Patrick Malope
Department of Agricultural Economics and Extension
pmalope@bca.bw
Presented at an inception workshop for the Competitive Smallholder Livestock in
Botswana project held at Gaborone, Botswana on 31 October 2012

 Introduction
 Smallholder production systems
 Competitiveness
 Competitiveness of smallholder beef prod.
 Competitiveness of smallholder small stock
production
 Factors influencing competitiveness of
smallholder livestock production systems
 Conclusions

 Livestock production is dominant, esp. beef
 Small stock important as they are kept by
many poor households esp. women
 Dual production systems: communal and
commercial
 Commercial practised in freehold or leasehold
 More integrated in the market
 Communal practised in tribal land and less
integrated into the market

 Keep small herds and are found in communal
areas
 Rent water for their livestock or group
ownership of water source
 Less likely to participate in the market
because of high transaction costs –
information, negotiation, transportation etc.
 Animals kept around villages

 “The ability of a firm or nation to offer
products and services that meet quality
standards of the local and world markets at
prices that are competitive and provide
adequate returns on resources employed or
consumed in producing them”
 Competitiveness being defined in terms of
profitability

 Must produce livestock or livestock by-
products that meet quality standards
 The higher grades will ensure that the
producers obtain high returns
 Costs of production important
 The value of output also important for
sustainable profitability
 Productivity also important

Livestock Indicator Commercial Communal or
traditional
Beef Birth rate 54.6 19.2
Mortality rates 3.10 6
Off-take rates 12 7.3
Small stock Birth rate 36.7 41.7
Mortality 9 18.7
Off-take rates 9.8 5.6
CSO, 2012: 2009 and 2010 Agricultural Surveys Preliminary Results

 BIDPA (2006) study using gross margin analysis
 Most beef production systems had negative gross
margins
 Gross margins were positively correlated with
herd size and annual rainfall
 Negative gross margin because of a drought year
 Hence results could not be relied on
 Found that farmers who sold breeding stock,
especially bulls increased their profits
substantially

 FAO study – BBVC ongoing
 Used different farm sizes: 20-cow, 80-cow and
130-cow, the last operating in a fenced farm
 Used different management regimes: basic,
improved and advanced
 Management regimes were divided according
to the use of purchased inputs such as
vaccines, medicines and supplements

 Key management variables
Management Basic Improved Advanced
Birth rate 45 55 65
Mortality rate 15 12 9
Dressing % 49 52 54
 BBVCS

Gross Variable Total costs. Gross margin Total profit Profit per cow
Revenue Costs ex. herd ex. herd
Basic 23,441 21,572 23,059 1,869 382 19
Improved 30,078 29,705 31,495 373 (1,416) (71)
Advanced 37,821 53,950 56,012 (16,129) (18,192) (910)
Cattle post (80 cow)
Basic 93,763 48,238 52,456 45,524 41,307 516
Improved 120,313 78,562 83,597 41,751 36,716 459
Advanced 151,283 173,226 179,021 (21,943) (27,737) (347)
Cattle post (20-cow)
Basic 152,365 91,136 117,305 61,229 35,060 438
Improved 195,509 178,264 208,233 17,245 (12,724) (159)
Advanced 245,835 295,681 329,459 (49,846) (83,624) (1,045)

 The results show that basic management
performs better
 There are economies scale in beef production
 Smallholder farmers are less profitable
because of small herd sizes
 Support BIDPA (2006) finding that
profitability increased with herd size

 Few studies conducted on small stock
 Panin and Mahabile (1994) in Kgatleng &
Kweneng
 Small stock profitable, with per head profit of
P23.00
 The return on capital invested 33.77%
 Small stock contributed 15% towards
household income, cattle (33%) and crops (6%)

 Moemi (ongoing): Odi Ext. Area Kgatleng
 Divides farms in terms of their management
 Preliminary results: some farms are
profitable, others not
 Unprofitable farms, mainly because they were
no sales during the year
 Conclusion is that small stock is profitable

 Issues of market access
 High transaction costs leading to less
participation in the market
 Mmopelwa and Seleka (2011) and Malope
(forthcoming) found that the following factors
affected market participation and levels of
sales:
◦ Education, gender, non-farm income sources,
ownership of a water point, state of the road,
contact with extension and group membership

 In the beef sectors institutional constraints
related to bolus
 The prices received by smallholders at the
BMC lower than those received by commercial
counterparts
 For small stock no formal markets leading to
high transaction costs and hence less
participation in the market

 Smallholders operate using limited inputs
 Productivity lower compared to larger farms
 Low profitability because of small herd sizes
 Policy issues
 Improvement in market infrastructure in
order to reduce transaction costs
 Improvement in extension services to
improve participation and raise productivity
 Encourage formation of farmers’ groups