BEEF AND BEEF PRODUCTS recorded annual price increases ranging from 1.2% to 3.6% contradicting the downward food inflation trajectory observed last year. Zambia’s beef is locally sourced from Southern and Western provinces which ideally should have tallied in downward trajectory with other key food component of the Consumer Price Index -CPI. Food inflation weighs 55%; while non-food accounts for 45% of the index.
Zambia generally enjoy a prized cultural position on the lunch and dinner table. In most homes, consumption of beef and beef products is associated with not only having a good living but the means finance a good dietary requirement. To the majority of Zambians, a good diet or meal is having a plate of the national staple of corn meal – Nshima served with a side dish of beef or chicken with accompanying vegetables like beans, cabbage, and rape.
It is therefore not surprising to find that beef and chicken are perhaps the two most important protein supplements in most households. Fish is the other competitor but it is more of an alternative or substitute and variety supplementing protein source. The fact that geographically, Zambia lies within the savannah region, has further made the consumption of beef products the center of how the general public views the cost of living, of which the price of beef is an important parameter with significant weighting.
The Savannah being the home of wildlife has historically provided the local community with a source of animal proteins even from hunting of wild animals which Zambia has in abundance. This fact puts the consumption and affordability of meat products to be rated highly by the vast majority of local citizens. The presence of large wild animals has now been preserved with controlled hunting in game parks and animal reserve areas.
A review of the central statistics office reports for 2017 shows that year on year food inflation had declined to 4.8% by end of the year. The decline was from 7.8% inflationary rate recorded for the same month December in 2016. This is a massive decline when you take a cursory look at the overall food inflation downward trend, but as they say, the devil is in the detail.
A further look at the national average prices for selected products inflationary tracker reveals a startling picture. The staple food, corn meal or Maize meal which is the first and most important food item on the average Zambian food table has recorded a decline in December 2016 to December 2017 prices of 32.6% for breakfast mealie meal and 38.3% decline for roller mealie meal. This decline in prices has been passed on to consumers and comes as a major relief to many households. It’s a major relief due to the fact that Zambia had experienced hyperinflationary period in the last two years.
A further review of the vegetables listed like cooking oil also recorded average annual retail prices declines of 4.8%, rape recorded annual price declines of 4.6%, Cabbage prices declined by 10.4%, tomatoes had perhaps the highest price declines under vegetables of 28.2% while beans prices also declined year on year by 10%.
The above scenario shows that the food table for an average Zambia had two major components recording notable decline in average prices for mealie meal and vegetables. But the most preferred protein food items beef and chicken rather recorded increases in prices. A further review of frozen chicken however shows that the prices have been on the decline from about October to December with the annual price movements between December 2016 to December 2017 recording a slight decline of 0.1%. The trends for frozen chicken prices seem to suggest that the reduction in average food prices is catching up with the sector.
Beef prices however are holding and increasing on an annual basis. A review of the Central Statistics December 2017 report showed that annual prices of beef fillet rose by 3%, T-bone prices increased by 3.6%, beef sausages increased by 1.5% and mince – meat prices increased by 1.2%. So the question is why has beef and beef products prices held and even increased when all other locally produced food products declined as depicted by the annual year on year food inflation and also shown by the product prices annual food tracker?
To answer this question, there is need to look at the beef production value chain in Zambia. Most of the beef consumed in Zambia is locally produced with minimal imports. The Zambian government realizing the importance of fisheries and livestock production split the erstwhile Ministry of Agriculture and Livestock into two namely, the Ministry of Agriculture and that of Fisheries and Livestock. This was aimed to give specific focus on both livestock – beef and others- and fisheries production.
In a paper entitled analyzing of beef value chain in Zambia produced by the Indaba Agricultural Policy Research Institute – IAPRI, the rapid urbanization, the emergence of a sizable middle class with raising household incomes has triggered off the demand and consumption of animal protein and beef in Zambia. IAPRI research paper states that in Zambia, the beef market is segmented into two, standard and choice beef market.
Standard beef is produced by the small holder farmers under low density but organic production systems. Its main attraction is that it’s organic and caters for close to 80% of the Zambian beef market from low to some sections of medium income earners. However, the standard beef market is characterized by seasonal supply challenges which lead to market price seasonal fluctuations. Choice beef is produced by large scale commercial farmers and fattened in feedlots with special breed selection and high intensity methods. It caters for the remaining 20% of the local market in Zambia.
Some of the challenges beef production has had include the fact that small holder farmer’s motivations for keeping cattle had been for reasons beyond commercialization, as a store of value than money, high incidences of animal diseases and lack of adoption of modern animal husbandry and breeding systems due to cultural reasons. These challenges are all being mitigated as the small holder farms and family held herds of cattle pass on to the younger generation who are more modern and commercially oriented and educated.
So the next stage of the value chain is processing and marketing, this is perhaps the place were beef prices have the higher possibility of being managed. There are three main channels that 80% of the cattle population can reach the retail market. These are via small scale traders, selling to commercial farmers with feedlots and thirdly direct sells to Abattoirs.
According to IAPRI, the 20% choice beef is mostly supplied via the feedlot system were the commercial farmers acquire weaned cattle of live weight of about 250kg, from mostly small scale local farmers, to fatten for about 90 days in feedlots which makes the same animals hit about 400kgs, fetching both higher weights and prices. The local farmers would do well to commercialize and take up this additional revenue within 90 days with additional feed investment.
In Zambia, Zambeef a LuSE listed company is a major player and its vertically integrated businesses span across the production, processing, marketing and retailing sector. They have both feedlots and abattoirs dotted across Zambia that are responsible for buying cattle from small holder farmers, feedlot the animals were applicable and therefore has some level of power to dictate the price of purchase and in turn the price of retail standard and to some extent choice beef and beef products.
We were unable to publicly get comparative Zambeef abattoir annual comparative beef buying prices as this is mostly company held internal information, our analysts at ZBT are still making efforts to get the comparative abattoir pricing within the industry and other notable players and check these across the one-year span to analyze the data and deduce if the buying prices have changed from the farmer’s production side but not being passed on to final retail consumers.
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