The Competition and Consumer Authority, is investigating allegations of restrictive business practices through collusion on pricing by some industry players in the manufacture and supply of poultry feeds.
The Minister of Trade and Industry Mmusi Kgafela told Parliament that the investigation process is on-going after which findings will be shared with law makers by August this year.
Kgafela was responding to questions from Member of Parliament (MP) for Palapye Onnetse Ramogapi. The MP had wanted the Minister to state the names of companies and directors who have invested in poultry, broilers, layers and all types of poultry feeds; if there is no monopoly in the sector, if so; and also what he is doing to rectify the situation and if not; and as well as if he will consider investigating and reporting the findings to Parliament.
Kgafela stated that in terms of industry players, there are about 260 poultry projects spread across the country adding that the majority are small scale broiler projects.
“It is not an easy task to state the Directors but I do have the names of the project owners,” said Kgafela.
He also stated that there are currently seven Poultry Feed Manufacturers in Botswana which are: Opti Feeds; Techno Feeds; Nutri Feeds; Tholo Holdings; Zenit Feed Producers; Irvines Botswana and Magnum.
Kgafela said that the poultry sector still has a lot of opportunities for smaller businesses within the various sectors of the supply value chain. He stated that what is progressive is that the sector no longer has monopoly/duopoly players as it used to be before implementation of the Competition Act and added that they however, recognize that there are still some dominant players in the sector.
“In 2013, my Ministry through the Competition and Consumer Authority carried out a study into the poultry industry and key findings were that there were two major producers of fertile eggs; two major producers of day old chicks; various producers of broilers and layers and many retailers in the market.
According to Kgafela, the study into the poultry industry revealed some problematic bottlenecks included: protectionist policies which were used by early entrants to make it difficult for new market entrants for example, any permit to import would require consent from the already existing players. He added that it also included already existing players were strongly vertically integrated along the supply value chain and at the same time competing with the small players who are their customers.
He gave an example they supplied day old chicks and poultry feed (which contributes about 60% of the cost of the end product) and it was almost impossible to import feed. He observed that this made it very difficult for smaller players to be able to compete with their master suppliers of about 80 percent of their main inputs.
“The study made some recommendations and what were realized that more producers of feed were able to enter the market and this reduced the high cost of feeds; more producers of day-old chicks entered the market and this brought down the cost of day-old chicks,” said Kgafela. He also stated that because of evident business opportunities in the market this attracted market entrance in the production of day-old chicks and poultry feed manufacturers; and that issues of Halaal were addressed through policy and that this opened opportunities for small producers to enter the retail market.
