High soybean prices in Zambia and Malawi are impacting poultry production costs significantly. These prices are influenced by competition issues within a concentrated market, exacerbated by climate-related production challenges. Small-scale producers face difficulties with feed costs, threatening food security in the region. Effective collaboration and monitoring of markets are essential to ensure competitive pricing and protect poultry production.
The rising prices of soybeans in Zambia and Malawi are significantly impacting the poultry industry, which serves as a vital protein source for the growing populations of East and Southern Africa. The critical role of soybeans, as a primary ingredient in chicken feed, becomes evident as production challenges in these countries threaten poultry availability and affordability.
Poultry feed constitutes 60% to 70% of overall poultry production costs, indicating that soybean pricing directly influences market competitiveness. Small-scale poultry producers, who rely on open market purchases for feed, are particularly disadvantaged, as they lack the bargaining power that larger entities possess in sourcing inputs and setting prices.
In East and Southern Africa, Zambia and Malawi are prominent soybean producers. However, both nations faced severe climate change repercussions in 2024, impacting soybean yields due to poor rainfall and low pricing practices. Specifically, Zambia experienced a staggering 74% drop in soybean production attributed to adverse weather and farmers reducing planting areas due to unsustainably low prices set by dominant buyers.
Malawi noticed a 20% decline in its soybean production, resulting from an intense drought, yet the price of soybeans surged by 48% within a span of six months, surpassing even Zambian pricing. This price inflation appears disconnected from the actual production levels, as Malawi maintained sufficient supply despite the constraints.
Research conducted by the African Market Observatory highlights that competition issues, stemming from large buyers’ pricing power, play a pivotal role in these price fluctuations. The concentration in the soybean trading and processing market has resulted in high margins, leading to increased costs for poultry producers who rely heavily on soybean feed.
As a crucial protein source with minimal environmental impact, poultry production in sub-Saharan Africa is on the verge of significant expansion, projected to grow fourfold by 2050. Yet, the current pricing trends may inhibit small-scale producers from sustaining operations amidst escalating feed costs and unfavorable margins.
From 2020 to 2023, Zambia’s soybean production reached a peak, but in 2024, significant declines reflected farmers’ decisions to cut back on soy planting due to low prices offered by processors. Contributing factors also included limited storage facilities, compelling farmers to sell shortly after harvest to few dominant processors, who exert influence over market prices.
Malawi’s soybean prices have demonstrated volatility, climbing above $700 per tonne in mid-2024 and peaking nearly at $900 per tonne later that year, exacerbated by concentrated market structures that reduce competitive pricing. In contrast, Zambia’s market saw price stabilization, aided by soybean imports and surplus management strategies implemented by processors.
Moving forward, it is imperative to address the underlying competition issues and enhance regional collaboration in market monitoring. Zambia’s ongoing poultry market inquiry highlights the urgent need for comprehensive strategies to protect and promote sustainable poultry production across borders in East and Southern Africa.
In conclusion, the challenges arising from high soybean prices and market concentration in Zambia and Malawi pose substantial threats to poultry production and food security in East and Southern Africa. Addressing these competition issues is critical to ensuring affordable poultry feed and maintaining competitiveness for small-scale producers. Immediate action and regional cooperation are necessary to strengthen the resilience of food markets and enhance the viability of poultry production in the region.
Original Source: theconversation.com
