A study published by the Centre for Competition, Regulation, and Economic Development (CCRED) has revealed that poultry industry in Malaŵi lacks competition and is dominated by few players.
According to the 45-page study titled: Competition issues and regional integration in soybean and animal feed to poultry markets, within and across Kenya, Malaŵi and Zambia, few large integrated commercial producers account for the majority of broiler production, feed production as well as processing facilities.
In addition, the research notes that in Malaŵi alone, consolidation and increasing concentration levels may raise competition concerns at several levels of the value chain in the poultry industry.
Reads the paper in part: “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.”
On broiler day old chicks, the paper says that there are five main suppliers who also produce feed, with Central Poultry accounting for 87% which is also dominant in broiler production at 80% and also affiliated to Sunseed Oil which trades in soybean and maize main ingredients in the production of feed.
Whilst admitting that the country’s poultry industry is uncompetitive, the Competition and Fair-Trading Commission (CFTC) maintains that the Commission is doing a lot.
“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 Innocent Helema, CFTC spokesperson.
The study further notes that the lack of competition among suppliers in Malaŵi has resulted from a series of mergers and acquisitions adding that Central Poultry has acquired a number of businesses in related activities including Dudu Estate, feed and storage facilities from Protofeeds, Crown Poultry, SS Poultry Agrotech in 2019, Dimakis Chickens Limited in 2021 and part of Charles Stewart’s business assets.
Based on the findings, the research recommends reshaping 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.
