Saturday, October 31, 2020

Has the Competition Authority ignored the foul play in the fowl industry?

In 2014, a research programme on competition dynamics and regional trade flows conducted under the African Competition Forum (ACF) and targeted at the poultry industry in Botswana and three other southern African countries established excessive pricing of poultry products at both feed and broiler breeding levels. 

 

The ACP report, released in April last year stated that Botswana and Zambia have been identified as the two countries where dominant companies could engage in unilateral conduct bordering on over-pricing of poultry products at both feed and broiler breeding levels. According to the ACF which is an association of competition authorities in Africa (including our very own Competition Authority), the major finding of the study is that the poultry industry in the region is oligopolistic in nature.

 

This was shortly after another paper, published by the Botswana Institute of Development Policy Analysis (BIDPA), indicated that based on international prices, the poultry industry in Botswana is uncompetitive and arguably characterised by an industry structure that is duopolistic or oligopolistic. Differently put, ownership in this sector in Botswana is concentrated on a few players. Some of the dominant players operated at different stages of production across all the four countries involved including Botswana. 

 

While the BIDPA study had affirmed the widely known cartelisation of the poultry industry, for the first time, through the ACF programme, figures were made public. The figures related mostly to the cost that the local consumer is suffering purely by consuming chicken in Botswana as opposed to elsewhere in the region, say South Africa. 

 

According to the ACF’s findings, from feed cost, to broiler production and abattoir processing costs, Botswana is firmly ahead of the field, with the snowball effect of the costs landing on the hapless consumer. It is an open secret that the closely controlled poultry industry in Botswana has resulted in inflation of the general poultry meat prices. At the same time, key players in the local industry enjoy government protection at the expense of ordinary consumer. The key question therefore remains, what is our consumer watch dog doing to resolve this matter? What has the Competition Authority done since the facts were put in their face? 

 

Like we said before, by the time it came onto the scene, the Competition Authority’s arrival in Botswana was well overdue. In fact, when the law establishing it was brought before Parliament, there was universal consensus that the Authority had arrived probably decades later than many had wished. The public had, over the years, watched helplessly as businesses connived and colluded amongst themselves to undermine competition, fix prices and, in the process, rob the public and, for a greater part, the government. These businesses entail those trading in the poultry industry who have since kicked aside or rather killed the culture of rearing poultry by most of households. The culture has since died and been buried mainly because of big business domination in the poultry industry who are also selfish. Why has the Competition Authority not taken significant measures to correct this day light robbery of consumers by chicken moguls? Is it maybe because of the government’s non-committal stance of not putting forward legislation that is unapologetic to systematic monopolies? When the findings of the study were made public last year in Morocco, the Botswana Competition Authority was heavily represented at the meeting, led by its then director of competition and research analysis, Mokubung Mokubung who is now reported to be at SPEDU. We had hoped that at minimum level, the Authority would have by now made it publicly known what it is that it is doing to correct this rather unfortunate scenario that is adding to the miseries of the already impoverished Motswana. As it stands, it seems the Authority, just like any another government agency would do, have shelved the report and ignored its findings in the process. The #Bottomline however remains that the dominant players in the poultry industry continue to enjoy a protected operating environment and are able to dictate terms to smaller players seeking a foothold in the market. It therefore remains to be seen whether the Competition Authority being the referee will end the foul in the fowl industry since the linesman being the ACF and BIDPA have already identified it.

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