Cost Incurred and Margins Secured across the Value Chain for Beef in the Southern Province of Zambia

Taiwo E. Mafimisebi, Benny C. Katewa, Olusegun A. Yerokun and Edward S. Syampaku

No 202759, 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California from Agricultural and Applied Economics Association

Abstract: The Zambian beef industry can potentially contribute more to the nation’s development if value addition is better promoted in the agricultural sector. Effective promotion of value chain (VC) activities is achievable only with in-depth understanding of economic activities embedded in the beef VC. This was the main issue for this study which analyzed cost incurred and margins secured across the value chain for smallholder beef cattle production in 4 districts of the Southern Province against the backdrop of high final consumer price of beef in Zambia. The objectives of the study were to describe the socio-economic characteristics of players, identify their value addition activities and how they influence the value chain, map the beef VC with key actors, compute the costs added to retail price at each value chain node and explain how this influences the final consumer price. Net margin accruing to VC participants and the overall cost of producing a unit of beef were also computed. Empirical results showed that the majority of VC participants were males which were below 50 years of age, married and had basic education. The cattle rearing node was found to contribute the largest proportion (38%) of the marketing margin of USD2.97/kg of beef followed by trading node and retailing node (27% apiece) while the abattoir node accounted for a paltry 8%. The net margin earned was also highest at the cattle rearing node (USD0.77/kg) followed by trading (USD0.70/kg), retailing (USD0.66/kg) and abattoir node (USD0.22/kg). Prices of steak and mixed cuts were found to be more uniform in all the four districts. However, the prices of offals tended to parity only in urban areas but were significantly higher in the largely rural Namwala District. In all the districts, the prices of offals were found to be significantly lower than those of steak and mixed cuts. It is concluded that final consumer prices are mostly determined by cost incurred and margins added at cattle rearing, trading and retailing nodes. Lastly, differentiating beef into steak and mixed cuts does not yield any corresponding price differentiation. The study recommended raising the participation of females in some value chain nodes, stopping beef differentiation into steak and mixed cuts and lowering final consumer prices by implementing policies such as elimination of double levies by councils that can lead to cost reduction at beef cattle rearing, trading and retailing nodes.

Keywords: Agribusiness; Livestock Production/Industries; Marketing (search for similar items in EconPapers)
Pages: 18
Date: 2015-07
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea15:202759

DOI: 10.22004/ag.econ.202759

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