Embed Size (px)
Citation preview
Linking famers to (high value) livestock product markets:
Opportunities and challenges in Southern and Eastern Africa
Hikuepi (Epi) Katjiuongua
Amos, Omore
AlicE 2013. Nairobi, Kenya, 26 June 2013
Outline
1. Background: Global livestock product markets and Africa
2. Lessons from Southern Africa: The Beef story from Namibia and Botswana
3. Lessons from Eastern Africa: Dairy in East Africa
4. Opportunities and challenges
5. Way forward
2
Demand for animal source foods: Global picture
• Demand for animal-sourced foods estimated to be very high
Background: Global livestock product markets and AfricaBackground: Global livestock product markets and Africa
3
108
10
7
33
6
86
0 20 40 60 80 100 120
Developed
Africa
Near East
Latin America
South Asia
East South East
Asia
Estimated consumption-2005/07…
Growth (mil. tons) Est. Consumption Annual growth rate
2030 2050 2005/7-2050 2005/7 - 2050
Developed 16.8 6.6 131.5 0.4%
Africa 10.3 13.9 34.8 2.8%
Near East 7 6.1 20.2 2.4%
Latin. Ame. 17 9.7 60.6 1.3%
S. Asia 12 21 40.4 4.1%
East SE Asia 50 22.8 160.3 1.4%
Why?
• Population growth
• Urbanization
• Increasing incomes
Source: Delgado (2007), IFPRI, FAO
Source: BMGF funded (WB, FAO, AU-IBAR & ILRI) Livestock Data Innovation in Africa Project (2013)
Demand for animal source foods: Africa picture
• Demand for animal-sourced foods: estimated to be ‘’extraordinarily high’’
Source: BMGF funded (WB, FAO, AU-IBAR & ILRI) Livestock Data Innovation in Africa Project (2013)
Background: Global livestock product markets and AfricaBackground: Global livestock product markets and Africa
4
32.4
1.6
0.8
2.2
2.9
4.7
Milk
Eggs
Pig meat
Mutton
Poultry
Beef
Est. Consumption (2005/7), mil. tons
Estimated Consumption
(2050) Annual growth rate
Milk 82.6 2.2%
Eggs 6.1 3.1%
Pig meat 3.5 3.3%
Mutton 6 2.3%
Poultry 11.8 3.3%
Beef 13.6 2.5%
Milk Eastern (43%); Northern (20%)
Beef Western (27%); South. & East. (22%)
Pig meat Southern(37%); Western (27%)
Poultry South. (29%); North. (24%); W. (21%)
Est. regional growth shares
Background: Global livestock product markets and Africa
• Africa: Net importer of animal source foods
5
0
200
400
600
800
1000
1200
1400
1600
1800
2000
1961 1970 1980 1990 2000 2010
Qu
an
tity
(T
on
ne
s)
Africa total meat trade
Imports
Exports
0
200
400
600
800
1000
1200
1400
1961 1970 1980 1990 2000 2010
Qu
an
tity
: to
nn
es
('0
00
)
African total meat imports
Chicken
Pig meat
Beef
Meat offals
Source: Calculated from FAO data (FAOSTAT, 2013)
• Production will not keep
pace with consumption
growth
• Africa expected to
continue being a net
importer of animal
sourced foods
• Global trade share: 3%
• Intra-regional trade
(2009): 10%
Background: Global livestock product markets and Africa
• Africa exports of animal-sourced foods
6
0
20
40
60
80
100
120
140
160
1961 1970 1980 1990 2000 2010
Qu
an
tity
: to
nn
es
('0
00
)
Meat exports (quantity)
Chicken
Pig meat
Beef
Meat offals
0
50
100
150
200
250
300
1961 1970 1980 1990 2000 2010
Va
lue
: U
SD
('0
00
)
Meat export (value: mil. USD)
Chicken
Pig meat
Beef
Meat offals
Source: Calculated from FAO data (FAOSTAT, 2013)
Beef Southern (96%) Eastern (2%)
Pig meat Southern (35%); Eastern (62%)
Poultry Southern (80%); Western (9%)
Mutton Northern (65%); Southern (25%)
Goat Eastern (88%); Northern (10%)
Source: Rich, K. (2009)
African Regional Export Shares (2003)
Background: Global livestock product markets and Africa
Global Meat prices
7
100
110
120
130
140
150
160
170
180
190
2005 2006 2007 2008 2009 2010 2011 2012 2013
Total Meat price index (FAO)
100
120
140
160
180
200
220
2005 2006 2007 2008 2009 2010 2011 2012 2013
International meat price indices (FAO)
Chicken
Pig meat
Beef
• Increasing meat products prices
• Increasing demand: regionally & internationally
• Economic development and business opportunity: volume & value
• Beef and milk: largest share in value
Source: Calculated from FAO data (FAOSTAT, 2013)
Outline
Lessons from Southern Africa:
The beef story from Namibia and Botswana
8
Southern Africa: The beef story from Namibia and Botswana
Role of livestock in the economy
• Over 60% of population depend on livestock for their livelihoods
• Key source of employment
• Export value: Over 200 mil USD/yr
Historical trading relations with the EU
• Lome-Cotonou agreement: non-reciprocal preferential trade
• Current policy reforms: Economic partnership agreement (EPA)
Mixed success stories
� Namibia
• Among the top ten beef exporters to the EU & penetrated high-end retail market
• Exported beef to the EU for the last 20 years. But holds only 3% market share
• Disease status (N. Namibia): limits greater participation of small livestock producers
� Botswana
• Inconsistent supply due to export bans: FMD disease challenge
• Focused primarily on the EU market: neglecting regional & domestic market opportunities
• Financial losses by key beef exporter 9
Southern Africa: Lessons from Namibia
1. Smart branding & marketing: shift from selling a commodity to selling attributes• Sells individual meat cuts to specific end market requirements: move up the value chain
• Branding: sells certified free-range high quality meat to Niche markets (e.g. Woolworth)
• Premium high quality cuts sold in overseas international markets: EU & Norway
- Norway: Sales volume: 5% But 15% of total sales revenue
- EU: Sales volume: 27% But 45% of total sales revenue
- Income returns of exports to EU: 40% higher per head of cattle
• Meatco revenue (2012): N$ 1.4 billion: primarily due to value addition and branding strategies
1%
19%
48%
29%
2%
0.19%
1%
Sales volume distribution
Africa
Namibia
S. Africa
Europe
Norway
Switzerland
Reunion
EU and Norway sales
value: 60% 10
Southern Africa: Lessons from Namibia
2. Credible cattle traceability system: FANMEAT certification
• Costly but signals compliance with international SPS standards & EU requirements
• Challenge: Strict EU standards/requirements – change frequently
- Example: New EU ’’residency requirement’’ regulation
3. Policy and private sector engagement
• Trade policy allows live animal exports: small farmers respond to higher weaner prices
• Weaner production system is more profitable for small livestock farmers. But it constraints animal supply to domestic abattoirs
• Ekwatho finance project: links livestock producers to the market and to add value
o Partnership: producers, banks and abattoirso Heads of cattle slaughtered: 13,000 (2012) and 11, 057 (2011)o N$ 110, million loaned to producers w/zero defaulto Target resettled small emerging livestock producers
11
Southern Africa: Lessons from Botswana
1. Market structure in a value chain matters: Monopsony (Botswana meat commission)
• BMC controls exports as a sole buyer and seller: little competition & low producer prices
• Operates below capacity: not profitable: Ave. losses of 33 mil. USD (2009-2011)
• Subsidized by the govt. currently undergoing reforms to revive sales and profitability
2. Weak traceability system & veterinary service provision: inconsistent supplier
• Inefficient traceability system: farmers report operational and misidentification problems
• Veterinary service delivery: not timely and FDM surveillance adds burden vet. officers’ service
• High transaction costs in marketing livestock
3. Trade policy hinders regional trade
• Trade: restricts farmers to sell live animals including small stocks into regional markets
• Livestock producers unable to take advantage of increasing weaner prices (e.g. SA market)
• Heavy focus the EU market: neglecting local and regional market opportunities12
Botswana and Namibia: role of small livestock producers Botswana and Namibia: role of small livestock producers
1. Small producers can supply high-value livestock product markets: participation is low
- Costs of moving to a weaner-ox production system are high (e.g. feed costs)
- Animal disease and animal welfare requirements: challenge & locks out many suppliers
- The lingering land question: insufficient grazing land
2. How to increase greater smallholder market participation?
- Market diversification: market segmentation targeting regional & domestic markets
- Public private partnerships: finance mechanisms to overcome capital constraints faced by small livestock producers and other value chain actors
- Coordination: to achieve economies of scale
- Diversity of smallholder livestock farmers: degree of market orientation
3. Costs of standards & compliance: should it all be borne by the farmer?
- Public good in ensuring safety in food supply chain and public health
- Need for appropriate mechanism to share costs of meeting food safety standards13
.
Lessons from Eastern Africa: Dairy in East Africa
14
Strong local and regional demand : highest estimated growth in Africa
• Removal of tariffs within the EAC region: doubled dairy trade to 11% (2005) vs. 5% (1995)
Dairy in Eastern AfricaDairy in Eastern Africa
15
Bur-
undiKenya
Rwa
da
Uga-
nda
Tanz-
niaEAC ROW
Total
exportsEAC (%)
Burundi 0.0 0.0 0.2 0.0 0.0 0.2 9.7 9.8 1.7
Kenya 2.8 0.0 4.8 152.5 122.0 282.2 239.3 521.5 54.1
Rwanda 0.7 0.0 0.0 0.0 0.0 0.7 45.8 46.5 1.4
Uganda 3.2 50.5 54.7 0.0 40.5 148.8 0.0 148.8 100.0
Tanzania 12.8 164.3 23.3 6.3 0.0 206.8 5.5 212.3 97.4
Imports
from EAC19.5 214.8 83.0 158.8 162.5 638.7 231.3 870.0 73.4
ROW 595.2 1,405.5 505.3 412.7 2,361.8 5,280.5
Total
imports614.7 1,620.3 588.3 571.5 2,524.3 5,919.2
EAC (%)3.2 13.3 14.1 27.8 6.4 10.8
Source: Gelan & Omore (2013) based on FAO data
• But Non-tariff barriers and transport costs hinder effective supply response to local & regional demand
Smallholder dairy producers in Eastern Africa are competitive
• Improving economies of scale (e.g. collective action)
• Improve access to services and appropriate technologies
• Enabling policy and institutional environment
Informal raw milk markets dominate in Eastern Africa
Dairy in Eastern AfricaDairy in Eastern Africa
16
Kenya
Tanzania
Uganda
82% 84% 86% 88% 90% 92% 94% 96% 98% 100%
Market share (%): Informal raw milk markets
• Low cost for consumer
• Taste and preferences:
Raw milk considered fresh and tastier (high butter fat content)
• Pay higher farm-gate prices in most markets
Source: ILRI Collaborative Research
.
Opportunities and challenges
Way forward
17
Opportunities
� High growth in domestic and regional demand of animal-sourced foods
� Increasing global meat product prices
� Inclusive livestock sector growth strategy: yields greater benefits for society at large
Challenges
� Low competitiveness and productivity (rising feed costs)
� High costs of compliance: SPS requirements in high value markets
� NTBs and high transport costs in regional markets
� Export of lower quality livestock products and by-products into African markets
- 5th quarter cuts from the UK are targeted to West and Central Africa
- EU low quality poultry cuts exports to African markets
- Attractively priced: EU CAP direct payments and investment aid keep EU raw material prices low
Opportunities & challenges: livestock product markets in AfricaOpportunities & challenges: livestock product markets in Africa
18
Way forward
1. Lower NTBs and improve regional integration: key to foster intra-regional trade and investment
• Development of intra-regional markets & trade: necessary to support livestock sector growth
• High NTBs and transport costs key obstacles to intra-regional investment
• Improve dialogue and capacity related to SPS standards issues
3. Improve productivity & competitiveness: productivity is required to respond to the growing demand
• Identify and scale out appropriate technologies to address production constraints
• Lower the cost of technology transfer and improve service delivery (e.g. animal disease vaccine delivery)
• Improve risk mitigating and coping strategies19
Way forward 4. Create smart linkages between private service providers and VC actors
• Reduce risk and address binding constraints faced by VC actors
• Enhance economies of scale for producers and other value chain actors
• Target small livestock producers: dominate in many countries, � But different type of support for different types (small) livestock producers
5. Invest in livestock data
• Enhance information flow on market conditions and planning
• Gain accurate picture about markets: consumption and animal resource base
• Improve data collection systems and analytical capacity
6. Trade agreements: EU-EPA trade agreement and others
• Need for informed and smart negotiation strategies
• Take a long-term perspective and retain some agric. safeguard measures
21
Thank you
Opportunities & challenges: livestock product markets in Africa:Opportunities & challenges: livestock product markets in Africa:
0 500 1000 1500 2000 2500 3000 3500 4000
SADC
COMESA
ECOWAS
CEMAC
East Asia & Pacific
South Asia
Latin America
EU
Cost to import (USD/container)
0 10 20 30 40 50
SADC
COMESA
ECOWAS
CEMAC
East Asia & Pacific
South Asia
Latin America
EU
Time to import (days)
Border inefficiencies & delays
- Risk to SSA exports and econ dev.
- Drive up retail prices
- Losses and spoilage in agric. &livestock products
Source: AfDB (2012)
