Botswana's poultry prices too high - researchers
Staff Writer | Thursday October 31, 2013 15:47
The workshop, hosted by the Competition Authority (CA) for the African Competition Forum (ACF) in Gaborone, to discuss a joint research project by Botswana, Kenya, Namibia, South Africa, Tanzania and Zambia examining competition issues and market dynamics in the cement, sugar and poultry industries, found that the prices of chicken in Botswana are higher than in the region largely due to high production costs.
“Botswana imports almost all the ingredients of poultry feed involving maize and soya beans. In contrast, South Africa and Zambia do not import such. Instead they are net exporters.
“That scenario advocates for the development of poultry industry to finally become self-sufficient and perhaps reduce production costs that drive the high cost of chicken in Botswana.
“Comparatively, the price of chicken in Botswana is higher than other countries participating in the research. Furthermore, the poultry industry in Botswana and Namibia is protected with trade barriers at the border gates, and researchers are of the view that they (barriers) should be dismantled to allow free and enhanced competition in the sector,” said Director of Competition and Research Analysis at CA Mokubung Mokubung.
Researchers are also looking at how the SMEs in poultry in Botswana could be integrated with the few big players in the sector to reduce the wide margin between the two. The poultry sector is known to incorporate a lot of SMEs and can be the vehicle towards poverty reduction if the latter are leveraged and assisted to produce and sell their output.
The workshop, which falls within the ACF’s programme of work for 2012/13, was a culmination of fieldwork research done during the year in all the six countries.
The African Competition Forum was established in March 2011 and its principal objective is to promote the adoption of competition principles in the implementation of national and regional economic principles of African countries, in order to alleviate poverty and enhance inclusive economic growth, development and consumer welfare by fostering competition in markets, and thereby increasing investment, productivity, innovation and entrepreneurship.
About the cement industry, the research observed that the market is highly concentrated with few companies dominating the sector in all the countries. The common barriers to entry to the cement sector emerged to be high set-up/capital costs and inaccessibility to raw materials such as limestone and fly ash.
“For example, in Botswana the sole appointment or first mover advantage of a company that obtains fly ash from the Morupule Colliery may create a barrier to entry for new entrants, and the limestone in Matsiloje is solely for the cement company in that area. Such issues would need concerted advocacy to negotiate for new entrants that would encourage more competition within the sector,” added Mokubung.
As for the sugar industry, the main producers are Kenya, Tanzania, Zambia and South Africa. These countries also have protectionist approaches in the form of ‘infant industry protection’, which was considered to encourage inefficiencies and low quality of produce. The research analysis is now trying to evaluate as to who is being protected in the value-chain, whether it’s the farmers, millers or consumers.
In a statement, the CA said that the overarching insights of this joint research work in competition matters are with the view to maintain regional integration and share economic development policies.
The research would reveal whether the companies are abusing their dominant positions in the markets. If that is the case, the competition agencies will have to cooperate and redress the illegal operations such as cartels, predatory pricing, market allocation and price fixing.
During the workshop, researchers crafted milestones on the way forward to finalise the work and disseminate results in the first quarter of 2014.