickly to favorable short run price conditions that develop in the southern markets. There is a relatively small amount of meat shipped to the south in refrigerated rail cars from large slaughter houses in the north. These large scale commercial slaughter houses are located in Sokoto, Kano, Maiduguri, Nguru, Kaduna, and Bauchi (see Figure 10) with capacities ranging from 200 to 400 head per day. Most of these abattoirs are operating at levels substantially below these capacities. The flow of frozen meat shipments amounted to about 12,000 cattle per year before' the war in Nigeria. This figure may have decreased by over 1/3 with the loss of the eastern market. This represents meat sold to high income Nigerians and expatriates located in the large urban centers in the South. heat 1 added to to Nothing edj Quarter Vin; There 32 Beef Consumption Meat is seldom used separately in the Nigerian's meal, but is added to the stew which is used to garnish the starch staple food. Nothing edible goes to waste. The edible offals are a valuable fifth quarter which may sell at only a slightly lower price than flesh.1 There is some indication that the "hot" meat available from local butchers who slaughter every day at the local slaughter stable is preferred by the average Nigerian to the "cold" meat shipped on refrigerated rail cars. There are three major reasons for this prefer- ence. First, a large number of the consumers do not have refrigeration to handle cold meat. Secondly, there is only slight, if any, differ- entiation made by the consumers as to the desirability of various cuts. However, the refrigerated meat is almost always sold by separate cuts. Thirdly, the "cold" meat is not usually available in the market areas where most of the Nigerians buy their food. TherefOre, in order for the demand for "cold" meat to increase relative to "hot" meat, time must be allowed for tastes to change and market infrastructure to develop. Ferguson has estimated the lean meat equivalent of a 700 pound market animal to be 198 pounds {7,p.130}. Using this calculation and estimated marketing numbers, the per capita consumption in Nigeria can be estimated. Table II-4 shows the estimated per capita beef availability by region in 1963/64. The total meat equivalent per 1The fifth quarter is composed of material such as intestines, feet, horns, tail, blood, and bones. It is sold in the markets with the meat at only slightly reduced prices. .::_x:x A: xe:_;:~w=>< 5oz: ...:LFQ LLL Please}; ...xl: AWN AN Pm“ 33 .mma .o ..uHo .oo .oomsmuom ”mouoom .moaa nauseaza eo.m aa.n m~.a mH.m ma.e o.~a muammsa \a<-aflaee amassoav-snaaaaeaae>< Hmsea< Amaoaaaaav ucon>Hmwm moon uooam>anmm madmmo oHanm moon coaumaamom coawom umoz HmuOH coon umwz Hmuoe woo woo: vogue smog I mo uooam>amwm awn: smog wauowwz .umow Hmuowm ¢c\mcma .oofiwom %n muHHHpmafim>< moon mufiomo uom voumawumm quHH oHan capita for t meager in rI pounds. As much higher in income a In gen satption is through ti: are Presen Sistence 1_ large 1085 be accurat 34 capita for Nigeria is estimated at 7.28 pounds. This is indeed meager in relation to the U. 8. per capita beef consumption of 105 pounds. As can be seen from Table II-4, the consumption of beef is much higher in the urban areas of the West and Lagos. Differences in income and prices probably account for most of this. In general, the beef economy of Nigeria from production to con- sumption is characterized by activities that have been developed through time to meet the economic, physical, and social conditions that are present. Because many of the participants live close to the sub- sistence level, the system is noted for practices that insure against large losses.' It could be termed a primitive system, but it would not be accurate to describe it as unable to react to economic changes. Relationship to Beef Production Model As indicated in this chapter, problems relating to the Nigerian beef industry are not confined solely to the distribution system. There are significant problems relating to disease, nutrition, breeding, and environment in the production sector. A closely related simulation model of the northern beef production sector has been used to investi- gate the interactions among the total herd size, number of cattle marketed, nutrition available from the range and crop residues, the growing human population and various policies that might be implemented to improve the production performance of the Nigerian beef industry {15}. This thesis is primarily concerned with beef distribution sector problems and policies, with little emphasis on the possible production changes that mdght occur. However, it is recognized that the :1. __l‘.. “I‘- --' production a For example, Table l-Z) devastating portation me YOunger catt beef Yield p needed adapt | animals take be economica studies you taken Sepera “Saarcli. 35 production and distribution sectors do not operate independently. For example, the relatively old age of market cattle in Nigeria (See Table II-2) is partly a result of the rigors of market treks that are devastating to young immature cattle. Therefore, if better trans- portation methods were available for moving the cattleto market, younger cattle might be marketed. This, in turn, would improve the beef yield produced from the herds. Another interaction would be the needed adaptation of the distribution system to serve the market animals taken from the modern grazing reserves. These cattle can not be economically trekked to southern markets. Other transportation methods would have to be used. While the integration of these two studies would provide a better framework for policy analysis than each taken seperately, this integration must be accomplished in future research. The thre t0 consuming These method. Inerefore, 1 iiportant to This is true 1’ePlace theS transport CC 60“ {9.12,} 02: CHAPTER III SPECIFICATION OF DISTRIBUTION COSTS - TRNSCST Introduction The three main methods of transporting cattle from producing areas to consuming regions are by trekking, railing, and truck hauling. These methods will probably continue to be important for many years. Therefore, information about the costs involved in these methods is important to policy makers involved in improving beef transportation. This is true for policies that may be instituted to either improve or replace these systems. Some studies on various aspects related to transport costs of trekking and railing cattle in Nigeria have been done {9,12,18,33,35,36}. Very little if any information is available on costs of truck hauling. The model described in this chapter organizes and integrates information from these studies, guessimates obtained from people with Nigerian experience, and data taken from a survey to estimate the costs of alternative transportation methods. In this framework, policy makers can identify major cost categories within each method, compare the same cost item among methods, and compare total cost differences among the various methods. The model gives the costs of these transportation alternatives on various routes enabling the user of the model component to identify differences in costs of transportation methods on different kinds of routes. For example, the comparative advantage of certain transportation 36 e __._...I “Pr‘ .1" n alternatives areas as cor: The res highly accur Ships must b information best availab. I {Immork Sh: Petrfornance . The TRN animal (in g areas f0r U] are 5' 37 alternatives may be different for routes going through tsetse infested areas as compared to routes in fly free regions. The results of this model component should not be considered highly accurate; more research on the various parameters and relation- ships must be done to attain higher levels of accuracy. However, the information used to estimate the parameters and relationships was the best available. Organizing this information into an integrated framework should help in the policy process that seeks to improve the performance of the Nigerian beef distribution system. The Model Framework The TRNSCST model is constructed so that the transport cost per animal (in £'s per animal) is calculated between each pair of the 15 areas for three different methods of shipment. The 15 areas chosen are shown in Figure 10. The 13 areas in the northern section of Nigeria correspond to the former provinces of the former northern region as follows. Areas 1, 2, 3, 6, 7, 8, 11, and 12 respectively have the same boundaries as the former provinces of Sokoto, Katsina, Kano, Niger, Zaria, Bauchi, Plateau, and Benue. Areas 4 and 5 divide the former province of Bornu. Area 9 combines the former province of Adamawa and the lower sector of the former Sardauna province, while the upper part of the former Sardauna province is designated as area 13 for this study. Area 10 is the combination of the former provinces of Ilorin and Kabba. Area 14 is the Western state plus 1/2 of the Mid-Western state. Area 15 is made up of 1/2 of the Mid-Western state plus all of the former Eastern region. Central locations within these any aenuz JHSNZ ‘ fililflafll‘ eunfimbzx «N» seamen ‘ A I b .4 V‘AH .li. I‘I\|III 38 Assam many ma non: ofiuoqu mo moou< woumamumoo ”0H ouowam couuoooa . . .33qu ouovoz ‘ on: :3. xiii... «unease nowuvoson moH< IIIIIIIII «spasm: aaeeaH Amav mszmm 0 mac» 8.3 253.: 3.3 9mg nauoHH A8 32:3 :3 mafia“ . mow mama: was: , 0 § . Andy < Hsm eHeunu no :seeaczsna 1 ...:Ls ..m III-ll A. ..VIHHN we ~14 ENE 52 owm>Hmm umnu awesome H on» so mHmaHom onu Co NC wouuomou .Hm um onmnuoz .mmoum vuumomoH omuomu oH muHHE CCH non NC.H Com mmoum moan omuomu om mmHHa CCN you NH on CHaos moHom .mmm>Hmm you CHom ouoz AmoHHE CCCC omvmnH ou comm aoum xmuu .mnmv 3mm w you mmoum CmumoCoH omuomu swooueu uoHo>muu o>mn oHuumo on» “mums mHuomovoum umoa nuoooo mmoH owm>Hmm “ouoz .eon .a .eeon .noaanao .uuomxomum .mHuosz anosuuoz oH NMumoon one: was oHuumC may ..Hm um .osmnuoz "mousom III mH. CCC. mHC. NMC. .mmC. m«C. N«C. NNC. .«CC. CC. NCC. CCC. «CC. CNC. CH III mH. H. CCC. «HC. H. NNC. N«C. «CC. CC. CCC. NCC. CC. «C. «H III CCC. mmC. HH. HHC. MC. CCC. HH. mmC. HC. m«C. HCC. NCC. mH III CHC. mNC. CMC. mNC. CCC. CCC. NC. m«C. «C. C«C. mmC. NH III CC. mmo. HC. «C. m«C. «NC. mC. NNC. CNC. HCC. HH III .mH. «CC. «CC. HNC. N«C. CCC. mmC. NMC. NNC. CH III HC. «CC. CNC. NHC. HC. CNC. CCC. C«C. C III mC. C«C. HC. CHC. NHC. NC. CNC. C III «HC. NHC. NNC. CCC. HC. NHC. N III «NC. «mo. NHC. CNC. NmC. C III HC. NCC. HC. NHC. C III NHC. NNC. mo. « III moo. NHC. m III CCC. N III H CH «H CH NH HH CH C C N C m « m N H AAH.HC mmv mmou< ooosuom wowm>Hmm oHuumC mo oOHuuomoum "«IHHH oHCmH | This I tion of ea: along the 1 In hi: mortality - percentage Percentage desrinacio Shrinka-e \L 37 CS ( 53 This mortality factor represents the average attributable propor- tion of each animal in losses due to mortality, thefts, and escapes along the trek routes. In his analysis of 25 different trek routes, Hunger found that mortality percentage was about one-third as high as the salvage percentage {12}. To obtain the cost of these losses, the mortality percentage is multiplied by the price of animals in the market of destination. Shrinkage Losses 37 CS (I,J) . .025 x‘WM (I,J)/100. x CLC x PM (J) x CW4+ .5 x (.025 X WM (I,J)/100. x WA - .025 x WM (I,J)/100 x CLC x CW) x PPS x PM (J) 38 RCS (I,J) - .025 x WM (I,J)/100. x CLC x PM (I) x CW + .5 x (.025 x WM (I,J)/100. x'WA - .025 x WM (I,J) [100. x CLC x CW ) x PPS x PM (I) CS (I,J), RCS (I,J) - Shrinkage costs from trekking cattle from area I to area J and area J to area I respectively in pence per animal. Information on live weight shrinkage of trade cattle during trek- king time was taken from four different sources. Werhahn quotes live weight losses on trade cattle of 12.52 for treks from Kano to Ibadan and 10% for Kano to Ilorin {35,p.231}. Godrey, e£_gl. report losses on 600 pound cattle of 13% from Jibiya to Ibadan {9,p.260}. Unsworth and Birkett report losses of 13 kg. on cattle trekked from Kano to Ilorin but amazingly never reported the initial live weights {33}. Jones-Davies reported 10% live weight loss of 450 pound young cattle for a trek from Jibiya to Ibadan {18}. Taking these observations and mileages between points, it appears that live weight shrinkage on treks is approximately 2.5% per 100 miles. .,_- I II The than car equation: Capital . 39 CI 42 54 The live weight shrinkage was converted to carcass and items other than carcass shrinkage in the same manner as outlined in the shrinkage equations for truck transportation. Capital Costs 39 CI (I,J) - ((PA (J) x RI x 240.)/365.)::((WM (I,J)/MWD) + 4.) 40 RCI (I,J) - (CPA (I) x RI x 240.)/365.)x ((WM (I,J)/MWD) + 4.) CI (I,J), RCI (I,J) - cost of capital embodied in the cattle as they walk from area I to area J and J to I respectively. where: RI - rate of interest The calculation of the capital costs is based upon the market value of the animal in the destination market and an interest rate of 10%. The daily interest charge (PA (J) x RI/365.) is multiplied by the trek time plus time in market before sale (four days) to arrive at the total cost of capital. Total Transportation Charge for Trek 41 TWDC (I,J) - (DF (I,J) + CM (I,J) + PM «I so (I,J) + cs (I,J) + C1 (I,J) + wsr (I,J) + TCT + MC (I,J))/240. 42 RTWDC (I,J) a (DP (I,J) + CM (I,J) + PM + SCR (I,J) + RCS (I,J) + RCI (I,J) + wsr (I,J) + TCT + RMC (I,J))/240. TWDC (I,J),RTWDC (I,J) - Total cost for on hoof transportation in 5's per animal from area I to J and J to I respectively. r we ' a .b 'O' '._ WS] I? T( Eq: trekkin‘ In 55 WSF (I,J) a water and supplementary feeding expenses. Costs must be calculated for maintenance feeding and watering for a part of the trek routes during the dry season. The costs calculated and method used are shown in Table III-5. FM - Marketing fee for cattle at the destination market which is about 24 pence per animal. TCT - Trade cattle tax. This tax which amounts to 72 pence per animal is imposed on all trade cattle. Equations 41 and 42 simply add the separate costs involved in trekking the cattle between all combinations of the 15 areas. Cost Structure for Trekking Animals with a Trypanosomiasis Control Campaign Instituted As discussed in the previous chapter, the tsetse induced disease of trypanosomiasis accounts for large mortality, salvage, and shrinkage losses in cattle that are walked through the tsetse infected areas. A vaccination campaign aimed at trade cattle moving through tsetse infested areas is being contemplated at the present time in Nigeria. Therefore, an attempt is made in this study to estimate the costs involved in trekking the cattle with the aid of prophylactic treatment against trypanosomiasis. From the set of equations 31 - 42, only 33 - 38 are affected by a vaccination campaign. The set of equations listed below replace 33 - 38. I 331 SC (I,J) = .5 x SF (I,J) x (PA (J) - .33 x PA (J)) x 240. aafi.thm3v HQEHZ< CO; 00:63 :H tumCU wthQCk ALZUZQSQHQQJC DC: #1.. .. [II]. n I93] -~.o‘~.~se ufllHNN UN A-Nh 56 “on new mom Cocoa a awesome H .umuC oHoga one uo>o oCuuo>w ow .Huusxmz mo nuooo moHHa CC uoHom a co oHCOHH souw sauna ooHH a mo canon ouaou xouu ago no open omen hHoo you .HnaHoo .oommom Nuv any CoHuov mousou xmuu osu mo when a you CoHuouos.voo CoHvoom you commono no; new you HmaHom you Cocoa CH uoono vouaoHvoH mousou xouu uoouowuHC CN mo mHnNHmou m.uowo=m "ouoz .umHuomooos woanHComo: .mousom sons «0 No>uom .HNHC .noHuCoHum .uowoom ”mousom III CNC CNN «C ««H CCC NCN NCN CCC H«« HCC NCC CHM NCC CC« CH WIII ‘noo ooe nan o eon oon Non and non nnm one nan mnn en III C«N CNN CCC CN CCH HNC CCC NN« mm CCC HNC CCC CH III NHH CC« CNN CCH CCC CC« CHm HCC CCN NCC CN« NH III CNC NCN CN NCN CCC NCN C«N NNH N«N CCC HH III «CC ICmm NCN NHH CCC CHC CNN NNN CNN CH III CCH CCC CC« C«N CCH HHC CCC CC« C III CCH CCN CCH CCH HCH NCN C«C C III om NCH CCC CN CCH C«N N III C«N «mm CCH CNN CNN C III CCH Cm CCH C«N C III C«N CCC CH« « III on HNH .n III CHH N III H CH «H CH NH HH CH C C N C C « m N H AAC.HVCCSV Hmqu< Com oooom oH mumoo CoHCoom mumuooaoHomoC Com noun: "CIHHH mHAmH ’ -w- In I Stitut inf QC! HQ talit) estimé estizg 57 341 SCR (I,J) = .5 x SF (I,J) x (PA.(I) - .33 x PA.(I)) x 240. 351 MC (I,J) - .5 x .33 x SF (I,J) x PA (J) x 240. 361 RMC (I,J) - .5 x .33 x SF (I,J) x PA (I) x 240. 371 CS (I,J) - VSF (I,J) x CLC x CW x PM (J) + .5 x (VSF (I,J) x WA-VSF (I,J) xCLCxCWxPPSxPM (J) +VF+ VML x PM (J). 381 RCS (I,J) - VSF (I,J) x CLC x CW x PM (I) +..5 x (VSF (I,J) x WA - VSF (I,J) x CLC x CW) x PPS x PM (I) + VF + VML x PM (I). The TRNSCST model is constructed so that these equations are sub- stituted for equations 33 - 38 only if the route crosses tsetse infected areas. Equations 331, 341, 351, and 361 estimate the salvage and mor- tality losses incurred if the cattle are vaccinated to be 1/2 of the losses of cattle that are not vaccinated. This is only a rough estimate. No good information based on large samples is available to estimate the improvement in death and salvage losses from a vaccination program. Shrinkage loss is represented by equations 371 and 381. Some researchers have reported weight gains in cattle trekked southward that have been vaccinated. However, here again, only a few studies have been conducted so no consistent data is available. Essentially, the estimated percent shrinkage of cattle destined for tsetse infested areas was set equal to the shrinkage incurred before the tsetse infested area was reached. The values estimated from equations 331, 341, 351, 361, 371, and 381 are used in equations 41 and 42 to estimate the total distribution costs for trekking cattle that have been treated against trypanosomiasis. 58 Cost Structure for Shipment of Live Animals by Rail I The costs involved in railing live animals fall into seven cate- gories. They are freight costs, attendant charges, shrinkage, death loss, trade cattle tax, and marketing fee. The following set of equa- tions are used to calculate these costs for all available rail routes between the 13 areas served by the Nigerian railroad. 51 AC (I,J) = .221 x RM (I,J) 52 Dv - (TAT (I,J) - 2.)/2. 53 DR 3 AMAX l (1., DV) 54 LWS - TABEXE (VAL, SMALL, DIFF, KF, DR) 55 BBC (I,J) - LWS x CLC x PM (J) x CWI+ .5 x (LWS x‘WA - LWS x CLC x CW) x PPS x PM (J) 56 RRSC (I,J) 8 LWS x CLC x PM.(I) x CW +'.5 x (LWS x WA.- LWS x CLC 3: CW) x PPS 1: PM (I) 57 DLR (I,J) . SDL x DR/Z. x PA (J) x 240. + SSP x DR/Z. x (PA (J) - .33 x PA (J))): 240. 58 ‘RDLR (I,J) - SDL x DR/2. x PA (I) x 240. + SSP x DR/2. xCPA (I) - .33 x PA (I)) x 240. 59 TRDC (I,J) - (RC (I,J) + AC (I,J) + RSC (I,J) + DLR (I,J) + TCT + FM)/240. 60 RTRDC (I,J) - (RC (I,J) + AC (I,J) + RRSC (I,J) + RDLR (I,J) - + TCT + FM)/240. Attendant Costs 51 AC (I,J) - .221 x RM (I,J) where: AC (I,J) - Attendant charges per animal in pence. RM (I,J) - Rail mileage between area I and area J. See Table III-6 for these values. 1'." I I'll-I me eH S N n n n -.o.n--III .o m N e m e NIJIIIMIIIIIIIIIII‘ fill!!! It‘ll“ 25.: 5: page. cesarean newsman: 3...: ..olwnw oases .‘n LE Iki'l u 59 .vmouHHou ooHuoCHz onu an Co>uom no: and CH can a mwou< "ouoz .C vaoomq< .oHuoCHz .moCmH .NuumsvoH Com wouosaou mo muumHon Hmuovom one you ooHuosuomoH Co NCuMHon Houovom .mHumez oH mumoo uouuusu ou mvHau < I ooHuwuuomwowua “mousom CNN CC« CNC C«C CCC CCC CCN CCC C«C CCC CCC CCN CNC CCH CNN C«C CC« CCN CNCH C«C CCC CCC III CCN CCC CNC CCC CCC CCC CCC CN« CNC C«« III CC« CCH CNN CNN CC« CCC CCC CCN CNC III CCC CNC CNN CCC C«C CC« CN« CC« C III CCC CCC CCC CCN CC« CNC CC« C III CCH CCN CNC CC on CHH N III CCC CNC C«N CCN CCN C III CCC C«H CNN C«C C III CCC CCC CCN « III CCH CCH C III mm N 3.35 I- H CH NH HH CH C N C C « C N H AAC.HV zmv mmou< coosuon oCmoHHz HHmC CIHHH GHCQH 60 This equation estimates the costs of hiring attendants to accompany the cattle being transported by rail. The data reported in Werhahn, ‘e£_3l. indicates that this charge in pence is about .221 times the mileage between loading and destination {35,p.l68}. Shrinkage Costs 52 DV = (TAT (I,J) - 2.)/2. 53 DR - AMAXI (1., DV) 54 LWS - TABEXE (VAL, SMALL, DIFF, KR, DR) 55 RSC (I,J) ' LWS x CLC x PM (J) x CW +1.5 x (LWS x WA - LWS x CLC x CW) x PPS x PM (J) 56 'RRSC (I,J) = LWS x CLC x PM (I) x CWI+ .5 x (LWS x WA - LWS x CLC x CW) x PPS x PM (I) DV 8 time the cattle are on the rail cars in days TAT (I,J) - turn around time for one rail car between points I and J AMAXI (1,, DV) = a fortran function that choses the maximum value of its arguments (1 or DV) and sets DR equal to that value. LWS = live weight shrinkage TABEXE - a simulation sub-program which approximates functional relationships by straight line segments. In this instance, TABEXE approximates the percentage of live weight shrinkage that corresponds to the number of days in transit (DR). RSC (I,J), RRSC (I,J) - shrinkage costs incurred by moving cattle by rail from area I to area J and area J to area I respectively. Equations 52 and 53 estimate the number of days the cattle will be on the train when being shipped between two areas. The turn around 61 time for one rail car between two areas (TAT (I,J)) was estimated by checking the schedule of trains established by the Nigerian Railway Corporation {13,Annex Table 6}. This turn around time is defined as the number of days it takes a rail wagon to go from area I to area J and back ready to depart again from area I. Table III—7 gives these values. Equation 54 estimates the percent of live weight shrinkage that corresponds to the number of days the cattle are on the rail car. The particular functional relationship is shown in Figure 11. Equations 55 and 56 transform the live weight shrinkage to carcass weight shrinkage and shrinkage of consumed items not in the carcass. This is done in the same manner as described in the truck shrinkage section. Mortality and Salvage Costs 57 DLR (I,J) . SDL x DR/2. x PA (J) x 240. + SSP x DR/2. x (PA (J) - .33 x PA.(J)) x 240. 58 RDLR (I,J) = SDL x DR/2. x PA (I) x 240. + SSP x DR/2. x (PA (I) - .33 x PA (I)) x 240. DLR (I,J), RDLR (I,J) = Death and salvage costs incurred by railing cattle from area I to area J and area J to area I respectively. SDL = Standard death loss expressed as percentage that die on the trip by rail from Kano to Lagos. Werhahn, e£_gl. report that on this route .07 percent of the cattle died in transit from 1960 to 1962. An additional .4Z had to be salvaged{35,p.172}. SSP = Standard salvage percentage. 62 .C oHCmH xoood .CCCH .uooam0H0>mC Coo ooHuosuumoooom Now xomm HmCOHumououoH I uuommomus > osoHo> amuoommoum Com mEoHCoum NmHuomwz mo ausouw oHaoooom Noouoom III nN m.n m NN e o n on o m.o m.m o III NN m.N n o m.m e N NN e N m.N III e N m m o n n m e N III e N e m o o e e o III m.N m e o m.m m o N II n III m o N m.e m o N o III n e N N N N N III e n e e e e III on N e o m III n N on e IIL N e n III N N III N mN eN nN NN NH oH o n N o m e n N N NNo.NC None Anna oN onmo Nnae Now many oooon< anon “NINNN annea 63 Equations 57 and 58 estimate the costs of death and salvage losses incurred by transporting cattle by rail. The percentage that die or are salvaged is estimated as a proportion of the death and salvage losses on the Kano to Lagos route for which some information was available. The mortality loss was valued at the price of the animal at the destination market while salvage losses were valued at 2/3 the price in the destination market. This assumes that the salvaged animals are sold at 1/3 the destination market price. Total Transportation Costs for Moving Live Cattle by Rail 59 TRDC (I,J) = (RC (I,J) + AC (I,J) + RSC (I,J) + DLR (I,J) + TCT + FM) /240. 60 RTRDC (I,J) = (RC (I,J) + AC (I,J) + RRSC (I,J) + RDLR (I,J) + TCT + FM)/240. TRDC (I,J),RTRDC (I,J) a Total transport costs for moving cattle by rail from area I to area J and J to I respec- tively in L's per animal. RC (I,J) = Rail freight cost in pence per animal. These rates were taken from Werhahn.g§;§gr {35} and materials prepared for me by Dr. Zook, adviser (at that time) to the Nigerian Federal Ministry of Commerce and Industry. See Table III-8 for these costs. TCT = Trade cattle tax. This tax amounts to 72 pence per animal. FM 3 Marketing fee payable to the destination market owners. It amounts to 24 pence per animal. Equations 59 and 60 calculate the total cost of transporting cattle by rail between all 2 area combinations of the 13 areas served by the railroad. 64 .oCmoHHE o£u NC C¢HCH>HC Coo mmuou osoox Conou ho Co>HNmC mma CH.H any .oCmoHHa moEHu CH.H um wouoHsono mums moooouowou o>ono osu oH oo>HC uoo mound "ouoz .muumsvoH Coo oouoaaoo Co NNNmHoHZ Houovom oH ummH>Co .xOON .NC suHs ooHumoHosano Hmoomuom .CCH .n ..uNo .oo .onmcumz “mouoom eoN on neo . ono ono ooo ooo oNo NnN emN ooN Noo ooN NoN . oNo ono ooe ooo eNNN NnN ooN ooN III moN ooo oon oon Nne eeo Noo noe Nne oom III eom mNN nmN NNn on eNe men ooN eNn III Noo oNe nmN ooo ooo onm oem Nmm o III men eNe ono ooN ooe oNe oom o III nNN eoN omo eoN no NNN N III Nne nNN oNN noN ooN o III mnoN NoN NNn Non m III ooN oNN moo e III ooN eNN n III no N III N nN NN NN oN o o N o o e n N N NNo.Nvooo NosNoo oom oocoo eN ooooo eeooNNn NNoo "oINNN oNooN 65 Meat Shipment The shipment of frozen meat from the north to southern urban areas is considered in this study for three reasons. First, it is being done on a small scale at the present time. Secondly, there are abattoirs in the north equipped to do this that are operating at capaCities well below their designed output. (See Figure 10 for their locations.) Thirdly, this form of beef distribution is being considered as a viable policy alternative for improving the system’s performance. The two alternatives for distributing frozen meat considered in this study are by (1) refrigerated truck and (2) refrigerated rail cars. Both methods involve picking up frozen carcasses and offal at the abattoir cold store in the north and transporting them to the cold stores in the southern urban areas of Ibadan, Lagos, Umuahia and Port Harcourt. Obviously the total demand in the southern areas cannot be satisfied by frozen meat shipment alone as the presence of cold stores and retail refrigeration units are practically non- existent in areas outside the main urban centers. Cost Structure for Shipment of Carcasses by Refrigepated Truck The main cost categories for carcass transport by refrigerated truck are (l) freight costs, (2) marketing costs, (3) offal freight costs, and (4) shrinkage. The freight costs are taken from a study by Werhahn on meat dis- tribution in Nigeria {36}. They estimated these costs to be 3d/carcass lb on a 740 mile trip with .43d/carcass 1b added for chilling and loading costs. 66 The marketing charge of 48 pence/carcass covers middleman fees and handling at destination points. The offal shipment is assumed to weigh 12% of the carcass or 52 pounds. The cost of transporting this is the same per pound as for carcasses. Werhahn estimated that frozen meat transport shrinkage amounted to about 3% of the carcass weight for a 740 mile trip. The pounds shrunk were valued at meat prices in the destination market. The freight and shrinkage costs were assumed proportional to mileage for the twelve routes over which meat is allowed to travel. Table III-9 gives these routes and the calculated costs per carcass on each fortransportby refrigerated truck. Cost Structure for Shipment of Carcasses by Refrigerated Rail Cars The cost categories for carcass shipment by refrigerated rail cars are the same as for truck shipment--freight costs, marketing charges, offal freight costs, and shrinkage loss. Interviews with two commercial companies in Lagos that transport carcasses in refrigerated rail cars indicated that the freight charge was about 5 pence per ten miles for wagons that were loaded to 2/3 capacity. The offal weight was charged 5 pence per ten miles also. The marketing charge was assumed to be 48 pence per carcass--the same as for refrigerated truck transportation. Shrinkage was assumed to be 3% of the carcass weight for a 740 mile trip as reported in Werhahn {36}. The total pounds lost were multiplied by the price of meat in the destination market to arrive at the cost of shrinkage. Table III-9: 67 Cost of Shipping Frozen Carcasses ROUTE Sokoto to the West Sokoto to the East Kano to the West Kano to the East Maiduguri to the West Maiduguri to the East Nguru to the West Nguru to the East Bauchi to the West Bauchi to the East Kaduna to the West Kaduna to the East Trucks 7.63 7.78 6.40 6.40 9.50 7.63 7.88 8.20 7.00 5.00 5.70 5.80 METHOD Refrigerated [Refrigerated 7 Rail Car (L's per Carcass) 3.86 3.86 6.00 4.80 4.80 4.80 4.80 3.25 3.10 3.15 68 Table III-9 compares the cost of transporting carcasses by these two methods. It shows clearly that refrigerated rail shipment is less expensive than refrigerated truck hauling. This is primarily due to the cheaper freight costs for rail shipment. Costs of ShippingpLive Cattle in Nigeria - Results Truck Shipment By far the most important categories of truck shipment are shrinkage costs and freight charges (see Tables III-10 to III-17). A major cause of high freight charges is the frequent occurrence of accidents. Some of the major factors causing these accidents are: heavy traffic on relatively poor roads, poor mechanical condition of the lorries, overloading the trucks, and driver stress from driving too long without rest. As a result, the freight Charge per animal for lorry transportation is over twice the charge for rail hauling. The survey of truck transportation costs made for this study indicated that the hauling time for lorries was not significantly different than the time for rail hauling between areas served by the railway. ‘For example, the drivers interviewed in the survey indicated that it took them 3.5 days to drive from Kano or Katsina to Lagos. This is approximately the same time it takes a rail car to travel the same distance. Compared to developed country standards this time seems linduly long for either method. Apparently, no feed or water was given tflne animals on the 3 to 4 day trips from Katsina and Kano to Lagos. 17113 long transit time with no feed or water is largely responsible f'Or'the high weight losses incurred. Over 1/2 of the drivers surveyed 69 o OOH C«.CC Hones oo.OOH oC.NC Hones oo.oOH oo.nNC Noooa C.HH NH.H umoo comm Coo Noam: N.« C«. mumoo umououoH H.N CN. 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Cocoa Coom N.N CC. uwoo ucmwoouu¢ C.NH CC.H oom m.Nm>oNC C.CC CN.C mumoo unCHon C.CC CN.N mumou ueCHon C.C C«. momooaxo Honuo C.« C«. momooaxo nonuo N.C C«. momoomxo wonuo N.Ne oN.n oooo oooxeNoeo o.Ne oo.e Coco oooaoNneo N.en nN.e oooo oooonneo N.HH CC. umoo oCm>Hmm C.C ««. umoo CuHkuNoz C.H CH. umoo CuHHmuNoz C.« «C. mumoo NuHHmuNoz Hmuoy BOUNC muowmumo Hmuos soo\m Cuowoumu Houoa 300\m Nuowoumo Co N umou Co N umoC no N umoo mez HNmC . xosua umoz mnu cu Ouoxom Bouu oHuumo CoHuNomwcmNH Co wumoo uCHIHHH UHCQB 70 C.CCH CC.HHm Hmuoa C.CCH HC.CHC F, Houoa C.CCH HC.CHC Hmuoe C.CH CC.H umoo Comm C mono: N.« CC. umoo amououoH C.N «N. Cocoa Coon «.N «N. umoo unaccouu< o.NN oe.N moo o.no>ooo o.on no.n ooooo neoNoNN N.No mN.oN ouooo DeoNoNo «.C C«. mooooaxo nonuo C.« C«. momoonxo nonuo «.N C«. momooaxo nonuo o.oe om.o oooou oooaoNneo N.oe no.e ooou oooonNoo o.on oo.m ouoou oooaoNueo N.NH C«.H mumoo oCo>Hom H.C NN. mumoo CNHHouuoz H.N HN. umoo CNHHmuNoz C.« HC. mumoo CuHHouuoz Hooch BOUNC mumwouou Hmuoa soo\m —1 Chowoumo Houoa soo\m Nuowoumo «0 N umoo mo N umoo «0 N umou xNos NNoo scone ummm one ou canon Baum oHuuoC CoHuNommomua mo mumoo "CHIHHH oHomH C.CCH «H.CHC HmuoH C.CCH CC.HHm Hmuow C.CCH CC.CHC Hmuoa H.«H «H.N umoo Comm C noum3 C.« CC. umoo umououoH N.N «C. Cocos coon H.C «C. mumoo oomCoouu< H.CH CC.H oom m.uo>oNC N.«« CH.C mumou DCCHCNC C.CC CC.CH mumoo ucwHon C.N C«. mmmomaxo N0£uC C.C C«. momooaxo nozuo C.N C«. momoomxo nosuo o.oe on.N Dooo oooaeNNoo o.Ne eo.e noon mooaoNNeo N.oN oo.m nooo oooaoNneo C.CH HC.H umoo owo>me N.C CN. uwoo NuHHmuNoz N.N CN. umoo CuHHouNoz C.C CC. numoo NuHHmuuoz Hmuoa soUNC Nuomwwmo Houoe soo\m mwowoumo Hmuoa 300\C mquwwmu Co N umoo «0 N umou C0 N umoo mez HHmm Josue onus ago on souom scum oHuumC CoHuuonmomuH «0 ounce ”NHIHHH oHooH 71 C.CCH NC.«C Houoe C.CCH HC.CC Hmuos C.CCH CN.NC, HmNOH C.HN CC.H umoo comm C noumz N.C NH. umoo umououoH C.C «H. Cocoa coom C.C HC. mumoo unaccouu< H.NH CN. oom m.uo>oua C.C« NH.C mumoo unCHon H.«C NC.« muwoo ufiCHon N.C C«. monommxm Hosuo C.C C«. momoonxo Honuo C.C C«. momooaxo nosuo m.on oN.N ouooo oooaoNneo N.on no.N ooooo oooaoNueo m.NN no.N ouooo oooonueo C.C CN. mumoo oCu>HmC e.N NN. ooooo NuNNoonoz e.N oN. ouooo NoNNooooz o.N NN. ooooo NoNNooNoz HouoH soUNC mmmwwNmC HmuoH soUNC NMwauoC Hmuoe soUNC mwowmwou no N umoC Co N umoo «o N umou mez HHom Noose oooM ou Huswochz scum oHuuoo CoHuuommooNH mo umoo "CHIHHH oHCmH C.CCH CN.CC Houos C.CCH CN.NC Hmuoa C.CCH CC.HHC HmNOH C.CH CC. umoo comm C noun: «.« CC. umoo umououoH C.H CH. Coco: coom C.C CC. mumoo oomcoouu< C.HH NC. oom m.uo>oun C.CC CC.N wumou uanon C.CC NC.C mumoo uszon C.« C«. monommxo nonuo C.C C«. mmwoomxo Honuo «.C C«. momoomxo nonoo N.oe mo.n ooooo oooaoNNoo e.oe on.n ooooo oooonNeo N.on oN.e oooou oooaoNneo C.CH CH.H umou oCm>Hmw N.C CC. mumoo NuHHMuuoz N.H NH. mumoo CuHHmNuoz C.« CC. mumoo CNHHMNNoZ HmuoaA soUNC Nuowmumo HmuOH soo\m Cuowmuwo Hmuoe soUNC Nuowouoo C0 N umoo C0 N umou «0 N umou mez HHom sonny umwm may ou Hnoamm Baum oHuumo CoNuuoamoouH Co muoou N«HIHHH oHowH 72 C.CCH N«.CC Houoe C.CCH CN.CC HouoH C.CCH CC.CC Houoe N.CN CN. umoo comm coo Nouoz N.C CH. umoo uomumuoH C.N CC. Cocoa coom C.C HN. mumoo uoocoouu< C.CH «C. oom m.uo>ouo C.CN CH.H mumoo uawHon H.CC CC.C oumoo uanoum C.HH C«. momoooxo nosuo N.CH C«. monomaxo nosuo C.C C«. momomaxo nonuo C.CC CC.H uoom owoonunm C.CC CC.N uooo oCoonunm C.«C NC.N umom mwoonuem C.« NH. umoo oCo>HoC C.N CC. oumom NoHHouNoz H.H «C. mumom CuHHmuuoz C.C CH. momoo CuHHouNoz IHmuoa soo\m NdeouoC Hooch somNC NumCWumu Houoa soUNm Cwowouoo mo N umoC mo N umoo II no N umoo mes HHmC xmoue mHNoN ou suswz aoum mHuuoC CoHuuoCmooNH mo umou "NHIHHH mHCoH o.ooN oN.oo Nooon o.ooN oo.mo Noooo o.ooN NN.oNo Nounm. C.CH CC.H umoo comm C noumz C.« NN. mumom umoumuoH N.N «H. Cocoa coom C.C CC. mumoo woocoouu< C.NH HC. oom m.No>0NC C.CC NC.H muooo unCHoum C.NC CH.C mumoo ueCHmum «.C C«. mmmooaxo umsuo .C.C C«. ommoonxo nonuo N.C C«. momoomxm nonuo N.oe oo.N ooooo oooooNnoo m.em NN.n ouooo oooaoNNeo e.en oo.n ouooo mooaoNneo H.C HC. mumom oCo>HmC N.e oN. oooou NoNNoouoz N.N NN. oooou NoNNoouoz N.e ee. ouoou NuNNoonoz Houoa som\m Nuowouoo Houoa soUNC Cwowoooo Houoa soo\m Cummwuoo mo N umoo «o N umoo no N umoo xHoz HHom xooua uoCHz ou :NoCz aouw mHuuoC CoHuNoCmoouH mo umoo “oNINNN oNous 73 indicated that the cattle they were hauling showed severe road stress on the trips from Kano and Katsina to Ibadan or Lagos. The detailed results of this survey are given in Appendix I. Rail Shipment Eighty-five percent of the total cost of shipping cattle by rail is accounted for by shrinking and freight charges. (See Tables III-10 to III-l7). Again, the large shrinkage costs occur because cattle are often railed 3 to 4 days with no feed or water. Additionally, the excitement and unfamiliar surroundings of rail transport causes heavy losses in the loading and unloading phases. Due to the excess demand for rail cars, cattle may have to wait at rail points for several days prior to loading. These waiting areas are heavily grazed around the rail heads. Therefore, weight losses probably start even before the cattle are loaded on the rail cars. As shown in Figure 11, the shrinkage percent increases rapidly from assembly at the rail points through the second day of travel and levels off for subsequent days. This is part of the reason why rail service becomes more attractive relative to trekking as the distance of transit increases. As beef production methods improve, market cattle will probably be younger and exhibit a higher degree of finish than the cattle now marketed. Walking these higher quality cattle 600 - 1000 miles to Inarket seems unreasonable. Therefore, rail and truck hauling will I>robably become more important relative to trekking. However, n"Drtality and shrinkage losses account for approximately 40 percent ‘31? the total transport costs for both rail and truck shipment on 74 important market routes (see Tables III-10 to III-l6). If these methods of transport are to be improved to provide some incentive to produce higher quality cattle, death and shrinkage losses must be reduced. This involves both a reduction of transit times and provision of food and water on long hauls. This entails building more and better roads for truck hauling and improving the efficiency of rail service. Both of these actions will require large investments but would provide benefits to other industries as well as beef. Trekking The important cost categories for trekking are shrinkage losses, drovers' fees, salvage losses and feed costs. The large shrinkage and salvage losses (which account for approximately 58 percent of the total transport cost) are apparently due to a great extent to the trypanosomiasis disease contacted as the cattle walk through the tsetse belt. Trials have been conducted with vaccinations for the tryps. disease in which the cattle lost no weight at all on treks to the southern areas {33}. Policies aimed at improving trek movement of cattle will logically involve a form of trypanosomiasis control and provision of feed and water along portions of the trek routes. Mor- tality losses are relatively low due in great part to experienced drovers that sell the diseased cattle before death. _§pmparison Of The Livestock Transport Methods One of the obvious results of this comparative study is that tiruck transportation is significantly more expensive than rail hauling <31? trekking. This is reflected in the present situation in which the number of cattle transported by lorry is significantly less than the LIN—Id number cars, t reactic Additic cannot reason In tageous through or less in Figu lOSSes while t" I 75 number hauled by rail or walked. However, due to the shortage of rail cars, truck hauling is the only method northern cattle dealers have of reaction quickly to favorable price conditions in the southern market. Additionally, lorry shipment is used for higher quality cattle that cannot economically withstand the rigors of trekking and for some reason are not able to get rail permits. In general, the longer the transporting distance, the more advan- tageous rail hauling becomes, especially if transit is necessary through tsetse infested areas. However, for distances of 250 miles or less in tsetse free areas, trekking is cheaper than rail as shown in Figure 12. This is primarily because shrinkage, salvage, and death losses increase proportionately more with distance increases on treks, while they increase proportionately less for rail transport. There- fore, the most efficient method of shipment from northern producing regions to southern consumer regions is generally by rail. Two policy implications are apparent here. First, improvement in shrinkage losses on rail hauling would further reduce the costs of hauling by this most efficient method. If this was accomplished, the demand for rail shipment would increase. Since the number of rail cars are inadequate to fulfill the demand at the present time, the number of livestock cars furnished by the rail lines would have to be increased to take advantage of any policy that would reduce rail shrinkage losses. However, not all major production regions are well served by the rail network. Areas 1, 9, and 13 (see Figure 10) are relatively :Lsolated from rail loading points. Therefore, the distance by rail to SOuthern areas is greater than the distance on more direct trek 76 1 Cost b/cow I .—-‘ .J l b _ J J l l l l L J 100 200 300 400 500 600 700 800 900 1000 miles trek costs - — - - rail costs Figure 12: Costs of Transporting a Cow Over Varying Distances by Trek and Rail routes from ar expensil trek [01 (See Tai In free re III-17) batWeen‘ Since ti Secondl) over dis C0: and wate adCQUate 77 routes making trekking more attractive. This is the case for shipment from area 1 to area 14. (See Table III-10.) Trekking is less expensive than rail shipment because the distance traveled on the trek route is approximately 200 miles less than by rail hauling. (See Tables 111-3 and III-6.) In general, trekking cattle between areas in the northern tsetse free regions is less costly than railing (See Tables III-15 and III-17). This is true for two reasons. First, trek route distances between northern areas are usually much shorter than railing distances since the rail system in Nigeria is oriented to north-south travel. Secondly, intsetse free areas, trek movement is cheaper than railing over distances of 250 miles or less. Considering these results, a policy of furnishing adequate feed and water on trek routes to major northern rail heads along with adequate numbers of rail cars for hauling cattle to the south would seem reasonable. Cost Reduction by Trypanosomiasis Control A policy run was conducted on this model component assuming that a trypanosomiasis control program was instituted for all cattle being trekked through tsetse infested areas. Tables III-18 and III-19 give the results of this run. The savings amount to about 40% based on the experiments done by Unsworth and Birkett {33}; Godrey, Ferguson, and Kendrick {9}, and Jones-Davies {18}. This treatment reduced the large losses of shrinkage, salvage, and death by slightly over one-half. However, the results of these experiments should not be taken as final. More research trials should be conducted using several alternative IRIS; ufl:~&u NIIN:G7;..:fi l — union: 3:“ Cu GEEK IN C232 LN|~C GuinewnoVNCVII . IIIIi'IIll Eouooum conozcmouo> mnoonsomOCCQNLh Esau manuozaox oumoo xosh NewINNN oases 78 o ooN oo.NNo NoooN o.ooN me.oo— Noooo o.ooN oo.No NoooN m.NN oo.N oooo oooo o ooooz o.NN NN.Nfiooo ooom o ooooz o.NN no. oooo ooom o ooooz N.« CC. umom umoumuoH N.« C«. umoo uooumuoH C.« NC. umom umououoH o.N eN. nose: oooo N.N oN. noses oooo N.N NN. noses econ C.HH C«.H oom o.No>oua C.NH CH.H oom o.Nm>ouC C.NH CC.H mow m.No>oNC «.C C«. monommxm Honuo N.« C«. momommxo nonuo C.C C«. momoomxm umsuo o.oe mm.m oooo oooaoNoeo o.oe ne.e oooo oooaeNoeo N.Ne oN.n oooo oooaaNoeo N.NN me.N oooo ooo>Noo o.NN eN.N oooo ooo>Noo N.NN oo. oooo ooo>Noo H.C NN. mumoo NuHHmuuoz C.C NC. mumom CNHHouNoz C.C ««. mumoo CuHHouuoz Hmuoa soUNC Nmmwouou Hmuoy soo\ Cuowuuoo Hooch zooxm Cmmwmumo «0 N umou «0 N uooC no N umoo ummm onu ou Huswochz umms mnw cu ooox ummz osu ou ouoxom aoNCoum oOHuooHoom> on :qu mumou xmua uCHIHHH mHnoH C.CCH CC.CC Houoa C.CCH CC.CCa HouoH C.CCH NC.CC Houoa H.CN CC.H umoo comm C nouoz. H.HN NH.H Tmom cmom C umumz C.CH CC. umom comm C nouoz N.N CC. umom ummuouoH C.N C«. umom umououoH «.N NC. umoo ummuouoH n.n eN. ooaoz oooo N.n oN. nose: oooo e.n NN. Nose: oooo H.CN C«.H mom m.Nm>oNC C.NN CH.H oom m.um>oNC C.CN CC.H moom m.No>oua N.C C«. momommxm Cosmo C.N C«. moooooxm umsuo C.C C«. momomaxm Nosuo N.eN NN.N oooo oooaeNoeo e.NN eN.N oooo oooonoeo o.oN om.N oooo oooNaNoeo C.CH CN. umoo oCm>HmC H.HH CC. umoo mCo>HmC C.C ««. uooo mCm>HoC N.m on. oooo ooNNooooz e.m oN. oooo ooNNooooz N.e NN. oooo ooNNooooz Hooch somNC Nuowoumo HouoH BOUNC .quwwNoo HouOH sooxm Numwmuoo «0 N uooo C0 N umoo C0 N omoo uwom mnu ou HuswscHoz uooz mnu ou ooox umoz may cu cuoxom aouwoum ooHuooHomm> mHmoHaomoooCNuH Scum CoHuHSoom oumou xous uCHIHHH mHan 7" a“ -—. .0 routes mature t routes. 0f cart It is i to reli As relative Charge 0 was cond rail Spe Speed re Shrinkag are 1/5 79 routes during different seasons. These trials should be done with mature trade cattle trekked at the usual speeds and weighed along the routes. To obtain statistically significant results, large numbers of cattle should be involved in both the treated and control groups. It is important that several trials be conducted as the use of drugs to relieve trypanosomiasis stress appears to have considerable promise. Cost Reductions by Increasing the Speed of Rail Service As previously indicated, shrinkage losses on rail transport are relatively high accounting for over 40 percent of the total transport charge on important market routes (see Table III-22). A policy run was conducted on the TRNSCST component to see what impact increased rail speed had on reducing shrinkage costs. Increasing the rail speed reduces turn around time between areas which in turn affects shrinkage in transit. The turn around times used in this experiment are 1/5 lower than the times thought to exist. Only turn around times to areas 14 and 15 were reduced in this trial. They are given in Table III-20. The results of this run are given in Table III-21. The decrease in the rail hauling time of 1/5 reduced shrinkage losses by about 10 percent from Sokoto and Kano to the West and_ Maiduguri to the eastern area. The total cost of rail transport was reduced by about 6.5 percent on these routes. The main reason these costs were not reduced further is that most live weight shrinkage on rail hauling occurs in the first day (see Figure 11). It would be interesting to estimate the cost savings if adequate feed and water were furnished at the rail heads as well as on the rail cars during o... N .NIN CHI!) N H N H e H C m N o n .\ Hervnvnuru H «a: HvoaigqurIvn-H A A... NV .~.<.~IV otK-vnu :N. IL :39 H ... 7.x Insvh Con: “.3 ~u-3aV-~< Nuke-.3 IIIIIIII ll. lllIl. "| N I]! .IACNIIN ~ N. ..v~ 2... ~. 80 .C oHCoH xmoo< .CCCH .uomaCOHo>mn com :OHumoNumoooom How xoom HooOHuooNouoH I uuomooouh > oaoHo> .muoommoum coo mEmHnoum NoHNomHz Co nusoNC oHBoooom “mousom II CH C « HH C.« C.C C.C .C C.N N N N CH II NN o n m..o m.e m.n o.m o m.e m.m o 3 CH II « N C C C C C C C N NH II C N « C C C « « C HH II C.N C « C C.C C C N CH C II C C N C.« C C N C II C « N N N N N II C C « « « C II CH N « C C II C C CH « II N « C II N N II H CH «H CH NH HH CH C N C C « C N H cmomm HHmm commoumcH NHC.HV HNoooPo NNo NNo NN3 NN3 NN.N NNN No No NNNN NNNN NNN NNN NNoo oNoz aoooo Noo; ooNo oaoaoNen omo: HouoH NomamNnC HoaHo< o>HH xmoumm>HH ooHuooCm ooN>Noo< Hmcoz aoumoum umooHH uomsmHLmoouH onu Co oHCBmxm ooHCmC 039 < "HI>H mHCoH 90 Activities As stated in the previous chapter, three alternatives for shipping live cattle are considered: truck hauling, trekking, and rail hauling. The cattle transfer cost (t for all i f j where i,j - 1,2 . . . . 15 ijn and n = 1,2,3) is taken from the TRNSCST model. Since areas 9 and 13 are not served by the Nigerian railway (see Figure 10), there are 54 fewer combinations possible for rail movement between areas. Two alternative methods of cold meat shipment (refrigerated truck and refrigerated rail cars) are included. Areas 14 and 15 are assumed to be the two most important areas relative to the demand for frozen meat. Further, it is assumed initially that the demand for "cold" and "hot" meat in these two areas is not competitive but independent. Later this assumption is eliminated in some cases. The modern slaughter houses that furnish the carcasses shipped to areas 14 and 15 are noted in Figure 10. The abattoirs in Kano, Maiduguri, Nguru, Zaria, and Bauchi are all served by the Nigerian railroad. Meat shipment from any of them to areas 14 and 15 may be by refrigerated rail car or refrigerated lorry. However, the abattoir at Sokoto is only allowed (in the model) to ship meat to areas 14 and 15 by refrigerated lorry since it is not a rail line. I Slaughter costs differ between the traditional open air slaughter slab and the relatively modern large scale abattoirs. The cost per head of traditional slaughter is estimated to be 51.40 {35,p.201 and 1,p.20} . Information on the cost of modern slaughter was obtained, from interviews with Mr. Fred Sicher of The Bauchi Meat Company and Mr. John Vines, Abattoir advisor for the Livestock and Meat Authority. An estimate of the costs of slaughter at various volumes of output was 91 not obtained. Most of the abattoirs were operating at very low capa- cities and information on the costs at full capacity was not available. However, the estimates of Vines and Sidher ranged from £2.60 to £3.00 per cow. £2.80 per cow is used in this study as the slaughter cost in these relatively large modern abattoirs. Equations The first set of constraints (1-2 in Table IV-l) assures that the number of cattle produced and consumed locally, plus the number slaughtered and shipped to other regions is equal to the total slaughter of that region. The second set of constraints or equations (3-4 in Table IV—l) are constructed so that no area can ship more cattle than are present in the area or are shipped into it. The entries in the matrix under the rail activities represent the number of cattle that may be hauled by one rail car between the two areas in one year. The number in the objective row is the product of the per cow cost of railing times the number that can be railed in one year. The TRNSCST model calculates this cost also. Two different sets of supplies in the 15 areas have been assumed for this model. As described in Chapter II, the cattle move to different locations as the tsetse fly and rains move. Therefore, the distribution of cattle among the fifteen areas changes, affecting the transportation pattern. The population distribution of cattle for the 15 areas is shown in Figure 10. The supply of slaughter stock for each area was calculated at 7.5% of the population in the area; the 7.5% figure is the extraction rate estimated by Ferguson for northern Nigeria {7,p.97}. 92 As previously noted, a substantial number of trade cattle enters Nigeria each year to be sold {7,p.9l}. Table IV-2 shows the estimated number entering Nigeria during the last fourteen years. Importations are assumed to be 290,000 for this study. Using Figure 6 as an indi~ cation of the entry location of these trade cattle, the 290,000 were allocated to seven areas as shown in Table IV-3. The wet and dry season supply distributions are simply the result of multiplying respective population distributions by the estimated extraction rate, plus imports into the respective areas. These two supply distributions are given in Table IVC3. The demand constraints are represented by equations 5-6 in Table IV—l. The demand for areas 14 and 15 was taken from Ferguson's estimate of the total demand for 1963-64 {7,p.53}. 'Since it is inherent in the model construction that total demand must equal total supply, the demand for the other 13 areas was calculated by subtracting areas 14 and 15 demand from the total available and multiplying this residual by the percentage of population in each area. The result of this cal- culation is presented in Table IV-4. Equation ‘7 in.Table IV-l illustrates the fact that only a certain number of rail cars are available for hauling livestock. In a report on Nigeria's transportation problems, the I.B.R.D. estimated that the Nigerian Railway Corporation had 281 livestock railcars {13,p.17}. However, at least 24% of the freight cars were estimated to be under or awaiting repairs. Therefore, for this study, a total of 212 livestock rail cars are estimated to be available for cattle hauling through one year. 93 Table IV-2: Nigeria: Trade Cattle Entering Northern Nigeria from.Niger, Chad, and Northern Cameroons; 1950/51-1964/65 Total Fiscal Year Entering Source of Estimate 1950/51 160,381 Annual Report of Verterinary Dept. 1950/51 1951/52 (165,000) Ferguson's personal estimate 1952/53 (168,705) Annual Report of Veterinary Department 1953/54 (145,000) Ferguson's personal estimate 1954/55 (145,000) Ferguson's personal estimate 1955/56 142,000 Nigerian Economic Survey, 1959 1956/57 (160,000) Ferguson's personal estimate 1957/58 (140,000) Ferguson's personal estimate 1958/59 146,712 Annual Report of Veterinary Department 1959/60 156,496 Annual Report of Veterinary Department 1960/61 262,121 Annual Report of Veterinary Department 1961/62 202,249 Annual Report of Veterinary Department 1962/63 (260,000) Ferguson's personal estimate 1963/64 291,351 Annual Report of Veterinary Department 1964/65 (260,000) Ferguson's personal estimate 94 CCC.NH II CCC.NH CCC.NH II CCC.NH CH oom.N II oon.N oom.N II oom.N eN CCC.CC II CCC.CC CCC.«C II CCC.«C CH CNH.CH II CNH.CH CCC.HH II CCC.HH NH CCC.CC II CCC.CC CCC.CN II CCC.CN HH mNo.eN oom.eN mNN.oN ooN.nN oom.eN ooN.oN oN CNC.CN CCC.C« CNC.CC CCC.HC CCC.C« CC«.CN C CCC.C« II CCC.C« CCC.CC II CCC.CC C CCN.HN II CCN.HN CNN.HH II CNN.HH N mNe.ee II oNe.ee ooo.mN II ooo.mN o CCC.CCH CCC.CC CCC.C« CCC.HHH CCC.CC CCC.CC C CCC.CNH CCC.CN CCC.CC CCC.CCH CCC.CN CCC.CCH « CCC.NCH CC«.C« CCC.CC CCC.CHH CC«.C« CCC.CC C ooo.no ooo.oN ooo.en oom.oN ooo.oN oom.oe N CNC.NCH. CCC.NN CNH.CC CCC.HNH CCC.NN CCC.CC H AoHuuoo mo anasov III HmNOH muuomaH oHumoaoa —N Houoa monomEH mHummeoo omu< GOHuanuumHC oomomC CNC — oOHuanuumHC oommmm um: nooN .ocNooaooz oom oNooNNo>< oNoooo mo oooe no oooNoooNoooNo NNoooo can "nIoN oNooN 95 Table IV-4: Quantity of Cattle Demanded by Area in Nigeria, 1963 Area Quantity Demanded l-Sokoto 77,942 Z-Katsina 43,586 3—Kano 101,016 4-Bornu 28,715 S-Nguru 13,845 6-Niger 23,587 7-Zaria 26,152 8-Bauchi 44,100 9-Adamawa 21,023 lO-Ilorin 31,992 ll-Plateau 24,614 12-Benue . 55,892 13-Sardauna 20,511 l4-Wes t 246 . 000 lS-East 110,000 ch in the 11‘. may): the r 96 Since the total number of rail cars needed and the allocation of the existing stock to the various supply areas are important questions in Nigeria, this model was constructed to give some information toward the possible solution of these problems. The turnaround time for a livestock car was estimated for all routes between the areas served by the railway system from a Nigerian Railway Corporation time table and reports of actual turnaround times {13,Annex Tables 6 and 7}. Using this estimate and an average rail car haul of 26 cattle, the total number of cattle hauled between any two areas in one year is calculated. With this data, the model allocates to each area the number of rail cars that minimizes the total distribution charge. Table IV-5 shows the estimated turnaround times and the resultant number of cattle that may be shipped yearly using one rail car between all areas served by the railway. The last set of constraints concerns the capacities of the relatively large modern abattoirs in the north that are equipped to slaughter and process "cold" meat for shipment to areas 14 and 15. These abattoirs are located at Sokoto (area 1), Kano (area 3), Maiduguri (area 4), Nguru (area 5), Kaduna (area 7), and Bauchi (area 8), (see Figure 10). Mr. J. Vines, Abattoir adviser to the Livestock and Meat Authority, estimated that the capacities of all these except Kano was 200 head per day. The abattoir at Kano is able to slaughter 400 head per day. Not all this capacity will be allocated to slaughter for meat shipment to the south. Therefore, using an esti- mate of 300 operating days per year and with 2/3 of the capacity available to slaughter for meat shipment to the south, the slaughter constraints given in Table IV-6 result. 97 .NooC moo oH «H coo « momuo oomsumn mHuumo CCN Ham: oom umo HHou moo .C.m .moaHu cooouoousu on» om>HC momuo osu ooosuon NooN o oH pom HHmN moo CC cmHoon on com ooe» mHuuom mo noneoo oSu omo oumovm mnu Co CHos uanu momma moo oH moHuuoo ona .mch HH moxou « omum ou xmon coo «H mono ou « mouo Boom .C.o .omuo ousuuommc onm ou Noon com GOHuooHumoc ou mono ousuuommc map aouw ow ou coNHsva mch mo Nonaoo osu mum muosvm mSu «0 «Ho: umoH NosoH oH muonasz ”ouoz .NIHH mHCmH mom "mouoom II CH C.C C HH C C C CH C C.C C.C C CH CCC II HH C.N C C C.C « N HH C N C.N «H I CH CNNN CCN II « N C C C C C C C N NH CCCH C«CH CCCH II C N « C C C « « C HH CCN CCCN «HHH CCCH II C.N C « C C.N C C N CH C CCCH CNC CCCH CCCC C«CH II C C N C.« C C N C CNC CH«H CCCH CCCH CCCH CCCH II C « N N N N N CNC CCCH CCCH CCCH CCCH CCCH CCCN II C C « « « C CCN «HHH CNC CCCH CCCH «HHH CCCH CCCH II CH N « C C NCC CCN CNC CCCH HNC CCNH «HHH CNC CCN II C C CH « CHC CH«H CCCH CCCH CCCH CCCH CCCC CCCH CCCC CNC II N « C CHC «HHH CCCH CCCH CCCH CCCH CCCC CCCH CCCH NCC CCCC II N N NCC C«CH «HHH CCCH «HHH «HHH CCCC CCCH CCCH CCN CCCH CCCC I H CH «H CH NH HH CH C C N C C « C N H commC HHmC NoHoComIImmmu< omosumC nomHHoM moo CC coaonm on Nos ooeu mHuuoC Co umoasz coo maHH cosouoche ”CI>H mHCmH “I 98 Table IV-6: Annual Capacity of Modern Abattoirs for Meat Shipment to the South Location Capacity (No. of cattle) Sokoto 42,000 Kano 84,000 Maiduguri 42,000 Nguru 42,000 Zaria 42,000 Bauchi 42,000 99 With this structure, the model will show the quantity of both meat and cattle shipped between areas, the method of shipment used for both meat and cattle, quantity slaughtered in each area at both modern and traditional facilities, and the number of rail cars to be allocated annually to each route to minimize the total cost of distributing beef among the fifteen areas. Model Experimentation Several modifications of the basic model assumptions and constraints were employed to evaluate the changes in transportation costs and trade flows which would result if policies to similarly change the actual situation were implemented. The effects of changes in consumer tastes between "hot" and "cold" meat are also evaluated. This model is intended to serve as a "laboratory" in experimenting with various policies rela- ting to beef distribution. Model experiments conducted in this study are: (1) the optimum transportation pattern for the existing conditions of "hot" and "cold" meat demand, rail cars available, per unit transfer charges without vaccination programs or improved rail efficiency, and the two supply distributions (wet season and dry season). (2) same as (1) except expanding the number of rail cars available. (3) same as (1) except replacing the trek costs per animal with estimated trek costs resulting from a trypanosomiasis control program. (4) same as (1) except increasing the proportion of "cold" meat demanded in areas 14 and 15 relative to "hot" meat demanded. 100 (5) same as (1) except increasing the speed of turnaround time for rail cars. (6) same as (5) except with unlimited rail car availability. (7) same as (1) except making no differentiation between "hot" and "cold" meat demand in areas 14 and 15. (8) same as (7) except using trek costs that result from a trypanosomiasis vaccination program. The results for all the experiments conducted on the transhipment linear program component are given on an annual basis for the wet and dry season supply distributions. The wet season in the cattle producing areas lasts approximately 3 to 4 months from June'to October. The dry season begins in October and usually continues until June. Therefore, the total number of cattle actually shipped in the wet season is about 1/3 of the number appearing in the tables. For the dry season, the number of cattle traveling over the various routes indicated is 2/3 of the annual totals appearing in the tables. The rail cars allocated to each route for the wet and dry season supply distributions are the number needed to transport the cattle during the respective seasons. Therefore, if 75 rail cars are allocated on the Kano to Ibadan route for the wet season and 50 are allocated in the dry season, 75 rail cars will be needed for four months and 50 will be required for the remaining eight months. Since the total rail cars needed for the wet season is higher than the number required for the dry season, some cars may be available for alternative uses during the dry season. 101 Results (1) Current System The first experiment of the model (specified as (l) in the preceding section) was run to find the optimum utilization of the transportation system as it existed in Nigeria in 1964. Table IV—7 gives the results of this run. The first obvious point is that no cattle are moved by truck nor meat by refrigerated truck in this solution. For longer distances, rail hauling is cheaper than trucks, and trekking is less expensive for shorter distances. There are many reasons for this. The road structure in the south is not adequate for the large traffic volume it carries. Accidents are frequent and costly. Overloading, poor mechanical condition, and driver stress are important factors causing accidents which result in high freight charges being levied by truck owners. To illustrate, the freight charge per cow from Kano to Lagos on rail cars is £3.35 {35,p.l68}. For the same trip, the charge per cow hauled on a 15 ton lorry averages about 58.3, almost 2 1/2 times the rail charge.2 The volume of cattle shipped by lorry is not known, but indications are that this method is used by cattle dealers in the north to react quickly to favorable price conditions in the southern markets. For the wet season supply distribution, the number of rail cars was a constraining factor. Rail shipment was used for longer distances through tsetse-infested areas. However, for movement over shorter distances through tsetse-free areas, trekking seems to be less 2This cost estimate was the average charge per cow obtained from the truck hauling cost survey made for this study. (see Appendix I) I‘ll] WCOHUCUCOU UCQEWHQ LQCCD fimhhmfiz :fi ROOM MOM :hfiuufim COHUTChOQQCWkH EJEHuLC ukl>w U~£$~ 102 NNe NNe coxxmuuN Nom Nnm NNoo no ooNoooo N ooo.oee.em ooo.oeo.eo o.o I oONoooooooaooN mo oooo Nooom ooN NNN oooo oooo NNom Nooom oNN.N N.N IIII IIII noon on NeooooINNoo NosNa< o>NNImNoo moo.oN N.oN IIII IIII oooz 6o oooNzINNoo NosNa< ooNNIeNoo moo.No N.no ooo.No N.No oooz co snoozINNoo NosNa< o>NnIeNno oeN.Ne e.em ooo.mo N.mN oooo 6o oooooINNoo NoaN:< o>NNImNeo eom.NN o.on Nmm.NN e.on oooz 6o oeoooINNom NosNa< o>NNIeNeo oom.N N.N IIII IIII ooos 6o oeoeINNoo Noan< o>NCIeNnm eon.oN e.NN NoN.mN N.eN oooz 6o oaNoooeINNoo NosNa< o>NoIeNNo IIII IIII moo.N N.e oooNz oo ooNoooeINNoo NoaN:< o>NNIoNo ooe.o IIII ooo.nN IIII Noooooz 6o ooooooooIoooN NosNa< o>NNINNnNo ooN.NN IIII oon.n IIII Noooaoz on ooaooIaooe Noqu< o>NNINNNNn oNo.on IIII ooo.oN IIII oooo 6o ososooNNInNo3 Noo.eN IIII NNn.oN IIII Noooeoz 6o ozosoooraooa NosNe< o>NNINNoz IIII IIII ooN.NN IIII Noooaoz 6o NeooooIaooo NosNa< o>NNINNoz IIII IIII IIII IIII moms 3 NomNzaoNN. No.55 o>NNIeNo3 Nme.e IIII NNn.eN IIII oNooN 6o oooNIoooN NoaN:< o>NNINn3 IIII IIII NCC IIII umCHz ou oomMIxmuH Hoch< m>HHICC3 IIII IIII CNC.H IIII umm3 ow oonquIxouH HmaHo< m>HqI«HN3 IIII IIII Nom.o IIII oNooNN 6o ocNoooeIaooN NosNo< o>NNIoNN3 oom.No IIII omo.no IIII oooz 6o oooxooIaooN NosNo< o>NNIeNN3 NoN.N IIII IIII IIII oNooNN 6o oooaoonooo NosNa< o>NNIoNN3 CCC.NN IIII CCC.NN IIII ooNOCIHm>oH NouswsmHC oumcoz «C C«H.C IIII C«H.C IIII ummm cu ooNOCIHHom CC oomamHsm ummz oououmIHC«x CCC.CH IIII CCC.CH IIII umoz cu ooNOCIHHmm NC NomaCHnm umoz oonoumIH««x IIIIIII nonasz commwnm mumm commHnm muoo oNoooo I NNoo oNoooo NNoo ooHuooHNuoHC NHmmsm oooomm Nun GOHuanNumHC CHmmdm oomomm No3 NuH>Huo< mGOHuHccoo uoommum Coca: oHuoCHz CH Comm Now cumuuom GOHuouNoomooNH EssHumC NNI>H mHCoH 103 expensive. The TRNSCST model results show that, in general, distances of 250 miles or more are more efficiently traveled by rail, while distances of less than 250 are probably less expensive when trekked. For the west area (14), approximately 65.3% of the arriving cattle were hauled by rail. For the eastern area (15), 52.3% arrived by rail. There are two primary reasons why these percentages were not higher. First, since all available rail cars were used, some Cattle were trekked that would have been railed if more cars had been available. (In the next experiment, this rail car constraint will be removed). Secondly, for the west, the distance from area 1 (an important supply area) to area 14 is significantly shorter (about 200 miles) when the trek routes are used than by the rail lines. (See Figures 2 and 10.) A large number of cattle are walked to the eastern area (15) because major supply areas (9 and 13) are not served by the rail system and it is cheaper to walk straight to area 15 rather than trek to a rail head and rail the cattle to the eastern area. In terms of rail car allocation, areas 4 and 5 (Maiduguri and Nguru) are major rail heads for cattle shipment. Approximately 100 rail cars a year are allocated to area 4 for shipment of cattle to the two large deficit areas (14 and 15). Area 5 is allotted 88 rail cars. The primary reasons for the large rail shipments from these areas are their large excess supply of cattle (due in part to the large imports from Niger and Chad and relatively small human popula- tions) and the long distances to major deficit areas which make trekking costly. The optimum rail car allocation changes as the location of the supply of cattle varies seasonally. For example, during the wet season, 104 cattle are railed to area 6 from area 2. However, in the dry season as the cattle move into area 6, it becomes an excess supply area from which cattle are railed to the west. The results also show that the trek routes connecting area 1 with 14 and area 9 with 15 are heavily used. This indicates that investments for water and supplementary feed will be needed on these routes rather than the routes more efficiently served by the rail system. The trek routes connecting areas 8, 9, 11, and 13 with area 12 are also heavily utilized. The use of trek routes also changes as the seasons vary. During the wet season, the trek routes connecting Kano and Katsina (areas 3 and 2 respectively) are utilized to walk cattle to areas 7, 10, and 14. However, in the dry season, the model shows that very few cattle would use these routes. The cold meat demand in areas 14 and 15 was supplied by the abattoir in Maiduguri and shipped in refrigerated rail cars. Assuming the same turnaround time for these cars as for those hauling live cattle, four refrigerated rail cars would be needed on the Maiduguri to the west route, and two would be adequate for shipment from Maiduguri to the east. The total cost of the live animal shipment slaughter and meat shipment among areas was £4,640,000 under the wet season supply assumption. As the wet season ensues and cattle move north, the distances from major supply areas to large deficit areas increases. Therefore, this charge drops to £4,440,000 on a per year basis assuming the dry season supply distribution.when cattle migrate closer to the major excess demand areas. 105 (2) Expanded Number of Rail Cars In the second experiment, the model was run with no effective constraint on the number of rail cars available for cattle shipment. During the wet season, 16 more rail cars were utilized to distribute the supply to deficit areas. The percentage of cattle railed to the west (area 14) increased insignificantly (from 65.3% to 66%). Area 15 received about 8% more cattle by rail than when the number of rail cars was small. The savings in distribution cost resulting from increasing the number of rail cars was insignificant. For the wet season supply distribution, they were small (£16,000 out of £4,640,000). These results are given in Table IV-8. A note of caution should be injected here. The data used to estimate the costs of distribution and rail efficiency were fairly crude estimates. Since the model results were sometimes quite sensi- tive to cost changes, caution should be employed in interpreting the results. This precautionary word is especially appropriate for the shipments between area 1 and area 14. The cost of trekking a cow on this route is estimated to be £8.14. Alternatively, the rail cost was estimated at £8.61—-a difference of only £.47--certain1y well within any subjective confidence intervals placed around these estimates. Fortunately, most cost estimates are not this close. In later experi- ments this sensitivity is tested. Irregardless of the previously noted data problems, it is apparent that many cattle will continue to be trekked to the two large southern excess demand areas because of the relatively shorter trek distances in relation to rail mileages. This is an expecially important point for areas 9 and 13 and the western parts of areas 1 and 10. It is also 106 NN« NN« coxxoufi N nom nom NNoN no ooNoooo N ooo.oon.eo ooo.oNo.eo o.o oN ooNoooooooooom o6 oooo NoooN ooN oNN oooo oooo NNoo Noooo oNN.N N.N ooN.NN o.o ooooINoooooINNoo NosNo< o>NNInNoo ooo.oN N.oN IIII IIII ooo3.IoooNzINNoo NoaNe< ooNNIeNoo moo.No N.no ooo.No N.No ooozIooooZINNoo NoaNe< ooNNIeNno oeN.Ne e.en .ooo.no N.mN ooooIoeNooINNoo NosNa< o>NNIoNeo eoo.NN o.on Nom.NN e.on ooosIoaoooINNom NoaNao o>NNIeNeo oom.N N.N NNo Ne. ooozIoeonINNoo NoaNe< o>NNIeNno eon.oN e.NN noN.nN o.oN ooozIooNooonINNoo NoaNo< ooNNIeNNo IIII IIII oom.o e.e oooNzIooNoooeINNom NosNa< o>NoIoNo ooe.o IIII ooo.nN IIII oooooIooooooooIoooN oNoooo ooNNINNnNo ooN.NN IIII oon.n IIII ooaooIooooonIoooN oNoooo o>NNINNNNn oNo.on IIII ooe.NN IIII ooomIososooeIoooN oNoooo o>NoInNo3 Noo.eN IIII NNo.NN IIII oooooIoaosooNNINNo3 Nne.e IIII NNn.eN IIII oNooNIooonIooNN oNoooo o>NNINn3 oom.No IIII ooe.oo IIII ooosIooooooIoooN oNoooo o>NN eNNz NoN.N IIII Nom.o IIII aNSNN 6o ooooooIoooN oNoooo o>NoIoNN2 CCC.NN IIII CCC.NN IIII ooNOCIHm>mH pounmsmHC ouocozI«C oeN.o IIII oeN.o IIII ooomIoooooINNoo no ooosoNoo oooz ooooooINmex ooo.nN IIII ooo.oN IIII ooozIoooooINNoo no oooaoNoo omo: ooooooINeex lllllllllllllllllllllll HNLCEDZ Illlllllllllllllllllll comCHnm mumo commNnm muoo oNoooo NNoo oNoooo NNoo GOHuooHuumHC,NHmmsm CONuonHuumHC NHmmsm NoH>Huo< oomoom CNC oommmm uo3 oHCoHHo>< muoo HNmm cmuHEHHoC nqu ououuom oOHumunoomooNH EsaHumC "CI>H mHomH 107 true, however, that the economic principles of supply and demand apply to the use of these trek routes. As the number of cattle using a particular route increases, the available grass and water becomes more scarce, increasing the cost of the transportation service which, in turn, influences the quantity of rail services demanded. (3) Trek Costs Resultingfrom Trypanosomiasis Control Poligy, An alternative run was made using the trek costs resulting from.a trypanosomiasis vaccination program. A discussion of this program and the potential costs saving was presented in Chapter III. The results of this experiment are presented in Table IV-9. As can be seen in Table IV—9, this program had a significant effect on the transportation configuration resulting from the model. No cattle were shipped by rail in the dry season and only six rail cars were used during the wet season. This, of course, means that the number of cattle moving on the trek routes would double, placing a heavy strain on the feed and water resources along the trek routes. As these resources became increasingly depleted, the shrinkage, salvage, and death losses on the treks would increase, raising the trekking costs. If a vaccination program did significantly lower trekking costs, additional investments in feed and water for the trade cattle would have to be made to keep the shrinkage and death from increasing to such a level as to eliminate the original cost savings. The savings in the distribution costs due to the vaccination program were estimated in the model at about £975,000 on the average (a 20% decrease). However, this does not mean that the program is economically desirable. Estimates of the costs of administering the program along with the costs of furnishing additional feed and water 108 noo.NNeowo onN.oeoono ooNooooomooooN mo oooo NoooN o N.o oooo oooo NNoo NoooN IIII IIII ono.N N.o oooNzIooooZINNoo NosNo< o>NNIoIno ooe.o IIII ooo.nN IIII ooomIoooooNooIooNa NoaNe< o>NNImNnNo ooN.NN IIII oon.n IIII oooooIoooooNoIoooN NoaNo< o>NoINNNNo NNe.on IIII IIII IIII ooozIososooNNImNo3 Noe.eN IIII NNo.on IIII ooaooIosoaooeIoooN NosNa< o>NNINNo3 ooN.N IIII ooN.NN IIII ooomINoooooIaoom NoaNoe o>NNImNo3 ooo.oN IIII IIII IIII ooo3.IoooNzIoooN NoaN:< o>NNIeNo3 omo.No IIII nNo.oo IIII ooozIoooozIooNN Noqu< o>NNIeNo3 ooN.Ne IIII NNN.eo IIII ooooIoooooIooNo NosNa< o>NNImNe3 ooo.NN IIII moo.NN IIII ooozIoooozIoooo Noqu< o>NNIeNe3 IIII IIII CNC.H IIII moooCIsoNomlmeH HoaHo< m>HHINH«3 mno.m IIII IIII IIII :NNoNNIooNooIooNN NosNa< o>NNIoNe3 Nnm.N IIII IIII IIII eNnoNNIooonIoon Noqu< o>NNIoHC3 Nme.e IIII NNn.eN IIII oNooNIoaonIoooo NosN:< o>NoINn3 IIII IIII Noo IIII oooNzIoaonIoooo NosNe< o>NNIon3 eNe.oN IIII NNn.oN IIII ooozIocNooonIooom NosNo< o>NNIeNN3 IIII IIII Nom.o IIII oNooNNIoaNooonIoooa NosNo< o>NNIoNN3 nnN.eN IIII ooo.no IIII ooozIooooooIoooN NosNoe o>NNIeNN3 CCC.NN IIII CCC.NN IIII soNOCIHm>oH Houcwoon oumcozI«C oeN.o IIII oeN.o IIII ooooIocoooINNoo no ooosoNoo oooz coooooINmen ooo.nN IIII ooo.nN IIII ooozIoaoooINNoo no ooosoNoo oooz ooooooINeen IIIIIIIIIIIIIIIIIIIII Nooasz III IIIIIII commHnC mumu commwsm mumo oNooou NNoo oNoooo NNoo GOHuzoNuumHC CHCmCC GOHuooHNumHC NHmde CuH>Huo< oomoom CNC oomomC umz aoNCoum coHuocHomo> oHomHaomoomCNuH m nuHa cumuumm ooNumuNoCmcmNH aseHumC "CI>H mHan 109 must be made. Unfortunately, not even "ball park" estimates are available on what these costs might be. A vaccination program against trypanosomiasis is being considered at the present time in Nigeria.3 If, as is being considered, the cattle traders are charged only two shillings per animal treated, the private net benefit will be large. (The savings in trek costs are estimated to be over £2 per cow from Sokoto to the west.) However, for the insti- tutions involved in the program, the benefits and costs must be viewed with a wider perspective, including opportunity costs of investing the capital in other programs. The relevant opportunity costs that should be considered by an institution depend on the array of investment opportunities available to that institution. For example, an agency involved only with the beef industry should consider the returns that might be achieved in other beef improvement programs such as grazing reserves and tsetse eradication. However, if the particular institution is involved in formulating policy for the whole agricultural economy, a much wider array of policies would need to be considered and compared with a trypanosomiasis control program. (4) Increased Demand for "Cold" Meat in the South The next experiment was run to find the optimum slaughter location and shipment pattern resulting if the demand for cold meat increased to 40% of the total demand for beef in areas 14 and 15. This would require favorable price ratios between hot and cold meat as well as a network of retail outlets in the cities. These factors would probably 3Personal communication from Dr. B. K. Na'isa of the Testse and Trypanosomiasis Division, Federal Ministry of Agriculture and Natural Resources. 110 influence heavily the change in tastes between the two types of meat. Because of butchers' unions and other groups, the establishment of easily accessible retail outlets for cold meats is no small problem as experience has shown. The results of this model trial are given in Table IV-lO. An interesting point is that the meat shipment originates only from abattoirs that can ship by rail, illustrating the comparative advan- tage that refrigerated rail car shipment has over refrigerated trucks. Area 14 receives cold meat from the abattoirs at Kano, Nguru, and Maiduguri. The transhipment feature is illustrated in this run.where area 5 ships approximately 40,000 cattle to Kano to be slaughtered and shipped as frozen meat to the west. Eighteen refrigerated rail cars would be needed to evacuate the meat to the west. Nine would travel the Kano-west route, 8 would be needed for the Ngurudwest route, and one for the Maiduguri-west trip. The Bauchi and Maiduguri abattoirs furnished the refrigerated meat for area 15. Since the abattoir at Maiduguri was operating at its allotted capacity, cattle were walked from area 4 to Bauchi to be slaughtered and subsequently shipped to area 15. A total of 12 refrig- erated rail cars would be needed to ship the meat to the eastern areas with 10 assigned to Maiduguri and two to Bauchi. In total, 30 refrig- erated railcars would be needed to distribute the carcasses of 150,000 cattle to the two southern areas. The abattoirs in Maiduguri and Nguru (areas 4 and 5 respectively) would operate at full capacity. Mbreover, cattle are transported from both of these areas to other plants to be processed. Area 4 provides approximately 1/3 of the cattle to the abattoir at Bauchi and area 5 lll CCC.C«H.«C CCC.CCN.«C COHusoHuumHC mo umom HouoH HC NC CC NCH com: mNom HHom Houoa II I II oee.N I n.N ooozIoooozINNom Noqu< o>NN eNoo II I II CCC.C I «.« an:CZIoonuoxIHHom HoaHo< o>HH CNC moo.oN I N.oN II I II ooosIoooNzINNoo NosNae o>NN eNoo nem.N I N.o NNo.on I e.oe ooooIoaoooINNoo NosN:< ooNN mNeo noo.on I o.oo ooN.Nn I m.me ooozIoaoooINNoo Noqu< o>NN eNeo eon.oN I e.NN noN.nN I o.oN ooozIoaNoooNINNoo NoaNa< o>NN eNNo CC«.C I II CCC.CH I II ooomCIoooocNoCImeH HmaHo< m>HH NHCH3 CCN.NH I II CCC.C I II osomCIsmmumHmeoNH HmaHo< m>HH NHH3 oNo.on I II ooe.NN I II ooooIososooeIaooN NosNe< o>NN mNoz Noo.eN I II . NNm.NN I II oooooIososooeIoooN NosNa< o>NN NNoz Nme.e I II NNn.eN I II oNooNIoooozIoooN NosNa< o>NN No3 CCN.C« I II CHC.CC I II oooMIsN5CZImeH HoaHo< m>HH CC3 oom.NN I II II I II NoooooIoooooIoooo NosN:< o>NN oes oom.No I II ooe.oo I II ooozIooooooIoooN NosN:< o>NN eNNz NoN.N I II Nom.o I II aNooNNIooooooIooom NosNa< o>NN oNNz nNo.nN I II ooN.NN I II NoooooINoooooNoz no oooooooNo cooooo eooo NCH.NC I II CCC.«C I II oooxIHuswochz um pounwooHC ouocoz HH mHuuoC ummz oHuumC o>HH Co .02 NooHHmC NomHNoC mo .02 NomHHmC NooHHom .umNC NHmmdm comoom CNC .umHC CHmmom oomoom umz .cooBmC moo: cHoo commomocH nuH3 cumuuom coHuouuommoouH aoaHuCC NCHI>H oHomH 112 supplies 80% of the cattle slaughtered at the large abattoir in Kano. The abattoirs at Maiduguri and Nguru operate at full capacity because both areas have large excess supplies. No inshipments are required to furnish the cattle to be slaughtered for cold meat shipment. These results also show that it is more economical to slaughter cattle at points of origin and ship in refrigerated rail cars to the south than to walk or rail live cattle to intermediate areas for slaughter and meat shipment to the south. In general, it seems that the advantage of cold meat trade relative to the traditional trade is in the transportation costs, while slaughter, storage, and retailing costs are higher. Successful refrigerated rail hauling of frozen carcasses requires dependable rail service and a relatively sophisticated organization for maintenance and provision of refrigeration units. A delay of only a few hours in replacing a freezer unit can result in a loss of several tons of meat. Much more information is needed on the costs of providing adequate support activities for refrigerated meat shipment before policies of this type are instituted. Since approximately 40% of the southern demand was supplied by frozen meat, fewer rail cars were needed for live cattle shipment. (Approximately 100 of 212 available). Their route allocation is given in Table IV-lO. This shows that if the private meat companies in the south are successful in marketing cold meat to a large number of consumers in the urban areas in the south, additional investments in live cattle transportation to the south can be curtailed. However, the stress on the transportation system for beef will be shifted somewhat to interarea transfers within the northern part of the country. 113.4. 3 'Plenl. "415' 113 This would probably mean more support of the northern trek routes as trekking becomes more attractive relative to rail transportation for shorter distances through tsetse-free areas. The costs of processing and distributing beef under the assumptions of this experiment were £4,300,000 for the wet season supply distribur tion. This is approximately £340,000 less than the costs associated with the assumptions for the first experiment (a 7%reduction). (5) Increased Speed of Rail Service As stated, the results of this transhipment model are sensitive to the relative transfer costs estimated for trekking and railing between a few large excess supply and demand areas (areas 1 and 14 being the most important). Therefore, an additional model trial was conducted assuming the turnaround times between the large excess supply and excess demand areas could be reduced by 1/5 (e.g. turnaround time of 10 days would be reduced to 8 days--see Table IV-ll). This resulted in lower per animal rail costs as shrinkage and death losses were reduced because of shorter travel times. This increased efficiency in turnaround times for rail cars had two primary effects on the demand for rail cars--one partially offsetting the other. First, with increased transit speed, one rail car could transport more cattle per year between two areas--tending to decrease the requirement for rail cars. However, because of the decreased cost of rail transportation, more shippers would want to use this shipping method, thereby increasing the demand for rail cars. This latter effect was stronger than the former, causing a net increase in the number of rail cars demanded. 114 .Nooh moo nH «H coo « omuo ommsumn oHuuom NCC Ham: omo Noo HHmu moo .C.o moBHu cooouoousu mnu oo>HC moouo osu oomsumn Noo» o oH uom HHou moo CC cmHoon on com umau mHuuoo mo Cones: mnu mum ouoovm mnu mo «Hon unCHu momma one oH moHNuom onm . .mnoc C moxou « mono cu Como com «H mono ON « mono Boom .C.o .omuo ououuomoc onm ou xoon com oOHuooHumoc ou mono ousuummmc mnu scum om ou cmuHsvoN mCoc Co moosoo onm mum muosum moo mo CHmn uon umsoH oH mumossz “muoz .NIHHH mHCmH oom "mousom II CH C « HH C.« C.C C.C C C.N N N N CH CCC II HH C C C.C C.« C.C C.C C C.« C.C C «H I. I CH CCCN CCN II « N C C C C C C C N NH CCCH CCCH CCCH II C N « C C C « « C HH CCN CCCN «HHH CCCH II C.N C « C C.C C C N CH C CCNH CCNH CCCH CCCC C«CH II C C N C.« C C N C CCNH CCNH CCCH CCCH CCCH CCCH II C « N N N N N CCNH CNNN CCCH CCCH CCCH CCCH CCCN II C C « « « C CNC CH«H CNC CCCH CCCH «HHH CCCH CCCH II CH N « C C C«CH NCC CNC CCCH HNC CCNH «HHH CNC CCN II C C CH « «HHH CCNH CCCH CCCH CCCH CCCH CCCC CCCH CCCC CNC II N « C «HHH CH«H CCCH CCCH CCCH. CCCH CCCC CCCH CCCH NCC CCCC II N N «HHH CCCH «HHH CCCH «HHH. «HHH CCCC CCCH CCCH CCN CCCH CCCC II H CH «H CH NH HH CH C N C C « C N H cmomm HHmC cmmomumoHIImooN< comsumm NomHHmm moo No cmCCHnm on Co: mono mHuuoC mo umoasz coo mEHH coooumousa HHHI>H mHan 115 Table IV-12 shows the results of the trial in.which the number of rail cars was constrained to the 212 estimated to be presently available in Nigeria. Comparing these results with Table IV-7 (transportation pattern under present conditions) shows that, by decreasing the time of transit, it becomes cheaper to ship cattle by rail from area 1 to area 14 even though the rail distance is approximately 200 miles longer than the trek distance. Therefore, the allocation of the rail cars is changed even though the total number is not. During the dry season, 53 rail cars are utilized on the Sokoto- west route with the cattle loading at Kaura—Namoda. Therefore, fewer cars are utilized at Funtua (area 2), Bornu (area 4), and Nguru (area 5). However, in each of these areas the same number or more cattle are shipped by fewer rail cars, except on the Bornu to the west route over which fewer cattle are railed. An additional supply area (area 8) enters this solution railing cattle to the western area. There are still substantial numbers of cattle trekked to the southern areas. Area 14 receives a substantial number of cattle trekked from area 1, and area 15 is the destination of several thousand cattle trekked from area 9. Areas 9 and 13 walk many cattle to area 12. It is becoming clear that these trek routes will be heavily utilized by trade cattle even if rail service is improved. This model experiment gives an indication of where long-term improvements in trek routes will be beneficial even if improvements in rail transport occur (given the current pattern of rail locations). By increasing the efficiency of turnaround times, an average of 65% of the cattle were hauled by rail compared to 552 for those in which longer turnaround times were assumed. The total cost of distribution decreased from £4,640,000 to £4,485,000--a drop of 3%. 116 NCC NCC wmxxouu uaooumm NCC NNC HHou CC CoHom: ooooumm oom.Nom.sm ooo~nw¢.«m aofiuanNtumNa mo “moo Nmuoa NNN NHN com: mtmu NNmm mo Honasz Nmuoa NN«.mN «N mom.Nn mN umszmchumMIHNmm NmaNq< o>NN «NNN II II oom.N e ummNzIouoxomINNmm NmaNa< mpaq CNN oNs.mo mm oom.NN NN umszouoxomINNmm NmaNq< m>Na «NNN «CN.N N ooN.NH m umozINsusmmINNmm Nmaan< o>Nq «Nam mom.Nm no ooN.Nm CC ummsIntaszNamm Hmafiq< m>Nq «Nmm Noe.m« we onm.o~ «N ummmIsauomIHHmN Nmaan< m>N4 mNsm on.mN mN «oe.ea NN amazIsauomINHmm Nmafiq< o>fiq «Hem CCN.H H II II umozIoamsINNmm NmaNq< o>NN «Nam moa.N II II II aNtoNHIummNzIxuus Haasq< o>Ng ode: II II New II “mmNzIoamxIxaue Nmaaq< m>Na on: Nm«.C II ams.mN II asammImasmuummemuy NmaNq< o>Ng NNNN: emN.NN II omn.m II asammIsmmuaNmIsoua Nmafin< m>Ng NNNNz ONm.mm II oo«.NN II ummNImsmamcfiq CHC: NCC.¢N II NNm.NN II msammImsmamuflg NNmz «CC.CN II II II umsztmmNZIxoua Nmefia< m>Ng «NC: Nm«.e II NNn.eN II «NtmNIoamxIxmua NmaNq< «>Ng NC: II II NNw.om II umozIouoxomemua NmaNq¢ m>Ng «NH; moN.n II Nom.o II aNtoHHIouosomemua NmaNq< m>Ng OHNz C«H.C II C«H.C II ummmIscuoCIucmaaHnm umoz cououm HC«N oem.mN II oom.NN II umszsauoqucmaaNam new: amuoum N««x mNuumo wNuumu m>fig mNuumo mNuumo m>fia «0 .oz mumo HHmm «0 .oz wumo HHmm CuH>Huo< .umHC commmw CNC .umHC sommmm uo3 oHanHm>< mumo HHmm CoUHaHC new CoooHonmm HHmm CommouooH :uHB cuouumm COHumuuommomuH asaHuCo "NHI>H mHCmH 117 (6) Increased Speed of Rail Service and Unlimited Rail Car Availability Table IV-13 shows the results of the model experiment with reduced turnaround times and unlimited rail car availability. In this outcome, an average of 236 rail cars were used with 251 and 222 employed during the wet and dry seasons respectively. This represents about 18% more rail cars than are presently available in Nigeria. Approximately 732 of all cattle involved in interarea shipment are carried by the rail cars. All the cattle arriving in the west are shipped by rail, while 2/3 of the east's excess demand is delivered by rail. The trek routes connecting areas 9, 12, 13, and 15 are still heavily utilized by the trade cattle, but, the pressure on the western trek routes has been relieved c0nsiderab1y. Kaura-Namada in area 1, Maiduguri in area 4, and Nguru in area 5 become important rail heads with approximately 60, 80, and 67 rail cars per year respectively being loaded, sent to the south and returned. Given the turnaround times for these routes, 10 rail cars would be loaded each day (260 cattle) for 300 days in Kaura-Namada for shipment to the west. There would be 12.5 rail cars loaded per day (325 cattle) for 300 days in Nguru. In Maiduguri, 11 rail cars would need to be loaded per day with 3 going to the west and 8 going to the eastern area. The total distribution charge for this experiment averaged £4,392,500-on1y about 3 1/22 less than the cost calculated for the case of no increased rail efficiency or number of rail cars. 118 NNN NNN emxxmuu sauuuom NCN NNN NNmu Np nmNama samuuom oom.mom.sm oom.Noe.em aofluanfisuwfin mo “moo Hmuoa NNN HmN was: sumo Nqu Nmuoa NCN.N N ooN.NN a umszflaosamINNma mNuumo o>NN «Nam mNm.mN C II II umoqummNzINNmm mNuumo u>Nq «Hem mam.Na no ooN.Na so umozIzusszHqu oNuumu m>NN «NCN Noe.¢« we CCC.CN «N ummmIscuomINNmm mNuumo o>Na CNem on.mN CN ¢o¢.ON NN umozIsauomINfimm mNuumo o>NN «N«N CCN.N H II II umszoamMINNmm «Huumo «>Ng «NCN CN«.mN «a nom.Nm NN umuzImaNmumNIHNmm «Nuuwo spa; «NNN NCN.¢N Nm on.mN co umszouoxomINHmm «dunno o>Ng «NNm II II oom.N s ummNzIouoxomINNmm «Nouns u>Nq NNCHm Nme.m II amm.mN II usawmImaamwummemua «Nuuao «>Ng NNmNs nmN.NN II omn.m II asammIsmmuwNmemua «Nuumo u>Nq NNNNz mam.mm II oo¢.NH II ummmImsmamcNN CNC; «NC.«N II NNn.NN II msammImamamuNg NNN: NCN.N II II II aNuoHHIumwNzIxmua «Nuuao o>HN oNe: Nme.e II NNN.«N II «NtmNIoamngmua ufluumo m>NN NC: II II Noo II ummaZIoamstmua «Hausa m>Nq on: II II Nam.o II aauoNHIouoxomemta «Nuumo m>fig eNNz osN.m II oqN.m II ummmIsauoquamaaNsm “as: assets Hmex oom.NN II oom.NN II umszsatoqucwaaNnm new: amuoum N««x «Hausa HmaNs< m>fia mNuumu Hmaaq< opNg mo .02 mumo Nfimm mo .oz sumo Hana .umHn commmm CHC .umHn commom uoB CuH>Huo< oHpmHHm>< mpoo HHmm vouHaHHoC Cam Cosmonwwm HHmC CommouooH suHa :uouumm oOHuouuommoouH asaHuCo "CHI>H oHCmH {I'll-III! 119 (7) No Differentiation between "Hot" and "Cold” Meat Demand in the South The last two model trials were run without the assumption that hot and cold meat were differentiated products in the two large excess demand areas in the south. Therefore, the demand for beef in areas 14 and 15 can be satisfied by either live cattle shipment and subsequent slaughter, or by slaughter in other areas and meat shipment to these two areas. Table IV-l4 presents the results. The results show that where refrigerated rail cars are available, the total slaughter and transportation charge of meat shipment is less than by walking or railing live animals to the south and then slaughtering them there. However, if the meat must move by truck, it is cheaper to ship live cattle. As shown in Table IV-l4, no slaughter for meat shipment to the south is undertaken at Sokoto for either of the two supply distributions. It is also interesting to note that the most efficient abattoir location is near the cattle supply areas rather than the demand centers or points in between, because transportation costs of shipping carcasses by rail are less than moving cattle on rail cars or treks. Therefore, the location of abattoirs in the north in areas of large excess supply is wise from an economic point of View. The western area received 68% of its excess demand in the form of frozen meat shipment principally from the abattoirs at Kano, Maiduguri, and Nguru. Cattle from areas 2 and 5 were shipped to the large abattoir at Kano for slaughter and subsequent shipment to the west. The live cattle shipped to the west came from area 1 by trek and area 6 by rail. 120 ooo.m¢o.em ooo.me.sa aoHuanHtumHe mo “moo Hayes .4 OH on H« N« omuHHHu: mtmu HHmH Hmuoa mom.ON I HH In I II umsztmeZIHme HmaHa< m>HH «Hem ooo.mH I CH «H« on I N« ummmIscuomIHHmm HmaHa< m>Hg CH«m C«« e I H In I II mHumNIBoxomIHHmm Hmqu< m>HH NHm In I II omm.m I n ummHzIouoxomIHHmm Hmqu< m>HH CHM CC«.C I II CCC.CH I II mocmmlmcomwummlxmufi HmaHG< m>HH NHCH3 CCN.NH I II 0mm.m I II mssamIsmmumHmemue Hmqu< o>HH NHHHz on.Cm I II oc«.NH I II ummmImsmameIxuua HmaHa< m>Hq CHC: NCC.¢H I II NHC.NN I II asammImamameHH NHmz nmo.om I II mmo.mm I II oamxIsusCZIxmus HmaHa< m>Hq mm: omN on I II oom.eN I II HausmmIscuomemne HmaHa< m>Hq mea «HWHCH H ”H www.mw H H” mwmwwImmHmumxIxmns Hmqu< m>Hq NNz . . I HmumxIsmue HmaHa< m>HH mNz «HH.CC I II CNC.NN I II umszouoxomemne HmaHa< m>Hg CHH: NCH.N .I II Nmm.o I II aHtoHHIouoxomemua Hmqu< o>Ha oHHz ooo Nq I II ooo.N« I II Hsosmqumunmstm stove: «mum In I II CNH.« I II memNIumunmsmHm cameos Now coo.N« I II ooo.N« I II anam2ItmucmsmHm sumac: zom ooo.N« I II ooo.N« I II HtswsuHszumunmsmHm cameo: mom MMW.WM M II OOONQQ I 2 ll OGmMIHmu fiwaHm GHNUOE gm II ooo.N« N II ummmIHsosmquamaaHzm ummz canona Hmmx In I II CNH « H II umszmHnmNIncmaaHnm omwz cmnoum HsNx CCC N« C II CCC.N« C II umo3I3u3CZIucmECHnm umoz conoum H«Cx CCC. H II mmm.@ N II ummmIHtswsuHszucmsaHnm sum: cmnoum Hmsx mqq.H« NH II C««.mm OH II umszHuswsuHszucwamHnm saw: canons qux mmo 0N NH .II ooo.sm mH II umszocmqucmaaHnm ummz cmuoum qux mHuumo ummz mHuumu o>HH mHuumo ummz mHuumo m>Hq mo .oz umoHHmm umoHHmm mo .02 tmoHHmm umUHHmm CuH>Huo< .umHQINHCCDC sommmw CNC .umHC mwmmom commom uoz chaon umoz CHOU was ac: oH soHumHucoummeC on :uHs :uouumm coHumuuoamsmuH asaHuaC "«HI>H oHCmH 121 Several refrigerated rail cars would be needed to evacuate the frozen meat to the western area. Thirteen cars, each with a six-day turnaround time, would be sufficient for the Kano~west route. The Maiduguri-west route would require 12 rail cars having turnaround times of 11 days, while eight rail cars would be needed for the Nguru- west route, each with 7-day turnaround times. Altogether, 33 refrig- erated rail cars would be required to ship 165,820 carcasses to area 14 during one year. In the eastern area, only 46% of the excess demand was satisfied by frozen meat shipment from the abattoirs at Maiduguri and Bauchi. Most of the cattle slaughtered at Bauchi for meat shipment to the eastern area were trekked from area 4. The majority of the excess demand in the eastern area was satisfied by live cattle trekked from area 9 and railed from area 4. The abattoir at Maiduguri would send one refrigerated rail car to the eastern area every nine days to export the frozen meat it had slaughtered for that market. Seven cars would be utilized on the Bauchi—east route with each car having a six-day turnaround time. Therefore, a total of eight refrigerated rail cars would be required to export 44,180 carcasses to area 15 in one year. For areas 14 and 15 together, a total of 41 refrigerated rail cars would be needed to haul the 210,000 carcasses demanded in one year. If an effort is going to be made to establish a significant market for "cold" meat in the two southern areas, the abattoirs at Nguru and Maiduguri should be used since they represent the least cost locations in terms of assembly, slaughter, and transportation costs. 122 The two primary reasons for this are (1) they are in the large production regions and (2) both are situated on rail lines allowing economical shipment of frozen meat by refrigerated rail cars. The total distribution charge for this trial was £4,232,000, a savings of about 8.5% over the total cost of distribution separating cold and hot meat demand (see Table IV-7). (8) Trypanosomiasis Vaccination Programr-No Differentiation in Demand The last experiment was made to investigate the transportation pattern resulting from a trypanosomiasis vaccination program while assuming no differentiation in cold or hot meat demand. The results of this run are given in Table IV-15. The vaccination program's estimated cost savings on treks (about 1/3) has a significant effect on the relative attractiveness of live cattle versus frozen meat shipment. Only 34% of the demand in the western area is furnished by cold meat shipment as compared to 68% for the trial with no vaccination program. Almost all the meat ship- ment to this area originates at the abattoirs in Nguru and Maiduguri. The eastern area receives only 2% of its demand in the form of frozen meat illustrating that frozen meat shipment cannot compete with live cattle transfers except over long hauls that originate in large excess supply areas such as Nguru and Maiduguri. Naturally, the requirement for refrigerated rail cars would be substantially lower if a: vaccination program were instituted. The Kano-west route would utilize only 1 car while the Maiduguri and Nguru abattoirs would need 12 and 8 cars per year respectively. Only one car would be dispatched from Maiduguri to the east for hauling the 123 oodN«CC~Cm ooo.ooq.ma coHuspHuumHe mo umoo Hmuos mm C HN N. Umfimwfl mumo HHmH HmuOH II II II ommqw II N uuszIsusszsota HmeHa< «>HN Cam CC«.C II II mmm.mH II II ummmImasmeummemua HmaHs< m>HN mHmHs emN.NH II II cmm.m II II usammIsmmumHmIsmua HmaHa< m>HH NHHH: HNe.om II II II II II ummmImsmamoHH mHon Hms.eN II II NNm.mm II II msaomImsmameHN NHmz omN.N II II ooN.HH II II ummmIHnosmmemua Hmqu< m>HN CHC: www.oN II II II II II umsztmmHZIxmua HmaHa< m>HH «Hos mmo.on II II moo.Nq II II umszsusszxmua HmaHa< m>HH «Hm: CCN.«C II II CCN.CC II II ummmIscnomemus Hmqu< m>HN qus II II II on.H II II msammIscuomemue HmaHa< m>HH Nqu om«.e II II NNn.eH II II mHnmNIoamxIxmua HmaHa< m>HN Nmz oeN.NH II II NNm.mN II II umszmaHmumMIxmus HmaHa< m>HH «HN: NCH.N II II Nam.o II II :HuoHHImchumxIxmua HmaHa< I>Hg OHNz CCN.«N II II mmo.mm II II umszouoxomemua HmeHs< m>HN CHH: ooo.Nq II II ooo.Nq II II stam2IumnnmsmHm cusses zom ooo.N« II II ooo.N« II II HusmseHszumuswsmHm sumac: mom Nmm.H II II Noo II II ocmquonswsmHm space: «Now ooo.Nq m II ooo.N« C II uwszstsszucwsaHnm “as: :mNoum Hsmx mmn H II mmm.o N II ummmIHtswamequcmaaHnm ummz cmuotm qux oss.Hq NH II msq.mm OH II umszHtswsvaqucmaaHnm saw: amuoum qux Nmm.H H II Noo H II umszocmqucmaaHnm saw: canons qux mHuqu ummz wHuumU m.e/H.H wHuumU ummz wHuumU 0>CA mo .02 umoHHmm umUHHmm «0 .oz umoHHmm umoHHmm CuH>Huo< .umHC CHCCDC commom CNC .umHC CHCCDC commom uoz EmuCoum GOHumsHoom> mHmmHSomocmCCuH m suHB cuouumm SOHumuuoamamuH adaHuCo Camsmn umoz CHoo Cam oom sH :OHumHusoumwwHC oz Cam uCHI>H oHCwH 124 frozen meat demanded in area 15. A total of 22 refrigerated rail cars were utilized in this trial compared to 44 in the previous experiment. This trial indicates that more meat would be shipped only if the capacities of the abattoirs in Nguru and Maiduguri were expanded. The slaughter houses in both these locations were operating at full capacity in this solution. A total slaughter and transportation costs of this trial are £3,594,000, a reduction of 23% over the optimum shipment pattern costs in the first experiment. However, this is only a 3% reduction in distribution charges when compared to the trial run assuming a vaccination program and differentiation between "hot" and "cold" meat demand. The 23% reduction is primarily the result of cheaper trek costs rather than increased frozen meat shipment. Additional Model Experiments The model structure is flexible enough to allow further experi- ments as more information is made available or conditions change. For example, as empirical estimates of abattoirs economies of scale become available, this model component can give the least cost location and size of operation of slaughter houses in Nigeria for both cold and hot meat processing.4 The results would be the location of abattoirs among the areas and the level of output at each location. The locations of beef production in Nigeria may change when more areas are cleared of tsetse fly, modern grazing reserves are introduced, 4See {24} for a procedure that can be easily adapted to the model presented in this chapter. 125 or use of improved management practices allowing cattle to be produced in tsetse-infested high forage areas. This model component can show the effects of these changes on the requirements placed on the beef distri- bution system. Additional model experiments can be run to determine the effects on the beef distribution system of changes in demand preferences between "hot" and "cold" meat in various locations within Nigeria. Summary of Major Conclusions Several conclusions drawn from the results given in this chapter can be summarized. Due to the lack of accurate data on many aspects of the distribution system, these results should be considered tentative hypotheses to be tested further as new information is made available. None of the eight model experiments gave truck shipment of "cold" or "hot" meat as part of the solution set of alternatives. Rail transport of live animals for longer distances was less costly than truck hauling while, trekking appears to be more economic for shorter distances. The high freight charges levied by truck owners were primarily responsible for this result. I The number of rail cars available for live cattle shipment is a constraining factor on the present system of beef distribution. The number available (212) is about 18 percent less than the number that could be economically used (250). Part of the reason more rail cars can not be economically utilized is that some major production areas are not adequately served by the Nigerian Railway. For this reason, the percentage of cattle marketed in the two southern areas that were trekked was never below 25 percent. In most solutions, the percentage 126 trekked to market was between 33-45 percent. Therefore, trekking will continue to be an important method of moving cattle to market. Any proposed policies to improve transportation methods should consider trekking as a potential area for improvement. Policy runs indicated that total distribution costs would not be decreased much by increasing the speed of rail service by 20%. An improvement of only 3.5 percent was achieved in this experiment. However, significant reduction in the total distribution costs (20 percent) resulted by instituting a trypanosomiasis control program for trekked cattle. A more detailed investigation on the benefits and costs of this type of program seems to be warranted; A trypanosomiasis control program could offer significant benefits to the beef industry as it is presently operating. However, additional improvements in beef transportation will need to be made as the quality and quantity of cattle produced in Nigeria increase. Trekking will surely not be economic for movement of higher quality younger cattle in the future. The optimum locations of abattoirs for processing frozen carcasses shipped to southern consuming regions are at Maiduguri, Nguru, and Bauchi. These locations are in areas with large excess supplies of cattle, therefore, incoming shipments are not needed. In major cities where facilities are available, "cold" meat shipment can compete with live animal shipment. However, much more basic data on the dependa- bility of refrigerated rail shipment and cost of providing and operating the facilities is needed before this hypothesis can be accurately tested. CHAPTER V SPATIAL EQUILIBRIUM FLOWS OF BEEF THROUGH TIME Introduction As supply and demand conditions for beef change through time within and among areas in Nigeria, the distribution system will need to adjust to accomodate these changing flows of beef. To guide policy decisions in beef distribution both now and in the future, ideas about the likely interarea flows and their changes through time are important. Investments directed toward improving the beef distribution system will probably alter the transfer charges of transporting beef among these areas. As these transfer charges change, relative prices among the areas will adjust. This causes the quantities demanded and supplied within the areas to change which alters the quantities of beef that flow among areas. Therefore, investments in the beef distribution system actually influence the level of demand for services placed on the system. In other words, policy makers should realize that the number of cattle that will utilize the services of the beef distribu- tion system depends in part on what investments are made to improve the system. In this chapter, a spatial equilibrium model is developed that estimates the results of interactions among changing demand and supply conditions within areas and alternative transportation policies. This model estimates through time the (1) competitive equilibrium prices in 127 128 each area, (2) the amount supplied and demanded in each area, and (3) the level of exports and imports among the locations for three alter- native investment policies in the transportation of beef. This kind of information should aid policy makers in making decisions regarding investments in the transportation system and the likely demands that will be placed on the system through time as a result of their decisions. First, the theoretical basis for the model is stated. Appendix IV outlines in more detail the theoretical and mathematical basis of the model. Then, demand and supply parameters and relationships are estimated from Nigerian data and applied to the 15 area structure that is utilized throughout this study. Finally, the equilibrium area prices, quantities demanded and supplied, and interarea flows are given at five year intervals for a 20-year time span for three alterna- I tive investment policies in beef transportation. Spatial Price Equilibrium Model For this model, the assumed problem setting consists of a single product multi-regional competitive economy. The demand and supply functions are assumed known for each region as well as the transporta- tion costs necessary to transfer the product between all combinations of regions. Under this specification, one would like to know what will be the (l) competitive equilibrium prices in each area, (2) the amounts supplied and demanded in each of the areas, and (3) the level of exports and imports among areas. 129 To develop the model used to answer these questions, equilibrium spatial market conditions will be defined in this chapter. In Appendix IV, these conditions will be cast as an extremum problem to be solved by quadratic programming in order to obtain the optimum set of prices, quantities and interarea flows. The solution to this problem will then be shown to satisfy the conditions of a spatial market in equilibrium. Equilibrium Spatial Market Conditions An economic state is said to be in a stable price equilibrium if the following conditions are met: {19} (1) Market Equilibrium No excess demand and excess supply conditions: (a) §i-§ijiso. over all i Di (Yi - § xji) - 0 . y1 = optimum consumption in area i. - Optimum interarea flow from area j to area 1. pi = equilibrium market demand price in area i. i,j = 1,2 ... N = number of areas in the entity being considered. (b) x1 - § x13. 2 0 ..i - - - ' p (x1 g x11) 0 over all i s. where xi = Optimum supply in area i 51 = equilibrium market supply price in area i 130 The market equilibrium condition (a) stipulates (1) that if the equilibrium market price is positive, 51 > 0, then the equilibrium amount of consumption, §i must equal the equilibrium amount supplied to region 1 from all other regions including its own supply and (2) if the amount consumed in equilibrium in area i, 51, is less than the amount , the equilibrium market demand price must be supplied to area i, g xij equal to zero. The market equilibrium condition (b) stipulates that (1) if the equilibrium market supply price is positive, 51 > 0, then the amount supplied in area i, ii, must be equal to the shipments to all regions , and (2) if what is produced in region 1, xi, , the equilibrium 1 is greater than what is exported to all regions, g x including itself, § xi 13 market supply price is zero, 0 3 0. (2) Area Consumer Equilibrium and Y1 (Di - P1) - 0 for all i. P = the maximum price the community is willing to pay for the consumption of the quantity of the commodity, §1. The consumer equilibrium condition (2) stipulates that (1) when there is a positive area consumption in the ith area, §1 > 0, the area market demand price 51, must be equal to the area demand price Pi, the maximum price the area is willing to pay for §1 and (2) when pi, is higher than the demand price Pi, there must be no consumption in that area. 131 (3) Area Producer Equilibrium 51-13150 and - -1 -1 xi (0 - P ) - O for all i where: P1 = the minimum price at which the producer in the area are willing to supply i1 This area producer equilibrium states that (1) when the area supply quantity is positive, I > 0, the area market supply price, i p , must be exactly equal to the regional supply price, Pi, the minimum price at which the area is willing to supply I and (2) when the area 1’ market supply price, 51, is lower than the minimum supply price, Pi, there must be no supply. (4) Locational Price Equilibrium - —i - - t s 0 and - -i x - - t - 0 for all i and 13 (DJ 0 ij) J where: t = transfer charge for the commodity to flow between area i ij and area j. The locational price equilibrium condition stipulates that (1) when the interarea flow is positive, > 0, then the equilibrium xij area market demand price in j must equal the area market supply price in 1 plus the transfer charges from i to j and (2) when the area market demand price in j is lower than the region market supply price 132 in 1 plus transfer charges from i to j, there must be no interarea flow, 0. E11- Given these spatial equilibrium market conditions, the task now is to specify the problem in a manner that may be solved by mathemati- cal programming to derive the optimum prices, quantities and interarea. flows and show that this solution fulfills the spatial equilibrium market conditions. This process is given in Appendix IV. The information required by the model is: (I) demand functions in each area through time, (2) supply functions in each area through time, and (3) transfer charges among all combinations of areas. Demand Functions The model requires a linear demand function of the following form: Q - a + b? where Q - quantity of beef consumed P 3 price of beef However, since the model is to be run through time, population and income influences on demand need to be included. Therefore, the following regression equation was estimated from data taken from consumer surveys in Nigeria {6}. log Q = a + b log I + b log P + e 1 2 Where Q 8 pounds of beef consumed per capita per year I - income per capita per year P a price of beef per pound in pence per pound. 133 Each of these surveys contain average income levels of three classes of people along with their consumption of beef. The prices for the beef in these areas was taken from the Annual Abstract of Statistics in Nigeria for the time period during which the survey was conducted {5}. There were 20 observations used in the regression analysis. Table V-l lists these areas and the data from each location. The results are given below with the standard errors in parentheses below the estimated coefficients. 2 108 Q 2.938 + .367 log I - 1.54 log p 52- " '353 (~26) (-06) (.172) R - .846 All coefficients were significantly different from zero at the 99 percent confidence level. The usual assumptions of ordinary least squares estimation apply to this equation. This way of estimating the demand function assumes that the quantity variable is the dependent or "adjusting" variable to price. An alternative formulation would have assumed that the prices adjusted to the quantity variable. The results of this formulation would have been an estimate of price flexibility instead of price elasticity. In addition, the coefficient of the income variable in this formulation would have been the percentage change in prices for a one percent change in income. To convert these coefficients to price and income elasticities needed in the spatial equilibrium component would require additional assumptions {see 2, 10, ll, 34 for a detailed discussion of this problem}. In general, arguments can be made for either formulation. The quantity variable was assumed to be dependent since the elasticities required by the spatial equilibrium component could be obtained more directly. 134 Table V-l: Beef Consumption Data Taken from the Urban Consumer Surveys Location Quantity Income Price (lbs./capita/year) (£/year) (d/lb.) Kaduna a 50.5 39.4 18.8 b 58.2 78.8 18.8 c 68.2 179.3 18.8 Gusau-Sokoto a 31.5 25.7 15.6 b 54.1 50.2 15.6 c 63.7 135.5 15.6 Enugu a 14.6 29.8 29.3 b 17.1 61.1 29.3 c 29.5 173.0 29.3 Onitsha a 16.2 46.6 31.7 b 17.1 63.1 31.7 c 30.9 145.4 31.7 Akure-Ondo-Owo a 13.7 23.5 30.8 b 23.7 57.5 30.8 c 21.7 139.2 30.8 Oshogbo-Ife-Ilesha a 22.5 19.3 23.0 b 32.3 44.8 23.0 c 39.4 137.0 23.0 Lagos b 33.0 68.0 28.0 c 36.6 108.2 28.0 NOTE: These are the only areas from which consumer surveys were avail- able. However, they are distributed in the three major cultural areas of the country. (See Figure 10). The survey defined a, b and c as: a - self-employed workers ' b - wage earners c - middle income 135 An alternative approach to the estimation of the demand coeffi- cients would have been to specify the quantity and price variables as endogenous in a simultaneous two equation system as given below. (1) Q a a1 + bllP + blZI + 111 (2) P 8 a + b21Q + u 2 2 where Q - quantity of beef P - price of beef I - income ul, u2 = disturbance terms If this were the "true" model, P and u in equation (1) would be 1 correlated. This violates an assumption of ordinary least squares estimation in dependence between the independent variables and the disturbance term. Therefore, the direct application of least squares will not yield unbiased or consistent estimates of the regression coefficients.5 However, Johnston points out that "This fact alone will not necessarily rule out the use of ordinary least squares as an estimating method, since the choice of a method in practice has to be made on a balance of the properties of the method and computational simplicity. Moreover, bias is not necessarily the most important property of an estimator, but has to be judged in conjunction with 5Jean Bronfenbrenner gives a thorough verbal and mathematical explana- tion of this in her article "Sources and Size of Least-Square Bias in a Two—Equation Model" in W. C. Hood and T. C. Koopman's book Studies in Econometric Method, J. H. Wiley and Sons, New York, 1953, pp. 221- 235. 136 variance".6 Johnston continues by giving a concise survey of results of Monte Carlo studies that are directed to comparing four different methods of estimating simultaneous equation systems. The methods compared were ordinary least squares (OLS), limited—information single-equation (LISE), two-stage least-squares (TSLS), and full- information maximum-likelihood (FIML). The first study (done by Summers) included in this survey compared these four estimation methods in terms of bias, variance of the estimates around their means, (SD), and the variance of the estimates around the true value of the parameter being estimated (called mean-square error--MSE). OLS per- formed poorest relative to the other methods in terms of bias in the estimates. However, the OLS estimates had the lowest variance and were second to FIML estimates in terms of minimum MSE. If specifica- tion errors are included in the equations, OLS estimates had as high or higher frequency of best results in bias, variance, and mean-square error as compared to the other three estimation methods. In general, the ranking of OLS estimates was below the other three when no speci- fication errors were made, but was close to the top in MSE ranking if specification errors were present. The next study (done by Basmann) summarized by Johnston involved comparing OLS estimation with TSLS and LISE. The results were that OLS estimates had the worst bias, but on the mean square deviation and variance they were better than TSLS in four cases out of five, and 6Johnston, J., Econometric Methods, McGraw-Hill Book Company, Inc., New York, 1963 p. 253. Johnston gives a concise account of some of the alternative methods of estimating simultaneous equations and comparative results in the last two chapters of this book. 137 both were substantially better than LISE. Wagner compared OLS with LISE and concluded that OLS showed a greater bias but smaller variance and mean square error. Other studies included in this survey also had mixed results when comparing these simultaneous equation estimation methods. Karl Fox compared the estimates obtained from reduced form esti- mation with the OLS estimates of a pork demand function with the same dependent and independent variables as the beef demand function esti- mated in this study. He found the structural coefficients to be within less than two standard errors of the OLS estimates: the differences were not statistically different.7 Fox also compares OLS estimates of the coefficients of a simultaneous model of the U.S. economy with the structural coefficients obtained. He found that 32 of the OLS coeffi- cients were within one standard error, and 45 within two standard errors, of the corresponding coefficients. In general, it is not clear which estimation procedure is "best" for estimating systems of simultaneous equations. Also, it does not appear that one method is uniformly worse than the others. Additional research on estimating demand functions for beef in Nigeria should be directed first to acquisition of more data and secondly to estimation procedure and form. The cross section consumer surveys were the only source of infor- mation on beef demand that could be located for use in this study. 7Ezekiel, M. and K. Fox, Methods of Correlation and Regression Analysis, J. H. Wiley 5 Sons, Inc., New York, 1959, p. 424. Chapter 24 gives an interesting example of the simultaneous equation problem in terms supply and demand for an agricultural commodity. IIIIIIIII I'llll'lll I'll. ll ljll .Il’ I’ll! I! II. III]. III in 'I ’1' ff .1 I. ‘l 'III'III 138 An analysis of time series data would have been useful for comparing results. However this was not available for Nigeria. For a detailed discussion of time series versus cross section data see Klein {20} and Manderscheid {26}. An examination of the data in Table V-l indicates that the income levels among the locations where the surveys were taken overlap con- siderable while price differences among locations are much larger. If there are differences among cities in tastes and customs affecting beef consumption, the effects of these differences will probably be reflected in the price coefficient. If these differences are uncor- related with the prices, no bias will result in the coefficient estimated for price. If they are correlated, there will be a bias although the direction of the bias would not be known g_priori. The price elasticity of -l.54 appears reasonable as different kinds of meat are available to substitute for beef in the Nigerian diets (e.g., goat meat, mutton, fish and "bush" meat from undomesticated animals). Beef is considered somewhat of a luxury in the diets of most Nigerians although since the quality is so low this point could be easily over emphasized. Both of these characteristics would lead one to think that the demand price elasticity for beef is somewhat elastic. The income elasticity for beef of 0.37 is somewhat lower than what might be expected. However, this estimate was utilized in this study because no other comparable estimates were available. In addition, the estimate of the percentage increase in demand through time is relatively insensitive to the income elasticity assumed.~ Given the population growth rates in the areas defined in this study 139 (see Table V-2), if the income elasticity was underestimated by 50 percent, the increase in demand would be only 10 percent higher. For example, if the population growth rate in an area is 3.5 percent annually and per capita income increases 2 percent annually, an assumed income elasticity of .37 would cause the demand for beef to increase approximately 4.24 percent per year. If the income elasticity was actually 50 percent higher (.55), the demand for beef would increase approximately 4.6 percent per year. The demand price elasticity (-1.54) was incorporated in each area demand equation which had to be arithmetically linear in the following manner. Since price elasticity is equal to %%-° g-, the coefficient for the price variable in a linear demand function 3%- is equal to -l.54 x %-. The prices and quantities demanded in each area were taken from Tables III-l and IV-4 respectively.for each area. From the known values of q, b and P the intercept value of a was derived by 81 - Q1 - bP for 1 - 1’ 2 .0... 15. 1 Since the model is to be run through time, the influence of popu- lation growth rates for the areas in this study were taken from data reported by the Centre for Population Studies {30}. These figures are shown in Table V-2. It is assumed in this study that these rates of growth will continue at the same magnitude throughout the time the model is run. The high population growth rates in the two large southern consuming areas (14 and 15) indicate that the beef distribution system will have to expand its ability to transport quantities of beef from the producing areas to these consumption areas. 140 Table V-2: Population Increases in 15 Designated Areas of Nigeria Population Percentage A£g§_ Increase Per Year l-Sokoto 2.2% ' 2-Katsina 2.4% 3-Kano 2.4% 4-Bornu 3.2% 5-Nguru 3.2% 6-Niger 3.4% 7-Zaria 2.5% 8-Bauchi 2.8% 9-Adamawa 1.6% lO-Ilorin 5.7% ll-Plateau 2.4% 12-Benue 3.2% l3-Sarduana 2.5% 14-West 6.6% lS-East 6.0% Source: Okonjo, C. "A Preliminary Medium Estimate of the 1962 Mid-Year Population of Nigeria" in The Population of Tropical Africa Ed. by J. C. Caldwell and C. Okonjo, Longmans of Nigeria LTD, Ikeja, pp. 86-97. 141 Per capita income is assumed to grow at 2 percent per capita per year in all areas through time. This growth rate was obtained from the FAO study on Nigerian agriculture {8}. This assumption was made because there is really no good data on which to base an alternative one. Demand functions in each area were calculated at 5-year intervals for a 20-year period incorporating these assumptions on population growth, income elasticity, and per capita income growth. Therefore, each area was represented by demand functions at time zero, five, ten, fifteen, and twenty years. Supply Estimates The spatial equilibrium model requires arithmetic linear supply functions for each area. The same general procedure was used to derive the area supply functions as was used for the demand functions. The supply function was estimated from data on number of cattle marketed in Nigeria from 1956/57 to 1964/65 and the corresponding annual prices.. These data and their sources are given in Table V-3. The following relationship resulted. 2 log q = 1.395 + .92 log P 112-"79 (.288) (.3) R = .76 where: q = number of cattle marketed p = price in pence per pound. All coefficients were significantly different from zero at the 95 percent confidence level. The standard errors are in parentheses below the estimated coefficient. 142 Table 6, p. 78. Table V-3: Prices and Quantities of Cattle Marketed in Nigeria 1956/57-1964/65 Year Number of Cattle Average Price (d/lb.) 1956/57 682,000 17.6 1957/58 665,000 16.3 1958/59 635,000 17.8 1959/60 725,000 18.0 1960/61 752,000 17.9 1961/62 805,000 19.2 1962/63 795,000 20.0 1963/64 839,000 20.3 1964/65 860,000 21.0 SOURCE: Number of cattle marketed was taken from Ferguson, {7}, The average price in Nigeria was taken from Ferguson, {7}, Table 28, p. 169. The price was derived by taking the pro- portion of cattle sold in North times the northern price plus the proportion of cattle sold in the South by the southern price. 143 The supply price elasticity (.92) was incorporated in each area supply function in the same manner as described for the demand functions, but using the prices and supplies given in Table 111-1 and IV-3. ,A problem arises from estimating an annual supply response function from time series data. If, through time, the supply function does not shift while the demand function moves, the observed data points would approximate the stationary supply function. However, this may not have been the situation during the time period over which the supply response was estimated. Ferguson {7,p.69} estimated the maximum growth rate of the cattle population at about 1 percent per year. Others feel that there has been no growth in population. Demand probably grew at about 3 - 3 1/2 percent per year during this time period from popula- tion and income increases. Therefore, it is clear that the demand curve shifted farther than the supply function. However, if the cattle population did increase during the observed time period, the estimated supply response would be more elastic than the annual supply functions. Therefore, the estimated quantities supplied would be slightly over estimated for prices higher than the equilibrium observed price and slightly under estimated for prices lower than the observed equilibrium price. In this study, it is assumed that total herd size will continue to change in the same magnitude and direction through the time the model is run as occurred during the time of the observations. More data relevant to supply response analysis for the Nigerian beef industry is badly needed. Some useful new theoretical concepts have been developed that can aid in gathering data pertinent to the problem. Glenn Johnson {16,17} has developed an extension of cost and II" 4" Ill!H ill-III I III ‘II III. "I.’ II ' ‘Illlll 144 production theory that is directly related to supply response analysis. He observed that the price of acquiring more of a resource for use in production (acquisition price) was higher than the price a producer would receive if he wanted to sell the resource (salvage price). This situation occurred for farm produced durables such as breeding stock and pasture stands; for nonfarm durables; and for resources like farm labor. This situation holds for resource movement into and out of a particular farm and for the farming industry as a whole. Within this framework, to maximize profits, more of a resource would be purchased if its marginal value product (MVP) was higher than the acquisition price. The resource would be sold if the MVP becameless than the salvage price. Since the price of acquisition is greater than the salvage value, the MVP can fluctuate between the two and not cause a change in the level of resource use or product output. Obviously, a profit maximizing farmer would not intentionally invest in a resource to the point of lowering its MVP below the acquisition cost. However, a decline in the product price in a subsequent period will cause the MVP to drop from being equal to being less than the acquisition cost. If this decline in output price was not sufficient to lower the MVP below the salvage value, no change in input useage or output would occur. Additionally, a consequent increase in product price would not induce an increase in output until the MVP was raised above the acquisition price. These two situations would be plotted as completely inelastic portions of the supply function. This theoretical extension helps to explain the overcommitment of resources to agriculture at rates of return below nonfarm earnings, the seemingly irreversibility 145 of supply functions from output price decreases and other phe- nomenon. It is likely that some of the resources used in cattle production in Nigeria might exhibit significant differences in acquisition costs and salvage values. Given the social structure of the Fulani and their employment opportunities in areas other than cattle production, the salvage value for their labor must be quite low. The salvage values for the young breeding stock is low relative to slaughter cattle prices since the costs of moving young cattle to market are substan- tial. For the cattle producers as a group, the salvage value of the range land is zero since almost none of it is owned and hence can not be sold. The acquisition prices of land that could be added to the grazing area would be relatively high since this would entail buying farm land or eliminating the tsetse fly. Given the situations of these three important resources, it appears that Johnson's fixed asset theory would be useful in analyzing the supply response of the Nigerian beef industry. In order to apply these concepts, more data is needed on the acquisition and salvage prices of these inputs, opportunities of employing these resources outside cattle production, basic price and quantities supplied obser- vations, and input-output relationships of cattle production. The relationships between quantities supplied and changing transportation and range conditions are also inportant. Some of these relationships could be internalized by merging the beef distribution and production models. 8 See Johnson {16,17} for a full theoretical development of these ideas and a discussion of their ramifications. 146 Tran8portation Policies The model allocates supplies among areas so that the price differ- ence between two areas is less than or equal to the transfer charge. Therefore, the transfer charge limits the price spreads and hence affects the supply and demand in each area. This, in turn affects the interarea shipment requirements placed on the transportation system. All this means that the size of the interarea shipments that the dis- tribution system will be required to service will depend in part on how that system is organized for the task. Figure 13 illustrates this simple concept in the static sense. If t denotes the initial 12 transfer charge, the interarea shipment quantity is xl-yl=y2-x2. 12 shipment increases to x1'-y1' = y2'-x2' (see Figure 13). However, if the transfer charges are altered to say t , the interarea This model was built to estimate the demands on the distribution sector of increases in population and per capita incomes and of following alternative investment programs through time. Three policy options are analyzed for the transportation sector. First, a policy that closely parallels the present one which is that of furnishing fewer rail cars than can be economically utilized. This means transfer charges between areas are essentially the costs of trekking since the number of rail cars is limited. The second alternative is to furnish as many rail cars as are demanded so that the transfer charge between areas is the cheaper of the trekking or railing costs. The third is to start a trypanosomiasis control program for trekking cattle and reducing the turnaround time of rail cars between points by one-fifth. The cheaper of these two resultant transfer costs is used as the tij for 147 mowumso wommcwuy ucouonHC 039 Lqu mson mmumuoCCH aoHunHHHovm ”CH muome HNAAHX ..HK Hun H.» m.» mun Nun N.C mm N.C.Nun HHsan N N A NV v NH Nmu 25:... H ANvam N can H mmoum cooauon moCumso woumamuu I Nmu .N u CHo>Huoonmou N Cam H mmoum oH msOHuosou CHCCoC I HNvam .AHvam CHo>HuooCmou N van H mmouw 6H chHuocom vamaoa I HNCva .AHCvHu 148 that particular route. In the following results section, the first situation is denoted as I, the second, II, and the third, III. These three sets of transfer costs were generated by the TRNSCST model using the equilibrium price arrays given by this spatial equilibrium model. As explained in the procedures section of Chapter I, the estimation of these interarea distribution costs and price arrays is done in a recursive way. The prices calculated for year t are used to calculate the transfer charges for year t+l which are inputs to the component that estimates prices for year t+l. These prices are then used to calculate the transfer charges for year t+2, etc. Therefore, as prices increase, the transfer charges calculated for each year will be biased downward. The elasticity of transfer costs with respect to price is about 0.5. This means that if prices increase 1 percent, the transfer charges increase about .5 percent. The results from the model runs indicate prices of beef are increasing 2 - 3 percent per year. There- fore, the transfer costs for any one year may be underestimated by about 1 - 1.5 percent. Results This spatial equilibrium model was run at five year intervals for twenty years for each of the three transportation inVestment options. The results are the equilibrium prices, quantities demanded, quantities supplied, and excess supply or demand in each area and the equilibrium interarea flows among the areas. Tables V-7 to V-21 present these data along with total area beef expenditures and receipts in tabular form. Appendix III gives most of these results in graphical form by 149 comparing the prices, quantities supplied and demanded and excess supplies or demands within most areas for the three transportation investment options. A preliminary model run was made to check the spatial equilibrium model results with the estimated supplies, demands, and prices given in Chapter III and IV. These results are given in Table V-4. In general, the model results were reasonably close to the previous estimates. The results for area 6 and area 10 were farther from the estimates in percentage terms than any of the other areas. Prices reported for area 10 in Nigerian statistical references are somewhat lower than one would expect from the prices in areas surrounding it. This can partially be explained by the fact that this is the area where many of the sick trek cattle are sold at low salvage prices that were to be trekked to the Ibadan and Lagos markets. This large number of lower quality cattle could tend to depress the price of beef in this area. Interarea Flows Through_Time The model results show that the number of cattle moving to the southern areas (14 and 15) will be increasing fairly rapidly irregard- less of the beef transportation investment strategy followed. Table V-5 shows the percent increases in shipments to areas 14 and 15 under all three options through time. In year zero, the percent of cattle moving south is around 39% if no investment is made in a trypanosomiasis control program or improved rail service-option I and 43% if both these programs are instituted-option III. The estimates in Chapter IV indicate that about 47% of the total number of cattle marketed in 1963 were shipped to the south. This model's estimates are lower because of 150 Table V-4: Comparison of Model Results with Previous Estimates of Price, Demands and Supplies in the 15 Areas Table III-1 SEM Table IV-3 SEM Table IV-4 SEM Area Price Price Supply Supply Demand Demand (£'s per (£'s cow) per cow) No. of Cattle 1 17.8 18.5 162,500 167,350 77,942 74,927 2 20.8 21.0 70,000 70,700 43,586 43,068 3 20.8 21.1 112,000 113,089 101,016 100,625 4 16.0 15.5 132,000 128,016 28,715 30,483 5 17.5 17.0 110,000 106,714 13,845 14,952 6 27.4 25.9 25,300 24,200 23,587 25,913 7 22.6 21.5 16,800 15,600 26,152 28,547 8 17.5 17.3 51,000 49,559 44,100 44,915 9 16.0 16.9. 70,000 78,753 21,023 20,514 10 22.2 23.9 25,000 26,821 31,992 30,332 11 17.5 18.5 32,550 34,150 24,614 23,241 12 24.5 24.0 14,075 13,835 55,892 57,529 13 16.0 16.0 32,550 32,550 20,511 20,511 14 31.5 32.3 2,500 2,560 246,000 245,640 15 31.0 31.0 12,500 12,500 110,000 110,000 Total ---- ---- 868,775 870,397 '868,775 870,397 151 Table V-S: Total Number of Cattle Produced and Exported to Areas 14 and 15 for 20 Years Under the Three Options Total % Increase Number of % Increase % of (b) Production of (b) ina 5 Cattle Moving of (c.)in a 5 Moving to Time (a) (b) year period to 14&15 (c) ,year period Areas 14815 Option I (No. of cattle) 0 850,118 328,584 39% 17% 41% 5 993,604 463,595 47% 13.5% 28% 10 1,128,083 595,354 53% 12.5% 25% 15 1,270,871 743,148 58% 11% 21% 20 1,415,321 896,591 63% Option II --------- 0 862,694 348,409 40% 17.1% 40% 5 1,010,471 488,494 48% 13.8% 29.5% 10 1,150,441 633,258 55% 13.0% 26% 15 1,300,040 799,087 61% 11.7% 22.5% 20 1,452,948 981,201 67% Option III --------- 0 881,015 376,605 43% 17.2% 40% 5 1,033,248 532,578 51% 14.1% 29% 10 1,179,904 688,616 58% '13.7% 27.4% 15 1,342,588 877,614 64% 12.2% 23.3% 20 1,506,738 1,082,973 71% 152 the loss of 1/2 of the market in area 15 in year zero. However, the percentage of total marketings going to areas 14 and 15 increase steadily through the twenty year time span. In year 20, it is estimated that 63% will be marketed in the two southern areas even if no substan- tial improvements are made in interarea transportation. This figure increases to 71% under option III which reduces interarea transfer charges significantly. This means that the demand for interarea trans- portation services will increase over 2.8 times in the 20 year period. This represents an increase of about 5.3 percent per year. This per— centage would probably increase for a few years if one moved from option I to option III during the 20 year time span. Ferguson estimated that supplies to the two southern areas had increased at about 5.2% per year from 1955/56 to 1964/65 {7,p.174}. Because the lower transfer charges among areas, more cattle are distributed for option III to areas 14 and 15 than any of the other two options. Under option 111, a total of 1,082,973 cattle are allocated to areas 14 and 15 in year 20 costing consumers about L34 per head. Option I provides 896,591 cattle at about £37 per head. Therefore under option III, 20 percent more cattle are provided at about 9% cheaper prices to consumers in areas 14 and 15. Table V-6 shows the major importing and exporting areas and inter- area flows through time for all the options. The major exporting areas are 1, 2, 3, 4, 5, 8, 9, 11, and 13 with areas 12, 14,.and 15 being large importers. Areas 6, 7, and 10 are neither large exporters or importers in any case. Sokoto, Katsina, Bornu, and Nguru (1, 2, 4 and 5) are the major export areas of cattle to the western area. Through omo.mH II oHN.os ««H.H II nmoImm II II NCCINH II II mmoImN II II HHHINH NH onm.Nn II II nmm.Hs II II mos.Hm II II omm.NN II II Nam.sH II II HH nmN.mNH II II on.moH II II NoN.NN II NNo.oH CCH.HC II NCN.NH mom.sm II aNo.H a mNm.wo II II mNo.mm II II NHo.Nm II II Hmm.sN II II II II HN¢.o C II mNN.omH II II «NN.soH II II «HC.HHH II II «CH.HNH II II «no.0m II n NNn.oH mms.mHN II CHH.N NNo.me II smH.NH oso.HsH II «CN.CN CHH.NOH II II HmN.mm NHN.mH a II «CN.Cm II II ooo.sm II II NNn.eN II II «NN.N II II II II H II NNo.oN II II «NN.NC II II NNC.NN II II smm.mN II II NNN.oH II N II mNN.HmN II II Non.NHN II II mNs.oNH II II mas.msH II II Nom.mHH II H III II HHH aoHueo Nss.ss II II mNN.oN II II HNm.mN II II Noo.HN II II II II nNo.mH NH smm.Ns II II Nam.Nm II II NCN.mN II II msH.HN II II II II NNo.mH HH HNo.Hw II Hao.mm Nao.mo II soh.mm mNe.sq II oHs.mm mHm.mN II NNo.mm Hmm.Hs II NCN.HH m NHs.No II II Hoo.Ns II II HNm.Nm II II moN.HN II II Nam.m II II a II mNm.mmH II II wom.HoH II II mmo.mmH II II NHm.mHH II II wmo.mm II C II Nso.moN II NNn.H onN.mNH II NHm.NH oom.CMH II NCC.NN Ham.ooH II NCN.oH NCH.mN II c II nsm.mN II II NCN.ne II II «NH.HN II II ems.H II II II II H II mmm.mn II II soH.ns II II aNs.HN II II CNN.NN II II oNN.NH II N II nmN.mHN II II NNs.owH II II omN.omH II II «CN.CNH II II mHN.HoH II H HH aoHuro Hmo.sm II II HmmIHm II II onm.mN II II NoNIwH II II II II soo.oH mH NNN.HH II II mNm.Nm II II NHH.oN II II mmN.mH II II smH.HH II II HH oNo.mo II mNm.Ns osm.as II Nms.Ns Nom.om II Hms.Ns mam.oN II cso.ms mNH.Hm II II a on.ms II II oNN.Hm II II oom.mN II II Hoa.NH II II II II «CC.N C II Hmo.NoH II II mas.wsH II II st.mNH II II HHN.HHH II II NNn.eN II n «HC.HC HNH.NN II osH.Hn CNN.CN II ons.ms mms.so II Hno.ms «NC.HH II was NHH.mN ooo.nN 8 II onm.sn II II mHm.os II II NNN.¢H II II CN«.N II II II II H II «NN.NH II II eNm.Ns II II CCN.HN II II mNN.oN II II HHm.nH II N II ooN.omN II II osH.mHN II II «so.omH II II NoN.mmH II II mmm.mNH II H CH HH NH «H 4H NH nH «H NH mH 4H NH mH 4H NH ouoaxm CN “mow CH Mao» CH umow C you» ouoN uaow uuonaH H soHu o mcoHuCC mouse HH< nova: COHuom oeHH umo» CN m cH mmou< Coos< .oHuumC mo mson moumuouaH uofiwz nCI> oHan 154 all the years and for all the options, cattle are sent from these four areas to area 14. The pattern of exports from the large supply area 4 varies with investment options. under option 1, approximately 2/5 of the total export of area 4 goes to the eastern area. As the number of rail cars are increased (option II) area 4 exports almost exclusively to the western area. This occurred because rail transportation tends to be more economic than trekking over longer distances. Therefore, area 4 captured some of the western market from area 1 which trekked cattle to the south. The slack in demand left in area 15 was made up by increased shipments from areas 8 and 9. As trekking becomes cheaper (option III) area 1 exports more to 14 than under option I or II. Since the cattle in much of area 1 are quite far from rail points, an increase in the number of rail cars available tends to decrease the number of cattle being exported from that area, because other areas can better utilize the additional rail cars (e.g. area 4 increased exports as rail car numbers increased). It is interesting to note that area 3 in year zero does not export any cattle. However, as demand increases in the southern areas, area 3 rapidly becomes a major exporter to area 14 under all options. How these rapid increases in exports are generated in the northern areas will be discussed later in this section. Area 15 received cattle from area 9 under all options in every run. As this eastern area recovers from the war, areas 8, 11 and 13 become additional major sources of supply for it. The traditional pre-war exports of areas 8, 9, 11 and 13 to area 15 were diverted to area 12 or kept within these areas. As shown in Appendix Figure III-23 155 less cattle tend to be exported to area 15 under option 11 (increased number of rail cars) than under options I or III. Since two of the major export areas to area 15 are not served by rail (9 and 13), an improvement in trekking is important to consumers in this eastern area. As the demand for beef rapidly increases in area 15 through the rehabilitation period, exports to area 12 are diverted to the eastern area. From year 5 on, area 12 is supplied by exports from either area 9 or 13. Again, neither of these areas is served by the rail system. Increasing the number of rail cars and improving trekking conditions both tend to decrease the number of cattle being exported to area 12 (see Appendix Figure III-21). As trekking becomes cheaper, cattle tend to move from area 13 to area 15 rather than area 12. As more rail cars are provided, area 11 exports to area 15 at the expense of area 12. Therefore, as a result of improving the transportation methods area 12 may pay higher prices for fewer cattle than if no improvements were made. The importance of improvement in trek costs is emphasized by the fact that through time areas 1, 9 and 13 continue to be major exporting areas which are not served by the rail system. Demand Table V-5 shows that the percentage increase in exports of the northern areas to the southern areas is less than the percentage increase in production in these areas. Since increased production can not fulfill the expanding demands in the southern areas, many northern areas may actually retain fewer cattle for consumption within the area. This phenomenon occurs in areas 1, 2, 3, 4, 5, 8, 9, 11, and 13 (see 156 Appendix Figures III-16 to III-19). As transfer charges are lowered (especially Option III) and demands increase rapidly in areas 14 and 15, more cattle are diverted from local markets and exported to the southern areas. This tends to increase local prices and hence decrease quantities demanded within these areas. Informed people in Nigeria feel that the population of cattle in Nigeria and surrounding countries is becoming a limiting factor. While this study does not look at the population Of cattle, it does show that many areas within Nigeria may face declining numbers of cattle available for consumption purposes. It also indicates that an increasing percentage of this limited supply of market cattle will tend to be exported to the southern areas especially if transfer costs are lowered by investments in beef trans- portation. Appendix Figure III-36 shows the increase in cattle marketed through the 20 year period. These increases amount to about 2% increase per year. However, this does not imply an increase in the population of cattle. An increase in the extraction rate from around 7-8 percent to around 14% in 20 years would provide these increased marketings from a stable cattle population. This may not be unreasonable to expect as the extraction rate in the U.S. and other I developed countries is around 27 percent. Area Beef Expenditures and Receipts Total expenditures and receipts increased at about 6 percent per year through the 20 year time span under all three options. In year 20, total beef receipts and expenditures were approximately £49,000,000 for option III, £48,300,000 for option 11 and £46,900,000 for option 1. Over the 20 year time period, the estimated total receipts generated 157 under option III would be about £11,500,000 more than the total received by the beef industry under option I. In other words, the beef industry would gain an average of £575,000 per year in total receipts for 20 years from investments to control trypanosomiasis and furnish adequate numbers of rail cars. The increases in total receipts were not shared equally by all areas for all investment options. Table V—22 shows the total receipts and total receipts minus marketing charges for the nine large export areas in year 20 of the model run. All these areas had higher receipts under investment option 111, after the marketing charges were subtracted than if option I had been followed. However, this is not the case for option II relative to option I. If an adequate number of rail cars had been furnished, but no trypanosomiasis control program implemented, areas 1 and 2 would have had lower total receipts in year 20 than they would have received under option I. This occurs because under option II, cattle from areas 4 and 5 move to area 14 at the expense of shipments from areas 1 and 2. Summary In this chapter, the interarea trade pattern for beef was esti- mated through time for three investment options in beef transportation. The results show that shipments to the southern consuming regions (14 and 15) are likely to increase fairly rapidly irregardless of the transportation investment strategy followed. In year 20, 63-71% of the total cattle marketed will be shipped to areas 14 and 15. If an effec- tive trypanosomiasis control program is implemented and adequate rail service is provided, consumers in these two southern areas will be 158 Table V-7: Equilibrium Area Prices, Quantities, Expenditures, Receipts and Interarea Flows at Year Zero, Option I Excess Total Total Area Price Demand Demand Expenditures Supply Receipts (£/cow) (NO. of (NO. of (£'s) (No. of (£'s) cattle) cattle) cattle) 1 20.5 -125,355 59,933 1,228,627 185,288 4,951,670 2 19.0 - 15,311 49,115 933,147 64,424 1,387,884 3 19.9 + 564 108,089 2,150,971 107,525 2,139,748 4 13.5 - 77,210 35,783 483,071 112,993 2,412,531 5 16.8 - 90,937 15,013 252,218 105,950 2,947,520 6 23.3 + 7,172 28,991 675,490 21,819 508,383 7 20.7 + 14,074 29,575 612,203 15,501 320,871 8 17.0 - 3,844 45,815 778,855 49,659 864,961 9 16.4 - 51,128 20,486 335,970 71,614 1,660,186 10 25.7 - 4,635 23,880 616,543 28,625 754,203 11 18.4 - 11,484 22,608 415,987 34,092 713,423 12 22.4 + 40,414 53,379 1,195,690 12,965 290,416 13 15.7 - 10,904 21,084 331,019 31,988 575,268 14 29.7 +264,986 267,354 7,940,404 2,368 70,330 15 25.9 + 64,598 68,905 1,784,845 5,307 137,451 Total -- --- 850,118 19,734,845 850,118 19,734,845 Interarea Shipments Route Number of Cattle Route Number of Cattle 1-14 125,355 5-14 90,373 2-14 15,311 8-12 3,844 4-6 7,172 9-15 51,128 4-7 14,074 10-14 4,635 4-12 25,666 11-15 11,484 4-14 29,312 13-12 10,904 4-15 986 5-3 564 159 Table V-8: Equilibrium Area Prices, Quantities, Expenditures, Receipts and Interarea Flows at Year 5, Option I Excess Total Total Area Price Demand Demand Expenditures Supply Receipts (£/cow) (No. Of (No. of (£'s) (No. of (£'s) cattle) cattle) cattle) 1 22.3 ~155,762 54,933 1,225,006 210,695 6,178,238 2 21.4 — 26,778 48,746 1,043,164 75,524 1,894,705 3 21.4 - 7,475 113,382 2,426,375 120,857 2,664,080 4 16.1 -104,390 35,145 565,835 139,535 3,506,325 5 19.2 -lll,7ll 14,235 273,312 125,946 3,825,722 6 25.1 + 8,224 32,754 822,125 24,530 615,703 7 23.0 + 11,941 29,888 687,424 17,947 412,781 8 19.1 - 12,901 45,214 863,587 58,115 1,215,785 9 18.1 - 63,938 18,541 335,592 82,479 1,943,372 10 27.5 - 7,384 24,666 678,315 32,050 913,126 11 20.5 - 18,259 21,345 437,573 39,604 936,043 12 24.1 + 43,040 57,612 1,388,449 14,572 351,185 13 17.9 - 18,202 19,758 353,668 37,960 850,583 14 31.8 +344,684 347,343 11,045,507 2,659 84,556 15 27.3 +118,911 130,042 3,550,147 11,131 303,876 Total -- --- 993,604 31,963,583 993,604 31,963,583 Interarea Shipments Route Number of Cattle Route Number of Cattle 1-14 155,762 5-14 111,711 2-14 26,778 8-15 12,901 3—14 7,475 9-12 43,040 4-6 8,224 9-15 20,898 4-7 11,941 10-14 7,384 4-14 35,574 11-15 18,259 4-15 48,651 13-15 18,202 160 Table V-9: Equilibrium Area Prices, Quantities, Expenditures, Receipts and Interarea Flows at Year 10, Option I Excess Total Total Area Price Demand Demand Expenditures Supply Receipts (£/cow) (No. of (NO. of (£'s) (NO. of (£'s) cattle) cattle) cattle) 1 24.0 —186,069 51,234 1,229,616 237,303 7,518,748 2 23.0 - 34,758 50,092 1,152,116 84,850 2,326,936 3 23.0 - 19,727 116,070 2,669,610 135,797 3,336,383 4 17.8 -126,239 34,680 617,304 160,919 4,538,462 5 20.8 -128,329 14,264 296,691 142,593 4,634,211 6 27.2 + 8,434 36,198 984,586 27,764 755,181 7 25.1 + 9,364 29,822 748,532 20,458 513,496 8 21.0 - 23,360 43,374 910,854 66,734 1,588,294 9 20.0 — 79,258 15,891 317,820 95,149 2,497,439 10 29.4 - 6,200 29,643 871,504 35,843 1,081,064 11 22.4 - 26,113 19,110 428,064 45,223 1,185,667 12 26.2 + 42,451 58,965 1,544,883 16,514 432,667 13 19.7 - 25,550 18,063 355,841 43,613 1,096,791 14 33.8 +440,068 443,027 14,974,313 2,959 100,014 15 29.0 +155,286 167,650 4,861,850 12,364 358,556 Total -- —-- 1,128,083 31,963,583 1,128,083 31,963,583 Interarea Shipments Route Number of Cattle Route Number Of Cattle 1-14 186,069 5-14 128,329 2-14 34,758 8-15 23,360 3-14 19,727 9—12 42,451 4-6 8,434 9-15 36,807 4-7 9,364 10-14 6,200 4-14 64,985 11-15 26,113 4-15 43,456 13-15 25,550 161 Table V-lO: Equilibrium Prices, Quantities and Interarea Flows at Year 15, Option I Excess Total Total Area Price Demand Demand Expenditures Supply Receipts (£'s) (NO. of (No. of (£'s) (NO. of (£'s) cattle) cattle) cattle) 1 26.0 -218,140 50,877 1,322,802 269,017 9,197,656 2 25.0 - 47,376 49,006 1,225,150 96,382 2,935,424 3 24.9 - 40,313 113,400 2,823,660 153,713 4,276,959 4 19.1 -144,730 35,885 685,404 180,615 5,512,669 5 22.6 -l48,448 13,332 301,303 161,780 5,660,276 6 28.9 + 9,529 40,389 1,167,242 30,860 891,854 7 26.7 + 7,785 30,543 815,498 22,758 607,639 8 22.3 - 31,790 42,371 944,873 74,161 1,933,542 9 21.4 - 92,297 14,278 305,548 106,575 3,035,878 10 31.6 - 12,096 28,241 892,416 40,337 1,329,081 11 23.6 - 32,878 17,049 402,356 49,927 1,424,862 12 27.8 + 42,457 61,534 1,710,645 19,077 530,341 13 21.1 - 31,851 17,042 359,586 48,893 1,350,152 14 36.1. +542,749 545,567 19,694,969 2,918 105,340 15 31.1 +197,499 211,357 6,573,203 13,858 430,984 Total -— —-— 1,270,871 39,224,656 1,270,871 39,224,656 Interarea Shipments Route Number of Cattle Route Number of Cattle 1-14 218,140 5-14 148,448 2-14 47,376 8-15 31,790 3-14 40,313 9-12 42,457 4-6 9,529 9-15 49,840 4-7 7,785 10-14 12,096 4-14 76,276 11-15 32,878 4-15 51,140 13-15 31,851 162 Table V—ll: Equilibrium Prices, Quantities, and Interarea Flows at Year 20, Option I Excess Total Total Area Price Demand Demand. Expenditures Supply Receipts (£'s) (No. of (No. of (£'s) (NO. of (£'s) cattle) cattle) cattle) 1 27.6 -250,200 48,964 1,351,406 299,164 10,884,026 2 26.5 - 59,274 47,682 1,263,573 106,956 3,521,912 3 26.5 — 59,956 111,266 2,948,549 171,222 5,232,873 4 20.4 —l65,738 36,121 736,868 201,859 6,590,863 5 24.0 -l67,051 13,034 312,816 180,085 6,677,459 6 30.5 + 10,705 44,788 1,366,034 34,083 1,039,532 7 28.2 + 5,558 30,714 866,135 25,156 709,399 8 23.8 - 43,370 39,463 939,219 82,833 2,366,092 9 22.8 -107,445 11,642 265,438 119,087 3,652,066 10 33.5 - 20,804 23,980 803,336 44,784 1,595,962 11 25.4 - 41,732 14,493 368,122 56,225 1,741,105 12 29.4 + 42,375 62,698 1,843,321 20,323 597,496 13 22.5 — 39,659 14,907 335,408 54,566 1,640,189 14 38.1 +644,406 648,041 24,690,362 3,635 138,494 15 32.9 +252,l85 267,528 8,801,671 15,343 504,785 Total -- --- 1,415,321 46,892,252 1,415,321 46,892,252 Interarea Shipments Route Number of Cattle Route Number Of Cattle 1-14 250,200 5-14 167,051 2-14 59,274 8-15 43,370 3-14 59,956 9-12 42,375 4-6 10,705 9-15 65,070 4-7 5,558 10-14 20,804 4-14 87,121 11-15 41,732 4-15 62,354 13-15 39,659 163 Table V-12: Equilibrium Prices, Quantities, and Interarea Flows at Year Zero, Option II Excess Total Total Area Price Demand Demand Expenditures Supply Receipts (£'s) (NO. of (No. of (£'s) (No. of (£'s) cattle) cattle) Cattle) 1 18.9 -101,715 70,069 1,324,304 171,784 4,192,667 2 18.7 - 12,870 50,625 946,688 63,495 1,309,622 3 19.9 0 107,525 2,139,748 107,525 2,139,748 4 15.3 - 96,226 30,452 465,916 126,678 3,147,628 5 18.0 - 99,372 13,521 243,378 112,893 2,990,527 6 24.0 + 5,727 28,140 675,360 22,413 537,912 7 22.5 + 9,674 26,406 594,135 16,732 376,470 8 17.9 - 9,719 42,354 758,137 52,073 1,000,574 9 16.7 ~ - 53,213 19,612 327,520 72,825 1,688,324 10 24.3 - 77 27,098 658,481 27,175 660,653 11 19.0 - 13,673 21,447 407,493 35,120 720,605 12 22.9 + 38,130 51,359 1,176,121 13,229 302,944 13 16.3 - 13,075 20,037 326,603 33,112 626,021 14 28.2 +285,817 286,076 8,067,343 2,259 63,704 15 26.3 + 62,592 67,973 1,787,690 5,381 141,521 Total -- —-- 862,694 19,898,917 862,694 19,898,917 Interarea Shipments Route Number of Cattle Route Number of Cattle 1-14 101,715 8-15 3,992 2-14 12,870 9-12 11,382 4-14 79,457 9-15 41,831 4-15 16,769 10-14 77 5-7 9,674 11-12 13,673 5-14 89,698 13-12 13,075 8-6 5,727 164 Table V-13: Equilibrium Prices, Quantities, and Interarea Flows at Year 5, Option II Excess Total Total Area Price Demand Demand Expenditures Supply Receipts (£'s) (NO. of (NO. of (£'s) (NO. of (£'s) cattle) cattle) cattle) 1 20.9 -132,276 66,001 1,379,421 198,277 5,336,156 2 21.0 — 23,776 50,446 1,059,366 74,222 1,775,024 3 21.6 - 10,202 111,700 2,412,720 121,902 2,671,973 4 17.8 -123,858 29,262 520,864 153,120 4,200,969 5 20.3 -119,912 12,723 258,277 132,635 3,867,628 6 26.0 + 6,042 31,375 815,750 25,333 658,658 7 24.3 + 8,246 27,128 659,210 18,882 458,833 8 20.2 - 21,268 39,948 806,950 61,216 1,402,454 9 18.9 - 68,192 17,680 334,152 85,872 2,116,555 10 25.9 - 825 29,482 763,584 30,307 788,417 11 21.1 - 21,145 19,539 412,273 40,684 1,004,333 12 24.8 + 39,679 54,640 1,355,072 14,961 371,033 13 18.5 - 21,007 18,135 335,498 39,142 923,694 14 30.1 +373,694 376,222 11,324,282 2,528 76,093 15 28.0 +114,800 126,190 3,533,320 11,390 318,920 Total -- --- 1,010,471 25,970,740 1,010,471 25,970,740 Interarea Shipments Route Number of Cattle Route Number of Cattle 1-6 6,042 5-14 119,912 1-14 126,234 8-15 21,268 2-14 23,776 9-12 39,679 3-7 8,246 9-15 28,513 3-14 1,956 10-14 825 4-14 100,991 11-15 21,145 4-15 22,867 13-15 21,007 165 Table V-14: Equilibrium Prices, Quantities, and Interarea Flows at Year 10, Option 11 Excess Total Total Area Price Demand Demand Expenditures Supply Receipts (L's) (No. of (No. of (5's) (No. of (L's) cattle) cattle) cattle) 1 22.6 -162,751 61,500 1,389,900 224,251 6,587,071 2 23.0 - 34,429 50,421 1,159,683 84,850 2,264,854 3 23.5 - 26,991 111,553 3,621,496 138,544 3,453,291 4 19.6 -148,178 27,858 546,017 176,036 5,277,907 5 22.1 -138,633 12,268 271,123 150,901 4,721,242 6 27.9 + 6,461 34,881 973,180 28,420 792,918 7 26.2 + 5,867 27,156 711,487 21,289 557,772 8 22.1 - 32,821 37,173 821,523 69,994 1,809,435 9 20.6 - 83,089 14,734 303,520 97,823 2,681,568 10 28.3 0 34,584 978,727 34,584 978,727 11 23.0 - 28,789 17,569 404,087 46,358 1,270,636 12 26.9 + 38,416 55,339 1,488,619 16,923 455,229 13 20.3 - 28,321 16,534 355,640 44,855 1,188,102 14 32.1 +486,342 489,163 15,702,132 2,821 90,554 15 30.1 +146,916 159,708 4,807,211 12,792 385,039 Total -- --- 1,150,441 32,514,345 1,150,441 32,514,345 Interarea Shipments Route Number of Cattle Route Number of Cattle 1-6 6,461 5-14 138,633 1-14 156,290 8-15 32,821 2-14 34,429 9-12 38,416 3-7 5,867 9—15 44,673 3-14 21,124 11-15 28,789 4-14 135,866 13-15 28,321 4-15 12,312 166 Table V-15: Equilibrium Prices, Quantities, and Interarea Flows at Year 15, Option II Excess Total Total Area Price Demand Demand Expenditures Supply Receipts (L's) (No. of (No. of (L's) (No. of (L's) cattle) cattle) cattle) 1 24.4 -193,063 60,276 1,470,734 253,339 8,065,995 2 24.7 - 45,104 50,199 1,239,915 95,303 2,786,983 3 25.4 - 48,075 108,525 2,756,535 '156,600 4,391,526 4 21.3 -175,279 24,755 527,282 200,034 6,535,987 5 24.0 -l61,308 10,077 241,848 171,385 5,774,712 6 29.9 + 6,091 37,937 1,134,316 31,846 952,195 7 28.2 + 2,292 26,241 739,996 23,949 675,362 8 23.9 - 47,061 32,083 766,784 79,144 2,277,442 9 22.3 - 98,856 11,936 266,173 110,792 3,321,429 10 29.9 - 213 38,079 1,138,562 38,292 1,145,868 11 24.8 - 37,897 14,417 357,542 52,314 1,574,035 12 28.8 + 35,764 55,455 1,597,104 19,691 567,101 13 21.9 - 36,378 14,255 312,185 50,633 1,479,919 14 34.3 +613,130 615,581 21,114,428 2,451 84,069 15 32.1 +185,957 200,224 6,427,190 14,267 457,971 Total -- --- 1,300,040 40,090,594 1,300,040 40,090,594 Interarea Shipments Route Number of Cattle Route Number of Cattle 1-6 6,091 5-14 161,308 1-14 186,972 8-15 47,061 2-14 45,104 9-12 35,764 3-7 2,292 9-15 63,092 3-14 45,783 10-14 213 4-14 173,750 11-15 37,897 4-15 1,529 13-15 36,378 167 Table V-16: Equilibrium Prices, Quantities and Interarea Flows at Year 20, Option II Excess Total Total Area Price Demand Demand Expenditures Supply Receipts (L's) (No. of (No. of (L's) (No. of (L's) cattle) cattle) cattle) 1 26.1 -224,122 59,597 1,555,482 283,719 9,664,260 2 26.2 - 58,555 47,267 1,238,395 105,822 3,363,942 3 27.1 - 73,545 101,317 2,745,691 174,862 5,415,374 4 23.0 —205,642 20,128 462,944 225,770 7,927,749 5 25.7 ~183,979 8,106 208,324 192,085 6,886,762 6 31.7 + 5,837 41,163 1,304,867 35,326 1,119,834 7 29.5 0 26,240 774,080 26,240 774,080 8 25.5 - 62,417 25,978 662,439 88,395 2,778,375 9 23.7 -114,762 8,550 202,635 123,312 3,978,517 10 31.8 - 5,226 37,409 1,189,606 42,635 1,379,310 11 26.3 - 47,539 10,567 277,912 58,106 1,889,484 12 30.5 + 33,691 54,724 1,669,082 21,033 641,507 13 23.3 + 44,942 11,453 266,855 56,395 1,790,389 14 36.3 +745,232 748,707 27,178,064 3,475 126,143 15 33.9 +235,969 251,742 8,534,054 15,773 534,705 Total -- --- 1,452,948 48,270,430 1,452,948 48,279,430 Interarea Shipments Route Number of Cattle Route Number of Cattle 1-6 5,837 8-15 62,417 1-14 218,285 9-12 33,691 2-14 58,555 9-15 81,071 3-14 73,545 10-14 5,226 4-14 205,642 11—15 47,539 5-14 183,979 13-15 44,942 168 Table V-17: Equilibrium Prices, Quantities, and Interarea Flows at Year Zero, Option III Excess Total Total Area Price Demand Demand Expenditures Supply Receipts (L's) (No. of (No. of (ETs) (No. of (L's) cattle) Cattle) cattle) 1 19.8 -115,507 63,873, 1,264,685 179,380 4,290,969 2 19.2 - 16,272 48,772 936,422 65,044 1,362,749 3 19.9 0 107,525 2,139,748 107,525 2,139,748 4 15.9 -101,801 29,439 468,080 131,240 3,070,525 5 18.0 - 99,636 13,257 238,626 112,893 2,813,640 6 24.3 + 5,123 27,791 675,321 22,668 550,832 7 22.5 + 9,581 26,313 592,043 16,732 376,470 8 18.2 - 11,544 41,333 752,043 52,877 1,019,296 9 17.3 - 56,592 18,654 322,714 75,246 1,672,494 10 24.0 + 838 27,702 664,848 26,864 644,736 11 19.2 - 14,557 20,906 401,395 35,463 749,308 12 22.2 + 41,176 54,035 1,199,577 12,859 285,470 13 17.4 - 17,414 17,760 309,024 35,174 695,615 14 26.2 +307,198 309,198 8,100,988 2,113 55,361 15 23.9 + 69,520 74,457 1,779,522 4,937 117,994 Total -- --- 881,051 19,845,254 881,015 19,845,254 Interarea Shipments Route Number of Cattle Route Number of Cattle 1-14 115,507 8-6 5,123 2-14 16,272 8-12 6,421 4-10 838 9-12 1,629 4-12 15,712 9-15 54,963 4-14 85,251 11-15 14,557 5-7 9,581 13-12 17,414 5-14 90,055 169 Table V-18: Equilibrium Prices, Quantities and Interarea Flows at Year 5, Option III Excess Total Total Area Price Demand Demand Expenditure Supply Receipts (£'s) (No. of (No. of (£'s) (No. of (5's) cattle) cattle) cattle) 1 21.7 -145,993 59,380 1,288,546 204,373 5,420,148 2 21.7 - 28,859 47,642 1,033,831 76,501 1,850,541 3 21.9 - 14,573 108,897 2,384,844 123,470 2,760,624 4 18.5 -132,390 26,324 486,994 158,714 4,175,547 5 20.5 -121,434 12,418 254,569 133,852 3,691,151 6 26.4 + 4,928 30,618 808,315 25,690 678,216 7 24.6 + 7,371 26,468 651,113 19,097 469,786 8 20.6 - 24,551 37,792 778,515 62,343 1,416,841 9 19.4 - 71,971 16,021 310,807 87,992 2,148,266 . 10 25.7 0 30,089 773,287 30,089 773,287 11 21.5 - 22,889 18,515 398,073 41,404 993,187 12 24.1 + 42,868 57,440 1,384,304 14,572 351,185 13 19.5 - 25,085 16,027 312,527 41,112 917,075 14 28.3 +405,696 408,085 11,548,806 2,389 67,609 15 26.0 +126,882 137,532 3,575,832 10,650 276,900 Total -- --- 1,033,248 25,990,363 1,033,248 25,990,363 Interarea Shipments Route Number of Cattle Route Number of Cattle 1-14 145,993 5-14 121,434 2-14 28,859 8-15 24,551 3-6 4,928 9-12 17,783 3-7 7,371 9-15 54,188 3-14 2,274 11-15 22,889 4-14 107,136 13-12 25,085 4-15 25,254 170 Table V-19: Equilibrium Prices, Quantities and Interarea Flows at Year 10, Option III Excess Total Total Area Price Demand Demand Expenditures Supply Receipts (£'s) (No. of (No. of (L's) (No. of (L's) cattle) cattle) cattle) 1 23.7 -180,473 54,033 1,280,582 234,506 6,766,961 2 23.4 - 37,622 48,597 1,137,170 86,219 2,280,879 3 23.9 - 33,260 107,481 2,568,796 140,741 3,555,122 4 20.4 -158,230 24,524 500,290 182,754 5,269,240 5 22.4 -l41,544 11,274 252,538 152,818 4,555,475 6 28.6 + 4,200 33,277 951,722 29,077 831,602 ' 7 26.6 + 4,531 26,123 694,872 21,592 574,347 8 22.6 - 37,013 34,463 778,864 71,476 1,815,228 9 21.3 - 87,879 13,064 278,263 100,943 2,720,737 10 28.3 0 34,584 978,727 34,584 978,727 11 23.5 - 31,403 15,901 373,674 47,304 1,252,958 12 26.2 + 42,546 59,060 1,547,372 16,514 432,667 13 21.2 - 32,469 14,249 302,079 46,718 1,152,767 14 30.4 +525,214 527,897 16,048,069 2,683 81,563 15 28.0 +163,402 175,377 4,910,556 11,975 335,300 Total -- -—- 1,179,904 32,603,574 1,179,904 32,603,574 Interarea Shipments Route Number of Cattle Route Number of Cattle 1-14 180,473 5-14 141,544 2-14 37,622 8-15 37,013 3-6 4,200 9-12 10,077 3-7 4,531 9-15 77,802 3-14 24,529 11-15 31,403 4-14 141,046 13-12 32,469 4-15 17,184 171 Table V-20: Equilibrium Prices, Quantities, and Interarea Flows at Year 15, Option III Excess Total Total Area Price Demand Demand Expenditures Supply Receipts (£'s) (No. of (No. of (L's) (No. of (L's) cattle) cattle) cattle) 1 25.7 -212,562 53,515 1,375,336 266,077 8,283,601 2 25.6 - 52,723 45,817 1,172,915 98,540 2,886,413 3 25.9 - 57,463 102,024 2,642,422 159,487 4,503,501 4 22.3 -188,l65 20,696 461,521 208,861 6,569,357 5 24.4 -164,724 9,348 228,091 174,072 5,581,621 6 30.8 + 3,067 35,801 1,102,671 32,734 1,008,207 7 28.7 + 330 24,676 708,201 24,346 698,730 8 24.5 - 53,075 27,937 684,457 81,012 2,282,014 9 23.2 -105,870 9,138 212,002 115,008 3,398,689 10 29.9 0 38,292 1,144,931 38,292 1,144,931 11 25.5 - 41,985 11,722 298,911 53,707 1,562,660 12 28.2 + 39,635 58,958 1,662,616 19,323 544,909 13 23.3 - 44,079 9,601 223,703 53,680 1,475,175 14 32.5 +669,104 673,104 21,875,880 4,000 130,000 15 30.1 +208,510 221,959 6,680,966 13,449 404,815 Total -- --- 1,342,588 40,474,623 1,342,588 40,474,623 Interarea Shipments Route Number of Cattle Route Number of Cattle 1-14 212,562 5-14 164,724 2-14 52,723 8-15 53,075 3-6 3,067 9-15 104,870 3-7 330 11-15 41,985 3-14 54,066 13-12 39,635 4-14 185,029 13-15 4,444 4-15 3,136 172 Table V—21: Equilibrium Prices, Quantities and Interarea Flows at Year 20, OptiOn III Excess Total Total Area Price Demand Demand Expenditures Supply Receipts (£'s) (No. of (No. of (L's) (No. of (5's) cattle) cattle) cattle) 1 27.7 -251,229 48,965 1,356,331 300,194 10,073,977 2 27.6 - 70,032 41,082 1,133,863 111,114 3,563,974 3 27.9 ‘- 89,763 89,952 2,509,661 179,715 5,624,437 4 24.2 -224,027 13,081 316,560 237,108 8,059,638 5 26.4 -l90,378 6,649 175,534 197,027 6,781,650 6 32.9 + 1,218 37,787 1,243,192 36,569 1,203,120 7 29.5 0 26,240 774,080 26,240 774,080 8 26.1 - 69,593 20,765 541,967 90,358 2,756,364 9 24.7 -123,253 4,982 123,055 128,235 4,043,501 10 31.2 0 41,877 1,306,562 41,877 1,306,562 11 27.2 — 52,880 7,107 193,310 59,987 1,874,894 12 29.7 + 40,240 60,757 1,804,483 20,517 609,355 13 24.7 - 53,276 6,319 156,079 59,595 1,765,752 14 34.7 +814,857 818,189 28,391,158 3,332 115,620 15 31.8 +268,116 282,986 8,998,955 14,870 472,866 Total -- --- 1,506,738 49,024,790 1,506,738 49,024,790 Interarea Shipments Route Number of Cattle Route Number of Cattle 1-14 251,229 8-6 1,218 2-14 70,032 8-15 68,375 3-14 89,763 9-15 123,253 4-14 213,455 11-15 52,880 4-15 10,572 13-12 40,240 5-14 190,378 13-15 13,036 173 Table V-22: Total Receipts and Receipts Minus Marketing Charges in Major Export Areas for Year 20 Under Three Transportation Options Option I Option 11 Option 111 Area Receipts 7 Receipts Receipts Minus Minus Minus Total Marketing Total Marketing Total Marketing Receipts Charges Receipts Charges Receipts Charges (in His) 1 10,884,026 8,254,420 9,664,260 7,405,066 10,073,977 8,315,374 2 3,521,912 2,834,334 3,363,942 2,772,536 3,563,974 3,066,746 3 5,323,873 4,537,383 5,415,374 4,738,760 5,624,437 5,014,049 4 6,590,863 4,117,924 7,927,749 5,192,170 8,059,638 5,728,014 5 6,677,459 4,322,040 6,886,762 4,936,585 6,781,650 5,201,513 8 2,366,092 1,971,425 2,778,375 2,254,073 2,756,364 2,358,344 9 3,652,066 2,715,184 3,978,517 2,922,494 4,043,501 3,167,405 11 1,741,105 1,428,115 1,889,484 1,528,188 1,824,894 1,631,646 13 1,640,189 1,227,735 1,790,389 1,344,004 1,765,752 1,471,997 174 provided with 20 percent more cattle at 9 percent lower prices than if these investments in beef distribution were not provided. The beef producers in Nigeria would gain approximately 511,500,000 in total receipts from these investments over a 20 year period. However, consumers in many northern areas may face declining numbers of cattle available for consumption in local markets as demands increase in the southern areas and as transfer charges are lowered for cattle movement to these locations. Producers in area 1 and 2 would have lower receipts from the sale of cattle under investment option II relative to option 1. However, all areas gain in terms of total receipts from implementing investment option III relative to options I or II. These changes in total cattle marketed and location of originating shipments have important ramifications on the organization of the dis- tribution system. The effects of these changes on the demands placed on the beef distribution system through time will be estimated in the following chapter. CHAPTER VI SUMMARY, Introduction A review of the total model and the relationship among its three components is stated at this point so the results and summary given in this chapter can be placed in perspective. Figure 1 illustrates the integration of the components into the overall model framework. The transportation cost component (TRNSCST) calculated the costs of trans- porting an animal between all two area combinations possible among the 15 areas for five different transportation methods (truck, trek, and rail for live animals and refrigerated truck and rail for carcasses). This component was also used to estimate transportation costs resulting from programs to control trypanosomiasis and increase the speed of rail service. The transhipment linear program component was constructed to find the configuration of transportation and slaughter facilities that would minimize the total cost of processing and shipping beef in Nigeria. The objective function of this component utilized slaughter and transporta- tion costs calculated by the TRNSCST component. The constraints of the linear program were the number of rail cars available for live cattle shipment and the estimated quantities demanded and supplied in each of the 15 areas. Two supply constraints were incorporated to represent the wet and dry season supply distributions. Several modifications were 175 176 made on this component to show the results of varying the number of rail cars available, increasing frozen meat shipments, instituting a trypan- osomiasis control program, and increasing the speed of rail service. For each modification, the appropriate transportation costs taken from the TRNSCST component were entered in the objective function. All of these runs were made at one point in time assuming constant supplies and demands (given in Tables IV-3 and IV-4) in each area. To estimate the consequences of alternative policies through time, a dynamic spatial equilibrium model (SEM) component was utilized. This component used the transportation costs estimated by the TRNSCST com- ponent and estimated supply and demand functions in each area as inputs. It allocated supplies among areas so that the transfer charge between any two areas was greater than or equal to the price difference. The demand functions were updated through the 20 year time span according to assumptions about income and population increases. The results of these runs were the equilibrium structure of area prices, quantities supplied and demanded, and the interarea trade flows among the 15 areas at 5 year intervals. After each run of the spatial equilibrium model component, the resulting equilibrium prices were used as an input to the TRNSCST component which in turn calculated new transportation costs to be used in the subsequent SEM run. The SEM component was run through the 20 year time span three times utilizing the appropriate set of transfer costs derived from TRNSCST resulting from three different transportation investment strategies. The last step in the total model process involved finding the optimum transportation configuration through time for each investment option. To do this, the transhipment linear program component was 177 utilized. The quantities demanded and supplied in each area through time for each investment option (taken from the SEM component) became constraints in the linear program while the appropriate set of inter— area costs derived from TRNSCST were entered in the objective function. Then, utilizing the appropriate costs, supplies, and demands, the linear program component was run at 5 year intervals for a 20 year time span. The results of these runs were the optimum transportation configurations for each investment option at 5 year intervals. In this chapter, the results of this final model step are reported and analyzed. Then, a summary of the major results and conclusions derived in this study is given. Finally, a research agenda is proposed that will help to both improve the estimates of the model parameters and relationships used in this study and contribute to understanding how the system may be altered to improve its performance. Requirements of the Three Investment Options on the Transportation System Through Time In Chapter V, information about the probable effects of the three transportation investment strategies were given in terms of area equili- brium prices, quantities demanded and supplied, and interarea flows of beef through 20 years of simulated time. In addition to this kind of information, policy makers are also interested in the requirements placed on the distribution system by each of the alternative plans. Therefore, the results of the model component described in Chapter V are used as inputs to the transportation linear program component to derive these requirements. For each option, the estimated quantities demanded and supplied in each area at 5 year intervals (given in Tables V-7 and 178 V-21) are used as constraints in the transportation linear program. These constraints replace those given in Table IV-3 and IV-4. The rail car constraint varies with each option. For option I, the number of rail cars available increases at about 2 percent per year. Unlimited numbers of rail cars are available for options II and III. The transportation cost entries in the objective function also change with the option being analyzed. The transfer costs for options I and II are the trek and rail costs with no increased speed of rail services or trypanosomiasis control program. For option III, the transportation costs are those that result from a trypanosomiasis control program and increased speed of rail service. The price in the destination market influences the cost of trans- porting an animal to that market because shrinkage and death costs are evaluated at the destination market's current price. Since the area price structure at the 5 year intervals is different for each option, the set of transportation charges calculated by the TRNSCST components differ for each option. Therefore, the transportation cost entries in the linear program's objective function are different for each option at the same point in time. For example, the cost of trekking an animal from area 3 to area 14 at year 10 under option I is different than the trek cost for option II because the price in area 14 is not the same. Consequently, a separate run of the TRNSCST component was needed for each option at each 5 year interval to derive the proper transportation costs for use in the linear program's objective function. The linear program was run five times representing years 0, 5, 10, 15 and 20 for each of the three options, making a total of 15. Each run utilized the appropriate area supplies and demands taken from the 179 spatial equilibrium model component. The transportation costs used in the objective function were taken from the TRNSCST component which estimated the costs from the price structure given by the spatial equilibrium component. The mathematical structure of the linear program component is given in Chapter IV. Basically, the objective is to find the least cost transportation configuration to service the interarea flows given by the spatial equilibrium model (Table V-7 to V-21). The results of this step are the optimum number of rail cars to be uti- lized, the allocation of these rail cars on particular routes, the location and number of cattle using trek routes, and the total distri- bution charge for each alternative investment option at five year intervals for 20 years. Option I Investment Strapggy_ This option entails providing fewer rail cars than can be effec- tively utilized through time. The number of rail cars available for cattle transport are increased about 2.2 percent per year through the 20 year time span. This is about the rate of increase observed over the past 10 years in Nigeria. In years 0, 5, 10, 15, and 20, the number of rail cars available are 212, 236, 272, 302, and 332 respectively. No investments are made in option I for controlling the trypanosomiasis disease along the trek routes. The results of the linear program runs for option I at 5 year intervals are given in Tables VI-l through VI-5. For year 0, the number of rail cars utilized (174) is less than the number available (212) because of the assumption that the demand in area 15 is reduced significantly due to the civil war. Forty two 180 Table VI-l: Optimum Transportation Pattern for Year 0, Option I Number of Rail Number of Method Route Cars/Year Cattle/Year Trek 1-14 - - 4 125,355 " 4-7 - 14,074 " 5-3 - 564 " 8-12 - 3,844 " 9-15 - 51,128 n 10-14 - 4,635 " 11-15 - 11,484 " 13-12 - 10,904 Rail 2-14 14 15,311 " 4-6 8 7,172 " 4-12 27 35,666 " 4-14 42 29,312 " 4-15 2 986 " . 5-14 81 90,373 Total Number of Rail Cars/Year 174 Percentage of Total Inshipments to Areas 14 and 15 Hauled by Rail - 42% Total Distribution Costs - £4,168,915 181 Table VI-2: Optimum Transportation Pattern for Year 5, Option I Number of Rail Number of Method Route Cars/Year Cattle/Year Trek 1-14 - 155,762 " 4-6 - 8,224 " 4-7 _ - 11,941 " 8-15 - 12,901 " 9-12 - 43,040 " 9—15 - . 20,898 " 10-14 - 7,384 " I 11-15 - 18,259 " 13-15 - 18,202 Rail 2-14 24 26,778 " 3-14 6 7,475 n 4-14 ‘ 50 35,574 " 4-15 56 48,651 " 5-14 100 111,711 Total Number of Rail Cars/Year 236 Percentage of Total Inshipments to Area 14 and 15 Hauled by Rail - 50% Total Distribution Costs - £5,576,421 182 Table VI-3: Optimum Transporation Pattern for Year 10, Option I Number of Rail Number of Method Route , Cars/Year Cattle/Year Trek’ 1-14 - 186,069 " 2-14 - 34,758 " 4-6 - 8,434 " 4-7 - 9,364 " 8-15 - 23,360 " 9-12 - 42,451 " 9-15 - 36,807 " 10-14 - 6,200 " 11-15 - 26,113 " 13-15 - 25,550 Rail 3-14 15 19,727 " 4-14 91 64,985 " 4-15 51 43,456 " 5-14 115 128,329 Total Number of Rail Cars Per Year 272 Percentage of Total Inshipments To Areas 14 and 15 Hauled by Rail - 43% Total Distribution Costs - £7,067,324 183 Table VI-4: Optimum Transportation Pattern for Year 15, Option I Number of Rail Number of Method Route . Cars/Year Cattle/Year Trek ' 1-14 - 219,140 " 2-14 - 47,376 " 4-6 - 9,529 " 4-7 - 7,785 " 4-15 - 24,263 " 8—15 - 31,790 " 9-12 - 42,457 " ‘ 9-15 - 49,840 " 10-14 - 12,096 " 2 11-15 - 32,878 " 13-15 - 31,851 Rail 3—14 31 40,313 " 4-14 107 76,276 " 4-15 31 26,877 " 5-14 133 148,448 Total Number of Rail Cars Per Year 302 Percentage of Total Inshipments to Areas 14 and 15 Hauled by Rail — 39% Total Distribution Costs - £8,790,925 184 Table VI-S: Optimum Transportation Pattern for Year 20, option I Number of Rail Number of Method .Route , Cars/Year Cattle/Year Trek _ 1-14 - 250,200 " 2-14 - 59,274 " 4-6 - 10,705 " 4-7 - 5,558 " 4-15 — 51,083 " 8-15 - 43,370 " 9-12 - 42,375 " 9-15 - 65,070 " 10-14 - 20,804 " 11-15 - 41,732 " 13-15 - 39,659 Rail 3-14 46 59,956 " 4-14 123 87,121 " 4-15 13 11,271 " 5-14 150 167,051 Total Number of Rail Cars Per Year 332 Percentage of Total Inshipments in Areas 14 and 15 Hauled by Rail - 36% Total Distribution Costs - 510,688,088 185 percent of the total inshipments to areas 14 and 15 were hauled by rail during year 0. Almost none of the cattle shipped to area 15 were hauled by rail while about 1/2 of the cattle transported to area 14 were railed. This occurs because the major supply areas (9 and 11) are not served by the rail system or are relatively closer to area 15 than the supply areas for area 14. These factors combined makes trekking relatively more attractive to area 15 while railing is cheaper to area 14. This phenomenon in general holds for all the runs under option I. For year 0, only 1.2 percent of the total rail cars are used to ship cattle to area 15. Approximately 24 percent are utilized in this manner in year 5. For years 10, 15 and 20, the percent of total rail cars utilized to ship cattle to area 15 is 19, 10 and 4 respectively. This indicates that rail shipments to area 15 may decline substantially if the number of rail cars becomes a serious limitation. Tables VI-l to VI-5 also show that an increase in the number of rail cars of 2.2 percent per year will not be enough to meet the demand for rail shipments. From year 5 on through year 20, the percentage of total cattle being shipped to areas 14 and 15 by rail steadily declines from 50 percent in year 5 to 36 percent in year 20. This indicates that if rail car numbers are to be less than what could optimally be used, investments in trek routes leading to area 15 should be considered. Since the percentage of cattle hauled by rail is decreasing under option I, the number of cattle using trek routes increases. The trek routes connecting areas 1 and 2 with area 14 and areas 4, 8, 9, 11 and 13 with area 15 are heavily utilized especially from year 10 on. Of 186 these routes, only 1 to 14 and 9 and 13 to 15 are less expensive to travel by trek than by rail. Cattle trek over the remaining routes because the limited number of rail cars can be used more effectively on other longer routes. Areas 3, 4 and 5 remain important rail loading points for shipment of cattle to areas 14 and 15. Option 11 Investment Strategy This second investment strategy consists of furnishing as many rail cars as are demanded for cattle shipment, but no investment is made for controlling the trypanosomiasis disease along the trek routes. Tables VI-6 through VI-lO shows the results obtained from applying the transportation linear program to the interarea flows given in Tables V-12 through V-16. The demand for rail cars increases rapidly under option II. From year 0 to 20, the number of rail cars utilized increases from 227 to 643. This represents an average increase of about 5.4 percent per year or about 2.5 times as much as rail car numbers were allowed to increase under option I. The percentage of total inshipments to areas 14 and 15 hauled by rail, is 59 percent in year 0 and increases to about 64 percent in year 20. It is interesting to note that in the model results, over 1/3 of the total inshipments to areas 14 and 15 are trekked no matter how many rail cars are provided. This occurs because major excess supply areas (1, 9 and 13) are not close to rail lines. Rail shipments comprise about 1/3 of the total inshipments to area 15 in year 0 and about 1/2 in year 20. For area 14, about 2/3 of the total imports are carried by rail in each year. 187 Table VI-6: Optimum Transportation Pattern for Year 0, Option 11 Number of Rail Number of Method Route Cars/Year Cattle/Year Trek 1-14 - 101,715 " . 5-7 - 9,674 " 8-6 - 5,727 " 9-12 - 11,382 " ’ 9-15 - 41,831 " 10-14 - 77 " 11-12 - 13,673 " 13-12 - 13,075 Rail 2-14 12 12,870 " 4-14 112 79,457 " 4-15 19 16,769 " 5-14 81 89,698 " 8-15 3 3,992 Total Number of Rail Cars Per Year 227 Percentage of Total Inshipments to Areas 14 and 15 Hauled by Rail - 59% Total Distribution Costs - £4,360,492 188 Table VI—7: Optimum Transportation Pattern for Year 5, Option II Number of Rail Number of Method Route Cars/Year Cattle/Year Trek 1-6 - 6,042 " 1-14 - ~ 126,234 n 3-7 — 8,246 " 9-12 _ - 39,679 " 9-15 — 28,513 " 10-14 - 825 " 11-15 - 21,145 " 13-15 - 21,007 Rail 2-14 22 23,776 " - 3-14 2 1,956 " 4-14 142 100,991 " 4-15 27 22,867 " 5—14 108 119,912 " 8-15 17 21,268 Total Number of Rail Cars Per Year 318 Percentage of Total Inshipments to Areas 14 and 15 Hauled by Rail - 60% Total Distribution Costs - £5,902,261 189 Table VI-8: Optimum Transportation Pattern for Year 10, Option II Number of Rail Number of Method Route Cars/Year Cattle/Year Trek 1-6 - 6,461 " 1-14 - 156,290 " 3-7 - 5,867 " 9-12 - 38,416 " 9-15 - 44,673 " 11-15 - 28,789 " 13—15 - 28,321 Rail 2-14 31 34,429 " 3-14 16 21,124 " 4-14 192 135,866 " 4-15 14 12,312 " 5-14 124 138,633 " 8-15 25 32,821 Total Number of Rail Cars Per Year 402 Percentage of Total Inshipments to Area 14 and 15 Hauled-by Rail - 60% Total Distribution Costs - £7,494,719 190 Table VI-9: Optimum Transportation Pattern for Year 15, Option II Number of Rail Number of Method Route Cars/Year Cattle/Year Trek 1-6 - 6,091 " 1-14 - 186,972 " ' 3-7 - 2,292 " 9-12 - 35,764 " 9-15 - 63,092 " 10-14 - 213 " 13-15 - 36,378 Rail 2-14 41 45,104 " 3-14 35 45,783 " 4-14 245 173,750 " 4-15 2 1,529 " 5-14 145 161,308 " 8-15 36 47,061 " 11-15 24 37,897 Total Number of Rail Cars Per Year 528 Percentage of Total Inshipments to Areas 14 and 15 Hauled by Rail - 64% Total Distribution Costs - £9,415,280 191 Table VI-lO: Optimum Transportation Pattern for Year 20, Option II Number of Rail Number of Method Route Cars/Year Cattle/Year Trek 1-6 - 5,837 " 1-14 - 218,285 " 9-12 - 33,691 " 9-15 - 81,071 " 10-14 — 5,226 " 13—15 - 44,942 Rail 2-14 53 58,555 " . 3-14 57 73,545 " 4-14 290 205,642 " 5-14 165 183,979 " 8-15 48 62,417 " 11-15 30 47,539 Total Number of Rail Cars Per Year 643 Percentage of Total Inshipments to Areas 14 and 15 Hauled by Rail - 64% Total Distribution Costs - £11,549,524 192 Areas 2, 3, 4, 5, 8 and 11 are important rail loading locations in year 20. However, area 11 does not rail cattle to area 15 until year 15. Previous to that, cattle were trekked along this route. This change in transportation method occurred because the price of beef increased in area 15 to the point that the large shrinkage and salvage losses from trekking raised the trek costs higher than the rail charges. This is an illustration of the phenomenon that trekking costs increase faster than railing costs as the price in the destination markets increase. The major treks occur on the routes connecting areas 1 with 14, 9 with 12, and 9 and 13 with 15. Option III Investment Strategy Option III consists of instituting a trypanosomiasis control program along with increasing the speed of rail service by 1/5. An unlimited number of rail cars are available for cattle shipment. The interarea flows that result from this strategy are given in Tables V-l7 to V-21. The results of applying the linear program to these flows are shown in Tables VI-ll through VI-15. The number of rail cars demanded increases from 164 in year 0 to 390 in year 20. This represents an increase of about 4.4 percent per year. The percentage of total imports to areas 14 and 15 hauled by rail decreases slightly through time from 47 percent in year 0 to 38 percent in year 20. The percentage of imports arriving by rail to area 14 decline from 57 percent in year 0 to 50 percent in year 20. This decline occurs because exports to area 14 from areas 2 and 3 are trekked and rapidly expand over time. With an effective trypanosomiasis control program, these routes can be utilized at lower costs by trekking 193 Table VI-ll: Optimum Transportation Pattern for Year 0, Option III Number of Rail Number of Method Route Cars/Year Cattle/Year Trek 1-14 - 115,507 " 2-14 - 16,272 " 4-12 - 15,712 " 5-7 - 9,581 " 8-6 - 5,123 " 8-12 - 6,421 " 9-12 - 1,629 " 9-15 - 54,963 " 11—15 - 14,557 " 13-12 - 17,414 Rail 4-10 1 838 " 4-14 99 85,251 " 5-14 64 90,055 Total Number of Rail Cars Per Year 164 Percentage of Total Inshipments to Areas 14 and 15 Hauled by Rail - 47% Total Distribution Costs - £3,896,231 194 Table VI-12: Optimum Transportation Pattern for Year 5, Option III Number of Rail Number of Method Route Cars/Year Cattle/Year Trek ' 1-14 - 145,993 " 2-14 - 28,859 " 3-6 - 4,928 " 3-7 - 7,371 n 3-14 - 2,274 " 8-15 - 24,551 " 9-12 - 17,783 " 9-15 - 54,188 " 11-15 - 22,889 " 13-12 - 25,085 Rail 4-14 124 107,136 " 4-15 24 25,254 " 5-14 86 121,434 Total Number of Rail Cars Per Year 234 Percentage of Total Inshipments to Areas 14 and 15 Hauled by Rail - 48% Total Distribution Costs - £5,182,618 195 Table VI-13: Optimum Transportation Pattern for Year 10, Option III Number of Rail Number of Method Route Cars/Year Cattle/Year Trek ' 1-14 - 180,473 " 2-14 - 37,622 " 3-6 - 4,200 " 3-7 - 4,521 " 3-14 - 24,529 " 8-15 - 37,013 " 9—12 - 10,077 " 9-15 - 77,802 " 11-15 - 31,403 " 13-12 - 32,469 Rail 4-14 163 141,046 " 4-15 17 17,184 " 5-14 100 141,544 Total Number of Rail Cars Per Year 280 Percentage of Total Inshipments to Areas 14 and 15 Hauled by Rail - 44% Total Distribution Costs - £6,622,113 196 Table VI-14: Optimum Transportation Pattern for Year 15, Option III Number of Rail Number of Method Route Cars/Year Cattle/Year Trek 1-14 - 212,562 " 2-14 - 52,723 " 3-6 — 3,067 n 3-7 - 330 u 3-14 - ' 54,066 " 8-15 - 53,075 . n 9-15 - 105,870 " 11-15 - _ 41,985 " 13-12 2 - 39,635 " 13-15 - 4,444 Rail 4-14 213 185,029 " 4—15 3 2,136 " 5-14 116 164,724 Total Number of Rail Cars Per Year 332 Percentage of Total Inshipments to Areas 14 and 15 Hauled by Rail - 40% Total Distribution Costs — £8,316,539 K “' m-M' 197 Table VI-15: Optimum Transportation Pattern for Year 20, Option III Number of Rail Number of Method Route Cars/Year Cattle/Year Trek 1-14 — 251,229 " 2-14 ' - 70,032 " 3-14 - 89,763 " 8-6 - 1,218 " 8-15 - 68,375 " 9-15 - 123,253 " 11—15 - 52,880 ; " 13-12 - 40,240 ‘ " 13—15 - 13,036 i Rail 4-14 246 213,455 " 4-15 10 10,572 ” 5-14 134 190,378 Total Number of Rail Cars Per Year 390 Percentage of Total Inshipments to Areas 14 and 15 Hauled by Rail - 38% Total Distribution Costs — £10,280,065 198 rather than rail hauling. The long routes connecting areas 4 and 5 with area 14 utilize rail cars for cattle shipments. All cattle arriving in area 15 from areas 8, 9, 11 and 13 are trekked while the cattle originating from area 4 are railed. The percentage of total inshipments to area 15 carried by rail cars declines from 20 percent in year 5 to only 4 percent in year 20. Under option III, the number of cattle using trek routes increases substantially through time. The routes connecting area 1 with 14 and 9 and 13 with 15 will be required to accommodate a large number of cattle as was alsothe case for options I and II. However, because trek costs have been reduced, additional trek routes become important. The cattle produced in areas 2 and 3 to be exported to area 14 utilize trek routes as do the cattle moving from areas 8 and 11 to area 15. It is apparent from these results that the number of cattle utilizing trek routes will increase if an effective program for con- trolling trypanosomiasis is implemented. If this program is to be effective, substantial investments will need to be made to furnish adequate feed and water for the cattle being trekked so that the savings in reducing disease losses are not lost to shrinkage from inadequate nutrition provision along the routes. Comparison of the Three Policy Options Comparative cost information for the three strategies is given in Table VI-l6. The distribution cost per head is the average cost of transporting and slaughtering an animal that enters interarea trade. Under all three options, the cost increases through time because prices in general are rising. The average cost of distribution is slightly higher for option II relative to I because the cattle are transported 199 m.m mmw.see.a Hme.e~a.a e.oa “He.eea.oa a~k.o~o.a m.oH amm.meo.oa m-.nma ON e.m o~w.a~a.k eeo.o~a e.oe ~ma.mkk.m em~.mew N.CH Naa.~ma.w aam.oom ma H.» swo.eo¢.e mmm.ama o.oH eok.aem.e ~oo.qme m.m ~mm.noe.o moo.mmo OH m.e asa.wmm.e mek.kwm e.m eeo.as~.m Hes.~sm m.e mam.-m.e oom.eum m e.e «mm.ae~.m m~m.mms N.m one.uak.m oea.aam e.e Hmm.m~m.m wom.omm o AmHuumu Amauumu . Amauumo Ame any to .ozv Ame Ame no .ozv Ame Ame so .ozv wmmm vmmm Ummm mom umou umoo umm umoo umoo pom umoo umoo mvmuu soauso coausoauu momma sowuso soausofiuu menus coauso sowusofiuu swam Ifiuumaa Imam Hmuoa mmumumusH Ifiuumfio Imam amuse mmumumucH Iwuumfla Imam Hmuoy lumusH ummw HHH coauao HH coasao H coauao msOfluao ucmsumm>cH cowumuuommcmua mounH mow mafia stousa mumoo coausowuumfio "QHIH> manme 200 over longer distances. The availability of rail cars makes shipment over longer routes relatively more attractive than trekking over shorter routes. This encourages more production in the far northern areas which results in slightly higher transportation charges. The average distribution cost per head is significantly lower for option III relative to options I or II. The difference amounts to a reduction of about 18%. This decrease can be contributed to the reduction in trek and rail costs due to trypanosomiasis control and increased speed of rail service. Relative to option 1, option 111 handles 15 percent more cattle in interarea trade at a reduction of 18 percent in average cost per head. Under option III, 9 percent more cattle enter interarea trade at a reduction of 18% average cost per head relative to option II. Rail car requirements and percentage hauled by rail for the three options appear in Table IV-17. The percentage of total inshipments hauled by rail to area 14 is greater than area 15 for all three options. For reasons already stated, the locations supplying area 14 can utilize rail cars for shipment more effectively than the locations supplying area 15. If strategy 11 were implemented, 643 rail cars would be required in year 20. This represents an increase in rail car numbers of 5.7 percent per year over the present number of 212. Option III would require 390 rail cars in year 20~~an increase of about 3.1 percent per year over 212. The decrease in trekking costs due to the control of trypanosomiasis is responsible for lower requirement of rail cars for option III relative to option II. It appears that 201 a on can me On new q as Nmm om N mm «mm ow mo wNm «a we «on ma Ha cm owN an we was mm me NNN ON ON on «mm mm no man He mm emu m 0 mm «0H mm co NNN N am «NH o N N .02 N N .oz N N .02 Hfimm Ham“ memo Hana Hana sumo Hana Adam mumu ho cease: No vasmm Hana as means: mo weapon mem an vmasmm mo moans: Mama ma mwu< ou «a mou< ou ma mead ou «H mead Ou ma muu< ou «H mmu< ou muuomaH mo muuoaaH mo muuoaaH mo muuoaaH mo muuoaaH mo monomaH mo ammusouumm ammuamoumm ammusmoumm wwmusmuumm mwMusmoumm amouaouumm ummw HHH cognac HH coauao aofiuao msoauao usmaumw>sH sofiumuuoamsmue mouse you mafia zmsoune musoaouwavmm umu Hams "NaIH> magma 202 implementation of a trypanosomiasis control program will significantly reduce the number of rail cars that must be purchased to accomodate the rapid increase in the number of cattle that will be moving to areas 14 and 15 in the next 20 years. Summary of Results and Conclusions This section provides a summary of the major findings and conclu- sions of this study. More detailed reporting of results is contained in the last parts of Chapters III, IV, V and the first section of this chapter. Specification of Distribution Costs--TRNSCST This model component was developed to identify the transportation costs of alternative methods of shipment between each pair of the 15 areas that were delineated for Nigeria. Trek movement and truck and rail hauling were the methods of transportation considered. Major cost categories were quantified for each shipment method over all the routes. In general, truck shipment was the most expensive method of trans- porting live cattle. The primary reason for this was the high freight charges levied by truck owners--over 2 1/2 times the freight charges of rail service (see Tables III-10 through III-17). A major cause of high freight charges is the frequent occurrence of accidents due to heavy traffic on relative poor roads, poor mechanical condition and overloading of trucks, and driver stress from driving too long without rest. The survey of truck transportation costs (see Appendix I) indicated that the hauling time for lorries was about the same as for rail hauling. Over 1/2 of the drivers surveyed indicated that the cattle they were hauling showed severe road stress on trips between 203 Kano and Katsina to Ibadan and Lagos. Truck shipment does give cattle dealers an opportunity to react quickly to favorable price conditions in the southern markets. Higher quality cattle that can not withstand the rigors of trekking and for some reason can not get rail permits are often moved by truck. The drivers surveyed indicated that no stops were made and no feed or water given on the 3 to 4 day trips to the south. The questionnaire and results of the survey are given in Appendix 1. Although truck shipment is the most expensive method considered in this study, future investments in improving the road structure in Nigeria might reduce these costs substantially. Present Nigerian development plans call for substantial investments in highway construction and improvement. If these investments are successfully completed, road conditions, turnaround time, and accident rates might be improved substantially. These improved conditions would probably be reflected in lower freight charges being levied by lorry owners. If adequate feed and water provision could be combined with these improved conditions, lorry transport of cattle may become very com- petitive with rail and trek methods, especially for higher quality cattle. The major cost categories for rail shipment are shrinkage costs (44 percent) and freight charges (41 percent) (see Tables III-10 through III-l7). The large shrinkage losses occurred because of the long time period on the rail cars (3 days to go 700 miles) and inadequate provi- sion of feed and water for the cattle during that period. In general, rail shipment provides the least cost method of moving cattle from northern producing regions to southern consuming regions. The results show that for distances of 250 miles or greater, rail shipment is 204 cheaper than trekking, especially if cattle are to be moved through tsetse infested areas. However, the distances between some important locations are much longer for rail travel than trekking. This is true for movement between many areas in the north since the rail lines are oriented to north-south travel. In addition, the costs of rail shipment between area 1 and 14 is higher than trekking costs because of the shorter trek distance as compared to rail mileage. No rail service is available for areas 9 and 13 (see Figure 10). Other than these exceptions, rail transport from northern excess supply regions to southern excess demand areas is less expensive than trekking. If shrinkage losses could be reduced during rail shipment, this method of transportation would be especially attractive to dealers moving higher quality cattle. Reducing shrinkage on rail trips would entail provision of feed and water along the way and/or increasing the speed of rail service. Results of this study show that by increasing the speed of rail service by 1/5, the costs of rail shipments decreased by only 6.5 percent. It seems that feed and water must be provided with increased rail speed if significant reductions are to be realized in rail transportation costs. If these factors can be successfully imple- mented and adequate rail car numbers can be provided, rail service should be of increasing importance in beef distribution in the future as the quantity and quality of cattle to be marketed increases. The major cost categories for trekking are salvage losses (11 percent) shrinkage costs (47 percent), drovers' fees (13 percent) and feed and water costs (12 percent). The shrinkage and salvage losses are mainly attributable to diseases and injuries contacted along the trek routes with trypanosomiasis being the major cause of these losses. 205 In general, trekking cattle is the most efficient method of moving cattle among areas in the northern tsetse free regions. It is also the most efficient method of transporting cattle from area 1 to 14 and areas 9 and 13 to area 15. These are important routes for cattle moving south. Therefore, even with no trypanosomiasis control program and an unlimited number of rail cars, trekking will continue to be an important method for moving range cattle to the southern consuming regions. Data from limited research trials indicate that losses from this disease can be substantially curtailed. The results from these trials were mixed, but a conservative estimate is that salvage, shrinkage, and mortality losses could be reduced by 1/2 by controlling trypan- osomiasis on the trek routes. If this occurred, trek costs could be reduced by 40 percent (see Tables III-18 and III-19). These prelimi~ nary estimates indicate that investments in a trypanosomiasis control program should be investigated thoroughly. However, even with a program to control trypanosomiasis, the losses from trekking higher quality cattle for several weeks will be very high. Therefore, if the quality of market cattle in Nigeria is to be broadly improved, alternatives to trekking must be developed. Using estimates gathered for this model component, shrinkage and death losses were calculated for cattle moving to areas 14 and 15 over the 1954-1963 decade. It was estimated that 144,835 tons of live weight was lost from shrinkage and death in the railing and trekking of cattle over this decade (see Table III-23). While the proportion of cattle trekked to the south over these years was slightly less than 50 percent, trekking accounted for 57 percent of the total pounds lost. 206 Assuming an animal weighs 700 pounds, the total pounds lost over the 10 years is equivalent to 423,138 cattle which is over 42,000 cattle equivalents per year. The total pounds lost due to shrinkage and death was about 13 percent of the total pounds marketed. Each of the three methods discussed entail large losses due to shrinkage, death, and salvage of the animals as they are moved over long distances. Adequate feed and water provision must be provided if these losses are to be reduced and the transportation system is to contribute to increasing the quality and quantity of cattle to be marketed in Nigeria. Additional detailed results and parameter and functional relation- ship estimates are contained in the tables and text of Chapter III. The interested reader is directed there for this additional information which is not included in this summary. Optimum Transportation Patterns The transportation pattern component utilizes the linear program technique to calculate the least cost organization of slaughter and transportation facilities. The quantity demanded and supplied in each of the 15 areas and the transportation costs of alternative methods of shipment are exogenous variables to this component. Eight model experiments were run to determine the consequences of using alternative assumptions and implementing various policies. No truck shipments of live cattle or frozen carcasses occurred in any optimum distribution result. For live cattle shipment, rail hauling is cheaper relative to truck hauling over longer distance while trekking is less costly for shorter distances. Frozen meat shipment is more economical on refrigerated rail cars than refrigerated trucks. However, future planned investments in the road network in Nigeria might 207 influence these results somewhat. This model framework is flexible enough to account for these changes. A discussion of how they might be included is given later in this chapter. In general, the optimum transportation configuration is to rail cattle from the large excess supply regions of 2, 3, 4, 5 and i to the two southern excess demand areas and trek cattle from areas 1, 9, 11 and 13 to areas 12, 14 and 15. However, given the estimated number of cattle to be moved, the present number of rail cars (212) is inadequate especially during the rainy season when the cattle are farther north. The model results show that under present conditions about 230 rail cars could be effectively utilized-~an increase of over 8 percent over the present number. Therefore, one way to improve the beef distribu-~ tion system would be to increase the number of rail cars that could be utilized for cattle shipment. The major trek routes utilized in the optimum solution are the ones connecting area 1 with 14, 9 with 15, and 11 and 13 with area 12 (see Tables IV-7 and IV—8). Since these routes are heavily used for treks, they would be the most productive locations for programs that control trypanosomiasis and provide additional feed and water. A model experiment was conducted that assumed the speed of rail service could be increased by 20 percent. As noted in the TRNSCST component discussion, this reduces the shrinkage in transit and hence reduces rail costs. This increased efficiency in turnaround times had two primary effects on the demand for rail cars--one partially off setting the other. First, with faster turnaround times, one rail car could transport more cattle than previously, thus reducing the number of cars needed to haul a given quantity of cattle. Secondly, the 208 increased speed reduced railing cases which made rail transport more attractive relative to trekking. The results show that the second effect outweighed the first. The number of rail cars demanded increased to 250 under this assumption. This represents an increase of 15 percent over the number of rail cars at the present time. There- fore, to take advantage of any improvement in rail service, additional rail cars must be provided. The total slaughter and transportation cost was reduced by 3.5 percent as a result of the improved rail service. However, there were still substantial numbers of cattle trekked to areas 14 and 15 (over 1/4 of the total inshipments). It seems that certain trek routes will be heavily utilized by trade cattle even if rail service is improved. An additional model experiment was run assuming an effective trypanosomiasis control program was implemented for cattle walking through tsetse-infested areas. As can be seen in Table IV-9, this program had a significant effect on the optimum transportation configu- ration. No cattle were shipped by rail in the dry season. This means that the number of cattle utilizing the trek routes doubled relative to the number of cattle trekked with no disease control program. This would probably place a severe strain on the water and feed resources along the established trek routes. If these resources became depleted, the shrinkage, salvage and death losses due to inadequate nutrition might eliminate the original cost savings realized from the program. It is important that any trypanosomiasis control program be supported by plans to increase the availability of feed and water along the trek IOUtQS o 209 Assuming that adequate nutrition could be furnished, the savings in distribution costs due to the trypanosomiasis control program would be £944,000--a 20 percent reduction. These cost savings would need to be compared with the costs of implementing the program.and providing more nutrition to judge its profitability. This calculation should also include the opportunity costs of funds that could be invested in other programs. A trypanosomiasis control program does appear to be a prospective action worthy of immediate consideration. It may likely be a method of reducing shrinkage and salvage losses quickly on the type of trade cattle marketed in Nigeria at the present time. However, other transportation methods will need to be utilized to enable the transportation system to accommodate higher quality cattle that are being and will be produced in the future. Further model runs were conducted assuming the demand for beef in areas 14 and 15 could be satisfied by either live cattle shipment to the south and subsequent slaughter or by slaughter in other areas and the meat shipped to these areas in the south. The results showed that where meat shipment can be accomplished on refrigerated rail cars, the total slaughter and transportation charge is less than by walking or railing live animals to the south and then slaughtering them. However, if the meat must be moved by truck, it is cheaper to ship live cattle. The advantage of the carcass distribution system is in the transporta- tion phase. For this reason, the most efficient locations for the abattoirs processing carcasses are in the excess supply regions of the north. Abattoirs in Maiduguri, Nguru and Kano represent the most efficient lOCations respectively. The abattoirs in Bauchi and Kaduna are also in the solution. However, no carcasses are shipped from the 210 slaughter house at Sokoto because it is not served by the rail line and truck shipment is more expensive than trekking. The costs of distributing the meat to southern consumers after it has reached its destination is probably higher for frozen carcass shipment than the live cattle transporation methods. Therefore, the total cost of distribution from the northern producer to the southern consumer may not be lower for frozen meat shipment than for live animal shipment. Before frozen carcass processing becomes a major alternative distribu- tion method, more facilities will need to be available to the meat dealers throughout the rural towns as well as the large urban centers. However, frozen meat shipment is superior in terms of the sanitation of meat handling and it does appear to be able to compete cost wise with live cattle shipment in urban areas where facilities are available to process the meat. Much more research is needed on the dependability of refrigerated rail shipment and costs of providing and operating the supporting facilities before this hypothesis can be accurately tested. A much more detailed account of the results of the eight model trail runs is contained in the text and tables of Chapter IV. Spatial Equilibrium Flows of Beef Through Time This model component calculated through time the (1) competitive equilibrium price in each area, (2) number of cattle supplied and demanded in each area, (3) the level of exports and imports among locations for three alternative investment options in transportation of beef. The three investment options are: I. - a policy that closely parallels the present one of furnishing fewer rail cars than can be used and providing no program to control trypanosomiasis, II. - provid- ing as many rail cars as needed but furnishing no protection against 211 disease on the trek routes, and III. - implementation of an effective program to control trypanosomiasis and reducing the turnaround time of rail cars between points by one-fifth. This component was run at ' 5 year intervals through 20 years of simulated time with demand and supply functions that were constructed for each area through time. The demand functions changed through time according to assumptions about the changes in population and incomes in these areas. After the interarea shipments were determined through time, the transporta- tion linear program was run to find the requirements placed on the transportation system by the three investment options to accommodate these flows. The results of these two steps are integrated and summarized together in this section. The results of the spatial equilibrium model indicate that the proportion of total cattle marketed that go to areas 14 and 15 is going to increase through time irregardless of the investment strategy followed in the transportation of beef (see Table V-S). In year 0, 39 persent of the total cattle marketed move to areas 14 and 15 under option I, 40 percent for option II, and 43 percent for option III. These percentages increase in year 20 to 63 for I, 67 for II, and 77 for option III. The number of cattle moving to the two southern areas increases approximately 2.8 times in the 20 year period. This is an increase of approximately 5.3 percent per year. The method by which these cattle are transported depends on the investment strategy implemented. If rail car numbers are limited to a growth of 2.2 percent per year (Option 1) the proportion of cattle arriving by rail will decline from 42 percent in year 0 to 36 percent in year 20. If 'an adequate number of rail cars are furnished (option II), the 212 percentage of imports to areas 14 and 15 hauled by rail will increase from 59 percent in year 0 to 64 percent in year 20. Under this policy, 643 rail cars will be required in year 20. This represents an increase of 5.7 percent per year in rail car numbers over what.is now available. However, if a successful trypanosomiasis control program can be imple- mented (option III), the required number of rail cars for use in shipment to areas 14 and 15 can be reduced to 390 in year 20. To reach this number, rail car numbers would have to be increased only 3.1 percent per year. Under option III, 1,082,923 cattle are provided to areas 14 and 15 at an average price of £34 per head in year 20. For option I, the number of cattle imported to areas 14 and 15 in year 20 is 896,591 at a price of £37 per head. Therefore, in year 20, 20 percent more cattle arrive in areas 14 and 15 81:39 percent lower price under option III relative to option I. As shown in Table VI-17, under options I and III in year 20, approximately 50 percent of the cattle arriving in area 14 will be trekked while almost all of the cattle moving to area 15 will utilize the trek routes. Even assuming option II is implemented, 30 percent of area 14's imports will utilize the trek routes and 50 percent of the imports to area 15 will be trekked. Therefore, policies to improve trek routes will be important considerations in all investment plans for the beef distribution system. Appendix Figures III-16 to III-l9 show that areas 1, 2, 3, 4, 5, 8, 9, 11 and 13 actually retain fewer Cattle for internal consumption through time. As transfer charges are lowered (especially option III) and demands increase rapidly in areas 14 and 15, more cattle are diverted from local markets and exported to the southern areas. This 213 tends to increase local prices and hence decreases quantities demanded within these areas. This phenomenon occurs under all three options but to a greater extent for option III. Therefore, if interarea transfer charges are lowered significantly, many northern areas in Nigeria may face a declining number of market cattle for consumption within the area. 3 The estimated total receipts from beef sales generated under option III would be about £11,SO0,000 more than the total received by the beef industry under option I. The beef industry would gain an average of £575,000 per year in total receipts for 20 years from investments to control trypanosomiasis and furnish adequate numbers of rail cars. However, the increases in total receipts are not shared equally by a11.areas for all investment options. All areas had higher receipts under investment option III, after marketing charges were subtracted than if option I had been followed (see Table V422). However, if an adequate number of rail cars had been furnished, but no disease control program implemented, (option II), areas 1 and 2 would have lower total net receipts in year 20 then would be received under option I. With an increase in rail cars, areas 4 and 5 shipped cattle to area 14 at the expense of cattle from areas 1 and 2. Table VI-16 gives the average distribution cost per head for all the cattle moving in interarea trade under all investment options. In year 20, the average cost per head for options I, II and III is £10.5, £10.7 and £8.7 respectively. The cost per head under option III is approximately 15 percent less than for either option I or II. 214 Because of the rapid increase in population of the southern areas in Nigeria, demand for beef in these locations will probably expand more rapidly than in other areas. Therefore, the limited funds available for investment in beef distribution should be allocated to programs that are concerned with movement of beef from the northern excess supply areas to the southern excess demand locations. It appears that furnishing more rail cars through time along with a trypanosomiasis control program and better provision of feed and water on treks and rail cars are potentially productive investments for improving the distribution of these cattle to the southern areas. As previously stated, the investments made by Nigeria in their trans- portation sector will influence the kinds of investments that will need to be made_in beef distribution. It is apparent that improvements in shrinkage losses and transit times are necessary for rail hauling, truck hauling and meat shipment if higher quality cattle are going to be furnished to southern consumers at prices that they can pay. Other Uses of the Model The model framework was developed so that it would be sufficiently flexible to help evaluate the consequences of several changes that might occur and investment plans that might be envisioned. This section will discuss possible uses of the model that were not explicitly con- sidered in this study. Future investments in the transportation sector of Nigeria will probably have an affect on the beef transportation system. The present Nigerian development plan places heavy emphasis on investment in road construction and improvement. If these investments are made, the competitive position of truck shipment of cattle may change. The 215 TRNSCST component can be utilized to calculate the changes in the cost of hauling cattle by truck resulting from these investments. If road mileage between areas change, the new mileages can be entered in the road mileage array given in Table III-2. Improved road conditions would probably change the freight charge levied by truck owners. This parameter, appearing in equation 21 in Chapter III, could be adjusted accordingly. The increased speed of transit by truck could be reflected by adjusting the parameters in equation 24 in Chapter III. Investments in providing more feed and water to animals traveling by truck could be analyzed by changing the independent values of the shrinkage function shown in Figure 7. If investments were made in extending rail lines or improving the speed of rail services, similar changes could be made in the parameters of the equations calculating rail costs. If mileages were affected, the entries in the rail mileage matrix should be adjusted (see Table III-6) along with the turnaround times in Table III-7. Invest- ments that might be made to decrease shrinkage losses on rail hauling could be reflected by adjusting the parameters in the shrinkage function given in Figure 7. An explanation of how investments in trypanosomiasis control for trekking cattle could be included are given in Chapter 111 since this was a policy that was considered in this study. Once these new costs of distribution have been calculated by the TRNSCST component, they could be processed through the whole model structure through time as described at the beginning of this chapter. The transhipment linear program component discussed in Chapter IV can help evaluate a number of important issues. This component is I. I‘lllll'nlllll‘llllul’illlll ‘.,II.I all [I " 216 constructed so the optimum location, output level and number of modern abattoirs can be determined given the demand for "cold" meat and the unit costs of operation at various levels of output. The explanation of this procedure is given in Logan and King {24,p.145}. As more markets for "cold" meat develop in Nigeria, the optimum location of the abattoirs and shipment routes and methods can be ascertained. This could be done by adding extra equations for the location of the "cold" meat demand and adding extra activities for the shipment of the processed meat to these locations in the same way as was done for the "cold" meat demand in areas 14 and 15 (see Table IV-l). The effects of location specific investments in certain trek, rail or truck routes on the configuration of transporation methods could be evaluated by adjusting the costs along these specific routes (derived from TRNSCST) in the objective function. These kinds of investments may have to be implemented if funds are inadequate for investments along all routes. The linear program component was constructed so that the method of shipment utilized for a group of cattle could be changed at locations between the point of origin and destination. For example, it is possible in this component for cattle going from Maiduguri to Ibadan to be trekked to Zaria and railed on to Ibadan. This feature allows one to investigate the pattern of transportation that might result if only portions of a route were improved for some method of shipment.‘ The spatial equilibrium component could be used to evaluate changes in conditions or policies affecting the supply and demand for beef. As more information about beef demand becomes available, the 217 parameters in the demand equation should be improved. If it becomes apparent that there are basic differences in tastes or customs among areas relating to beef consumptions, the demand curves in the areas could be adjusted accordingly. Differences in the price and availa- bilities of close substitutes for beef in the areas could be reflected in the demand functions. The effects of uneven interarea per capita income growth could be reflected by varying the extent the demand curves are shifted through time within the areas. Another potentially valuable use of this model would result in combining it with the simulation model of Nigerian beef production discussed briefly at the end of Chapter II. This simulation model determines the quantity of cattle supplied through time as a function of available nutrition and policies aimed at improving the environment faced by the Nigerian cattle producers. By integrating these two models, the interactions of policies aimed at either production or distribution of beef could be evaluated. For example, the production model can estimate the shifts in location of beef production from changes in available grazing land and range deterioration. This shifting of beef production has important consequences on the distri- bution system requirements. 0n the other hand, the investments in transportation facilities in beef would affect the incentive for producing higher quality animals and the investments that might be made to support this incentive. These are just two examples of the potential usefulness that an integration of these two models might have. Another important aspect of the supply of beef in Nigeria is the importation of cattle from Niger, Chad and the Cameroons. Changes in 218 these import supplies could be reflected in adjusting the supply functions of the areas bordering these countries. In general, this model framework can assist in evaluating many changes in conditions and investments that might occur through time. However, to insure proper adjustments are made, the user must be familiar with the assumptions and techniques used in the framework as well as the procedures involved in integrating the three components. Additionally to be of use in helping to solve real problems, the user should be closely coordinated with the policymakers involved in making decisions relating to beef distribution. Major Research Needs One useful result of the process of building and specifying an integrated model of beef distribution in Nigeria is that it facilitates the identification of areas that need further research. This section provides a description of research problems that are important to understanding the beef distribution system and how it might be improved. Unfortunately, most of these problems do not fall neatly into any one academic discipline but rather require insights from several. Addi- tionally, proper identification of problems and research priorities will require coordination with public and private institutions involved with the beef industry in Nigeria. Therefore, successful research studies will require cooperation among different disciplines and between decision makers and researchers. More information is needed on the costs of the alternative methods of shipment. This is true of all the methods considered in this study. It would be useful to observe several actual treks on various routes 219 during alternating seasons so that better estimates could be obtained on shrinkage, salvage, and death losses as well as availability and expenditures on supplementary feed and water. Weighings at intermediate points along the routes would give valuable information about the rela- tionship between trek days and weight loss. It would be useful to record slaughter weights so that the relationship between live weight loss and actual tissue shrinkage could be obtained. This would involve slaughtering a control group at the point of departure. It would be important that the type of cattle and trek procedures be as representa- tive of actual trek conditions as possible. The same kind of research is needed to accurately specify the results of treating trek cattle for trypanosomiasis. The administra- tive and operating costs of a trypanosomiasis program should also be specified so that benefits and costs can be compared. For rail hauling, information is badly needed on live weight shrinkage of cattle as a function of days in transit. The relationship between this live weight shrinkage and actual tissue loss for varying transit times is crucial. Is the shrinkage a loss of fill or actual . tissue reduction? The effects on live weight and tissue shrinkage of feed and water provision on rail cars is also important. Perhaps tissue loss could be restored efficiently by feeding programs at the destinations market. These same types of questions need to be inves- tigated for truck shipment as well. Much more research is needed on processing and transporting meat from the north to the south. The unit costs of slaughter and proces- sing meat at the abattoirs for varying levels of output would be useful. With this kind of information, the model component described 220 in Chapter IV could determine the optimum location and level of output .for the abattoirs processing meat for shipment to the south as well as the least cost transportation configuration. The experience of the firms now processing and shipping "cold" meat should be carefully reviewed in terms of the capital and operating costs involved in operating this kind of activity. Methods developed by Logan and King provides a useful framework for this type of study {24}. Projects need to be instituted to identify consumer preferences toward consumption of both "hot" and "cold" meat. Is the lack of "cold" meat a result of a lack of retail outlets available demand for to the average Nigerian consumer? Would he consume "cold" meat if it were available at prices comparable with the traditionally processed meat? Why does he differentiate between the two? These and similar questions should be answered before any large investments are made in processing and shipping cold meat for consumption by peOple other than relatively wealthy foreigners and Nigerians. Additional study needs to be done on the factors that affect the demand for beef. Improved estimates of price and income elasticities should be obtained. Identification of substitutes for meat along with the effect that changes in their prices and quantities available have on meat consumption is important. Since Nigeria is composed of many diverse cultures, demand studies in various areas would be useful. One of the most important areas that needs further study relates to the supply of market cattle. The Fulani herdsmen are often char- acterized as economically irrational managers seeking status and wealth by accumulating cattle. What kind of supply response might be expected 221 as prices for cattle increase in the future? This question is very complex as it relates to production conditions and decision processes of Fulani herdsmen. The total agricultural system of northern Nigeria is involved in this matter. Since the majority of market cattle are produced on residual land not yet cultivated, the increase in crop land area isja crucial variable in determining the amount of land available for grazing and hence the total herd size. Estimation of supply response must also consider the costs of producing the cattle. The acquisition price of an additional acre of grazing land is probably very low for the individual Fulani. However, it must be considerably higher for the whole set of beef producers. Under present property right rules, the individual beef producer has very little incentive to conserve the capital inherent in the grazing lands. The acquisition price for additional grazing land is very low and the salvage value is zero. Therefore, the deterioration of this capital embodied in the grazing areas from over grazing is considerable and must be an important variable in determining long term supply response. The relationship between transportation methods available and the age and quality of cattle is also involved. If the rigors of transporting an animal 800 miles in Nigeria were substantially reduced, would younger, higher quality cattle be marketed? Improved transportation methods must be developed if large numbers of higher quality cattle are to be available to the large number of consumers in the southern areas at prices they are willing to pay. It is apparent from this discussion that many of the parameters and relationships used in this study are inaccurately known. There- fore, the results are not to be taken as highly accurate and final. 222 However, the attempt at gathering available information and "guesstimates" into an integrated model helps to provide a starting point for assisting decision—makers to develop wise policies in relation to the beef distribution system in Nigeria. The model cannot accurately predict the consequences in the future of alternative policies. But, policy decisions are being made and funds are being invested. If the model can provide a framework for organizing the best information available in a systematic way, and provide a vehicle for cooperation of researchers and policymakers, it can make a valuable contribution to improving the performance of the beef distribution system in Nigeria. BIBLIOGRAPHY 10. ll. BIBLIOGRAPHY Arthur D. Little, Inc., Ibadan Meat Slaughter and Market Require- ments and Feasibility of a Central Abattoir, Economics Department of the Premier's Office, Ibadan, Nigeria, 1964. Bender, F. E., R. Suttor, "A Look at Flexibilities and Elastici- ties: Comment", Journal of Farm Economics, Vol. 48, No. 4, Part I, Nov. 1966, pp..1021-1022. Bida, Shehu, "Cutaneous Streptothricosis", Paper presented at the Livestock Conference, Ahmadu Bello University, Zaria, Nigeria, June 1969. Federal Ministry of Commerce and Industry, Transportation - A Guide to Current Costs in Nigeria, published by the Federal Ministry of Information, Lagos, Nigeria, 1965. Federal Office of Statistics, Annual Abstract of Statistics - Nigeria 1967, Lagos, Nigeria. Federal Office of Statistics, Urban Consumer Survey in Nigeria - Report on Enquiries into the Income and Expenditure Patterns of Low and Middle Income Households, Kaduna, Gusau, and Sokoto, Enugu, Onitsha, Akure, Ondo and Owo, Laggs, and Oshogbo, Ife and Ilesha, Lagos, Nigeria. Ferguson, Donald, The Nigerian Beef Industry, unpublished M.S. Thesis, Cornell University, 1967. Food and Agriculture Organization, Agricultural Development in Nigeria 1964-1980, Rome, 1966. Godrey, Killick-Kenrick, Ferguson, "Observations on Cattle Trekked Along a Trade Cattle Route through Areas Infested with Tsetse Fly", Annuals of Tropical Medicine and Parasitology, No. 3, September 1965, pp. 255-269. Houck, James, "A Look at Flexibilities and Elasticities", Journal of Farm Economics, Vol. 48, No. 2, May 1966, pp. 225-232. Houck, James, "A Look at Flexibilities and Elasticities: Reply", Journal of Farm Economics, Vol. 48, No. 4, Part I, Nov. 1966, pp. 1022-1023. 223 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 224 Hunger, Fredrick, "Analysis of Cost Structure on Hoof Transport", unpublished manuscript, Livestock and Meat Authority, Kaduna, Nigeria. International Bank for Reconstruction and Development, Economic Growth of Nigeria: Prdblems and Prospects, Vol. V Transport, November, 1965. Johnson, Glenn, 0. Scoville, G. Dike, and C. Eicher, Strategies and Recommendations for Nigerian Rural Development, 1969-1985, Consortium for the Study of Nigerian Rural Development, July 1969. Johnson, Glenn, R. Deans, A. Halter, M. Hayenga, E. Kellogg and T. Manestch, A Simulation Model of theNigerian Agricultural Economy: Phase I - The Northern Nigerian Beef Industry, Progress Report to A.I.D. Contract No. AID/CSD—1557, April 26, 1968. Johnson, Glenn, "The Labour Utilization Problem in European and American Agriculture", Agricultural Economics Journal, Vol. XIV, No. 1, June 1960, pp. 73-87. Johnson, Glenn, "The State of Agricultural Supply Analysis", Journal of Farm.Economics, Vol. XLII, No. 2, May 1960, pp. 435-452. Jones-Davies, W. J., "The Protection of a Small Group of Nigerian Trade Cattle from Trypanosomiasis using Samorin", Bulletin of Epizootic Diseases in Africa, 1967, 15, pp. 323-335. Judge, 6., T. Takayama - Book manuscript on Spatial Equilibrium Models - to be published by North Holland Publishing Company, May 1971. Klein, L. R., An Introduction to Econometrics, Prentice-Hall, Inc. Englewood Cliffs, New Jersey, 1962. Klein, L. R., A Textbook of Econometrics, Harper and Row, New York, 1953. Larson, L., Report on Nine Cattle FatteningTrials in Sokoto, Katsina, Kano, Bauchi, and Bornu of Northern Nigeria, Agency for International Development - Nigeria, June 1967. Llewellyn, R. W., Fordyn - An Industrial Dynamics Simulator, Raleigh, North Carolina - Privately Printed, 1965. Logan, S. H., G. A, King, "Size and Location Factors Affecting California's Beef Slaughtering Plants", Hilgardia, Vol. 36, No. 4, December 1964, pp. 139-188. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 225 MacLennan, K. J. R., "The Current Significance of Trypanosomiasis in Relation to the Development of the Livestock Industry in Nigeria", Paper presented at the Livestock Conference, Ahmadu Bello University, Zaria, Nigeria, June 1969. Manderscheid, L. V., "Some Observations on Interpreting Measured Demand Elasticities", Journal of Farm Economics, Vol. 46, No. 1, February 1964, pp. 128-136. _ Manetsch, T., A. Halter, M. Hayenga, "Simulating a Developing Agricultural Economy", American Journal of Agricultural Economics, Vol. 52, No. 2, May 1970, pp. 272-290. Manetsch, Thomas, et. a1., A Simulation Model of the Nigerian Agricultural Economy, Progress Report to AID, Contract No. AID7CSD-1557, November 1, 1969. Northern Nigerian Ministry of Animal and Forest Resources, Veterinary Division Annual Reports 1954-1963. Okonjo, C., "A Preliminary Medium Estimate of the 1962 Mid-Year Population of Nigeria", The Population of Tropical Africa, Ed. by J. C. Caldwell and C. Okonjo, Longmans of Nigeria LTD, Ikeja, Nigeria, pp. 86-97. Shorthose, W. R., "Weight Losses of Cattle Prior to Slaughter", CISRO Fd. Preserv. Quarterly, Vol. 25, No. 4, 1965. Simantov, A., "The Dynamics of Growth and Agriculture", Zeitschraft fur Nationalokonomie 27: 3, 1967, pp. 328-351. Unsworth, R., Birkett, "The Use of Antrycide Pro-Salt in Protecting Cattle Against Trypanosomiasis when in Transit Through Tsetse Areas", The Veterinary Record, Vol. 64, No. 24, June 1952. Waugh, F. V., Demand and Price Analysis - Some Examples from Agriculture, Economic and Statistical Analysis Division/Economic Research Service U.S.D.A. Technical Bulletin No. 1316. Werhahn, H., F. Werner, F. Hunger, F. Weltz, H. Gottschalk, H. Saager, The Cattle and Meat Industry in Northern Nigeria- Vol. I, Frankfort, Germany, 1964. Werhahn, H., H. Gottschalk, H. Saager, The Cattle and Meat Industry in Northern Nigeria-Vol. II, Frankfort, Germany, 1964. APPENDICES APPENDIX I SURVEY ON COSTS OF HAULING CATTLE BY TRUCK Since little was known about costs of transporting cattle by truck in Nigeria, a survey was implemented to fill this data gap. This survey was a cooperative effort by Dr. S. O. Olayide, Department of Agricultural Economics, University of Ibadan; Dr. Dupe Olatunbosun, Nigerian Institute of Social and Economic Research, University of Ibadan; and Earl Kellogg, Department of Agricultural Economics, Michigan State University. The information was gathered in June 1969 outside Ibadan, Nigeria on the main highway from the northern section of the country. A total of 30 different truck drivers were interviewed while they stopped at the military check point outside Ibadan. The questionnaire used on the survey is given in Appendix Table I-l. The results of the survey are summarized in Appendix Table I-2. On the average, it takes 3.5 days to travel between both Kano and Katsina to Lagos (a 720 mile trip). The number of cattle hauled on the 5 ton trucks was about 13. The average for the 15 ton trucks was about 23 cattle. The average freight charge per animal on the 5 ton lorries was approximately £9 per animal on the Katsina-Kano to Lagos trips. The average freight charges on the 15 ton lorries was a little cheaper being about £8.5 per animal. Of the 27 drivers that answered, 15 indiCated that the cattle they were hauling exhibited severe road stress. None of the drivers said that they stapped to feed or water the cattle on the 3 day trips. Twenty-five of the twenty-seven 226 227 drivers that answered, indicated the cattle they were hauling were owned by northern cattle dealers and were to be delivered to these dealers' selling agents in the south. 228 Appendix Table I-l: Survey Questionaire For Truck Hauling Costs NIGERIAN INSTITUTE OF SOCIAL AND ECONOMIC RESEARCH, UNIVERSITY OF IBADAN. and DEPARTMENT OF AGRICULTURAL ECONOMICS AND EXTENSION, UNIVERSITY OF IBADAN. and DEPARTMENT OF AGRICULTURAL ECONOMICS MICHIGAN STATE UNIVERSITY, U.S.A. B. Economics of Cattle Movement Questionnaire on Truck Movement General Information 5. 6. Plate No. of Vehicle Size of Lorry (5, lS-ton, etc.) Day of Interview Time of Interview Driving experience of driver (yrs.) Number of cattle in lorry (count) Specific Questions 1. 2. Where did the journey start from? On what date did it start? At what time of the day? How many cattle were then loaded? Were there any pick-ups en-route (Yes/No)? If YES, how many? (1) where (ii) where (iii) where (iv) where 10. 11. 12. 229 Were there any off-loading cn-route (Yes/No)? If Yes, how many? (1) where (11) where (iii) where (iv) where How long has the trip taken now? What is your destination? How long do you think it will take to get there from here? Normally how long has the journey taken you on previous occasions? C. Livestock Condition 1. 2. 3. Did you have any difficulties with the animals en-route (Yes/No) If Yes, what form? (1) Sickness (ii) Heat (iii) Road Stress (iv) Water (v) Feed (vi) Others How many stops were made as a result of these and where? (1) where (ii) where (iii) where (1V) where (V) where D. 4. How long was the (i) Feeding (a) (b) (c) (d) (11) Watering (a) (b) (a) (d) 5. How many animals 230 delay in performing the services of? where where where where where where where where die enroute? 6. What do you think the conditions of the remaining stock are now? (i) (11) (111) (1V) (V) Excellent Good Fair Bad Very Poor Cost of Transportation 1. Who owns the cattle? (1) Dealer 2. To whom do you deliver?(i) Agent in cattle market 3. Is the lorry on hire (Yes/No) If so what is normal charge (ii) Agent (iii) Association .(ii) Association (iii) Dealers in cattle market (iv) Private Butchers 231 If not what are your needs for the journey? (i) gasoline ,,gallons @ ‘ m.p.g. (ii) engine oil gallons (iii) daily stipend of driver (iv) daily stipend of driver's apprentice How do you base your charges on cattle movement (i) £ ,per load. (ii) £ per head of cattle. (iii) £ ' load excluding petrol and other expenses. 232 Appendix Table I-2: Results of Survey on Hauling Cattle by Truck I J 7 umber of, Total lCost lRoad Size of Time of Cattle on Cost per Per Stress Truck _ Route 2 Trip _ Truck Truck ‘Animal Indicated? (In Tons) (In Days) (£) (£) ' 5 Kano to Lagos 3.5 10 90 9 Yes " " " " 3.5 10 8O 8 N0 " " " " 3.5 14 110 8 NO " " " " 3.5 14 150 10.7 No " " " " 3.5 14 150 10.7 No " " " " 3.5 12 108 9 N0 " " " " 3.5 12 108 9 Yes .. n v " 3.5 14 126 : 9 Yes "2 " " " 3.5 14 126 9 NO " Katsina to Lagos 3.5 12 126 9 Yes " " . " " 3.5 14 140 10 Yes " " " " 3.5 12 108 9 Yes " Kano to Ibadan 3.0 14 126 9 No 15 Kano to Lagos '3.5 22 198 9 No " " " " 3.5 24 216 9 Yes u n n " 3.5 24 180 7.5 Yes " " " " 3.5 22 198 9 Yes " " " " 3.5 24 198 9 N0 " _ " " " 3.5 24 198 9 Yes ' " .Katsina to Lagos 3.5 22 175 8 Yes . " " " " 3.5 16 120 8 Yes " " " " 3.5 25 175 7 Yes 233 Table I-2 continued-- umber of Total Cost Road Size of Time of Cattle on ost pe Per Stress Truck Route Trip, _ Truck _Truck 'Anima1_Indicated? (In Tons) . (In Days) (£) (£) 15 Katsina to Lagos 3.5 24 200 8.3 Yes " " " " 3.5 24 180 7.5 No " " " " 3.5 22 198 9 Yes " " " " 3.5 22 198 9 No " . Kano to Ibadan 3.0 22 176 8 IN.A. " Zaria to Lagos .3.5 24 216 9 No " Ogbomosho to Lagos 1.0 22 110 5 No APPENDIX II COMPUTER PROGRAM FOR TRNSCST MODEL The listing of the computer program written in fortran and fordyn is given in this appendix. The description of the variables is included in Chapter III. The array data was entered in data state- ments which do not appear here. These data are given in the tables in Chapter III. 234 FORl. 15 235 3A PROGRAM DIS COST DIMENSION TM(15,15),PA(15),PM(15),WM(15,15),WSF(15,15) l,SF(15,15),RC(15,15),RM(15,15),TFC(15,15),TDL(15,15),TS 2C(15,15),TTDC(15,15),DF(15,15),CM(15,15),MC(15,15),SC(15,15),CS(15 3,15),CI(15,15),TWDC(15,15),AC(15,15),RSC(15,5),TRDC(15,15),RTDL(1 45,15),RTSC(15,15),RTTDC(15,15),RMC(15,15),SCR(15,15),RCS(15,15),RC 51(15,15),RTWDC(15,15),RRSC(15,15),RTRDC(15,15),VSF(15,15) 6,TAT(15,15),CHYR(15,15),TDCP(15,15),RTDCP(15,15),RDCP(15,15),RRDCP 7(15,15) DIMENSION VAL(12),DLR(15,15),RDLR(15,15) REAL MF,MC,LWS SMALL-0 DIFF-.5 KF-ll cw=340. CLO-.77 SDL-.0007 SSP=.OO4 PTFC=3. PDT-.02 FM°24. ; TCT-72. . PDF=.S4 PCM-18. MWD=13. . CPD=15. OE-lOO. WA-700. PPS=.44 RI-.l DO 11 M-l,2 no 8 I=2,15 K-I-l DO 7 J-1,K TFC(I,J)=PTFC*TM(I,J) TDL(I,J)=PDT*PA(J)*.34*TM(I,J) RTDL(I,J)-PDT*PA(I)*.34*TM(I,J) DT=TM(I,J)/700.*3.5 LWS=TABEXE(VAL,SMALL,DIFF,KF,DT) TSC(I,J)=LWS*CLC*PM(J)*CW + .5*(LWS*WA-LWS*CLC*CW)*PPS*PM(J) RTSC(I,J)-LWS*CLC*PM(I)*CW + .5*(LWS*WA~LWS*CLC*CW)*PPS*PM(I) TTDC(I,J)-(TFC(I,J)+TDL(I,J)+TSC(I,J)+TCT+FM)/240. RTTDC(I,J)=(TFC(I,J)+RTDL(I,J)+RTSC(I,J)+TCT+FM)/240. TDCP(I,J)-TTDC(I,J)*20. RTDCP(I,J)=RTTDC(I,J)*20. DF(I,J)-PDF*WM(I,J) CM(I,J)-(PCM*WM(I,J)/MWD)/CPD IF(M.EQ.1) GO TO 12 IF(I.EQ.l0.0R.I.EQ.12.0R.I IF(J.EQ.10.0R.J.EQ.12.0R.J. 236 12 MC(I,J)-.333*SF(I,J)*PA(J)*240. RMC(I,J)-.333*SF(I,J)*PA(I)*240. SC(I,J)=SF(I,J)*(PA(J)-.333*PA(J))*240. SCR(I,J)=SF(I,J)*(PA(I)-.333*PA(I))*240. CS(I,J)-.024*WM(I,J)/100.*CLC*PM(J)*CW+.5*(.025*WM(I,J)/100.*WA- 1.025*WM(I,J)/100.*CLC*CW)*PPS*PM(J) RCS(I,J)-.025*WM(I,J)/100.*CLC*PM(I)*CW+.5*(.025*WM(I,J)/100.*WA- 1.025*WM(I,J)/100.*CLC*CW)*PPS*PM(I) GO TO 9 10 MC(I,J)-.5*.33*SF(I,J)*PA(J)*240. RMC(I,J)-.5*.33*SF(I,J)*PA(I))*240. SC(I,J)-.5*SF(I,J)*(PA(J)-.33*PA(J))*240. SCR(I,J)=.5*SF(I,J)*(PA(I)-.33*PA(I))*240. CS(I,J)=VSF(I,J)*CLC*CW*PM(J)+,5*(VSF(I,J)*WArVSF(I,J)*CLC*CW) 1*PPS*PM(J)+VF+VML*PM(J) RCS(I,J)=VSF(I,J)*CLC*CW*PM(I)+.5*(VSF(I,J)*WArVSF(I,J)*CLC*CW) 1*PPS*PM(I)+VF+VML*PM(I) 9 CI(I,J)-((PA(J)*RI*240.)/365.)*((WM(I,J)/MWD)+4.) RCI(I,J)-((PA(I)*RI*240.)/365.)*((WM(I,J)/MWD)+4.) TWDC(I,J)-(DF(I,J)+CM(I,J)+FM+SC(I,J)+CS(I,J)+CI(I,J)+WSF(I,J)+ 1TCT+MC(I,J))/240. RTWDC(I,J)-(DF(I,J)+CM(I,J)+FM+SCR(I,J)+RCS(I,J)+RCI(I,J)+WSF(I,J) 1+TCT+RMC(I,J))/240. AC(I,J)-.221*RM(I,J) Dv=(TAT(I,J)-2.)/2. DRFAMAX1(1.,DV) LWS=TABEXE(VAL,SMALL,DIFF,KF,DR) RSC(I,J)=LWS*CLC*PM(J)*CW+.5*(LWS*WA~LWS*CLC*CW)*PPS*PM(J) RRSC(I,J)=LWS*CLC*PM(I)*CW+.5*(LWS*WA9LWS*CLC*CW)*PPS*PM(I) DLR(I,J)=SDL*DR/2.*PA(J)*240.+SSP*DR/2.*(PA(J)-.333*PA(J))*240. RDLR(I,J)-SDL*DR/2.*PA(I)*240.+SSP*DR/2.*(PA(I)-.333*PA(I))*240. TRDC(I,J)-(RC(I,J)+AC(I,J)+RSC(I,J)+DLR(I,J)+TCT+FM)I240. RTRDC(I,J)-(RC(I,J)+AC(I,J)+RRSC(I,J)+RDLR(I,J)+TCT+FM)/240. CHYR(I,J)-(300./TAT(I,J))*26.‘ RDCP(I,J)=CHYR(I,J)*TRDC(I,J) RRDCP(I,J)=CHYR(I,J)+RTRDC(I,J) 13 FORMAT (5x 3(13,1X)) PRINT 13, I,J,M 6 FORMAT (2(10E13,3,/)) PRINT 6,TFC(I,J),TDL(I,J),RTDL(I,J),TSC(I,J),RTSC(I,J),DF(I,J), 1CM(I,J),MC(I,J),RMC(I,J),SC(I,J),SCR(I,J),CS(I,J),RCS(I,J), 2CI(I,J),RCI(I,J),AC(I,J),RSC(I,J),RRSC(I,J),DLR(I,J),RDLR(I,J) 20 FORMAT (5x 6El3,3) PRINT-20,TTDC(I,J),RTTDC(I,J),TWDC(I,J),RTWDC(I,J),TRDC(I,J), lRTRDC(I,J) 17 FORMAT (5E13.3) . PRINT l7,CHYR(I,J),TDCP(I,J),RTDCP(I,J),RDCP(I,J),RRDCP(I,J) 7 CONTINUE 8 CONTINUE 11 CONTINUE END 237 .101 FUNCTION TABEXE(VAL,SMALL,DIFF,KF,DUMMY) 102 DIMENSION VAL (I) 103 DUM-DUMMY—SMALL 104 N=MINO(MAX1(1.0+DUM/DIFF,1.0),KF) 105 TABEXE-(VAL(N+1)-VAL(N))*(DUMEFLOAT(N-1)*DIFF)IDIFF+VAL(N) 106 RETURN 107 END APPENDIX III FIGURES SHOWING RESULTS OF THE SPATIAL EQUILIBRIUM MODEL The figures contained in this appendix show the prices, quantities demanded and supplied, and interarea flows of beef through time in many Of the 15 areas in Nigeria for three investment options in beef transportation. The results appear in table form in Chapter V. The three transportation investment options are as follows: I - a policy that closely parallels the present one in Nigeria of providing fewer rail cars than can be effectively utilized and having no program to control trypanosomiasis. II - a policy that furnishes as many cars as are needed but no investments in trypanosomiasis control. III - a policy that furnishes an adequate number Of rail cars with a program to control trypanosomiasis along the trek routes. 238 Price (£lanimal) Appendix Figure III-1: Price (£/anima1) Appendix Figure III-2: 28.50 27.00 25.50 24.00 22.50 21.00 19.50 28.50 27.00 25.50 24.00 22.50 21.00 19.50 18.00 239 " 1’ . I I * 1” III . -0—0- "‘ : .1 ‘ l L, l O 5 10 15 -.20 Years Equilibrium Prices in Area 1 Through Time for Three Options 0 5 10 15 20 Years Equilibrium Prices in Area 2 Through Time for Three Options Price (Llanimal) 29.50 28.00 26.50 25.00 22.00 20.50 19.00 , 240 Appendix Figure III-3: Equilibrium Prices in Area 3 Through Time for Price (blanimal) 25.00 23.50 22.00 20.50 19.00 17.50 16.00 14.50 13.00 Three Options I F I 2 _ . .I‘ ‘1’ r- ./ ’7‘ ./ I r’ .4! "a' '1 ‘ .4’ 1' ._ a... ./ I ,r a’ e l,- ,r — /° // —. ’0 I F - F— -fi e a r— ,/’ I _. .//I _ a? __ +- II ‘ ———- — III . -0-0- .— l l l 0 5 10 15 Appendix Figure III-4: Equilibrium Prices in Area 4 Through Time for Three Options 20 Years 20 Years Price (L/animal) 28.00 26.50 25.00 23.50 22.00 20.50 19.00 17.50 _.. III --.—..— — - '1 l l l o 5 10 15 20 Years Appendix Figure III-5: Equilibrium Prices in Area 5 Through Time for Price (Llanimal) 33.00 31.50 30.00 28.50 r— 27.00 25.50 24.00 0 5 10 15 Three Options l l 1 20 Years Appendix Figure III-6: Equilibrium Prices in Area 6 Through Time for Three Options 242 Price 31.00 (£/anima1) 29.50 28.00 26.50 25.00 23.50 22.00 ‘ III - -O-O- l l l 0 5 10 15 20 Years 20.50 - Appendix Figure III-7: Equilibrium Prices in Area 7 Through Time for Three Options (Llanimal) _ ._ 4 26.00 — .I": P ./"/”'A .d' " 24.50 — / ’z - 23.00 21.50 20.00 18.50 " I-— II - --—— 17.00 III - -0-0— --1 ..J 15.50 1 I I O 5 10 15 20 Years Appendix Figure III-8: Equilibrium Prices in Area 8 Through Time for Three Options Price (hlsnimsl) Appendix Figure III-9: Appendix Figure III-10: 26.00 24.50 23.00 21.50 20.00 18.50 17.00 15.50 0 34.50 33.00 31.50 30.00 28.50 27.00 25.50 24.00 22.50. 243 J III 3 -o-o- L 11 Three Options 10 15 20 Years Equilibrium Prices in Area 9 Through Time for Three Options ’l. I a: _ g'. I d :490 II I -——- ! III - .0... -—1 +— .4 0 5 10 15 20 Years Equilibrium Prices in Area 10 Through Time for I'll] 'Il-I": llllllll I III l 244 Price 28.00 (Blenimsl) 26.50 25.00 23.50 22.00 20.50 19.00" III - —._.— -- l l l 0 5 10 . 15 20 Years 17.50 Appendix Figure IIIdllz Equilibrium Prices in Area 11 Through Time for Three Options Price 32.50 (blanimsl) ' I I I 31.00 29.50 28.00 26.50 25.00 23.50 22.00 0 5 10 15 20 Years Appendix Figure III-12: Equilibrium Prices in Area 12 Through Time for Three Options Price (h/enimsl) Appendix Figure III-13: Price (blanimsl) Appendix Figure III-14: 26.00 24.50 23.00 21.50 20.00 18.50 17.00 15.50 39.00 37.50 36.00 34.50 33.00 31.50 30.00 28.50 27.00 25.50 I.— II .---— III ...-0. .‘5 l 1 0 5 10 15 20 Years Equilibrium Prices in Area 13 Through Time for Three Options / I.— 0 II I ---- III - -o-o— — L l l O 5 10 15 20 Years Equilibrium Prices in Area 14 Through Time for Three Options 246 Price (blanimal) 35.00 33.50 32.00 30.50 29.00 27.50 26.00 24.50 III I .0..- l J 23.00 Appendix Figure III-15: Quantity Demanded 10 15 20 Years Equilibrium Prices in Area 15 Through Time for Three Options (thousands 73.0 of cattle) _ I if I 1 5 \ 68.0 — “‘ I - _ —-I \ .. \\ II I ---- “I \\ III - -o-o- 63.0 ix. ‘x\ ‘1 \\ ‘~-- ". ---------: ‘\ 58.0 q .— \° + 53.0 — °""‘\. ‘ \O _ \. -' 48.0 +— "‘ l l 1 43.0 0 5 10 15 20 Years Appendix Figure III-16: Equilibrium Quantity Demanded in Area 1 Through Time Under Three Options 247 Quantity Demanded (thousand 52 of cattle) l I +— 50 #- 48 '- 46 h- 44 - I.— II I ---— 42 —- III a —o-o- P----——-—--—-’---——-‘ l l .\.-+ \ 40 l I 0 5 10 15 20 Years Appendix Figure III—17: Equilibrium Quantity Demanded in Area 2 Through Time Under Three Options Quantity Demanded (thousands of - cattle) 120 I I 116 110 104 *- 98 92 — III I -.-.- l \ 15 * 20 Years Appendix Figure III-18: Equilibrium Quantity Demanded in Area 3 Through Time Under Three Options 248 Quantity Demanded (thousands 39 of cattle) I 1 l I L— 31 :. "1 K.\. ~~-~“ d ~— ‘0 ‘ 27 \.-_..~. ~§~“ A ‘- ~o~0\. \\ _ \. \ 23 - \.\ \\ -* L \'\ \V 19 F- I -— .\. d '- II I-——- \. .4 15 "_ III -—s—o— \.< — 4 u 1 1 1 O 5 10 15 20 Years Appendix Figure III-19: Equilibrium Quantity Demanded in Area 4 Through Time Under Three Options Quantity Demanded (thousand of cattle) 47°C 44.0 41.0 38.0 35.0 32.0 29.0 26.0 0 5 10 15 20 Years Appendix Figure III-20: Equilibrium Quantity Demanded in Area 6 Through Time Under Three Options Quantity Demanded (thousands 64 of cattle) 62 60 58 56 54 52 50 Appendix Figure III-21: Quantity Demanded (thousands of cattle) 900 800 700 600 500 400 300 200 Appendix Figure III-22: 249 0—0- 0—0 ‘ . 4 ”’----- ~~~~‘~i I - — " l’ 11 . -..—.— "l :‘I III 3 -0-.- P i l 1 l I O 5 10 15 20 Years Equilibrium Quantity Demanded in Area 12 Through Time Under Three Options ‘ TTTT J 5 10 15 20 Years Equilibrium Quantity Demanded in Area 14 Through Time Under Three Options 250 Quantity Demanded (thousands of cattle) 300'° 1 ] 1? 285.0 1— " I 270.0 1— I. ' / 255.0 —' l. . '- . I 240.0 -— /'/ ’I—A _ - / d .l I 225.0 1— ’ I, "" 1— ". [I A 210.0 k— .I / -1 h 3’ ‘1’ n 195.0 1— ., // --‘ ’ / r- ' 4 ./ I 180.0 1-- , I ‘4 __ . / 4 / / 165.0 — /' [I __ *- ./ // q 15000 ”- lo/ // — l I —1 135.0 1" . ,’ .1 __ / / .. /' ’ 120.0 a. . i, .1 _ .l/ 1 105.0 -- .ll/ _1 c I _ all 90.0 #- ,/I .1 / I " """'" _ ‘. / II - --—-A " 75.0 III . —o—o- -—1 I I -1 60.0 L l L O 5 10 15 20 Years Appendix Figure III-23: Equilibrium Quantity Demanded in Area 15 Through . Time Under Three Options 251 Quantity Supplied (thousands 330 I l of cattle) 310 L- I 290 L- 270 - 250 '— I 230 I 210 190 I.— II I ---- L— 1. 70 170 F III - -o—o- ...-1 0 L J l l , 5 10 15 20 Years 150 Appendix Figure III-24: Equilibrium Quantity Supplied in Area 1 Through Time Under Three Options 252 Quantity Supplied (thousands of cattle) 190 180 __’ 170 ~— 160 I [j 150 140 1 130 ~— 120 _1-- II . ---- 110 III - -o—o- — .1 100 1 I I I O 5 10 15 20 Years Appendix Figure III-25: Equilibrium Quantity Supplied in Area 3 Through Time Under Three Options 253 Quantity Supplied (thousands of cattle) 260 240 220 200 180 160 140 120 100 1 1 I O 5 10 15 20 Years Appendix Figure III—26: Equilibrium Quantity Supplied in Area 4 Through Time Under Three Options 254 Quantity Supplied (thousands of cattle) 140 130 120 110 100 90 80 70 60 0 5 10 15 20 Years Appendix Figure III-27: Equilibrium Quantity Supplied in Area 9 Through Time Under Three Options 255 Excess Supply (thousands of cattle) 260 240 220 200 180 160 140 120 I.— b / II - --—— 100 1 III - .0... -- 80 1 1 1 0 5 10 15 20 Years Appendix Figure III-28: Excess Supply in Area 1 Through Time Under 'Three Options 256 Excess Supply (thousands of cattle) 80 P 70 r— 1- 60 1... L. 50 h— 40 L— 30 -—- 20 . I ” IT; ::-..-: ’ "1 10 J L l 0 5 10 15 20 Years Appendix Figure III-29: Excess Supply in Area 2 Through Time Under Three Options 257 Excess Supply (thousands of cattle) 100 I I I 90 80 1* T’ 1’ 1* I 1* ‘\ 70 I 60 I 50 r- 40 - 20 ~— 10.— I.— 1 II I —--— I III . -0-.- l l 0 5 10 15 20 Years Appendix Figure III-30: Excess Supply in Area 3 Through Time Under Three Options Excess Supply (thousands of cattle) Appendix Figure III-31: 245 225‘ 205 185 165 145 125 105 85 65 258 I.— 11.---- III I -.--— l 0 5 Three Options Excess Supply in Area 4 Through Time 20 Years Under 259 Excess Demand (thousands of cattle) 11'50 - 10.00 I— 8.50 1- / 7.00 L- 5.50 4.00 ‘— 2. r- 50 I _ II I 1.00 "" III - -0-.- 0 5 10 15 20 Years Appendix Figure III-32: Excess Demand in Area 6 Through Time Under Three Options 260 Excess Demand (thousands 15 of cattle) 13 11 9 7 5 3 I n — \. \ ’- 11 - ......- \. \“ 1 III I -o-o- \ ‘\ "" r -y._,__‘_: L J 1 ~‘1 0 5 10 15 20 Years Appendix Figure III-33: Excess Demand in Area 7 Through Time Under Three Options Excess Supply (thousands of cattle) 130 120 L— 110 +— 100 —- 90 P- 70 - 60 F-‘dg 50 40, 0 Appendix Figure III-34: 5 Excess Supply in Area 9 Through Time Under Three Options 261 I.— II I ---- III I _o-o- J L 10 15 1 L 20 Years [Al'lllluiili‘ 262 Excess Demand (thousands 7 of cattle) 44'00 I 4r I l 42.50 1 41.00 _. .a—"‘:' 39.50 .5 q 38.00 p’ \\ — L— \\ J ‘\ r- \ d 35.00 — \\ -+ I - _ “ L— “ cut II . ---- “ 33650 — III I .0... ‘C‘ _ A 32.00 I 1 ' O 5 10 15 20 Years Appendix Figure III-35: Excess Demand in Area 12 Through Time Under Three Options 263 Total (thousands of cattle) 1560 1480 1400 1320 1240 1160 1080 1000 920 O 5 10 15 a 20 Years Appendix Figure III-36: Total Supply and Demand of Nigeria Through Time Under Three Options . APPENDIX IV SPATIAL PRICE EQUILIBRIUM MODEL FORMULATION AND SOLUTION The purpose of this appendix is to specify the spatial market economic problem in a manner that may be solved by mathematical programming to derive the optimum prices, quantities and interarea flows. The solution of this problem will then be shown to satisfy the spatial equilibrium market conditions specified in Chapter V. These conditions are repeated here to facilitate understanding this appendix. Spatial Market Equilibrium Conditions An economic state is said to be in a stable price equilibrium if the following conditions are met: {19} (1) Market Equilibrium No excess demand and excess supply conditions: (a) § - 2 i s 0 . ' i 3 J1 over all i where: y1 = optimum consumption in area i. Q a optimum interarea flow from area 1 to area i. equilibrium market demand price in area i. '0 H II i,j - 1,2 ...N - number of areas in the entity being considered. (b) ‘ - 2 xi 1 11 2 0 p (“1 ‘ g ‘1 ) = 0 over all 1's. 3 264 265 where: i1 - optimum supply in area i 51 - equilibrium market supply price in area i (2) Area Consumer Equilibrium and yi(o1 - P1) - 0 for all 1. where: E1 = the maximum price the community is willing to pay for the consumption of the quantity of the commodity, §1. (3) Area Producer Equilibrium - F1 s 0 -i p and §1(51 — fii) - o for all 1 where: P = the minimum price at which the producer in the area are willing to supply E1. (4) Locational Price Equilibrium - -i - - t S 0 DJ 0 13 and - -i x1j(pj - p - tij) 0 for all i and j where: tij a transfer charge for the commodity to flow between area i and area 1. 266 Problem Specification Assume that both the demand function and supply function are given for the ith region as: P = A - w i i — demand 1Y1 i a + - s 1 p Y1 01x1 upp y for all 1 Now, construct the following area quasidwelfare function for area i 1 W1 ' (f! (Ai'w1y1)dy1 “ “3 (Y1 + ”1x1)dxi Y1 x1 - K + A y - 1/2 my 2 - Y x - 1/2 n x 2 i i i i i i i i where 91 and £1 are the pre-trade equilibrium quantities and K1 is a constant . The total quasidwelfare function for the economy overall n areas is assumed to be additive and is given as: n n _ 2 2 W(y,x) : 2 W1(yi,xi) - 2 (K1 + Aiyi- 1/2 (01yi - Yixi- 1/2 nix1 i=1 181 in matrix form W(y.x) = K + A'Y - A'x - 1/2 Y'QY - 1/2 x' HX 267 where, p. ..a. . I. , c A (AlA2 ..... An) , Y (yly2 ..... yn) - ' o B ' Y (YIYZ ..... Yn) a X (xlx2 ..... xn) r- - '1 vwl w F1 2 2 9 ' ° . and H - ' . o wn . n ‘ "‘ .. .J The total transportation cost for all possible flows can be written as : t . £1 £3 tij x11 — T X where T - (t ... t 0 11 1n o.o tn. o.o can) I 0 and X (x11 ... x1n ... x ... x ) n1 nn Since these costs are determined exogenously, they are considered a negative benefit or welfare for the society. Therefore, the net quasi-welfare function is: NW(y,x,X) = K + A'y - y'x-1/2y'Qy-1/2x'Hx-T'X Diagrammatic Illustration of the Quasi-Net Welfare Function Figure IV-l illustrates the two area example of the problem. In this case, y1 J:1 NW(X.Y.X) = j (Al-wiy1)dy1 - j (Yffllxlflxl y1 III-Ill .lll.l|lllllllllxlll"lllll.l I! l ...Il’l [I'll 1 I» III III‘ II ’5'“! [I 268 .4.III.I.r.|Iy drake 6:?L£v—w=om coauUMIose "HI>H musuwm xfiucmmm< N was A mono ooosuon commons nowadays I NHu wouaua asuupwdgouo ovuuulumon I Nm.Hm «moans asaunaaaauo ouauuuuua u «m.NN noguauausa aaaunaaasuu «announces n Nm.Nm.Hu hHo>Nuoummuu N was H mono aw moowuuoaw museum I AvaNv.AHmvav hfluéauomamou N can A scum aw mooauooow kahuna I aNvam.AHvam .Hh hao>auuoamou N van H mono ma mmwuwuomov possum I N>.Hm moauuunusv asaunaauavo anomaloum I N«.Nm.H«.N% hao>auoommmu N now H ovum ca mowufiuomsv madman I Nx.ax acquuuoz H~.HA an Hmuas as o Nu «m.NN um ~x.~m HH as: : aNvam 269 y2 x2 y2 x2 ' t12(x1'y1) y1 The integral ‘11/ (Al-lelmyl represents area --Bl‘Y1Y1E1 or y1 equivalently -Bl'§29231' 321 f (Ylmlxlmxl represents area ElxlxlAl or equivalently area £1 ' i"- I E1 x2 2A1 y2 (AZ—w2y2)dy2 is area E2A2y292 y2 ;2 I/{’ (y2+n2x2)dx2 is area -E2x2sz2 522 ’_" I I t12(x1 yl) is area A23281 A1 Careful geometry will show the quasi-net welfare function is area E2A232+Bl'Al'El" When spatial price equilibrium is reached, this area will be maximized. 270 Constraints For each area, the quantity actually consumed is assumed to be less than or equal to the quantity shipped into the area from all other areas. Thus, n yi 5 1.2.1 x11 for all i and j Additionally, the actual supply quantity, x1, is assumed to be greater than or equal to the effective supply to all regions. Thus, x 2 2 x for all i and 3 These constraints may be written compactly in the following matrix form. y 0x andyzo,x>0,x.>;0 "x where 11 11 11 .1 o. o. 6‘ -1-1000-1 .1 . “1.10.00 1 s-l-lsssoo-l .... 2 __J (2n X n ) X - [%llx12 .... xln,x21x22 .... x2n .... xnl’an .... xné] (n2 X l) I: III: III 1|| I I l.‘ I Ill II" I If . I ll! 'II III, li'.l| III I I l l l I. I. ll ll! (.1 '11 l 1‘ I II‘ Ir] 271 y I I (yl,y2 so. yn,x1,X2 .... Kn) 'X The first row of the constraint inequality is x + x + ... + 11 21 xn1 2 Y1 The (n+1)§£ row of the constraint inequality is “X “X 11 12 "' “‘1n 3 -x1 Therefore, the two constraining conditions are correctly specified in Y GX . -x In order to derive the necessary conditions for the maximum of Optimality Conditions the objective function subject to the constraints, the following Lagrangean is formed: ¢(y1xlxlo) - K + A'y - Y'x - 1/2 y' 0y - 1/2 x'Hx - T'X + p(GX - -x where = l 2 n p - (plpz "' on, p p as. p ) (2n X 1) Following Kuhn-Tucker, the necessary conditions for this saddle value prdblem are as follows: ll]l‘l!l‘n.‘ll'lll’l."'[ I Ill-I‘ll I I II]. l‘l’illl [In ’.|\ I'll . 272 (a) fl-A-W-B 'A o m 3. ¢3u§u V ‘<| I o 'Ol I 0 (b) fi'-Y'-Hx+x<0and(-g-Q SE-0 fl - I- - a- - . (c) 8X T' + G'p 5 0 and 3X X 0 _ § _ (d) 3 - c i - > 0 and a B - 0 30 _ 30 “X Component wise, the above expressions are: (a) gfl-Ai-w -5i<0and—§y1-0foralli 1 fl. -1 - ' q—ai- I (b) 8:: p ('y1 + nixi) S O and 8x1 x O for all i 1 1 (c) i-E -51- 0 and - 0 for all i ap1 1-1 31 3‘)1p (d) - n -§%-- - 2 i1: + £1 2 0 and-§$'51 - 0 for all 1 39 1-1 39 These optimality conditions fulfill the equilibrium spatial market conditions previously specified as explained below. Condition (a) may be rewritten as: P1 ' A1 ' “1’1 5 p1 IIILI.III|{IIIIIII'1 273 and y1(pi - P1) - 0 for all i This is equivalent to (2) the consumer equilibrium condition.which states that at the optimum, (i) when consumption in the ith area is positive, then the area demand price P is equal to the market 19 demand price, 51, and (ii) when §1 - O, the market demand price 51, must be greater than or equal to the area demand price, Pi' Condition (b) may be written as: i - -i and i1 (61 _ 51) - 0 This corresponds to condition (3) and may be interpreted as follows: At the optimum, (i) when the supply is positive in the ith region, then the market supply price, 51, is equal to the area supply price, P1 and (ii) if £1 - O, the market supply price, 51, must be smaller than or equal to the regional supply price. Condition (c) is: and for all i and 1 This is equivalent to condition (4). It may be interpreted as: When the optimum flow is positive, > O, the difference between the £13 market supply and demand price is equal to the transportation rate, and I!"Il}lill{lll‘ll‘ I. 274 (ii) if ; - O, the difference is less than or equal to the trans- iJ portation cost. Finally, condition (d) relates the excess demand and supply possibilities and is equivalent to condition 1 (a) and (b). n — .. 121 x31 2 Y1 and - n .- D1 321 x31 ’ y1 ' 0' When the optimal market demand price, 51, is positive, the optimal consumption quantity, §1, is exactly met by inshipments from all areas, g i If 51 is zero, there may be excess inshipment or zero 31' inshipment over the optimal consumption. n — le xiJ S x1 and -1 - n 9 (x1 - 2 x13) - 0 3‘1 When the optimal market price, 51, is positive, the total supply quantity, i1, is exactly met by the out shipments to all areas including itself. If 51 is zero, the total production in the area exceeds or Just meets the total of self supply and outshipments from the area. Therefore, it is shown that that result of maximizing the objective function previously stated fulfills the conditions laid down for spatial price equilibrium. IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII uIIIum!4thngquulmlgwlgumuymuuml --fl---———m