Patrick Malope

Department of Agricultural Economics and Extension

pmalope@bca.bw

Presented at an inception workshop for the Competitive Smallholder Livestock in Botswana project held at Gaborone, Botswana on 31 October 2012

Introduction

Smallholder production systems

Competitiveness

Competitiveness of smallholder beef prod.

Competitiveness of smallholder small stock production

Factors influencing competitiveness of smallholder livestock production systems

Conclusions

Livestock production is dominant, esp. beef

Small stock important as they are kept by many poor households esp. women

Dual production systems: communal and commercial

Commercial practised in freehold or leasehold

More integrated in the market

Communal practised in tribal land and less integrated into the market

Keep small herds and are found in communal areas

Rent water for their livestock or group ownership of water source

Less likely to participate in the market because of high transaction costs – information, negotiation, transportation etc.

Animals kept around villages

“The ability of a firm or nation to offer products and services that meet quality standards of the local and world markets at prices that are competitive and provide adequate returns on resources employed or consumed in producing them”

Competitiveness being defined in terms of profitability

Must produce livestock or livestock by-products that meet quality standards

The higher grades will ensure that the producers obtain high returns

Costs of production important

The value of output also important for sustainable profitability

Productivity also important

Livestock Indicator Commercial Communal or

traditional

Beef

Birth rate 54.6 19.2

Mortality rates 3.10 6

Off-take rates 12 7.3

Small stock

Birth rate 36.7 41.7

Mortality 9 18.7

Off-take rates 9.8 5.6

CSO, 2012: 2009 and 2010 Agricultural Surveys Preliminary Results

BIDPA (2006) study using gross margin analysis

Most beef production systems had negative gross margins

Gross margins were positively correlated with herd size and annual rainfall

Negative gross margin because of a drought year

Hence results could not be relied on

Found that farmers who sold breeding stock, especially bulls increased their profits substantially

FAO study – BBVC ongoing

Used different farm sizes: 20-cow, 80-cow and 130-cow, the last operating in a fenced farm

Used different management regimes: basic, improved and advanced

Management regimes were divided according to the use of purchased inputs such as vaccines, medicines and supplements

Key management variables

BBVCS

Management Basic Improved Advanced

Birth rate 45 55 65

Mortality rate 15 12 9

Dressing % 49 52 54

Gross

Revenue

Variable

Costs

Total costs.

ex. herd

Gross margin Total profit

ex. herd

Profit per cow

Basic 23,441 21,572 23,059 1,869 382 19

Improved 30,078 29,705 31,495 373 (1,416) (71)

Advanced 37,821 53,950 56,012 (16,129) (18,192) (910)

Cattle post (80 cow)

Basic 93,763 48,238 52,456 45,524 41,307 516

Improved 120,313 78,562 83,597 41,751 36,716 459

Advanced 151,283 173,226 179,021 (21,943) (27,737) (347)

Cattle post (20-cow)

Basic 152,365 91,136 117,305 61,229 35,060 438

Improved 195,509 178,264 208,233 17,245 (12,724) (159)

Advanced 245,835 295,681 329,459 (49,846) (83,624)

(1,045)

The results show that basic management performs better

There are economies scale in beef production

Smallholder farmers are less profitable because of small herd sizes

Support BIDPA (2006) finding that profitability increased with herd size

Few studies conducted on small stock

Panin and Mahabile (1994) in Kgatleng & Kweneng

Small stock profitable, with per head profit of P23.00

The return on capital invested 33.77%

Small stock contributed 15% towards household income, cattle (33%) and crops (6%)

Moemi (ongoing): Odi Ext. Area Kgatleng

Divides farms in terms of their management

Preliminary results: some farms are profitable, others not

Unprofitable farms, mainly because they were no sales during the year

Conclusion is that small stock is profitable

Issues of market access

High transaction costs leading to less participation in the market

Mmopelwa and Seleka (2011) and Malope (forthcoming) found that the following factors affected market participation and levels of sales: ◦ Education, gender, non-farm income sources,

ownership of a water point, state of the road, contact with extension and group membership

In the beef sectors institutional constraints related to bolus

The prices received by smallholders at the BMC lower than those received by commercial counterparts

For small stock no formal markets leading to high transaction costs and hence less participation in the market

Smallholders operate using limited inputs

Productivity lower compared to larger farms

Low profitability because of small herd sizes

Policy issues

Improvement in market infrastructure in order to reduce transaction costs

Improvement in extension services to improve participation and raise productivity

Encourage formation of farmers’ groups