Competitive smallholder livestock in Botswana


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Presented by Sirak Bahta at a Seminar held at the Department of Agricultural Research (DAR), Gaborone, Botswana, 26 February 2014.

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Competitive smallholder livestock in Botswana

  1. 1. Competitive Smallholder Livestock in Botswana Seminar at DAR- 26/02/2014 Dr. Sirak Bahta International Livestock Research Institute (ILRI)
  2. 2. Competitive Smallholder Livestock in Botswana: Outline  Introduction and motivation  Research questions  Objectives  Partners and Collaborating Institutions  Work plan and research finding
  3. 3. Motivation Botswana smallholder sector: • produces most of Botswana’s meat • provides 70-80% of agricultural GDP • uses significant land and water resources 50-80 thousand smallholders own (most of the country’s) cattle 100,000 smallholders own sheep and goats
  4. 4. Motivation Cattle • ave. <220 kg (even with 4-5 year oxen) • <50% calving rates • <20% off-take by the commercial export slaughter sector • growing, multiple domestic market • promotion of specific production and marketing models • capacity-building initiatives Sheep and goats… thought to… • be of low productivity. • feature little value addition • have interactions with cattle (at farm level, at input service level, amongst traders, in the retail meat market)
  5. 5. Motivation A research project Existing research: • focused on exports • focused on beef • focused on production This project aims to enhance the competitiveness of smallholder livestock producers in Botswana
  6. 6. Research questions • Who is the smallholder livestock producer, and what factors constrain his/her livelihood? • How can livestock-related marketing systems be improved for the benefit of smallholders and the rural population?
  7. 7. Objectives  To better define smallholder livestock production systems, identify the factors affecting their productivity, and assess their competitiveness  To understand and improve conditions for market participation and value addition in markets for livestock, livestock products and inputs  To strengthen agricultural education and extension capacity.
  8. 8. Partners  ILRI - International livestock research institute  MOA, Botswana- Ministry of Agriculture Botswana  ACIAR- Australian Center for Agricultural research
  9. 9. Collaborating institutions  BIDPA- Botswana Institute for Development Policy Analysis  Department of Agricultural Research  Department of Veterinary Sciences  BCA-Botswana College of Agriculture  Department of Agribusiness Promotion  Department of Agricultural Statistics
  10. 10.
  11. 11. Late 2012  Consensus on competitiveness and factors affecting it (Competitiveness workshop on October 2012)  Understand competitiveness of smallholder livestock  Answer the questions: 1. What can be done to raise competitiveness? 2. Who should do it? 3. What partnerships are available to this project? Major work plan items late 2012
  12. 12.  Assess animal health problems, raise local animal health capacity • PE training in Serowe • 25 extension officers trained on PE • Blood and serum sample collection • Survey on disease prevalence • Majority of the sample are tested at BNVL Major work plan items late 2012
  13. 13. Major work plan items late 2012
  14. 14. Objectives of the snapshot survey: • Characterize the value chain actors involved with smallholder livestock production; • Evaluate marketing systems of smallholder livestock keepers; • Compare results with the recent FAO study and extend them to enterprise level; • Analyze product quality preferences and retail consumer purchasing demand; • Identify possible policy interventions to enhance livestock competitiveness. Major work plan items late 2012
  15. 15. Initial data collection on Value Chain - Snap shot survey conducted in central district to understand the livestock value chain Major work plan items late 2012 Livestock Producers BMC/Abattoirs Local cooperation Individual farmers Government programs Speculators/ Agents Feedlots Butcheries Input suppliers Supermarkets Consumers domestic market Consumers externalmarket Provision ofinputs such as feed and drugs Indicates the direct selloflivestock to consumers and consumers obligatory to killthe cattle in slaughter houses Two way supply/demand oflivestock Export ofhigh quality meat to foreign markets . .. Major market channels for cattle Major market channels for smallstock Exports
  16. 16. Figure 1: Total cost per household, subdivided by number of animals held (Total Livestock Units) Total costs subdivided by Herd size Major work plan items late 2012
  17. 17. Figure 2:Gross margin by livestock herd size (Total Livestock Units) Farmers’ discussion groups identified the following factors as constraints on financial performance: Limited numbers of veterinary officers to provide sales permits Technical problems with the bolus, such as read errors and double insertion Major work plan items late 2012
  18. 18. Problems restrict producers’ access to the export markets and promote the alternative, and usually lower-priced market channels for cattle. • BMC’s monopoly on cattle purchases, making it a local price maker • Exploitation by agents/speculators Producers claim to be powerless as market decision-makers, particularly in the face of continuing costs when sales dates are uncertain. • Lack of awareness and information about the quality requirements of the markets for beef and small stock, both live animals and meat, is a major problem Major work plan items late 2012
  19. 19. Figure 3: Products’ attributes important for consumers Consumers’ perception of meat quality Major work plan items late 2012
  20. 20. Figure 4: Factors consumers look when they buy meat (Sellers Perspective) Retailers’ perception of meat quality Major work plan items late 2012
  21. 21. Results of Value chain analysis: System dynamics model Livestock Keepers BMCSelling to BMC (mixed grade catlle) High Quality (prime, super, grade 1 & 2) Meat Exported & Sold to Domestic High Quality Retialers Feedlots Cattle sold to feedlots or kept on farmers own feedlot (weaner) Selling High Quality Cattle (prime and super grade) to BMC Livestock Outflow for Various reasons (death, gift, stray, theft, donation, individuals, festivals, etc.) Lower Quality Meat Sold in Domestic Market Big Butcheries (Carcass Distributor) Selling to Big Butcheries (cattle-all grades) Small/Local Butcheries Selling to Small Butcheries (mostly old cattle, goat, and sheep) Lower Grade Meat selling (cattle) Selling to locals Selling to Chain Stores & Hotels (Prime, super, grade 1 & 2) Government Programs (cattle, goat, and sheep) Selling to Domestic High Quality Retailers Figure 5: Cattle market channels in Botswana
  22. 22. Figure 6: Portrayal of model structure
  23. 23. Scenario 1: Baseline scenario • The model programmed to replicate the status quo of beef production and trade in Botswana • Exports to the EEA (over 75% of export market share) are blocked for two years. Thus, demand from the export market declines by about 75% for two years based on lost access to the EEA markets, and then returns to normal. • FMD outbreaks were programmed to occur randomly once each 7 years (based on historic outbreaks). The reported simulation introduced an FMD outbreak in week 98 (simulation time horizon is 260 weeks).
  24. 24. Scenario 2: Market liberalization • Looks at the effect of market liberalization on the financial and productive performance of producers and other value chain actors. • In addition to the existing domestic and export market channels, this policy targets exports of weaners to South Africa. • This scenario introduced to look at controlled sales of weaners and how it might influence production and marketed volumes for different value chain actors. • It evaluates the effect of exporting 2,000 weaners starting from week 52 (2,000 is a random initial value; the model endogenously calculates weaner prices). • This scenario is motivated by the policy debate in Botswana on the positive and negative effects of removing BMC’s monopoly over beef export channels
  25. 25. Scenario 3: Baseline + FMD freedom • This scenario, reports the results of a FMD-free scenario of cattle production and marketing. • This scenario assumes a smooth flow of cattle to the export market without any disruption due to animal diseases outbreaks. • This scenario is motivated by the fact that large scale FMD outbreaks and outbreaks in the EU export zones in Botswana, unlike small regional outbreaks, do not occur as frequently as outbreaks in FMD- endemic and FMD vaccinated zones
  26. 26. Scenario 4: Market liberalization + FMD freedom • This scenario tries to assess how FMD freedom combined with market liberalization will influence market dynamics within the beef value chain.
  27. 27. Value chain actors financial performance relative to baseline scenario Scenarios Producers Feedlots BMC Traditional urban and rural butchers Modern butchers and retailers Market liberalizatio n only 36% -3% -3% No change No change FMD control only 101% 21% 42% 10% 1% Market liberalizatio n and FMD control 172% 28% 36% 10% 1%
  28. 28. Producers cumulative profit
  29. 29. Feedlots cumulative profit
  30. 30. BMC cumulative revenue
  31. 31. Traditional urban and rural butchers cumulative profit
  32. 32. Modern butchers and retailers cumulative profit
  33. 33. • Without improved FMD control, liberalizing the monopoly power of BMC has little impact on producer market access in domestic and export market channels. • Strategies that combine FMD control and market liberalization generate benefits for producers and other value chain actors. • Investment in FMD control is not without cost: – Marginal benefits in market access likely to be diminished by significant fixed and recurrent investments in disease surveillance, vaccination, and maintenance of FMD zones. – This suggests that although partial market liberalization has potential benefits, other value-adding strategies need to be considered. Results of Value chain analysis: System dynamics model
  34. 34. - Household survey - A structured questionnaire was used to collect data. - Data was collected in collaboration with BCA - 15 enumerators and two BCA lecturers involved - About 600 households are interviewed in 1 and ½ months Major work plan items 2013
  35. 35. Major work plan items 2013
  36. 36. Data collected include detailed information on - Costs and returns and production inputs such as feeds, veterinary supplies and advisory services, labour and fixed inputs. - Cattle breeding method, - Disease prevalence, - Access to extension - Market services - Household socio demographic characteristics. - Food security and risk information Major work plan items 2013
  37. 37. Some of the research topics include: • Market participation, commercial orientation and channel choice • Animal health cost analysis • Profit efficiency and competitiveness • Technical efficiency • Feed related research output • Policy: trade and marketing • Food security and other studies of interest to local partners Major work plan items 2013-2014
  38. 38. Variables Mean Value of beef Cattle output (Pula per year) 5955 Beef cattle price (Pula) 1993.04 Feed cost (Pula per year) 605.57 Vet. cost (Pula per year) 650.89 Labour Cost (Pula per Month) 237.78 Cost of other inputs (Pula per year) 350.5 Value of fixed capital (Pula) 131779.5 Crop land area (Hectares) 6.19 Family labour (hours per month) 210.34 Results: Descriptive statistics 38
  39. 39. Variables Mean Age of household head (Years) 59.79 Education of Household head (years) 4.95 Household Off farm income (Pula per year) 54815.57 Distance to commonly used market(Km) 39.65 Herd size (Beef cattle equivalent) 23.86 Gender (% female farmers) 22% Information access (Yes=1, No=2) 76.79% FMD disease zone (Yes=1, No=2) 42.80% Crop income (Yes=1, No=2) 50.03% Results: Descriptive statistics 39
  40. 40. Results:Stochastic profit frontier estimates Variables OLS MLU Coeff. t-values Coeff. t-values Constant -34.87 -26.31 -38.12 -32.49 Ln (Average Beef cattle price) 5.01 28.23 5.51 34.85*** Ln (Feed prices) -0.15 -3.61 -0.13 -3.11*** Ln (Veterinary prices) -0.12 -2.97 -0.09 -2.46** Ln (Labor prices.) 0.08 0.24 -0.79 -1.93** Ln (fixed capital) -0.02 -0.64 0.02 0.53 Ln (Family labour Hrs) -0.06 0.28 0.46 1.82* Ln (Crop land area) 0.55 2.95 0.28 1.70* sigma-squared 7.87 6.03*** gamma 0.80 11.09*** log likely hood function -1129.60 -1093.43 LR test of the one-sided error 72.32
  41. 41. Results: Efficiency drivers Variables Coefficient t-values Constant -11.86 -2.47** Age of household head -1.26 -3.44*** Education of Household head 0.043 0.14 Annual household non-farm income 0.26 2.64*** Distance market (commonly used) 0.56 2.42** Herd size 2.48 4.92*** Gender (% female farmers) -2.82 -2.43*** Information access (Yes=1, No=0) 4.15 2.80*** FMD disease zone (Yes=1, No=0) -4.56 -3.84*** Crop income (Yes=1, No=0) -2.31 -2.94***
  42. 42. • Profit efficiency among farmers Project outputs 2013-2014 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 HZ1 (Mean=0.58) HZ2 (Mean=0.54) HZ3 (Mean=0.48) Pooled (Mean=0.57)
  43. 43. Feeds work - Feed assessment in Botswana • FEAST tool training to about 22 MOA staff • Feed assessment result will inform the composition of the diets that will be used at • Feed trial (pen) – DAR, Exchange visit to Australia • Feed trial (BMC): • will look on technical economic efficiency of feedlots • Include post slaughter performance indicators • Analysis will be done in cooperation with BMC and UNE (University of New England Major work plan items 2014
  44. 44. Breeding activity • Preliminary planning meetings held in Botswana by Boni (Dec. 2013) • Some element breed work will go into feed trials • Boni will communicate specifics in Feb-March during communications event • Feed trial (BMC) will have breeding analysis Major work plan items 2014
  45. 45. BIDPA’s deliverables • Roles for Co-operatives in Enhancing Competitiveness of Smallholder Livestock in Botswana • Public and Private Provision of Services to Smallholders: an examination of Livestock Advisory Centres • Regional Trade Opportunities for Botswana’s Livestock Sector • Policy Conference Major work plan items 2014
  46. 46. Animal health • PE survey results • Refresher training in April • Disease prevalence (test results) research outputs Extension work • Training need assessment • CICE to lead Major work plan items 2014
  47. 47. • A Survey of Smallholder Livestock Production in Central District, Botswana Poster presented at 9-11 September, Kampala, Uganda • Smallholder market competitiveness for beef production in Botswana: A quantitative value chain analysis Poster presented at 9-11 September, Kampala, Uganda • Measurement of competitiveness in smallholder livestock systems and emerging policy advocacy: an application to Botswana (Food policy Journal) • Determinants of profit efficiency among smallholder beef producers in Botswana (IFAMA June 16-17, 2014, Cape Town, South Africa) Project outputs 2013-2014
  48. 48. • Determinants of competitiveness of smallholder beef producers in Botswana 25-27 June 2014 | Halle (Saale), Germany • An analysis of beef market liberalization in Botswana: A quantitative value chain approach (IFAMA June 16-17, 2014, Cape Town, South Africa) Project outputs 2013-2014
  49. 49. Thank you!!