an analysis of beef market liberalization in botswana: a quantitative value chain approach
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Norwegian Institute
of International
Affairs
Norsk
Utenrikspolitisk
Institutt
An analysis of beef market liberalization in
Botswana: A quantitative value chain approach
Kanar Hamza, Karl M. Rich, A. Derek Baker, Sirak Bahta, and Hikuepi Katjiuongua
Norwegian Institute of International Affairs
International Livestock Research Institute
University of New England
Presented at the International Food and Agribusiness Management Association (IFAMA) annual meeting,
Cape Town, South Africa
16-17 June 2014
Norwegian Institute
of International
Affairs
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Utenrikspolitisk
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Smallholder Cattle Producers In Botswana
• Cattle provide draught power, meat, milk, as well as
new cattle through reproduction.
• Cattle can be easily converted to cash when needed.
About 3% of Botswana’s GDP is based on cattle
exports, and cattle accounts for most of the agricultural
share of GDP.
• Cattle also provide significant contributions in terms of
providing employment opportunities for rural
households in Botswana, especially in communal lands
were cattle production is the main source of income.
(Mahabile et al. 2005; BEDIA, 2010).
Norwegian Institute
of International
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Beef in Botswana: Marketing & Profitability
• The topic of beef export market liberalization in
Botswana through the removal of the Botswana
Meat Commission’s (BMC) monopoly is hotly
debated among policy makers and relevant value
chain actors (BOPA, 2011; BOPA, 2013).
• Currently, 80% of Botswana’s beef exports go to the
EEA and South Africa (von Engelen et al. 2012)
• Reforms in some guise are urgently needed.
Norwegian Institute
of International
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Norsk
Utenrikspolitisk
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Modeling Approach
• We present a holistic quantitative value chain model
of the beef sector in Botswana to evaluate the
effects of such structural changes on all value chain
actors.
• Methodologically, we used a system dynamics
modeling approach to develop a dynamic value
chain framework that highlights the changes and the
performance of the beef value chain among
involved actors over time (Rich et al. 2011).
Norwegian Institute
of International
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Research questions
• To what extent will the removal of BMC’s
monopoly over exports affect different beef
value chain actors?
• What are the implications of removing
BMC’s monopoly on its profitability?
Norwegian Institute
of International
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Norsk
Utenrikspolitisk
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Value Chain Actors & Market Channels
Norwegian Institute
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Production & Price settings
Norwegian Institute
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The constructed value chain model was used
to run four scenarios:
(1) A baseline;
(2) Removal of BMC’s monopoly (particularly, allowing
the sale of live weaners to South Africa by
producers);
(3) Control of an FMD outbreak maintaining prevailing
BMC policy; and
(4) Combined market liberalization (scenario 2) with
control of FMD outbreaks (scenario 3).
Norwegian Institute
of International
Affairs
Norsk
Utenrikspolitisk
Institutt
Intervention scenarios
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Intervention scenarios
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Total cattle population
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Adult Cattle Price
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Live weaner price
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VC actors financial performance under
tested scenarios
Scenarios Producers Feedlots BMC Traditional urban and
rural butchers
Modern butchers and
retailers
Market
liberalization only 36% -3% -3% No change No change
FMD control only 101% 21% 42% 10% 1%
Market
liberalization and
FMD control 172% 28% 36% 10% 1%
Norwegian Institute
of International
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Utenrikspolitisk
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Conclusion
• Removing BMC’s monopoly without animal disease
control generates no significant benefits to value chain
actors.
• However, implementing market liberalization policy
reforms combined with animal disease control leads to
significant gains to all value chain actors (a win-win
result).
• This suggests a need to couch market reforms alongside
public investments in the livestock sector.
Norwegian Institute
of International
Affairs
Norsk
Utenrikspolitisk
Institutt
Thank you…
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