Proceedings, 10 th World Congress of Genetics Applied to Livestock Production Risk-rated economic values for production and functional traits of Small East African goat using profit functions S.M. Mbuku 1,4 , I.S. Kosgey 2,4 , A.M. Okeyo 3 , and A.K. Kahi 4 1 Kenya Agricultural Research Institute, National Beef Research Centre, Nakuru, Kenya, 2 Laikipia University, Nyahururu, Kenya, 3 International Livestock Research Institute, Nairobi, Kenya, 4 Egerton University, Njoro, Kenya. ABSTRACT: The study reports the effect of incorporating risk in the derivation of economic values for traits of the breeding goal of Small East African goats under the pastoral production system. A model previously used to derive conventional economic values was revised to incorporate variances of profit and risk attitudes of livestock keepers in estimation of risk-rated economic values. This resulted in a decrease in the estimated economic values by -14.7% (milk yield), -2.7% (12-month live weight), -23.9% (consumable meat percentage), -6.6% (mature doe live weight), -98% (mature buck live weight), - 8.6% (kidding frequency), -8.2% (pre-weaning survival rate), -8.9% (post-weaning survival rate), -8.1% (doe survival rate) and 0% (residual feed intake). The decrease in the economic values implied that livestock keepers who were risk averse were willing to accept lower expected returns to avoid the opportunity of unfavourable outcomes. Keywords: Economic values; Small East African goat; Pastoral production systems Introduction Livestock production in the tropics and subtropics is a major source of livelihood among the livestock keepers, and is usually characterised by direct and collateral effects like frequent water and feed shortages, which ultimately lead to low production. Among the livestock species, indigenous goats are important for the majority of households found in the arid and semi arid lands (ASALs). Successful genetic improvement programmes for these goats should directly address the needs and objectives of the livestock keepers (Sousa et al. 2011)). The breeding objective is a combination of economic weights and the genetic information of all characters to be improved. The economic values (EVs) are found by expressing profit and liquid margins as a function of the traits in the breeding objective and using partial differentiation of profit and liquid margins with respect to the trait in question (see e.g. Tolone et al. 2011)). However, detailed economic analysis of expenses and incomes for low-input livestock production systems are rare due to technical, logistical and financial challenges. Breeding goals exist in many livestock species; usually these comprise production and functional traits. Breeding objectives have been defined for various livestock species in different countries e.g., for Valle del Belice dairy sheep (Tolone et al. 2011)), indigenous chicken (Okeno et al. 2012)), Creole goat (Gunia et al. 2013)) and Aberdeen Angus cattle (Campos et al. 2014)) but are lacking for of Small East African goat (SEAG). Appropriate EVs are important for selection within a population, evaluation of gene effects and for design of optimum breeding programmes. To be useful, agricultural models must account for risk (variance in profitability) and risk attitude of the producers due to environmental changes and uncertainty in low-input production systems (Pannell et al., 1995)). The present study estimates economic values with and without incorporating risk and farmers’ risk attitude for traits of the SEAG population reared under pastoral production system in Kenya. Materials and Methods Model overview. A deterministic static model was developed using the Fortran 95 programming language written in Microsoft Windows for the evaluation of economic aspects of important traits of the SEAG under pastoral production systems. The model described quantitative relationships between levels of genetic merit for the production and functional traits considered, and levels of inputs and outputs under the pastoral production circumstances. The profitability of the system was described, where the total annual profit of the flock was computed as the difference between costs and revenues of the system. The annual revenues and costs of the pastoral production systems were expressed on a per doe per year basis to account for both production and reproduction. Flock composition and flows. It was assumed that the flock consisted of a constant number of breeding does, N, present over one year and different goat categories were identified according to age. The size of the flock was kept constant over time by equating the number of replacement females with culled does and their respective survival rates. The ratio of breeding bucks to breeding does was assumed to be 1:35. Profit equation. The total profitability of the SEAG flock per year (P f ) (Kes) was expressed as a function of k biological traits (that are to be genetically improved), with the related costs and output values described by the following general equation 1 shown below; ( ) F t C R n P i i i k 1 i i f − − = ∑ = (1) where n i is the number of expressions for trait i in a year, R i the revenue per unit per expression of trait i (t i ), C i , the cost per unit per expression of trait i (t i ), and F the fixed cost per flock per year (fixed costs in the current study were negligible and, therefore, ignored). All the costs and prices were stated in Kenya shillings (Kes). Estimation of conventional economic values. Conventional economic values (CEVs) for the traits considered were calculated for the base situation with