Issue 10

    THE POULTRY INDUSTRY IN ZIMBABWE: Small Producers and Local Markets

    Occasional Research Paper


    By


    Dr. M. Tekere


    Ms E. Chomuyeke

     

    The research was carried out with financial support from

    CHRISTIAN AID UK- SOUTHERN AFRICA DEPARTMENT

    [TRADE CAMPAIGN]

    TRADES CENTRE
    3 Downie Avenue
    Belgravia
    Harare
    Tel.: 790441
    Fax: 790431
    E-mail: tradesc@africaonline.co.zw
    Web: http://www.tradescentre.org.zw

    		  

    May 2001

    Trade and Development Issues No 10

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    Table of Contents

    		 Executive Summary 4
    		Introduction 5
    		Background to Poultry Production and Markets in Zimbabwe  
    1.1
    		 Structure of Poultry Industry 6
    1.2
    		Shifts in Economic Policy Framework affecting poultry 7
    2
    		 Survey Methodology  
    2.1
    		 Coverage 8
    2.2
    		Sampling and Target Group 9
    2.3
    		 Data to  
    3.
    		 Salient Features of Small Scale Commercial Poultry Producers [SSCPP]  
    3.2
    		 Gender and Social Bias 10
    3.2
    		 Ownership patterns 11
    3.3
    		 Training, Experience and Technical Know-How 12
    3.4
    		 Push and Pull factors 13
    4.
    		 Small Scale Poultry —Production Environment and Dynamics  
    4.1
    		 What is the main form of Wealth for small poultry producers 14
    4.2
    		 Livestock holding Small Commercial Poultry Producers 14
    4.3
    		 Levels of Poultry Production 16
    4.4
    		 Development Cycle of small Poultry Enterprises 17
    4.5
    		 What Kind of Birds do Small Producers Keep 18
    4.6
    		 Poultry Houses in Rural Areas; They say it all. 19
    4.7
    		 Inputs—Key issue in poultry production 20
    4.8
    		 Market channels for inputs 21
    4.9
    		 Eyeing for new heights in poultry production in rural areas 22
    5
    		 Employment And Income For Small Poultry Producers. 23
    6
    		 Markets, Contractual Relations and Shrinking Markets  
    6.1
    		 Markets and Marketing channels for Small poultry producers 25
    6.2
    		Congratulations; its all informal but works 27
    7
    		 Competition, Trade and Shrinking of Markets for Small Producers  
    7.1
    		 Sources of competitiveness 29
    7.2
    		 The rich pushing out of the poor 30
    7.3
    		Trade Policy; From protectionism to liberalisation 31
    7.4
    		 Poultry Exports and imports: A story of shrinkages 32
    7.5
    		 But Competition from Imports is not an issue for small producers. 33
    8
    		 Main Problems Faced By Small Poultry Producers 35
    8.1
    		 Costs of inputs 36
    8.2
    		 Diseases outbreaks 36
    8.3
    		 Difficulty in Accessing credit 38
    8.4
    		Lack of subsidies and business support 39
    8.5
    		 Devaluation of local currency 39
    8.6
    		 Lack of Access to shelf space 40
    8.7
    		Competition from substitutes 41
    8.8
    		Costs of utilities 41
    8.9
    		 Skills in production 42
    8.10
    		 Upsurge in urban backyard poultry 42
    8.11
    		Hard infrastructure and land reform 42
    9
    		Conclusion 43
    10
    		 References 44
    11
    		Annexes  

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    Executive Summary

    The major objective of the study was to establish market dynamics of small-scale commercial poultry producers, with particular attention to market disappearance and dumping of imported chickens on the local markets. Thus we sought to establish sources of competition and market share shifts. In terms of geographic coverage, the survey targeted the four provinces of Mashonaland East, Mashonaland West. Manicaland and Mashonaland Central. Use was made of questionnaires. The main findings of the study include:

    • In terms of geographical coverage, SSCPP supplies reach all population concentration sizes such as growth points, urban centres, locals, business areas and villages. Although most of the SSCPP operations are sole traders, women constitute 58%. The pull factors into SSCPP production include; family background, the drive to generate income, food security consideration. About 64% of the producers showed serious involvement in poultry production between 1996 and 2001. This may be due to the increased “ruralisation” of the once urban-rich, who are constantly being displaced by retrenchments.
    • SSCPP is an easy entry and easy exit industry, with the producers being price takers in the market for inputs since the input suppliers are mainly oligopolistic (few). Inputs are bought mainly from the wholesalers, retailers, agents and producers and the common mode of payment is cash. In spite of this, production and marketing decisions are not always informed by recent market information.
    • The major markets for the SSCPP are not the large retail and wholesale outlets but they sell directly to customers, (neighbours in the village and the communities around them). The reasons for choosing this channel include; lack of shelf space in retail outlets, increased cost of transportation, lack of facilities to slaughter and maintain the cold chain for chickens and competition from large suppliers and others.
    • It is clear from the study that import dumping in the past few years has not been the major source of competition for small scale poultry producers (although some showed considerable ignorance on the issue), rather local large scale producers pose the moat threat for 85 percent of those captured in the interview. The level of poultry imports coming into Zimbabwe is negligible and has been declining due to shortage of foreign currency. Pricing of poultry products is not influenced by imports at all since their market share (imports) is reported to near zero percent.
    • The lack of accessible credit facilities emerged as a major cause of market shrinkage, and government extension services are not doing enough to improve the small-scale poultry industry.

    From the study is can be concluded that the markets for Small Scale Commercial Poultry Producers (SSCPP) are fast disappearing. The apparent disappearance of these markets is mainly due to local rather than external competition (mainly backyard urban producers and large scale firms). Disappearance has also been attributed to Economic Structural Adjustment Program and cash flow problems. Factors, which emerged as further threats to viability, include; ever increasing prices of stock feeds (due to consistent devaluations), increased prevalence of diseases, poor ingredient quality and improper ingredient grinding.

    The SSCPP market has failed to expand to capture hotels and big urban areas because of poor quality meat, poor meat variety, high prices, failure to meet meat tenderness standards, poor packaging (a case in point being Chibhanguza hotel in Murewa which stipulates strict meat tenderness standards).

    In terms of its impact on livelihoods of SSCPP, poultry production provides a steady source of income, school fees and employment. The industry also plays a critical role in the development and linkage of small-scale commercial business activities. This multiplier tendency enhances sustainability of business activity both in the communal and urban areas.

    Those farmers captured in the survey showed considerable ignorance on bilateral and multilateral trade issues such as EU-SADC trade agreement, EU-ACP agreements, etc and their implications. It is therefore imperative to reach out to these SSCPP, explaining and interpreting what the bilateral and multilateral trade arrangements (such as EU-SA trade agreement, SADC protocols, etc) mean and how these ultimately impact on their businesses and competitiveness with a view to ensuring pro-activity on their part.

    It however emerged from the study that the farmers view increased provision of credit facilities, training, access to urban markets, price controls on stock feeds and chicks, subsidies, government extension services and vaccines, as well as getting good quality chicks from reliable hatcheries as vital in restoring viability and ultimately expanding their markets. Formation of several poultry associations which encourage bulk buying of inputs (hence enjoy economies of scale) would go a long way in reducing input costs and hence retaining the lost markets.

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    Introduction

    The most pressing and mother of all problems in the current Zimbabwean society is escalating poverty among 12 million people most of who are scratching for a living in rural areas. Increasing poverty levels are responsible for the tense contradictions in all areas of our society such as politics, land reform, labour/capital relations, military, political repression and the general economic crisis. According to the 1998 Zimbabwe Human Development Report [UNDP 1999], over 61 percent of Zimbabwean households are poor and in rural areas 75 percent of the households are in the total poor category. Several top-down programs have failed to address poverty instead they have undermined the livelihoods of rural people including basic and traditional economic activities such as poultry farming.

    Poultry production is by far the most common economic activity for the majority of rural people and poor communities in Zimbabwe and across Southern Africa. According to the 1996/7 ICES, 90 per cent of the labour force in communal areas work for their own account oj are unpaid family workers. Rural households stock their wealth in livestock and all rural households own more heads of poultry than any other form of livestock. In these communities poultry serves not only as food but also source of income needed for other basic needs such as clothing, washing detergents, school fees and others. Further, the industry plays an important role in terms of food security and with regard to the development of small-scale commercial business activities both in the communal and urban areas.

    Poultry is a viable activity especially for rural and communal farmers. First, input costs are low since they use own harvest and. Second, poultry production is also an easy entry and easy exit industry because of minimal built-in costs especially in the communal areas where feeding is at own means of the chickens. In large part, extensive farming methods are used i.e. no special feeding, breeding, medication and chickens are left to survive on own means on free-range basis.

    The paradox however is that despite these advantages the markets for small-scale poultry producers are fast shrinking.

    Thus, given this background, Trades Centre in partnership with Christian Aid decided to undertake a pilot study on poultry industry in Zimbabwe, the situation of small-scale producers and local markets. The main objective of the study is to investigate the dynamics of rural commercial poultry production and markets in particular the threats to its sustainability and viability and impact on income and livelihoods of the rural communities. Specifically, the study explores salient features of rural commercial poultry production, examines its role in terms of supporting rural livelihoods, investigates the sources of its rise or fall and analyses challenges posed by various national and regional trade liberalisation programs as well as problems facing target group and finally provide some policy recommendations. The ultimate objective is two-fold i.e. bring about policy change in support of small scale poultry producers by revealing threats to this activity and to enable the poor communities depending on poultry to take appropriate action to mitigate the current and potential problems.
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