Policies and Regulations Impeding Growth of the Livestock Sector

The agricultural sector in Zimbabwe currently contributes 11% to the gross domestic product (GDP) and primary production of livestock is estimated to contribute 22% of the agricultural GDP. However, these indicators exclude subtle benefits provided by the livestock sector which include contributions to human nutrition and foreign currency earnings as well as the creation of employment through up- and downstream linkages to industries such as stockfeeds, leather and soap manufacture. The sector is also a major contributor to the attainment of the National Food and Nutrition Security Policy as well as the Zimbabwe Agenda for Sustainable Socio-economic Transformation.  

Value chain stakeholders in this sector welcome the recognition of livestock as an important sub-sector through the establishment of a separate Deputy Minister’s post within the Ministry of Agriculture, Mechanisation and Irrigation Development.  This has led to the development of a value-chain focused livestock policy after extensive consultation with stakeholders whose objectives are to:

        i.            enhance efficiencies along livestock value chains;

      ii.            secure the livestock resource against natural and man-made disasters;

    iii.            ensure the equitable development of livestock stakeholders along the value chains; and

   iv.            protect consumers against biological, moral and ethical risks arising from livestock development.   

However, this new policy framework has yet to be formally adopted by government and accompanying strategies have not yet been developed to implement it.  As outlined below, they will need to address a multitude of existing regulations that militate against the attainment of goals in the draft livestock policy across all the livestock value chain from input acquisition, production and marketing to the processing of livestock products.

Regulations affecting raw material production

The livestock sector is a major user of locally produced feed raw materials including maize, bran from both maize and wheat, soyabean cake, cotton cake and molasses.  However, current regulations discourage local production and use of these raw materials.  Excessive annual registration fees for buyers and contractors of grain and oilseeds under Agricultural Marketing Authority (AMA) Statutory Instrument (SI) 147 of 2012 and SI 140 of 2013 has led to increases in the cost of these raw materials in the stockfeeds sector.  Value added tax (VAT) of 15% charged on molasses used in cattle feeds is inconsistent with SI 273 of 2003 which zero rates by-products used for feed production. 

The current policy of the Grain Marketing Board (GMB) of buying maize at prices that exceed import parity has led to side-marketing by contracted maize farmers to the GMB and thereby discouraging contract farming relationships.  Further, GMB’s policy of reselling maize at lower prices to its feed and milling divisions is an unfair trade practice that impacts upon private millers and stockfeed plants.

To encourage local production of raw materials and lower the cost of locally produced feed raw materials, it is recommended that Government:

        i.            zero rates molasses for VAT purposes;

      ii.            removes all AMA fees for grain and oilseeds contractors and buyers; and

    iii.            either allow GMB to buy raw materials at going market prices or set a floor price based on the landed price of Zambian maize.

Regulations on input importation

Given the low production of key inputs required by the livestock industry, the sector has had to rely on imports to support livestock farming.

However, a number of trade related policies have affected access by the sector to imported raw materials.  Current government policy allows flour imports of 4,000mt/month, with the rest of the annual requirements being made up from wheat grain that is milled locally.  Poor border controls have led to as much as 8,000mt of flour per month being imported, thereby reducing the opportunity by millers to value add imported wheat grain.  This creates decreased availability of wheat bran, a key raw material for stockfeed production. 

Importers of feed raw materials incur high costs of compliance because of expensive annual registration fees under AMA and National Biotechnology Authority (NBA) regulations.  In addition, importers of raw materials are currently required to go through lengthy processes to obtain import permits. Whereas previously the process would take a week, up to a month is now required to navigate the approval process for imports from a multitude of institutions including Department of Livestock and Veterinary Services, NBA, AMA, Economic and Markets Department and Plant Protection Unit of the Department of Research and Specialist Services.

To improve the access to imported livestock inputs, it is recommended that government put in place a policy that encourages the importation of wheat grain rather than processed flour imports.  AMA and NBA annual registration for feed manufacturers and hatcheries already registered under other agencies is also counter-productive and only adds to the cost of doing business.  Certification for non – genetically modified wheat bran should be abolished as there is no commercial genetically modified wheat grain currently being grown worldwide. Finally, there is need to realign the issue of permits with one lead agency to reduce the time taken to obtain permits.

Farm level Environmental Management Agency regulations

At the farm, level two Environmental Management Agency (EMA) regulations are impacting negatively on livestock competitiveness. Under the Effluent and Solid Waste Regulations, dairy, poultry and piggery operations and beef feedlots are required to register and pay an annual registration fee, an annual inspection fee, and a quarterly discharge fee based on the estimated amount of waste discharged despite the fact that such waste is used to enhance soil fertility for crop farming.  EMA Agrochemicals and Fuel Regulations requires that farmers using agrochemicals or carrying more than 200 litres of fuel to obtain annual permits.

To reduce unnecessary costs on farmers, it is recommended that, since most waste produced on-farm can easily be transformed into valuable fertiliser inputs for crop production, registration with EMA (Effluent and Solid Waste Disposal) Regulations of 2007 and levying requirements should be abolished.  In addition, it is proposed that EMA should stop levying farmers for using agrochemicals and carrying fuel and instead focus on promoting good agricultural practices on the correct handling, storage and handling of these essential chemicals for any modern farming operation. 

Marketing regulations

Live marketing of cattle is currently being negatively affected by a multitude of regulations and misaligned institutional arrangements. The Ministry of Local Government, Public Works and National Housing has, though a model by-law, encouraged rural district councils (RDCs) to charge a levy of 10.5% on all live cattle sales.  This includes cattle traded between farmers for herd building as well as those for slaughter.  Of concern is that the proceeds from this levy is not specifically channeled to programmes to improve livestock production and it severely erodes profitability of livestock farming.  Standard rating for VAT purposes for goat and sheep meat, and eggs, discourages commercialisation of these animals which are predominately kept by smallholder farmers.  Other livestock products including milk, broiler meat and beef are zero rated for VAT purposes, making this tax discriminatory.

Some misaligned institutional arrangements also have negative impacts on the livestock value chain.  The current carcass grading and classification regulations tend to downgrade beef from small framed indigenous breeds, also predominately kept by smallholder farmers.  Stakeholders have proposed a grading system that removes this bias but to date, it has not yet been promulgated. The lack of a comprehensive livestock identification and traceability system (LITS) in Zimbabwe also affects the value chain.   Implementing an accessible LITS will help control the spread of disease, simplify trade in livestock and reduce cattle theft.

To improve live animal marketing, it is recommended that:

·        The current RDC marketing levy be replaced by a moderate livestock development sales tax that is levied on animals destined for slaughter;

·        Table eggs and sheep and goat meat be zero rated for VAT purposes in line with the policy on other livestock products;

·        The new carcass grading and classification system be implemented to counter the bias against indigenous climate resilient cattle breeds; and

·        Government designs and implements a livestock identification and traceability system that is accessible to all classes of livestock owners.

Processing regulations

The EMA (Effluentand Solid Waste Disposal) Regulations of 2007also apply to livestock processing plants including abattoirs and milk processors. Operators are required to pay an annual registration fee, inspection fees, and a quarterly discharge fee for abattoir and milk processing wastes and boiler waste water.

These processing plants are also subject to Animal Health Act provisions and municipal council by-laws that also include waste disposal regulations and fees, creating multiple taxation.  In addition, plants are required under the EMA Air Pollution Control Regulations (SI 72/2009) to pay annual registration, inspection and discharge fees for generator and forklift fumes.  AMA annual registration fees also add to the cost of doing business for processing plants despite the fact that they are already registered under Veterinary Public Health regulations. Yet another anomaly is carcass inspections carried out by both Veterinary Department meat inspectors and municipal meat inspectors, each for a fee.

Overlapping regulations noted above are counter-productive and lead to high cost of production for livestock products. There is need to rationalise the conflict between Animal Health Act provisions, EMA and Municipal by-laws on waste disposal to avoid overlapping taxation.  Double registration fees are unnecessary and increase costs.  Since Veterinary Public Health inspectors already inspect and approve plants as safe each year, there is no need for AMA to register and charge annual fees.

Post processing regulations

Finally, livestock processing generates by-products that contribute to economic growth. However, some current policies work against the realisation of this extra benefit. One such policy is the surtax of $0.75 per kilogram on the export of raw hides and skins produced at abattoirs in order to encourage local beneficiation. However, given the current price of hides on the international market, this has effectively amounted to a ban on exports.  Under-investment in local tanneries has caused the low uptake of hides by tanneries, leading to stock build-up and spoilage at abattoirs.  

Abattoir waste products such as blood, bones and feathers can be transformed into valuable inputs in the manufacture of stockfeed. Conditions imposed when Zimbabwe used to export beef to the European Union, private abattoir operators are not permitted to render abattoir waste to replace the $11.6 million spent on importing synthetic amino acids such as methionine and lysine and meat and bone meal, blood and fish meal.

Other abattoir by-products such as fat and trimmings from carcasses feed into a growing meat processing industry manufacturing sausages, polony and tinned meats. To improve the flavour of such products, processors include up to 30% of mechanically deboned meat (MDM), an imported by-product of poultry processing.  However, a duty of 40% is currently levied on MDM imports, making locally produced processed meat products non-competitive relative to regional products.

To improve the economic value from by-products of livestock processing, it is recommended that: 

·        The surtax of $0.75 per kilogram on raw hide exports be replaced with an export tax of 15% to help fund upgrading of the leather value chain;

·        Rendering of abattoir waste be allowed by private abattoirs in line with standards set by the Food and Agricultural Organisation; and

·         the import duty on MDM be reduced from 40% to 10% for the manufacture of processed meats as is the case with other raw materials.