The Sunday News
Farming Issues with Mhlupheki Dube
LIVESTOCK markets have in recent days provided very depressing lessons for anyone with an interest in this important value chain. The prices have been tumbling and animals sold at less than Black Friday prices.
In fact, one would be forgiven for thinking that it’s a clearance sale for a company that is closing shop for good. It is a known fact that the month of March traditionally provides the lowest beef producer prices in any given year, but this year the situation has reached tragic levels for farmers.
It is a drought year, induced by the El Nino phenomenon and this has been discussed and explained on many platforms for those with an interest to listen.
This pen has watched the beef producer price fiasco with a keen interest and it has provided a few lessons from which inspiration for this week’s edition is derived.
The positive lesson to emerge, is that livestock farmers have heard the barrage of extension messaging which has been relentlessly advising them to de stock their herds, sell and procure stockfeed for the remaining animals.
This is a message which many a times livestock farmers have ignored from extension agencies, with disastrous consequences.
This time, farmers heard and respected the message and the result is a crush in the markets as there is a serious glut. Prices have dropped to sad levels, with big oxen of around five hundred kilogrammes going for $200 or less. I have received reports from farmers who had taken their animals to livestock auctions held across some rural districts and they were all frustrated with what the market was offering.
At the apex level some big abattoirs temporarily stopped farmers from bringing animals as they had more than enough in their lairage and meat in cold rooms was not moving at all.
Now if abattoirs who provide the market at the apex end of the livestock value chain, can no longer buy, it affects the whole chain down to the producer who is the farmer.
In fact, it explains the ridiculous prices offered at rural district auctions because these are usually patronised by middle level players who buy for resell to the abattoirs. Now the abattoirs are sneezing and the whole value chain has caught a cold!
This brings me to the second and most important lesson being provided by this livestock market collapse. The top of the livestock value chain pyramid is too narrow and the El Nino-induced drought is just bigger to expose that fragility.
The view that we need more players at abattoir level in the livestock value chain has been shared by many farmers but there has not been any movement in trying to address that.
In one social media group, for which I am a member, there was an attempt by members to pool together resources and start a farmers’ abattoir to address the unfair trade practices. Of course the idea died a stillbirth like many co-operative efforts.
However, the problem still remains and it has been dramatised by this year’s drought for all to see. Bulawayo and its environs which services the two Matabeleland provinces with a combined cattle population of around two million, has just around five abattoirs of various capacities. These are the guys who determine the beef producer prices across the two provinces and part of Midlands.
They will obviously tell you that their price offering is dictated by the laws of supply and demand and this could be true to some extent.
However, the inherent weakness of having fewer players at any part of the value chain, is that there is no competition and this always tends to drive the prices down. Again when players are few, there are always chances of collusion in terms of prices offered or any other decision for that matter.
While it is accepted that the livestock glut was always going to drive the beef producer prices down, it can be argued with merit that having only a few abattoirs and meat wholesalers occupying the apex end of the livestock value chain, has shown its negative effect now than ever before as the five or so abattoir buckle under the pressure of a huge supply which could otherwise been absorbed better if the top had a significant number of players than is the current scenario.
Let this be a wake up call for players in the livestock industry, that there is a need to have more players at the top so that the future of a whole industry in two provinces is not left to the whims of a few players.
Uyabonga umntaka MaKhumalo.
Mhlupheki Dube is a livestock specialist and farmer. He writes in his own capacity. Feedback [email protected] cell 0772851275
