Charles Dhewa Review Correspondent —
Each time you chew a piece of appetising beef steak, you may not be aware of the trouble and sweat a farmer will have incurred in producing it. Many consumers of livestock products may be unaware of the challenges and opportunities surrounding livestock production in Zimbabwe.
While the majority of livestock farmers have mastered the art and science of producing the best beef for the market, they have to navigate numerous regulatory and policy hurdles.
According to the Livestock and Meat Advisory Council (LMAC), primary production of livestock contributes 22 percent of the agricultural GDP. These indicators exclude subtle benefits such as contribution to human nutrition and foreign currency earnings as well as employment creation through up and downstream linkages such as stock feeds, leather and soap manufacturing industries. However, sterling work by LMAC has uncovered a maze of policy and logistical issues that, once addressed, will enable Zimbabwe’s livestock industry to realise its full potential.
Regulations affecting raw material
The livestock industry is a major user of locally produced feed raw materials including maize, bran from both maize and wheat, soya bean cake, cotton cake and molasses. However, there are regulations that discourage local production and use of these raw materials, according to LMAC.
For example, excessive annual registration fees for buyers and contractors of grain and oilseeds under Statutory Instrument (SI) 147 of 2012 and SI 140 of 2013 has led to an increase in the cost of these raw materials in the stock feeds sector.
Value added tax (VAT) of 15 percent charged on molasses used in cattle feeds is also inconsistent with SI 273 of 2003 which zero rates by-products used for feed production.
To encourage local production of raw materials and lower the cost of locally produced feed raw materials, LMAC encourages Government to consider the following steps:
i. Zero rating molasses for VAT purposes;
ii. Removing all fees for grain and oilseeds contractors and buyers; and
iii. Either allowing the Grain Marketing Board (GMB) to buy raw materials at going market prices or set a floor price based on the landed price of maize from Zambia.
Regulations on importation of inputs
Given low local production of key inputs required by the livestock industry, the sector has had to rely on imports. However, a number of trade related policies have affected access to imported raw materials. The current Government policy allows flour imports of 4 000t/month, with the rest of the annual requirements being made up from wheat grain that is milled locally.
However, poor border controls have led to as much as 8 000t of flour per month being imported, thereby reducing the opportunity by millers to value add imported wheat grain. This decreases the availability of wheat bran, a key raw material for stock feed production.
Importers of feed raw materials are also incurring high costs of compliance because of expensive annual registration fees and National Biotechnology Authority (NBA) regulations. As if that is not enough, they are currently required to go through lengthy import permit application processes. 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. Realigning issuing of permits with one lead agency will reduce time taken to obtain permits.
Farm level Environmental Management Agency regulations
There are also challenges at the farm level. Under the Effluent and Solid Waste Regulations, dairy, poultry and piggery operations as well as beef feed-lots 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. This is despite the fact that such waste is used to enhance soil fertility for crop farming.
There are also EMA Agrochemicals and Fuel Regulations which require that farmers using agrochemicals or carrying more than 200 litres of fuel obtain annual permits.
Instead of levying farmers for using agrochemicals and carrying fuel, the livestock industry suggests EMA can focus on promoting good agricultural practices which ensure proper handling and storage of essential chemicals.
Marketing regulations
A multitude of regulations and misaligned institutional arrangements are currently negatively affecting live marketing of cattle. The Ministry of Local Government, Public Works and National Housing has, through a model by-law, encouraged rural district councils (RDCs) to charge a levy of 10,5 percent on all live cattle sales.
This includes cattle traded between farmers for herd building as well as those for slaughter. Of concern to farmers is that proceeds from this levy is not channelled to programmes that improve livestock production and it also severely erodes profitability of livestock farming.
In addition, VAT standard rating 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.
Misaligned institutional arrangements also have negative impacts on the livestock value chain. For instance, the current carcass grading and classification regulations downgrade beef from small framed indigenous breeds which are predominately kept by smallholder farmers.
Livestock stakeholders have proposed a grading system that removes this bias but to date, it has not yet been promulgated. Lack of a comprehensive national livestock identification and traceability system (LITS) 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 cattle breeds that are resilient to climate change; and
Government should design and implement a livestock identification and traceability system that is accessible to all classes of livestock owners.
Post processing regulations
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 kilogramme on the export of raw hides and skins produced at abattoirs in order to encourage local beneficiation.
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 low uptake of hides, 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 stock feed. Due to 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 percent of mechanically deboned meat (MDM), an imported by-product of poultry processing. However, a duty of 40 percent 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, the livestock industry recommends that:
The surtax of $0,75 per kilogramme on raw hide exports be replaced with an export tax of 15 percent 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 percent to 10 percent for the manufacture of processed meats as is the case with other raw materials.
Co-ordinated action and value chain integration
If the livestock industry is to become commercially competitive, policy makers have to swiftly address bottlenecks currently affecting the value chain. This will ensure the livestock industry reaches an acceleration phase that marked the development trajectory of other agricultural commodities where growth was modest at first and then took off.
Due to conflicting policy instruments, investors with abundant capital but less appetite for risk will continue viewing the livestock industry as uncertain — that is not good for an industry with enormous potential.
To avoid the current fragmented capabilities in the livestock value chain, a supportive policy environment will enable the industry to structure complex livestock projects in ways that collectively assemble all the capabilities needed to complete at the global scale.
Lack of stable regulatory and policy support discourages investors from committing funds, and without such investments the livestock industry will be hard pressed to grow.
Having existed for more than 100 years, the livestock industry is not really young. Over the past decades, it has gone through cycle of good and poor performance. Improving the way it is managed will make a difference. At least the industry has evolved and validated recognised levels of performance and reliable production patterns.
Enabling policy support can improve the business case substantially for the livestock industry while farmers do the rest. Policy co-ordination will also encourage collaboration among livestock stakeholders towards maximising chances of success.
Charles Dhewa is a proactive knowledge management specialist and chief executive officer of Knowledge Transfer Africa (Pvt) (www.knowledgetransafrica.com) whose flagship eMKambo (www.emkambo.co.zw) has a presence in more than 20 agricultural markets in Zimbabwe. He can be contacted on: [email protected] ; Mobile: +263 774 430 309 / 772 137 717/ 712 737 430.