Ethiopian cattle
Ethiopian cattle. Photo: ILRI/Fiona Flintan.

Drought, livestock holding, and milk production – a difference-in-differences analysis

EfD Discussion Paper
1 July 2023

This paper examines the impact of the 2015-16 large-scale El-Nino-induced drought on livestock holding and milk production of smallholder farmers. Recent research shows that climate change makes El-Nino more frequent and intense, and smallholder farmers in the developing world contributed little to climate change but are affected significantly more proportionately. This study found that El Nino-induced drought reduced smallholder farmers' livestock holdings and milk production significantly.

Meseret B. Abebe, Yonas Alem


We identify the effects of the 2015-16 El-Niño-induced large-scale drought on smallholder farmers’ livestock holding and milk production. The drought reduced milk production and livestock holding by 28.5% and 8.7%, respectively. Heterogenous impact analysis suggests that asset-rich households sold livestock and financed feed purchases, likely insulating milk production from the drought. In contrast, asset-poor households kept their livestock at all costs and absorbed all the decline in milk production. Our findings have important implications for formulating safety net and adaptation programs targeting smallholder farmers and the livestock sector in a rapidly changing climate.

Keywords: Drought, diff-in-diff, climate change, livestock holding, Ethiopia.

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Publication reference
EfD Discussion Paper DP 23-12
Publication | 17 July 2023