Table of Contents Next Page


Introduction

1. A common perception among officials in developing countries is that marketing agents charge unjustifiably high prices and receive unduly high profits, to the detriment of consumers (Harrison et al., 1974; Riley and Weber, 1983). Government officials rarely appreciate the functions that marketing agents perform, including assembly of geographically dispersed foodstuffs and livestock products, transportation from production zones to centres of demand, storage, and product transformation. Marketing margins, which are often high in developing countries, are perceived to reflect windfall profits rather than normal returns, high transactions costs, and real transport, handling, storage and interest costs. Empirical evidence of livestock marketing costs in West Africa (Staatz, 1979; Josserand and Sullivan, 1979; Herman, 1983; Holtzman et al 1980) and in East Africa (Reusse, 1982; Evangelou, 1984) generally demonstrate that butcher and trader returns are not excessive, given high real marketing costs, significant risks, and the high opportunity cost of capital.

2. In attempting to protect consumers of livestock products from allegedly exploitative "middlemen," developing country governments often impose price controls at different levels of the marketing chain (Bekure and McDonald, 1985). These prices do not usually allow marketing intermediaries adequate margins within which real costs can be met and a reasonable return on capital, labor and management can be obtained. Price controls, if effectively enforced, typically induce disincentives to produce and market agricultural and livestock commodities. Low or negative returns in markets with controls encourage diversion of supplies to markets where enforcement is lax. Parallel markets emerge, as in Tanzania (Ferris and Stokes, 1976; Sullivan, 1984) and Uganda (FAO, 1980), in which livestock and meat prices are well above price ceilings, and supplies available at artificially low prices are often rationed. Supplies may even be shipped to foreign markets, leaving insufficient quantities and lower quality produce in local price-controlled markets, as in Tanzania in the 1970s, or imports discouraged from traditional suppliers in the case of Ghana in the late 1970s (Sullivan, 1984). By altering the price discovery and determination process, developing country governments may inadvertently exclude certain groups of consumers from obtaining adequate supplies of wholesome and nutritious foods, although the intent of such interventions is quite different.

3. In the Mandara Mountains of northern Cameroon, government administrators have attempted to protect consumers of beef from rising prices by enforcing retail price controls in urban areas. Officials perceive beef prices and butchers' profits to be too high, to the detriment of consumers. The control prices have been set at low levels in urban areas, encouraging urban butchers to slaughter low quality animals from the Diamare Plains, an adjacent livestock surplus region, rather than well-fleshed, locally available stall-fed cattle. Slaughter of locally produced stall-fed cattle is common in rural areas of the Mandara Mountains where retail meat prices are not controlled.

4. This paper will examine urban butchers' procurement and slaughter practices under the distorting influence of retail price controls in northern Cameroon. An analysis of the costs and returns to butchering and retailing at urban markets will demonstrate that slaughter of stall-fed cattle is generally unprofitable at urban markets where price controls are enforced. This finding has important implications for policy-makers in northern Cameroon, where a World Bank funded project has promoted expansion of stall-feeding. As oil revenues and demand for beef have declined in recent years in Nigeria, which absorbed an estimated 15% of stall-fed cattle offtake from the Mandara Mountains region in 1980, it becomes increasingly necessary to tap the growing urban markets in Cameroon. This will require removal or relaxation of the retail price controls, so that urban butchers can acquire the locally produced, higher quality stall-fed cattle for slaughter and retail the beef at an acceptable return.


Top of Page Next Page