This article discusses the significant impact of high soybean prices on poultry production in Zambia and Malawi, highlighting challenges related to market competition and climate change. It indicates that small-scale producers suffer due to price dynamics influenced by dominant buyers, necessitating regional strategies to improve market resilience and ensure economic sustainability in poultry production.
The availability of affordable poultry, a critical protein source in East and Southern Africa, is largely influenced by soybean prices due to soybeans being necessary for chicken feed. The poultry industry in Zambia and Malawi faces challenges due to fluctuating soybean prices, which significantly affect production costs. With poultry feed constituting 60%-70% of production costs, the rising prices burden small-scale producers reliant on open-market feed purchases, as larger producers can leverage their operations for better pricing.
In 2024, Zambia and Malawi experienced a drop in soybean production, severely impacted by climatic changes and market dynamics. Zambia’s soybean production plummeted by 74%, while Malawi also reported a 20% decrease. Despite a lesser drop, Malawi witnessed soaring soybean prices, with prices increasing by 48% within six months, surpassing those in Zambia and creating an acute supply imbalance.
As the competition between buyers affects pricing within the soybean market, small producers are significantly disadvantaged. In Zambia, processors offered farmers prices below $400/ton, leading to reduced planting in 2024. Poor rainfall also exacerbated production issues in Malawi, culminating in rising prices driven mainly by a concentrated market that lacks sufficient competition, thus limiting producers’ profits.
Poultry, recognized as an economically viable protein source, is essential for sub-Saharan Africa, expected to see a fourfold increase in demand by 2050. The escalating prices for soybean and day-old chicks have critically impacted small-scale producers, resulting in negative profit margins. Both Zambia and Malawi are major soybean producers; however, competition and price dynamics have stifled their potential to satisfy demand while ensuring the viability of independent poultry producers.
After increasing soy production from 297,000 tonnes in 2020 to about 650,000 tonnes in 2023, Zambia’s output drastically fell to 170,000 tonnes in 2024, mainly due to a lack of favorable pricing and production decisions made by farmers. Limited storage capacities further press farmers to sell immediately post-harvest, exacerbating price pressures influenced by a few dominant processors.
The El Niño phenomenon contributed to poor rainfall in these regions, significantly affecting agricultural outcomes. A regional collaborative approach is necessary to bolster resilience to climate impacts, facilitate diverse agriculture production, and enforce fair trading practices.
While soybean prices in Malawi soared to nearly $900/ton by year’s end, Zambia’s prices stabilized due to import influences and reduced processing capacity caused by power outages. The situation highlights the crucial need for addressing anti-competitive behaviors and improving market resilience to support sustainable poultry production in the region. Near-term efforts should focus on conducting comprehensive market inquiries and fostering inter-country cooperation.
The poultry industry in Zambia and Malawi is heavily impacted by soybean pricing and production challenges, leading to increased costs and diminished competitiveness, especially among small-scale producers. Both countries’ experiences underscore the importance of improving market competition and trade relations to enhance food security and stability within the poultry supply chain amidst climate variability. Immediate actions are necessary to tackle deep-rooted market competition issues for sustainable poultry production.
Original Source: theconversation.com
