A review of the animal and aquafeed industries in Zambia - G. Bentley and M. Bentley

Kafue Fisheries/Lechwe Lodge, PO Box 37940, Lusaka, Zambia

1. Introduction

The change in Government in Zambia in 1991 has led to a general liberalization of the Zambian economy. The liberalization policies have put an end to price controls, the privatisation of parastatal industries and the withdrawal of state subsidies/protection for local producers. The implications for the agricultural sector are such that the supply of goods and their marketing are left to the private sector. In addition, there are no longer restrictions on the cross-border trade of agricultural produce. The new trade legislation has left Zambia vulnerable to cheap imports - particularly from South Africa - which undermine local industries, and thus reinforce the national dependence on imported goods. There is currently a high level of reliance on imports for machinery, chemicals, medicine, fuel and building materials. The devaluation of the Zambian Kwacha means that imported goods are becoming progressively expensive, and consequently inflate production costs.

At present, the agricultural sector contributes between 11 and 16 percent to GDP, with livestock contributing 35 percent of the national agricultural output. There is a high potential for growth in the livestock industry - only about 20 percent of the arable land are currently in use. Seventy-five percent of the cultivated land are in the hands of small-scale farmers, and the remaining 25 percent are farmed by large commercial farmers/corporations. Smallholders produce 83 percent of the 2.8 million cattle, 97 percent of the 1 million goats, 64 percent of the 80 000 sheep, and 90 percent of the 480 000 pigs. Zambia produces 16 million broilers a year and has 4 million layers. These extensive systems require little or no processed feed. Total domestic demand for animal feed did not exceed 113 000 tonnes in 2001. The population density is low (16.3 inhabitants/km²), and distributed throughout the country. Thus, for many traditional farmers access to markets and livestock services is problematic, and in many cases aggravates poor agricultural production.

The combination of low consumer purchasing power and the comparatively high meat prices, restricts the per capita meat consumption to approximately half the African average (MAFF, 2000). The favoured sources of proteins (amongst those available on the market) are, in order of preference, fish, poultry, beef and lastly pork.

2. The animal feed industry

Prior to economic liberalization in 1991, the National Milling Company (NMC) was the country's monopolistic parastatal miller and feed processor. Liberalisation has enabled new feed processors to enter the market, e.g. Tiger Feed, Meadow/Quality Feed^[1] and Yielding Tree. Another key player in the feed industry is the Livestock Services Co-op Society (LSCS). LSCS was set up in the early nineties to supply Zambian farmers with additives, medicines and small quantities of specialist feeds (horse and rabbit feeds).

In 2001, the feed industry produced 113 000 tonnes of feed (comprising both the formal and informal sectors). The structure of the feed industry is presented in Table 1. Currently, three feed manufacturers supply 70 percent of the market: Tiger Feed (48 000 tonnes/year), National Milling Company (25 000 tonnes/year) and Meadow Feed (6 000 tonnes/year). All three producers are reporting spare production capacity - Meadow Feed and Tiger Feed are operating at approximately 50 percent of capacity. A number of smaller manufacturers account for 4 percent of the annual feed output. Annually, farmers contribute 26 percent of the national feed production (30 000 tonnes/year; Table 1). The farmers and industrial specialists estimate that "on farm mixing" can reduce their feed costs by about 20 percent. Nevertheless, investment costs in mixing equipment and cash flow problems associated with the bulk purchase of the raw materials, precludes many farmers from mixing their own feeds. In general, most large commercial dairy and pig farmers mix their own feeds, whereas poultry farmers have a greater tendency to buy processed feed. Smallholders, who traditionally use "low input/low output" production strategies, purchase very little feedstuff. The feeds produced by the three leading feed processors (representing 94.5 percent of the formal feed sector) are presented in Table 1.

Table 1. Zambian feed production in 2001 (tonnes)

2.1 Poultry

The poultry industry is the largest livestock industry in Zambia, and in 2001, accounted for over 79 percent of the formal feed sector's production.

Approximately 16 million broiler chickens are produced per annum - 14 million and 2 million in the formal and informal sectors, respectively. The industry has benefited from rapid returns on investments and reasonably low start-up costs - broiler production cycles are 6 to 7 weeks as opposed 6 months for pigs or several years for cattle. The broiler industry accounts for 50 percent of all processed livestock feed - 56 000 tonnes per year (Table 2).

Table 2. Types of feed produced by the three major feed processors, 2001 (Tiger Feed, NMC and Meadow Feed)

Of this, 30 percent is sold to smallholders, and the rest to the large-scale intensive farm operations. There is a strong tendency - even among the larger-scale producers - to buy the feed from manufacturers. There are approximately 4 million laying hens in Zambia (between 1 and 1.3 million commercial hens), producing some 350 million eggs a year. As opposed to on-farm mixing, farmers demonstrate a strong preference for processed feeds. Thus, the leading feed manufacturers produce 23 500 tonnes of layer feed a year (30 percent of their total production).

2.2 Beef

The Zambian cattle herd currently stands at 2.9 million animals. Annually, they produce 128.4 million litres of milk and 21 000 tonnes of meat. Cattle are bred extensively under ranching systems (commercial producers), or on communal grazing areas (traditional farmers). Both farming systems rely on pastures for feeding/fattening. The low market prices currently attainable for beef products make intensive feedlot systems economically unviable. If necessary, maize stovers are supplied, and during the dry season, farmers may mix their own feed. This being the case, they use molasses available from Mazabuka Sugar Company (Southern Province), soya and cottonseed cakes, maize bran and urea (Atkins, 1999).

The low milk price currently attainable has produced two types of dairy farmer: the large commercial producer (high production costs - compensated by high yields and economies of scale) and the traditional small-scale farmer (low yields and low production costs). The only medium-sized dairy farmers commercially viable, are those that market their own produce. Commercial dairy farmers tend to produce their own silages, maize and hay. The majority will also mix "on-farm feeds" using combinations of soya and cotton oilcakes as well as maize and wheat brans. The demand for manufactured feeds comes from the small-scale farmers who do not have the infrastructure to mix feeds, and the large producers that need to complement their basic rations. The formal feed manufacturers produce 10 500 tonnes of dairy feed per annum, which by volume, accounts for 13 percent of their total output. This figure includes calf feeds which became more important during the past few years.

2.3 Pigs

Pig production is limited in Zambia. The national herd comprises 481 000 animals, and produces 1 100 tonnes of meat a year. Marketed pork is generated almost exclusively on commercial farms; traditionally produced pigs are generally reserved for home consumption (Atkins, 1999). Commercial pork production in Zambia is a high risk industry. This is due to a combination of high production costs, a sale price that is artificially lowered by retailers (to match Zambians' low purchasing power) and cheap imports from Zimbabwe and South Africa. In addition, consumer demand for pork is low, with preference often shown for fish, chicken or even beef. Price elasticity for pork products is therefore low.

In 2001, the formal feed manufacturing sector produced only 3 600 tonnes (4.5 percent of output) of feed for the pig industry (Table 2). As opposed to buying processed feeds, the large-scale farmers select to mix "on-farm" feeds thereby reducing operating costs.

2.4 Dogs

There is very little demand for dog food in Zambia - only a restricted section of the population can afford to keep dogs. As a result, the three major leading companies only produce 790 tonnes of dog feed a year. This figure represents approximately 1 percent of their total output. Feed is imported from South Africa for marketing in the local supermarkets, and to a lesser extent at LSCS.

2.5 Horses

There is a limited market for horse feeds. In 2001, 550 tonnes were produced (representing 0.7 percent of the feed manufactured by the formal industry). LSCS imports some feed from Zimbabwe (20 tonnes/month).

2.6 Goat and Sheep

Although Zambia has about one million goats, 97 percent of them are kept by smallholders and have no relevance to the feed industry. The small size of the national sheep herd - 80 thousand sheep - is again insignificant to the animal feed industry.

3. Feedstuffs available to the animal feed industry

3.1 Raw Materials

The materials available to the animal feed industry are generally those that are produced within the country. These include maize, maize bran, wheat bran, soya cake and cotton cake. While there are occasionally shortages (resolved by imports from neighbouring countries), a proportion of the harvest is regularly exported. Oilseeds (soya, cotton and sunflower seeds) are grown under contract between farmers and manufacturers, and therefore volumes and prices remain relatively static. However, maize is predominantly grown by smallholders, and thus production fluctuates on a yearly basis. Commodity shortages have been reported throughout the year, and in order to avoid interruptions in feed production, manufacturers vary their formulations. Shortages of raw materials are usually compensated by imports from South Africa. Nevertheless, shortages adversely affect prices - which are largely born by the farmers. The principle raw materials available in Zambia and their associated cost are presented in Annex 5.

3.1.1 Maize

Maize is the major component of animal feeds and accounts for approximately 60 percent of their composition. Zambia produced 800 000 tonnes in 2000/01 (Annex 5). During the period between 1995 and 1999, the country produced 88 percent of its maize requirements. Imports were required in those years in which the country's requirement was not met by domestic production. Normally, the maize price fluctuates at around US$150/tonne. However, recent shortages and over production have meant that between 2000 and 2001, it has fluctuated between US$85/tonne and US$200/tonne. Government maize imports and subsidies (as of December 2001) are only applicable to material destined for human consumption. Feed manufacturers cope with the large fluctuations of price and supply by stockpiling, and as a last resort, importing. In order to help avoid controversies over the use of maize for livestock, feed manufacturers use maize classified unsuitable for human consumption. South Africa has become Zambia's most reliable source of maize imports. Maize bran is available at US$67.7 - 73.3/tonne (Dec 2001).

3.1.2 Soya

During 1995 - 1999, soybean production has been sufficient to provide the countries requirements, and thus, Zambia has become a net exporter of soya products. National production reached 28 200 tonnes in 2000/01. During 2001, soybeans were traded at US$230 - 235/tonne and soya oilcake at US$304/tonne (Annex 5). Soya oilcake is the second most important ingredient in animal feeds. It is produced by local crushers (Amanita Premier Oil, Meadow/Quality Feed).

3.1.3 Fishmeal

Fishmeal is exclusively imported from Namibia; feed manufacturers mistrust local fish by-products as their level of infestation, particularly with Salmonella, is problematic. LSCS is the major importer, importing approximately 1 200 tonnes a year.

3.1.4 Other

Wheatings are available at US$66.6/tonne. Groundnut production was 52 000 tonnes in 2001; the price of groundnut oilcake was US$320.5/tonne. Feed manufacturers also use cotton oilcakes; cotton production was just under 50 000 tonnes in 2001. Brewer's yeast sweepings are occasionally included in feed mixes and cost US$102.6/tonne.

3.1.5 Premixes and additives

Most mineral, vitamin and additive mixtures are imported from South Africa and Zimbabwe. Salt comes from Namibia. Limestone flour is produced locally; its market price at the end 2001 was US$28.2/tonne.

The LSCS cooperative organises the importation of the majority of premixes and additives available in Zambia. The country's consumption is approximately 28 tonnes a week (1 456 tonnes/year). The mixtures are either sold directly to farmers or to feed manufacturers. Imports from Zimbabwe have dwindled - to the benefit of South Africa. The prices for premixes, additives and minerals available in Zambia during 2001 are presented in Table 3.

Table 3. The main additives and premixes available in Zambia (2001)

Source: LSCS, 2001

3.2 Taxes and duties

Zambia is a member country of COMESA (Common Market for Eastern and Southern Africa), as is its neighbour and trading partner Zimbabwe. Since 1993, trade between Zambia and Zimbabwe has been facilitated by the gradual removal of tariff barriers. This process culminated in 2000 when all tariff barriers were removed.

South Africa and Namibia - currently the main import source for stock feed commodities - are not part of this common market, and as a result do not benefit from the trade agreements underlying COMESA. As of 2004, the tariffs to be applied will be 0 percent on capital goods, 5 percent on raw materials, 25 percent on semi-finished goods and 30 percent on finished goods.

4. Aquaculture

The Zambian aquaculture industry is a small underdeveloped industry, and while there is significant demand for fish within the country, the majority is supplied by the capture fisheries - principally, the kapenta and tilapia fisheries. Kapenta is fished from Lake Kariba, and tilapia from the numerous lakes and river systems (Lakes Kariba and Tanganyika, Kafue River, Zambezi River, etc.). With respect to aquaculture, there is a small amount of tilapia farmed in intensive cages or extensive pond systems. Small quantities of catfish and carp are also farmed. Usually, this is undertaken in the tilapia culture ponds, and is designed to improve the production of these ponds. With the exception of tilapia fry production, intensive raceway systems are not in use in Zambia. It is estimated that there are a maximum of 10 commercial farms currently operating within the country - all of which are oriented towards the Zambian market. In addition, there is a large number of informal fish ponds that are designed to supply local/family requirements.

Tiger Feed is currently the sole producer of aquafeeds in the country. Annually, it produces 750 tonnes of hatchery, grower and finisher feeds. This represents less than 1 percent of the total volumes of all feed produced by the three leading feed manufacturers (Table 1). The country's entire feed production is used by just one farmer, who produces 1 000 tonnes of tilapia a year. The farm employs intensive cage culture on the Zambezi River. Three types of feed are produced: a hatchery feed (35 - 38 percent protein), a grower feed (26 - 29 percent protein) a finisher feed (19 - 21 percent protein). Feed formulations were deemed proprietary information, and thus are not available. In the past, LSCS imported feed from Zimbabwe; however, insufficient demand for the product has curtailed this operation.

Currently, pond farming in Zambia is insufficiently intensive to justify additional feed inputs; thus at present, intensive feeding with formulated feeds is only commercially viable for those involved in intensive cage culture. At present, Zambia's most successful commercial extensive fish pond culture systems are integrated with other farming techniques - either with pig, or pig and duck production. Integration with these species boosts the natural production of the farm, and negates the need for artificial feeds. Occasionally pond grown fish are supplemented with mealy meal, wheat bran, maize bran, dairy meal, or Napier fodder.

Crocodile farming in Zambia is normally undertaken in combination with other activities (abattoir, fish farm, etc.) whose residues serve as a feed source for the crocodiles. Only Meadow Feed produces crocodile feed, and only 180 tonnes a year.

Despite the extensive water resources and a high demand for fish, aquaculture in Zambia remains a small and underdeveloped sector. The current status of the industry is principally due to:

1. A discrepancy between the real and potential demand for fish. Indeed, while the potential demand is high - the majority of the population would like to increase the amount of fish in their diets - the economic reality is such that few can afford to purchase fish, and thus the demand is low.

2. Aquaculture is in direct competition with low cost product obtained from the country's extensive freshwater fisheries. Moreover, poaching is rife, and there is a low level of compliance with the annual fishing ban (December to April) that is designed to prevent fishing during the breeding season. Farmers who see the fishing ban as a market opportunity are regularly disappointed.

3. Small non-commercial fish ponds - although not directly in competition with farmers - have an impact on the market size.

4. Fish retail prices are low. Thus, farmers that have high infrastructural/operational costs are unable to market their product at a competitive price. Thus, farming operations designed to supply the local market must focus on low cost technologies.

5. Historically, the population has relied on obtaining their fish from capture fisheries. Aquaculture is a relatively new and unknown farming technology, and plays no part in their cultural practices. Thus, most fish farming projects are steered by foreigners from either Asia or Europe. Many of these projects are not commercial but humanitarian, and associated with development or religious organizations.

6. Due to the devaluation of the Zambian Kwacha, commercial farmers favour production technologies that will generate hard currency cash flows, e.g. US$. With respect to aquaculture, the only way of generating foreign exchange is to enter the export market. Unfortunately, this type of operation requires a significant financial investment, that to date has not been forthcoming.

7. As the industry is so small, there are few people with the relevant expertise that can promote and provide assistance to new entrants.

5. Sources of information

Atkins, M. 1999. Possible investment opportunities in Zambia. A study investigating possible investment opportunities for INVE (a Belgium Livestock Feed Manufacturing Company) in the Zambian livestock feed manufacturing industry.

Ministry of Agriculture Food and Fisheries. 2000. Livestock Development Plan 2000 - 2004. 2000. Lusaka.

Ministry of Agriculture Food and Fisheries. 2001. Department of Meteorology and Central Statistical Office. 2000/2001 Final Crop Forecast. September 2001. Lusaka.

Mwakinjungu, A.B. 1998. Regional Integration, Common Market for Eastern and Southern Africa (COMESA). University of Zambia.