Role of collective action in enhancing competitiveness of smallholder livestock farmers

Conference on Policies for Competitive Smallholder Livestock Production Gaborone, Botswana, 4-6 March 2015

Vehaka M Tjimune

United States Continuing decline in herd 87.75m cattle Circa 10% decline since 2009 Record prices being paid Same cattle prices as EU YOY Oz imports up 36% NZ/Can/Mex imports up 20% Net importer

Mexico Herd in 5 years decline 17.2m cattle Circa 25% decline since 2009 YOY cattle prices 15% up US demand a strong driver Home consumption decreasing Net exporter

Europe Herd size declining slightly 88.0m cattle 2007-2012 cattle prices rose 2012 – 2014 cattle prices fell 2015 – cattle price forecast to rise Net importer

Brazil Herd in growth phase 212.7m cattle Circa 10% increase since 2009 Open for China & Middle East Exports up 11% YOY

Argentina Herd size slightly increasing 51.7m cattle Inflation is running at 40% Cattle price YOY have risen Q2 = 76%, Q3 = 95% Exports remain difficult to EU

Uruguay Herd size slightly increased 12.1m cattle EU & US key export markets EU hind quarter cuts US manufacturing cuts 2nd largest supplier to China

China Herd is in 5 years decline 4% reduction in Herd Cattle prices YOY 17% up Importers YOY up 20.3% Same period 2013 up YOY 380%

Australia Herd size slightly declining 2012/2013 slaughter topped 8m head First time in 35 years Prices low due to drought slaughter & FX

New Zealand Herd size stable 2014 cattle prices continually rising YOY exports 15% up Pacific Rim, US, China main export markets

The cattle herd across Africa is estimated at 200 million.. of which >8% is commercialised

Disease Zones • Area in Green and Red is

FMD zone • Area in white is FMD Free

zone • Area in Red is the Zambezi

= FMD endemic area

Cattle Production • 2.2 million cattle in Namibia • 1.2 in the North of VCF

(FMD and Lung disease) ±8.1% Off-take

• 800 000 are South of VCF (commercial purposes ±25% Off-take

NCA = 81.2% of all households that own cattle have herds of less than 30 cattle, 17% have herds of 30 and 100 animals, 1.8% have herds of 101 and 300 animals and only 0.1% have herds of more than 300 animals

63.38 %

Namibia is a net exporter of beef

13.10% 1.41%

0.24%

22.64%

0.28%

Meatco’s role

Corporate objective: Maximise Producer Returns

We strongly believe that the success of the Corporation is vested in the success of the Namibian Producer. The aim is therefore to maximise the returns to all livestock farmers through the maximisation of the Corporation’s sustainable profits

Maximum distributable income

Ability to maximise Producer returns and remain

competitive

Maximum market returns

Maximum carcass return

Production efficiencies

Integrated planning

Cost effectiveness

Collective actions….. Collective actions by smallholder farmers gives them competitive edge.. ‘Milk Train’ Concept in Namibia (smallholder livestock producers) Purpose: • Aim is to supply required volumes to markets on a consistent

basis. • Reduce transport cost (by maximising full loads) • Negotiate better freight rates through collective bargaining

power • Local FA’S recruited staff to organise logistics on their behalf

(paid with commission earned)

What are the benefits?

Market share Average annual increase in Meatco producer price amounts to 9.82 % compared to the 9.37 % increase in the RSA parity price

Exports of live cattle increased significantly during the past 10 years.

What are some of the Policy Implications At village / farm level: • Support to FA’s / Coops capacity at local level • Sustainability issues of FA’s / Coops (commission = 1-2% of turnover) At institutional (government and industry) level:

• Local value addition is crucial but ‘incentivise, do not penalise = levies)

• Quantify impact of ‘Levies’ on supply chain cost and final producer price

• Create environment for genuine PPP At Regional level:

• De-regulate intra regional trade = open borders for flow of livestock and meat trade (taking into consideration TBD)

• Create capacity and trust amongst Competent Authorities

• There are structural design issues that needs serious urgent attention (government owned ‘meat commissions’)

Question is: have we been able to influence policy through what we now know already?

Questions …..later

Vehaka M Tjimune Executive: Policy Innovation, Stakeholder Relations & Corporate Affairs

• 24 years in livestock and meat (government/unions/meat processing) • Served as Regional Coordinator to SADC Smallholder Network (FOS Belgium) • Professional interest: Policy Analysis in Agriculture and Land related matters