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 has established excessive pricing of poultry products at both feed and broiler breeding levels.
The ACP report state 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, the major finding of the study is that the poultry industry in the region is oligopolistic in nature.
“Differently put, ownership in this sector is concentrated on a few players. Some of the dominant players operated at different stages of production across all the four countries involved,” said the report.
With regard to Botswana, the ACP study revealed that ownership in the poultry sector is unique and complex. It has further emerged that the largest poultry producers in the country have ties to South African producers, and domestic producers are no match to these huge firms at the breeder and processing levels. A working paper by the Botswana Institute of Development Policy Analysis (BIDPA) states that the main supermarkets in Botswana are supplied by five to six companies which are closely inter-related. The paper states that leading supermarkets such as Choppies, which purchases 45 percent of poultry consumed by supermarkets, will buy from any source as long as it meets standards and price. The BDIPA paper suggested that part of the explanation for the high consumer price of poultry meat in Botswana may be found at the level of growers and processors but also at retail level where the indicative margins appears to have expanded over time.
“There is therefore reason for concern that there is an absence of competition in the poultry sector at retail level, though there certainly needs to be more research undertaken by authorities on these matters,” researchers at BIDPA noted.
This week the African Competition Forum study noted that the tight trade restrictions in Botswana protect dominant players from competition, adding that the relationship between the poultry abattoir and processing plant with contract growers places smaller farmers in a challenging position as they appear to be set up to fail. The cost of poultry feed in Botswana is said to be one sore area as studies shows that there is a high likelihood that feed costs could be driven up by government restrictions on feed importation, as broiler producers have to source at least 70 percent of their feed locally. Dominant players in Botswana include amongst others, Bokomo Botswana, Tswana Pride (Owned by Dada family) and Ross Breeders Botswana. Currently a chicken 2kg braai pack costs close to P60.