Zim regulatory framework an impediment to Zim’s beef sector competitiveness

By Thomas Madhuku

Continuous poor performance of Zimbabwe beef on the international market has been blamed on the regulatory framework which producers pointed as pushing up production costs making the country’s beef the most expensive in the region.

A study by the Zimbabwe Agriculture Competitiveness Program (Zim-ACP) titled *Analysis of Costs of Compliance with Regulations in the Livestock and Poultry Sectors*, notes that the country’s livestock sector has since 2012 been operating under heavy regulations.

“These include the proposed Agricultural Marketing Authority (AMA) Poultry and Poultry Product Development Regulations of 2012, Ministry of Local Government proposed Rural District Council By-Law on cattle buyers Levy, Statutory Instrument 147 Agricultural Marketing Authority (Registration of Companies and Submissions of Returns) Regulations 2012,” the report notes.

The report indicated that the cumulative effect of these regulations added to the costs of doing business in the livestock sector, be it beef, dairy, poultry and pig.

Shamiso Nyikayaramba, Regulatory Researcher and Analyst with Zim-ACP pointed that over regulation of agricultural sector has resulted in poor economic growth and unfair trade practices among other effects.

Nyikayaramba said the overburdening effects of Zimbabwe’s regulatory framework was promoting corruption as farmers opted for quick and cheaper ways of doing business.

An Agricultural economics expert, Tafireyi Chamboko of the Department of Agricultural Economics and Extension at the University of Zimbabwe said the cost of compliance  affects the livestock production sector because the costs are generally passed on to the farmer either through direct deductions on the final price paid to the producer, or indirectly through lower prices offered to the producer.

“The end result is that this is a disincentive for production. The regulatory costs cumulatively add on to the cost of producing an animal, making livestock production enterprise unviable for commercial production,” Chamboko said.

Asked what needs to be done to ensure a win-win situation between producers and the relevant authorities involved in the value chain, Chamboko said, “part of the money collected through the various levies and charges can be invested in areas that enhance the productivity and competitiveness of the sector.”

He added that there is need for stakeholder consultation between the local authorities and the livestock industry in order to come up with agreed levels of levies and charges that are sustainable and offer win-win situations for both the livestock sector and the local authorities.

A study into Zimbabwe’s livestock sector competitiveness compared to other regional and international markets shows a serious discrepancy militating against local producers.

Dr Thomas Mupetesi, Chief Executive Officer of the Farmers Association of Chief/Headmen Investment Groups (FACHIG Trust) noted that local  farmers especially cattle farmers were faced with high costs in complying with state regulations, in a large way compromising their competitiveness.

“As much as the small holder farmers would want to be competitive, there are layers of costs that a farmer has to go through for example you want to market your cattle, you need to comply with Zimbabwe Republic Police (ZRP) clearance which is a cost, you need to comply with veterinary services permit which is another cost and also there are other hidden costs and at the end all these costs will pile up on the farmer,” Mupetesi said.

Dony Kwadzinoenda, a cattle farmer in Matope area ward 24, Mt Darwin reiterated that cattle farming was being constrained by countless levies paid to the police, Rural District Council (RDC) and veterinary services permit.

Zim-ACP notes that the cattle levies imposed by RDCs varies widely from $5 to $40 per head sold, while some district councils require buyers’ license of $250 per quarter to purchase animals in the District in addition to the levies charged.

Farmers also need an AMA cattle buyers’ licence that costs $150 per annum with cattle movements requiring a permit that costs $10.

This is in addition to the delays incurred by farmers to access the requisite documentation which usually takes between two to three days.

“Producers also incur travelling costs to ferry the police officers (on average two trips) depending on the location of the farm from the police station. Travelling costs also increase in cases where the Veterinary Department and the Police Station are located separately, and on average farmers allocate two days to obtain the necessary permits and police clearance,” reads the Zim-ACP report.

In the end, the price of cattle will have to be cognisant of all these costs that have to be borne by the consumers thereby making the price of beef in Zimbabwe above regional and international pricing models.

A short survey of the export price of beef in the African region conducted by Zim-ACP shows that Zimbabwe has the highest price of beef as compared to countries like Kenya and South Africa.

The price of cold dressed mass beef (CDM) per metric tonne for Zimbabwe producers is $3,500 while for Kenya is $2,055 and South Africa is $3,127 with Argentina selling at $3,138.

For live weight beef, Kenya trades at $1,137 per metric tonne while Zimbabwe trades at $1,758.

The survey also shows that Zimbabwe has the highest wholesale price of beef selling at an average of $3, 88 per kilogram against Zambia’s $2,68 , Kenya $2,16, Namibia $2,13, South Africa 2,80 and Botswana $2,93.

With Zimbabwe struggling to emerge from a decade long economic malaise, Dr Reneth Mano, a value chain specialist noted that the regulatory bodies are using regulatory powers to prey on the agricultural producers and market players with predatory levies to sustain their operations.

He added that the heavy burden of regulations from regulatory bodies has not improved livestock market operations because the levies are not being used to improve quality of regulatory services but to offset fiscal budgetary shortfalls.

Photo creditwww.dailynews.gov.bw

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