Small Market, But Now Growing

1. Small Market, But Now Growing • Incomes low outside formal employment • Prices: higher than neighbours, • 10% of food expenditure • But market for beef now growing 5%-7%, • Dairy c. 10% p.a. But constraint in Lusaka. • Driven by: • higher urban incomes, urbanisation • changing lifestyles, • changing food consumption patterns

2. 3 Systems: Motives, Opportunities & Constraints Cattle Population (000)

3. Input Costs Undermine Competitiveness • Feed, drugs and medicine costs higher than RSA (feed+15%) • Poor access to vet services – govt, private • Fuel costs high, power expensive (self generated) • No rail, expensive road transport: Three times RSA • Finance inaccessible (collateral, short term) & expensive (spreads)

4. Immature Industry Still Evolving

5. Beef: Competition Limited But Growing • Market power lies with industry • Few independent abattoirs, no formal wholesale market for beef. • Focus on capturing value, not efficiency. • Market concentration, integration are barriers to entry. • Weak supply linkages with farmers. BUT growing market, reasonable returns are attracting investment • Competition increasing: dominant players losing market share, new entrants will exert competitive pressure.

6. Dairy: Competition Limited But Better Linkages • Market power with industry. • Dominant processor – 50% market share, • Growing power of supermarkets = Large remain dominant But growing market, good returns causing better business models + investment • Major processor: collection centres, helps trace diseases. • Emerging farmers = 10% of market & increasing. • New producer dairies and cooperative dairies are being established. • Interest from large foreign companies but surplus capacity. • Still need investment in supply chains

7. Ministry Ambitious Plans – Consensus? • Disease free zones, Vet & Ext Services, livestock centres, research and breeding. New Acts. • Disease free zone: Disadvantage main production areas? Policing? • Meat and Dairy boards. Old problems? • Sustained political will? • Choice: Government driven Vs Public Private Partnership

8. What Could The Industry Look Like

9. Scenario 1: Business as Usual • Population growth 2-3% p.a.: 4 provinces • Industry growth = 2-3% above GDP. • Uncompetitive, so opportunistic exports • Limited job creation • Off take rates low • Traditional, small scale farmers may not escape poverty

10. Scenario 2: Major Industry in a Decade • Population grows 5% p.a. & spreads to other provinces • Industry growth 4-5% above GDP. • Exporter to region, emerging on world stage • Investment = job creation (Kenya = 700,000 dairy jobs) • Emergent farmers lead output growth • More traditional farmers become emergent • Traditional, small scale farmers escape poverty.

11. What Needs To Happen?

12. More Competitive Inputs Available • Diseases are controlled - govt. prevents (economic diseases), targets hot-spots - farmers prevent (management diseases) - efficient private sector supply of vet services & drugs - quarantine facilities enable exports • Breeding services improve - Govt research and breeding - Private AI services • Feed improves - farmer fodder banks, legumes, range management - feed companies support cheaper solutions • Extension services spread good practice - govt. services - private companies govt. Services

13. More Competitive Inputs Available • Transport & Fuel costs fall -lower tax on fuel for agric. & transport – green diesel -duties and taxes on spares - skills - finance for fleet • Access to Affordable Finance Increases - short & longer term for transition & emergent farmers - innovative products (i.e. Livestock, machinery collateral) - better business plans, loan supervision - affordable long term finance for processors • Power is available and cheaper in rural areas -less outages -off-grid solutions, renewable

14. Farmers Maximise Opportunity Traditional farmers: increase off take • security from drought, disease • better extension = adopting good practice • commercial incentives increase: supply chains, market centres Emergent farmers : increase productivity • access to short and long term finance • improved private sector supply of extension, training • better integration in supply chains Commercial farmers : invest, improve competiveness • cost of inputs falls, cheaper finance • access to infrastructure improves • cost of doing business falls • lower X – rate volatility Emergent farmer is key to faster growth and competitiveness

15. Efficiency Increases, Value Addition Beef • Increased investment in feed lots + attractive exports • Specialised businesses, wholesale market for beef, • Bigger, better utilised, abattoirs, • Lower transport, power costs • Access to finance • Quarantine facilities for exports Dairy • Investing in supply chains, higher capacity utilisation • Investing in market development (i.e. School milk) • Business development services for producer and coop dairies • Product diversification • Reducing Non Tariff Barriers

16. Policy & Institutions Improve Policies & Institutions are sustainable and sustained • policy contradictions reconciled • co-ordination between ministries improved • political interference, handouts fall Effective public private partnership develops • clear roles • PPP for disease prevention, vet & extension services, Govt. Institutions are more effective • service oriented • better managed Investment climate improves • input costs fall • cost of permits, licenses falls

17. The Prize: Major Industry in a Decade • Population grows 5% p.a. & spreads to other provinces • Industry growth 4-5% above GDP. • Exporter to region, emerging on world stage • Investment = job creation (Kenya = 700,000 dairy jobs) • Emergent farmers lead output growth • More traditional farmers become emergent • Traditional, small scale farmers escape poverty.

18. Way Forward? Over to You Thank You