The high soybean prices in Zambia and Malawi threaten poultry production due to market concentration and poor climatic conditions. With small-scale poultry producers facing significant challenges, there is a pressing need for regional market oversight to enhance competitiveness and ensure food security as demand for poultry grows.
In the east and southern African regions, poultry serves as an essential and economically viable protein source for the growing population, heavily reliant on soybeans as a primary feed ingredient. The interplay of soybean prices significantly influences poultry production costs, as feed comprises 60% to 70% of these costs. Small-scale independent poultry producers particularly face challenges, as their purchasing power in the market is limited in comparison to larger producers who can set prices through their operations.
Zambia and Malawi stand out as key soybean producers in these regions; however, both countries faced substantial production challenges in 2024 due to climate change and market dynamics. Zambia experienced a dramatic 74% drop in soybean production due to adverse weather conditions and unfavorable pricing pressures that discouraged farmers. Meanwhile, while Malawi suffered a lesser decline in soybean production (20%), it saw an extraordinary price surge of 48% from May to November 2024, outstripping even Zambia’s prices despite a sufficient production capacity to allow for exports.
A rigorous analysis by the African Market Observatory illustrates that the challenges in soybean pricing and production stem largely from market concentrations and a lack of competitive pricing. The low prices offered by dominant buyers have pushed many farmers to reduce crop yields, as evidenced by the subpar planting in 2024 following a poor pricing environment in 2023. The significant price increments experienced in both countries can therefore be attributed to both market manipulation and climatic disruptions.
Poultry, being a sustainable protein source with minimal environmental impact, requires a robust supply chain, especially regarding feed availability. It is alarming that demand for poultry in sub-Saharan Africa is projected to grow significantly by 2050, necessitating affordable feed sources to sustain production. Notably, many small-scale producers rely on competitive markets for inputs, but consistent increases in soybean prices, coupled with escalating costs for day-old chicks, have led many to incurred losses.
Zambia’s soybean production volume nearly doubled from 2020 to 2023, but this growth collapsed in 2024, a significant decline attributed to low prices that prompted farmers to reduce planting significantly. Following harvesting, farmers grapple with storage limitations and must sell quickly to major processors, resulting in limited bargaining power. The unfavorable rainfall attributed to the El Niño phase has exacerbated production issues across both Zambia and Malawi, as contrasting weather patterns exist in regions such as Kenya and Uganda.
As of mid-2024, soybean prices in Malawi soared to over $700 per tonne, peaking at around $900 by the year’s end, predominantly due to concentrated market dynamics rather than a decrease in production. In contrast, Zambia witnessed a stabilization in prices attributed to soybean imports, which alleviated some pressure on local markets. The existing high prices in Malawi raise significant concerns regarding market competitiveness and the welfare of small-scale producers.
The developments regarding soybeans in 2024 underline the critical need for regional market oversight and competitive practices to combat the vulnerabilities faced by small poultry producers. An inquiry into Zambia’s commercial poultry market is underway; however, a coordinated regional approach is necessary to enhance market resilience and ensure a fair economic environment for poultry production.
In summary, the rising soybean prices in Zambia and Malawi significantly impact poultry production costs, particularly affecting small-scale producers. The interplay of market concentration, climate change, and pricing strategies shapes the agricultural landscape in these regions. The ongoing need for competitive market practices and regional oversight has become apparent to secure food security and support the poultry industry’s growth.
Original Source: theconversation.com
