The article discusses the impact of rising soybean prices on poultry production in Zambia and Malawi, highlighting the challenges posed by market concentration, climate adversity, and the need for a collective approach to enhance competitiveness and food security in the region.
In Zambia and Malawi, the rising cost of soybeans is substantially impacting poultry production, which is critical for food security in East and Southern Africa. Soybeans constitute a significant component of chicken feed, accounting for 60%-70% of poultry production costs. This situation disproportionately affects small-scale poultry producers, who lack the bargaining power enjoyed by larger producers that source feed from their own operations.
Zambia and Malawi are key soybean producers in the region, yet both have experienced significant declines in production due to adverse weather conditions and manipulative market practices. For instance, Zambia’s soybean production plummeted by 74% in 2024, attributed to both drought and farmers opting to plant less due to previously negotiated low prices from large buyers. Malawi, while also facing a decrease in production of 20%, witnessed a notable surge in soybean prices, which increased by 48% from May to November 2024, exceeding prices in Zambia despite its capacity to export.
The African Market Observatory has documented that issues of market concentration and the dominance of large buyers have led to inflated soybean prices. Malawian prices soared, which could not solely be explained by reduced production. In Zambia, low offers from buyers in the past season influenced farmers’ planting decisions, resulting in significant decreases in acreage planted. The drought conditions further exacerbated production challenges.
As poultry serves as an affordable protein source with a low environmental impact, maintaining a stable livestock feed supply chain is essential. With sub-Saharan Africa projected to experience a fourfold increase in poultry demand by 2050, affordable feed becomes vital for producers, particularly small and independent ones. However, escalating feed prices in Malawi have created negative profit margins for these small producers, compounding the competitive challenges facing the industry.
In the years preceding 2024, Zambia witnessed a remarkable increase in soybean production, from 297,000 tonnes in 2020 to 650,000 tonnes in 2023. However, the collapse to 170,000 tonnes in 2024 primarily stemmed from low price incentives for farmers, leading to reduced seed purchases. Additionally, farmers faced consolidation of power in trading, limiting their capabilities to negotiate fair prices.
Despite ongoing climate challenges from phenomena like the El Niño Southern Oscillation, which led to contrasting weather impacts across the region, Zambia’s prices were moderated by increasing imports and stockpiling of soymeal. Conversely, Malawi’s soybean prices escalated sharply, raising concerns regarding competition due to the concentrated nature of its trading market.
The events surrounding soybean markets in 2024 underscore the importance of addressing competition issues and enhancing market resilience in regional food systems. There is a call for a collaborative regional focus to monitor market dynamics and support local poultry production effectively. A comprehensive poultry market inquiry is currently being conducted in Zambia to address these challenges.
The high soybean prices in Zambia and Malawi are severely affecting poultry production, primarily driven by market concentration among large buyers and adverse weather conditions. This has resulted in elevated feed costs, disproportionately impacting small producers who struggle to remain competitive. A collaborative regional strategy to monitor market dynamics is crucial for enhancing the resilience of the local poultry industry and ensuring food security in East and Southern Africa.
Original Source: theconversation.com
