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Value Chain Analysis of Botswana Poultry Industry: The Case of

Gaborone, Kgatleng, Kweneng and South East Districts

Charity Masole, Gare K. Mphothwe, John C. Moreki

Policies for Competitive Smallholder Livestock Production

4-6 March, 2015, Gaborone, Botswana

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Outline

• Introduction and Background• Objectives of the study• Methodology• Results and Discussion• Conclusion and Implications

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Introduction and Background

• Agriculture plays a vital role in Botswana and the rural dwellers depend on it for survival.

• While other agricultural sub-sectors have not performed well in terms of production volumes, the poultry subsector has experienced tremendous growth over time and remains the most celebrated example of import substitution.

• The commercial chicken holding in Botswana has generally increased substantially over time (Transtec and BIDPA, 2010).

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Introduction and Background cont…• Value chain is a range of activities conducted by

organizational stakeholders of the same chain to provide product or service from the beginning to the end user (Nguyen 2010).

• The poultry industry in Botswana is dominated by relatively small number of large-scale broiler farmers and so it is oligopolistic (Grynberg and Motswapong, 2011).

• These producers are vertically integrated along the value chain all the way from production to distribution.

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Objectives

• Evaluate and characterize the current structure of the poultry value chain of the four districts

• Identify the different actors in the poultry value chain and how they are linked with each other

• Identify challenges faced by the poultry industry and how to overcome them to ensure real profits and sustainability of the industry.

• Assess the relative importance of specific flows of poultry and poultry products.

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Methodology

The study sites were Gaborone, Kgatleng, Kweneng and South-East Districts

Figure 1: Map showing research sites

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Methodology cont…

• A random sampling technique was used to select participants from a list obtained from the Ministry of Agriculture.

• 40 poultry farmers, 10 input dealers, 10 retail stores and five poultry officers were selected. A total of 65 respondents were interviewed. Both primary and secondary data were used.

• Data were collected using a well-structured questionnaire and by observation

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Methodology cont…• Respondents ranked the challenges they faced on a

Likert-scale, with 1 to 2 indicating minor challenge, 4 to 5 (major challenge) and 3 for average.

• The participants’ perceived levels of working relationships were estimated using an index derived from their scores on Likert-type of scales that showed how strongly they agreed or disagreed with the statements under each relationship feature with a score of 4 for strongly agree and 1 for strongly disagree.

• Data were analysed using Statistical Package for Social Sciences (SPSS version 16.0)

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Results and discussion

• Seventy-five per cent of the respondents were males while the remainder was female (Table 1).

• The reason could be that chicken production in Botswana has become one of the major commercial and value adding industries. 

• The results showed that 45% of respondents were aged 31-40 years followed by ≥51 years.

• About 33% of the respondents said they had been in business for less than a year while 40% had ≥10 years’ experience in running a business.

  

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Results and Discussion cont…Variables Frequency Percentage

Gender    Male 30 75Female 10 25Age (years)    20-30 9 22.531-40 18 4541-50 3 7.551 and above 10 25Citizenship    Motswana 27 67.5Non-citizen 13 32.5Marital status    Single 30 75Married 10 25Divorced Nil  Education level    Non-formal 7 17.5Primary school Nil -Secondary school 13 32.5Tertiary 20 50Production experience    <12 months (a year) 13 32.5<10 years 11 27.5≥10 years 16 40

Table 1: Socio-economic data of poultry farmers in the four districts

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Botswana’s poultry value chain

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Results and discussion cont…• Index scores above 3.5 indicate high levels of good

relations while an index value of 1.5 suggest low levels in the working relationship (Table 2).

• The scores for poultry officers ranked 2.25 on joint-problem solving and 3.67 on communication, which calls for improved relations between officers and farmers.

• Grocery stores selling poultry products scored a minimum of 1.25 and a maximum of 4.00 on joint problem solving.

• A minimum of 1.33 and a maximum 4.00 was scored by feed stores on communication, joint problem solving and trust aspects of the relationship.

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Results and Discussion cont…• Small-scale farmers scored an average mark of 2.60

showing weak business relations. • They do not have direct access to supermarkets probably

due to weak links and this finding is supported by (Grynberg and Motswapong 2011) .

• A minimum score of 3.00 on commitment, joint-problem solving and trust was captured with a high of 3.67 and 4.00 on all aspects of the relationship in medium and large-scale poultry operations.

• The stronger links observed in medium and large-scale operations could be attributable to vertical integration, which is common in these enterprises.

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Results and discussion cont…

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Results and discussion cont…• Respondents ranked higher input prices

especially feeds as number 1 challenge (Table 3). • Badubi et al. (2004) and Moreki (2010) also

reported high feed costs as a major challenge. Higher feed prices squeezes farmers profits.

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Results and discussion cont…

Challenge Ranking of challenges  Farmers Retail stores Feed stores Poultry

officers

No government production incentives 3 6 5 5Unfavorable climatic conditions 5 6 6 5Crime 4 3 3 5Lack of skilled personnel 14 1 10 5

Increased competition from mushrooming firms 8 2 2 13Inconsistent market information 16 9 11 5

High interest rates 6 11 4 15Long distance to the market 12 13 14 15

Availability of resources 13 9 13 13

Expensive machinery and replacement costs 9 11 11 5Lack of commitment from employees 15 3 6 5

Low price selling of goods 7 13 8 5Pests and diseases 2 6 15 3Transport challenges 10 13 8 3

High raw material prices 1 5 1 1Halaal 11 16 16 2

Table 3: Ranking the key challenges by the four district’s poultry value chain players

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Results and discussion cont…

Broiler value chain• The main producers are Goodwill, Moleps Poultry, Tswana pride,

Medina, RICHMARK, Dikoko tsa Botswana and Bobbsies. • These companies are vertically integrated along the value chain.

Egg value chain• The main producers are; Notwane, East, Star poultry and Egghead

poultry. • Primary products in this chain are table eggs and spent hens. • Most of the inputs required for egg production are imported from

RSA. • A number of actors are involved in this egg value chain,- from

hatcheries, breeders, farmers, extension services, feed stores, poultry officers, retail stores and final consumers of eggs.

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Results and discussion cont…

Sex Feed stores Retailers Farms

Males 99(83) 27(64) 877 (62)

Females 20(17) 15(36) 545 (38)

Total 119 42 1422

Table 4: Number of people employed in feed stores, retailers and poultry farms (values in brackets are percentages)

• The industry employs more males than females. • It was however, indicated that during slaughter times

temporary labour is employed most of who are women.

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Opportunities• Production of further processed chicken meat.• There is need for government to intervene in order to

reduce the market power possessed by the few industry players.

• The establishment of pullet rearing facilities.• Expansion of broiler breeding facilities in order to

meet the country’s hatching egg requirements. 

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Conclusion

• The majority of commercial poultry producers are males.

• The study identified different actors in the poultry value chain, how they are linked with each other and further analysed how they relate with each other.

• Medium to large-scale farmers showed stronger working relationship links when compared to small-scale farmers.

• High feed costs remains to be the major challenge in poultry production.

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Recommendations

• There is need for government to intervene in order to reduce the market power possessed by the few industry players.

• Both the public and the private sector should partner and finance those who enter the industry up until when they can operate on their own.

• The government should give incentives to local entrepreneurs to provide alternative supply of poultry input facilities.

• It must be made mandatory for retailers to buy a certain potion of poultry from smallholder farmers provided that they meet certain safety standards.

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Acknowledgements

• Mr. P.G. Nthoiwa• Statistics Botswana• Ministry of Agriculture• Farmers• Extension Officers• Retailers and Feed Stores