Agro-processing sector should have to grow in order to match the growing supply ofrnagricultural products and increasing demand for processed agricultural products. Agro-rnprocessing designed for accelerating growth and poverty reduction, and the ultimaternachievement of structural transformation, is the critical policy challenges in present dayrnEthiopia. This paper examines the impact of the Export of Live Animals on the Meatrnprocessing Firms and Foreign Exchange Earnings in terms of the value of meat processedrnand exported and assess the gain/loss/ against the value of the export of live animalsrnparticularly cattle, sheep and goat if processed in domestic firms. The study was originatedrnfrom the hypothesis that meat processing firms operate far below their installed capacityrndue to supply shortage; meanwhile the country exports live animals. To this end the studyrndata was collected from meat processing firms and the ECuA (from 1997-2007; thoughrntransactions were not regular) and NBE, and compiled on monthly bases for econometricrnanalysis and yearly bases for descriptive analysis. Because of the time series nature ofrneconomic data, Error Correction econometric Model was used for analyses. The analysesrnresults revealed that processing livestock (cattle, sheep, and goat) fetches more benefits asrncompared to exporting live animals. The analyses of the model, that is, the econometricrnresult showed that the export of live animals significantly affected the performance of meatrnprocessing firms. Accordingly, the same amount of processed meat of heads of livestockrngenerates more benefits over the export of the same amount of live animals and thernestimated minimum net gain obtained per head is 23.21, 8.33 and 23.09 ETB for cattle,rnsheep and goat respectively. Despite the fact that it requires detailed examination, with therncurrent capacity utilization alone, this preliminary study shows that the unutilized gap ofrnmeat processing firms in terms of the value is estimated to 192 million ETB per year whilernon average firm operate the value of about 32 million ETB per year. Thus, in addition to thernlow supply to which domestic firms are confronted, these results validate that the export ofrnlive animals has an impact on the meat processing firms.