47. With its problems of low productivity and overstocking, the Lesotho livestock sector poses many challenges for development. Market development initiatives appear to have some potential role in promoting that development. The appropriate form of those initiatives, and their likely consequences, depend crucially on the underlying conceptual framework.
48. A review of the Lesotho problem situation with reference to four alternative conceptual frameworks indicates that the capital assets model is most appropriate for understanding the overall production - utilization - marketing framework of Basotho stockowners. Within an overall investment framework, Basotho stockowners are subject to cash flow constraints which influence decisions concerning the timing of sales. The structure, conduct and performance of the market affect the timing and location of sales, the market outlet chosen, and the level and variability of prices received for marketed animals.
49. To achieve the objectives of reducing the stocking rate and increasing productivity, the implementation of a number of initiatives and instruments should be considered. These initiatives are categorized below by the relevant conceptual framework:
(i) Cattle are generally treated as capital assets. The potential benefits and costs of initiatives which promote stronger institutions to manage the communal range, increase the opportunity cost of capital invested in livestock, increase the cost of producing livestock products, or reduce the revenues generated from livestock products should all be considered. Grazing permits or grazing associations are two possible range management institutions. Increased returns from alternative productive enterprises such as intensive livestock crop production or expanded and improved bank saving facilities would reduce the relative attractiveness of livestock as a form of investment. Grazing fees, grazing taxes or lower values of livestock or livestock products would make livestock less attractive investment alternatives and thus result in reduced numbers. Production or marketing initiatives which make livestock more attractive may result in greater returns to producers, but will also promote increased stocking rates.(ii) Livestock owners face cash flow constraints. Marketing initiatives should be considered which are able to expand or contract operations depending on the prevailing economic conditions. If unfavourable external economic conditions force early disposal of animals, then the marketing system should be geared to ease the costs of such disposal. This would be accomplished by promoting market outlets which are widely dispersed geographically and flexible enough to allow sales on short notice.
(iii) The present structure of the marketing system hampers good performance. Initiatives which increase market performance with a minimum of government involvement should be encouraged. In Lesotho this would be accomplished by encouraging private trading stations to buy and sell animals, and by facilitating exchange points where all market participants from producers, butchers, feedlots, speculators, South African buyers, and consumers would be encouraged to participate. By increasing market performance these initiatives would result in increased returns to producers, but would also encourage increases in the stocking rate. The relative magnitude of these contradictory results would have to be evaluated.
