Department of Agricultural, Food, and Resource Economics Feed the Future Innovation Lab for Food Security Policy

Thelma Namonje-Kapembwa, Harrison Chiwawa, Nicholas Sitko, 2019.  Value Chain Analysis of Goats in Zambia: Challenges and Opportunities of Linking Smallholders to Markets. Feed the Future Innovation Lab for Food Security Policy Research Paper 139. East Lansing: Michigan State University.

Zambia’s livestock sector plays a pivotal role in the socio-economic development of both the rural and urban population. Smallholder farmers, for the most part, dominate the sector, and at the household level, its role goes beyond the provision of food and nutrition in people’s diets, to act as a risk buffer by providing an alternative source of income in case of crop failure. Though the small animals perform a wide range of economic and social functions, low productivity among the smallholder livestock farmers is still of concern in Zambia’s livestock sector. Goats are the second most popular owned livestock by most smallholder farmers in Zambia. Their ability to utilize a broad range of feed resources and adapt to marginal conditions presents an opportunity for income generation among the poor rural households. Further, with the prevailing farm structures and increasing land constraints in Zambia, opportunities for income generation from field crops is limited. Small livestock rearing is, therefore, suited for the rural farm households to invest in and take advantage of the rapid increase in income and population growth. However, despite these opportunities, the small livestock sector is still underdeveloped and lacks a clear government policy to guide it. Further, the small livestock sector is characterized by the limited supply of both goat meat in the formal markets such as well-established supermarkets and butcheries. The study is motivated by the desire to address the following research questions:

1. What factors influence producers’ choice on whether to use the formal or informal marketing channels for goats and what factors influence their marketing behavior?
2. What socio-economic characteristics affect the herd size of goats among smallholder farmers and how can they improve it?

To address these questions, we used a value chain analysis approach to gain an understanding of the factors surrounding the marketing of small livestock. Using primary qualitative data from eight selected districts in Southern, Western, Central, Eastern, and Lusaka provinces in Zambia and supplemented by nationally representative household survey data, this study analyzed the value chains of goats and highlights the factors surrounding the production and marketing of small livestock. The small livestock sector is faced with some challenges ranging from cultural related issues, management issues, and access to the necessary services.

The following are the main findings from this study.

1. The analysis of the gross margin suggests that commercialization of goats yields positive net income, however, the magnitude of the margins accrued to the producer is lower than other actors in the value chains.
2. Small livestock are assets easy to sell for cash and as such, many of the sales are triggered by the need to support family expenses rather than as a business initiative. It was observed that a majority of the households that participate in the marketing of goats are those with a bigger flock. Since small livestock are productive assets that generate future income, livestock marketing by smallholder households respond mainly to demands for cash needs rather than short-term profit making. Building and maintaining the herd size is, therefore, of great importance to the smallholder farmers and affects their marketing decisions.
3. Production of goats is affected by high disease incidences and mortality rates. This has adverse effects on the herd sizes and limits the farmer's ability to participate in livestock markets. Analysis of the factors that influence herd size shows that off-farm income, landholding size, the age of the household head, and good management practices have a positive bearing on the size of the flock. 
4. Management of small livestock is often under the semi-intensive system with little to no supplementary feeding. Regarding management, most farmers put more emphasis on cattle compared to the small livestock. This is because there is a general perception that small animals requires minimal management and cattle are significantly more valuable both culturally and economically. The limited knowledge of management practices by smallholder farmers is primarily attributable to no access to extension services from the veterinary officers. Therefore, knowledge dissemination through extension and training must be promoted to improve small livestock production.
5. The marketing channel for goats is over 80% informal; this affects the prices that farmers receive. Further, the results from the probit regression analysis show that the choice of which marketing channel to use is influenced by the herd size of the animals, and the gender of the decision maker as well as the geographical location. It was observed that households with big herd sizes were more likely to sell to traders as opposed to selling to individual households. The choice of the marketing channel used by the farmer has a bearing on the price received and the gross margins. Farmers complained about the low prices that are offered by small-scale traders, and this discourages some of the farmers from selling their animals. There is no standardized pricing―in most cases the size of the goat determines the prices. These factors, therefore, limit the farmers’ ability to invest and expand their livestock production.

To address some of the challenges in the small livestock production and marketing, the study recommends the following actions:

1. To address the problem of disease incidences, the government should introduce sanitary mandates. Sanitary mandates entail contractual arrangements where the state contracts the private sector to implement certain animal health services that are carried out in the national interest, usually at the cost to the state. This can be revised to mean assistance from other stakeholders in the development of the livestock value chain. These mandates could establish an income base enabling the establishment of private practicing in the areas of extensive husbandry systems, which would not normally support such an enterprise
2. Extension and community participation; most smallholder farmers cling to the old paternalistic approach to veterinary services whereby the state made most disease control decisions and implemented them at no cost to the beneficiary. However, this approach can no longer be sustained. Therefore, communities need to take on these responsibilities themselves. There is a need for communities to appreciate their responsibilities in disease control. This could include the necessity of locally enforceable legislation through the local authorities and traditional leadership. Accordingly, extensive publicity/extension campaigns need to be undertaken to inform and explain to the communities of the need for their involvement in the preparation of alternate provision of animal health services
3. One of the factors that have been highlighted in literature, which affects the choice of the marketing channel, is the issue of high transactional costs. One way of minimizing vi transaction costs is for smallholder farmers to form livestock marketing groups. By pooling resources together, it has the potential for small livestock producers to increase their participation in formal markets and increase access to information
4. To encourage entrepreneurs to pursue value addition activities such as processing, pasture production, and others, the government, through related agencies, must partner with private firms/institutions in the facilitation of the development of facilities currently deemed expensive and unattractive to the entrepreneur in remote areas to lure individuals to participate in the markets. Using the Chibolya market model, the government would initially own the facilities but lease out operations to individuals or groups of individuals who shall run the facility at competitive market rates. These must be established in selected districts with production potential.
5. Government and the private sector should establish more abattoirs and slaughter slabs in selected districts especially those with a high population of livestock. The abattoirs should not be product specific but be able to handle all types of livestock that are owned by farmers. These should be regularly be inspected by the veterinary department and health inspectors, as these facilities can be a source of health concerns if sanitary conditions are not adhered to by producers and traders.

There is need to establish more breeding centers for small livestock to help increase herd sizes and encourage farmers to participate in the marketing of goats. Grants must be made available to selected individuals or institutions to create and manage breeding centers and programs on behalf of the people or government.