the animal feed to poultry value chain in zambiaanimal feed to poultry value chain has evolved from...

Indaba Agricultural Policy Research Institute

INDABA AGRICULTURAL POLICY RESEARCH INSTITUTE

By

Paul Samboko, Olipa Zulu-Mbata and Antony Chapoto

Presented at the UNU-WIDER and the National Treasury Conference on Growth and development policy – new data,

new approaches, and new evidence

Pretoria, South Africa

1st December 2016.

THE ANIMAL FEED TO POULTRY

VALUE CHAIN IN ZAMBIA


Outline

Introduction

Industry Overview

Trade opportunities

Challenges and threats to competiveness

Conclusion

1


Rapid demographic and income changes in Southern Africa

Population growth and

UrbanizationRising Incomes

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GD

P p

er

capita (

consta

nt

2005 U

S$)

Zambia Sub-Saharan Africa (developing only)

Source: World Bank

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

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Population Trends in Southern Africa

Urban population Rural population


Trends are likely to lead to diversification to higher

value commodities and industrialization

Increased demand for

agricultural produce

Changing consumption

patterns

3

Source : Chisanga and Zulu-Mbata, (2016)

Beef Poultry EggsAquaticproducts (Fish)

Othermeat

Meat,milk,

eggs &fish

1996 6.0 4.6 1.4 11.5 25

1998 3.3 4.6 1.4 9.7 4.5 26

2010 3.0 6.8 1.7 11.5 3.0 28

0.0

5.0

10.0

15.0

20.0

25.0

30.0

% o

f fo

od

expe

nd

itu

re


The poultry industry offers opportunities for

industrialization and rural transformation

It has exhibited rapid growth in many Southern African countries, with demand for poultry exceeding that of other products.

Its strong linkages with animal feed and feed inputs present opportunities for rural development.

4

2.8

2.2

1.9

Poultry Pork Beef

Consumption Growth (2013-2022)


Industry Overview-Zambia

Animal feed to poultry value

chain has evolved from

very few players—to

one involving several

multinational companies

Rapid annual growth in the

poultry industry

averaging 8%

Triggered investments by existing

and new firms in both animal

feed and poultry

Competition has increased

increasing product quality

and driving product prices

downwards

5


Broiler value chain6

Small-scale

producers

account for

65% of the

broiler market


….Industry overview-animal feed7

Growth of the poultry industry has triggered

investments in animal feed

Numerous players, some with forward linkages

in the poultry value chain

About 65-70% of produced animal feed is for

poultry

Capacity utilization is not maximum among

some firms, implying the possibility of gains from

full capacity utilisation


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Opportunities for trade


Low production levels and competitiveness limit exports

Most output in the animal feed and poultry industries is

locally absorbed rendering minimal exports.

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0

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2010 2011 2012 2013 2014

Mill

ions

Day-old chicks (Number) Production

Day-old chicks (Number) Domestic market

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

2010 2011 2012 2013 2014

Mill

ions

Animal Feed (Metric tons) Production Animal Feed (Metric tons) Domestic


Feed and Poultry Exports by Destination

Table Eggs are exported to Angola, Ethiopia, Kenya, Malawi and Zimbabwe

10

Animal

Feed

Day-old chicks and

Hatching Eggs

Botswana X

Burundi X

Democratic Republic of Congo X X

Kenya X

Malawi X X

Mozambique X

Namibia X X

Rwanda X

South Africa X

Tanzania X

Zimbabwe X X


Can Zambia Supply Southern Africa With

Animal Feed and Poultry Products?11

Animal feed and feed input production levels and productivity

remain very low, but improving.

Even poultry products are produced in small quantities.

Worse, these may not compete with cheaper inputs coming into the

region from other countries.

Except for exports to a few countries north of Zambia.

There are some local threats to product competitiveness.


Threats to competitiveness in the feed to

poultry value chain12

Multiple currencies for maize and soyabeans trade

Power shortages (short-term and recurring)

Un-refunded VAT(16%)

Low soyabean production levels and rising regional

demand is pushing prices upwards

FRA maize price policy greatly affects the price of maize

both locally and regionally—this has the largest effect on

poultry costs given its share in production costs


Conclusion

Global demand for food is likely to be met through imports.

Agricultural productivity growth will be key to meeting this food demand and driving rural industrialization as it frees up labour from agriculture.

Existing challenges in the animal feed to poultry value chain limit the extent to which Zambia can participate in regional industrialization.

This leaves a large market in the region unexploited. With trade limited to countries north of Zambia.

13


Steps towards rural transformation and

regional industrialization in poultry

A good starting point is finding innovative ways of enhancing competitiveness of Zambian products.

Address existing industry issues that

are creating inefficiencies.

Limit maize price volatility by reducing government’s role in the maize market.

A long term solution: increase agricultural

(maize and soy beans) productivity. Quickest avenue is

via commercial production

14


Thank You15

For more information see our websites at:

http://www.iapri.org.zm/

http://www.iapri.org.zm/


16


The broiler value chain

A high degree of concentration at the primary producer level for parent breeding stock—these essentially control the industry production parameters.

• Ross breeders and Hybrid poultry produce parent breeding stock.

A few firms produce day-old chicks but by far less concentrated than the parent breeding stock level

There are several processors, both small- and large-scale.

The large-scale processors operate chain stores.

Many producers of broiler chickens at the secondary producer level.

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the animal feed to poultry value chain in zambiaanimal feed to poultry value chain has evolved from...

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