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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

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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).

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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.

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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).

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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?

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Value Chain Actors & Market Channels

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Production & Price settings

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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).

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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%

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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.

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Thank you…