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International Competitiveness of Botswana’s beef industry Tebogo B. Seleka Pinkie G. Kebakile Botswana Institute for Development Policy Analysis Outline • • • • Introduction Measuring international Competitiveness Results Against SADC countries Against leading beef exporters Factors underlying Botswana’s beef industry competitiveness Introduction • Beef industry in Botswana plays a key role in the economy. - It accounts for a large proportion of agricultural value added. - It is the second leading source of export revenue after minerals. - It is one of the key sources of livelihood among rural dwellers – as a source of income and employment (including self-employment). • However; - Its share of agricultural value added has declined over time. 1,200,000.00 40,000 1,000,000.00 800,000.00 30,000 600,000.00 20,000 400,000.00 10,000 200,000.00 0 0.00 Year Real Values(2006 prices) 50,000 19 76 19 79 19 82 19 85 19 88 19 91 19 94 19 97 20 00 20 03 20 06 20 09 Quantities (Mt) - Beef exports have declined QTY (Mt) Real Values Measuring international competitiveness • • • • • - RCA1ij= xij/xnj RCA2ij=(xij/xnj)/(xik/xnk) RCA3ij=(xij-mij)/(xij+mij) NPij=(xij-mij)/pij PCij=pij/cij RCA=Revealed comparative advantage, x= exports, m=imports, I= country I, j = beef, k= all agricultural commodities, n=set of countries (SADC or leading beef exporters), NP = ratio of net trade to production, PC=ratio of production to consumption, p = production, c= consumption. Results: Botswana more competitive than SADC countries but its competitiveness has decline over time – RCA2 100 90 80 70 60 50 40 30 20 10 0 Botswana Namibia South Africa Zimbabwe Ratio of net trade to production 1 0.8 0.6 0.4 0.2 0 -0.2 Botswana Namibia South Africa Zimbabwe Ratio of production to consumption 9 8 7 6 5 4 3 2 1 0 Botswana Namibia South Africa Zimbabwe Botswana Compares well with leading beef exporters by its relative competitiveness has declined over time: RCA2 40 35 30 25 20 15 10 5 0 Argentina Australia Botswana Namibia New Zealand Uruguay Ratio of net trade to production 1 0.8 0.6 0.4 0.2 -0.2 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 0 Argentina Australia Botswana New Zealand Uruguay USA Namibia Ratio of production to consumption 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 - Argentina New Zealand Australia Uruguay Botswana USA Namibia 3500 3000 2500 2000 1500 1000 500 0 100 95 90 85 80 75 70 Cattle Share of communal Ratio of communal (Percent) Heads (thousands) Factors underlying competitiveness: Supply-side factors – cattle population • Poor productivity indicators - Mortality rates averages 12 percent in communal system – although they have improved over time - Off-take rates averaged 8 percent under communal arrangements - Calving rates averaged 57 percent and have stagnated over time. - Cattle prices declined consistently from 1974 to 2006. - Disease outbreak (FMD). - Recurrent drought 300,000 90 80 70 60 50 40 30 20 10 0 Heads sold 250,000 200,000 150,000 100,000 50,000 0 Total BMC Year Share of BMC Demand-side factors – increasing domestic demand for beef – Cattle sales for export slaughter declined from 80 to 40 percent BMC throughput declined two fold from 1984 to 2012 300,000 Heads 250,000 200,000 150,000 100,000 50,000 0 Year Institutional factors: one channel export marketing through the BMC a threat to industry sustainability 250000 200000 150000 100000 50000 0 -50000 -100000 -150000 -200000 • Preference erosion in the EU market due to future policy reforms. Conclusions • Botswana’s beef industry is more competitive than other SADC countries, but compares well with leading beef exporters. • Declining competitiveness levels are due to low and stagnant productivity. • Increasing domestic demand for beef in Botswana, which has resulted in declining exports. • Future threats include single channel export marketing and possible preference erosion in the EU market.
