A recent study has established that the poultry in industry in Malawi is not competitive.
The study conducted by Centre for Competition, Regulation, and Economic Development (CCRED), a research institute under the University of Johannesburg group assess the poultry value chain in three countries namely Malawi Zambia and Kenya. Beef Feed Additives
The research has established that few large integrated commercial producers account for the majority of broiler production, feed production as well as all abattoirs and processing facilities, hence limiting completion.
The paper estimates that there are 1.3 million smallholder households who keep or own chickens, while the commercial broiler and egg production system constitutes the largest proportion of the national flock.
Responding to the findings the Competitions and Fair Trading Commission (CFTC), while acknowledging some of such challenges, insists it is putting in a lot of work to ensure a level playfield.
“Key mergers removed potential rivals and effective competitors from the market leaving few alternative sources of inputs for small and medium-sized independent downstream producers and few alternative sources of chicken itself for consumers. Small and medium-sized independent downstream producers are being subjected to small margins as a result of some anticompetitive conduct by large integrated producers,” reads part of the paper.
CFTC Spokesperson Innocent Helema indicates that the commission has also done its own assessment study towards correcting such problems and has since handled and resolved a number of complaints on the same.
“The Commission conducted a market study in the poultry sector which raised a number of issues. The study was aimed at identifying problems in the sector and correct them. The Commission has also handled a number of complaints, some of which have been resolved. On mergers, the Commission authorizes mergers with conditions which we believe competition will be restricted as a result of the merger,” said Helema.
Currently the local market has a few players that have also been built through acquisitions of other small entities, a situation which has seen in some cases a single firms conducting business from production of chicken feed, to chic production and distribution all the way to selling of eggs as well as dressed chickens.
Meanwhile, the researchers have recommended a need to reshape the poultry value chain, and agricultural markets more widely, by among others implementing policies that support smaller producers and to have effective referees for markets such as CFTC and the COMESA Competition Commission.
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