Economics of beef cattle fattening in the traditional cattle supply chain in Tanzania

Thesis

A study was conducted to examine the economic viability of beef cattle fattening in the traditional cattle supply chain as a means of increasing income to cattle keepers in Tanzania. Analysis of the supply chain, technical efficiency and profitability of beef cattle fattening were carried out; and factors that influenced pastoralist and agro pastoralist’s willingness to adopt beef cattle fattening were determined. A structured questionnaire was used to collect data from 401 pastoralists and agro-pastoralists, and 90 cattle fattening operators in eight districts of Shinyanga and Mwanza regions. The districts covered were Kahama, Kishapu, Meatu, Bariadi, and Maswa in Shinyanga Region and Nyamagana, Sengerema and Magu in Mwanza Region. The questionnaire interviews were supplemented with focus group discussions and key informant interviews. Qualitative and quantitative data were collected and analyzed using descriptive statistics and gross margins to compare different actors along the supply chain. Technical efficiency and profitability for beef cattle fattening enterprises were examined using stochastic frontier production function and budgeting analysis respectively, whilst factors influencing profitability were determined using multiple regression analysis. Keeping other factors constant, profit was expected to be a major incentive for pastoralists and agro-pastoralists to adopt the cattle fattening technology. Factors that influenced pastoralists and agro-pastoralists’ willingness to adopt the cattle fattening technology were investigated using Logit regression model. There were two types of beef cattle supply channels in the study area, one channel where cattle are sold directly to butcher operators within the country and another channel where cattle are fattened in feedlot and sold to exporters of live animals. The key actors in the beef cattle supply chain are the primary producers (agro pastoralists and pastoralists), traders, butcher operators, middlemen and retailers while the service providers included banks, drug stores, supplementary feed suppliers and government institutions. The spot market relations among actors were the most common practice in the study area. The gross margins for traders who fattened cattle were higher (20.2%) compared to 11.5% for traders who did not fatten their cattle. The challenges along the beef cattle supply chain for producers (pastoralists and agro-pastoralists) were different from those of beef cattle fattening operators whose main problems were; lack of fattening skills (22.6%), lack of credit (20.4%), high cost of fattening (17%), and limited availability of animal feeds (14.2%). While, the problems for beef cattle fattening operators were; high prices of fattening feeds (27.7%), lack of credit (16.6%), difficulty in securing areas for conducting fattening (16.2%), and limited availability of feeds (22.6%). Opportunities for beef cattle fattening included: availability of market outlets for fattened beef cattle (58.9% for Pugu market), availability of feeder cattle (55.1%) and the high level of beef cattle fattening awareness (95.5%) among the agro-pastoralists and pastoralists. The technical efficiency of cattle fattening ranged between 48% and 98% with an average technical efficiency score of 91%. Education, experience, access to credit, extension services and ethnicity of cattle fattening operators were the main factors that contributed positively to improving the technical efficiency. The maximum net profit was TZS 77 729 200.00 per enterprise and the minimum was a loss of TZS 7 916 500.00 per enterprise with an average of TZS 12 165 871.60 per farmer per annum. The benefit cost ratio of cattle fattening enterprises was 1.35, indicating a return of 35% for every shilling invested in beef cattle fattening. The main determinants of profitability of beef cattle enterprises were; the prices for buying (X2) and selling (X$) animals as well as transportation costs from various sources of cattle purchases (X3) and to the points of selling fattened cattle (X5). About 93.5% of the sampled pastoralists and agro pastoralists were willing to fatten their cattle if given an opportunity, while 14.7% had already started to fatten their cattle with about 30 to 100 animals per fattening cycle of three to four months. The main factors influencing adoption of beef cattle fattening were marital status (p<0.1), awareness (p<0.05) and attitude towards the technology (p<0.01). On the basis of these findings, it is concluded that beef cattle fattening in the traditional cattle supply chain within the study area is economically viable and that pastoralists and agro pastoralists have shown willing to adopt the technology. Thus creationing awareness regarding benefits of cattle fattening, changing the attitudes of pastoralists towards large cattle herds as sign of status, and addressing the challenges faced by cattle fattening operators along the supply chain would promote accelerated adoption and up scaling of cattle fattening in the study area and in Tanzania as a whole.

Ministry of Livestock and Fisheries Development through the Agricultural Sector Development Program (ASDP) of Tanzania.