Livestock Research for Rural Development 21 (6) 2009 Guide for preparation of papers LRRD News

Citation of this paper

Structural changes in livestock marketing cooperatives in Botswana: A two decades analysis

O I Oladele and M Monkhei

Department of Agricultural Economics, Education and Extension, Botswana College of Agriculture, University of Botswana, Gaborone
oioladele@bca.bw   ,   oladele20002001@yahoo.com   ,   mmonkhei@bca.bw

Abstract

This paper examines structural changes in livestock marketing cooperatives in Botswana over two decades.  Marketing Cooperatives in Botswana evolved from cattle marketing because the cattle industry is the principal sector with a major contribution to beef export to the European Union market and the difficulty in the arrangement for individual farmers to market their livestock to the Botswana Meat Commission. Despite the realization of the importance of cooperative societies there has been a declining trend in the number, membership and turnover. Secondary data used for this study were compiled from the Department of Cooperatives, Ministry of Agriculture and Ministry of Trade and Industry generated over time.

 

Data on number of cooperative societies, membership and turnover were compiled. The data were then described to show trend over two decades.  Results show that generally, Livestock Marketing Cooperatives in Botswana were increasing in number, membership and turnovers from 1986 to 2000, stagnated from 2000 to 2002 and then declining from 2002 to 2008. Reasons for this trend include under-capitalization, mismanagement, poor transport system, poor members’ commitment, marketing problems, competition from chain stores and natural disaster. The paper recommends pragmatic government interventions as these societies are largely government driven.

Keywords: Botswana, cooperatives, livestock, marketing, membership, profit


Introduction

The cattle industry is the principal sector with a major contribution to beef export to the EU market. In Botswana, livestock ownership is an important household asset because they are significant in maintaining the livelihoods of their keepers by providing food, draught power, manure, skin, hide, cash, security, social and cultural identity, medium of exchange and means of savings (Mrema and Rannobe 1996).  Lack of alternative investment opportunities in rural areas has promoted investment in livestock (Chernichovsky et al 1985; MFDP 1991). Over 70 percent of Botswana’s population lives in rural areas and earns a living from agriculture. Because of the dry climate and low population density, livestock production dominates agricultural activities and is a very important socio-economic activity (World Bank 2001).

 

Agricultural cooperatives started in Botswana in 1964 by Serowe Marketing cooperative whose major purpose was to sell agricultural inputs and market farmers’ livestock to Botswana Meat Commission, the success of which led to the emergence of agricultural marketing cooperatives all over the country. The oldest cooperative was registered in 1975. There were Dairy and Small stock Cooperatives by then since there was no market for them (Department of Cooperatives 2002).

 

Tumagole (1993) reported that the marketing of livestock to Botswana Meat Commission is a complex arrangement which individuals, especially those in rural areas, find difficult to execute. They have to rely on middlemen to carry out the services on their behalf. But as their services to farmers in the rural areas were marginal, trust and confidence in the agencies were eroded and aggrandized as some  agencies were accused of inefficiencies and misappropriation. The foregoing strengthened the emergence of livestock cooperatives in Botswana

 

The government of Botswana has been very positive and motivated in facilitating   the development of successful cooperative movement but the rural agricultural cooperatives remain weak. There is a growing mineral (diamond) dependent economy that provides opportunity for cooperatives. The cattle marketing cooperatives are being revived with the restructuring of Botswana Meat Commission. The country has well trained government staff who can take the challenges of supporting a member driven cooperative movement. The challenge is however the lack of matching level of skills and competencies in the movement. This has resulted in a situation where the movement is largely driven by government.

 

Over the years constraints against cooperative movement identified include: (a) under-capitalization (cooperatives are not able to operate viably and undertake additional investment opportunities), (b) mismanagement (causing collapse of societies at the levels of management committees and employees; (c) Transport (since most societies are small and do no have their own transport, distant retail outlets do not receive enough supplies); and (d) members’ commitment (there is a growing apathy among members leading to low participation).  External constraints, such as marketing (difficulties in marketing members produce due to poor financial resources, promotional skills, poor and product quality. Competition from chain stores due to trade liberalization, the domestic market has been penetrated by foreign market outlets. Also included was natural disaster - the problems of recurring droughts and outbreak of livestock diseases such as foot and Mouth, Cattle Lung Disease have led to the poor performance of cooperatives in the agricultural sector.

 

Government within the overall policy and strategy for achieving sustainable socio-economic development is ensuring that an enabling environment is created for the sustenance of cooperative societies. These include, market growth, diversification and expansion by targeting business opportunities that have potential for commercial viability. Also, mergers and acquisitions are promoted to encourage the creation of business alliances through franchise arrangements, joint venture and recapitalization.

 

Materials and methods  

The study was carried out in Botswana which is located  on latitude 24 45S and longitude 25 55E  with a land area of 582,000 squares kilometers at the south of the Equator and dissected by the Tropic of Capricorn, Botswana is in both the eastern and southern hemisphere. This landlocked country is positioned in southern Africa (Figure 1).   



Figure 1.  Map of Africa showing Botswana


Secondary data used for this study were compiled from the Department of Cooperatives, Ministry of Agriculture and Ministry of Trade and Industry generated over time. Data on number of cooperative societies, membership and turnover were compiled. The data were then described to show trend over two decades.

 

Results and discussion 

Number of registered cooperatives

 

There is an increasing trend in the number of cooperative from 1986 to 1990, 5 additional societies were added. During 1993 to 1995 new cooperative societies were registered particularly the producers and savings and credit cooperatives which was due to the institutionalization of savings and credit cooperatives. >From 1995 to 1997, the number of societies increased by 8 with most of the newly registered ones being savings and credit and multipurpose cooperatives. In 1998 to 2000 the number of cooperative societies registered remained constant and membership was decreasing and an alarming rate, with the multipurpose decreasing most at 40 percent. A slight increase was recorded in 2000 to 2002 period after a long time of stagnancy in the growth of number of cooperatives societies registered. The decreasing trend had continued since then (Figure 2). 



Figure 2.  Number of registered Cooperatives 1986 to 2008


Membership of cooperatives

 

>From 1986 to 1990 there was significant increase in membership for multipurpose cooperatives. This may be attributed to the high profits and regular bonus distributed at the end of each financial year. The profitability is stimulating more members to join. Another reason is the introduction of savings or deposit scheme where members were able to use the societies as savings bank. The ease of withdrawal or depositing funds  on weekdays including Sundays prompted many people to become members. Similarly most of the savings and credit cooperatives were active. From 1993 to 1995 there is a decreasing trend in membership of cooperative societies.  The decrease in membership of both marketing and multipurpose cooperatives was due to prolonged droughts leading to poor feeding materials for livestock and the effect of the liquidation of Botswana Cooperative Union and Botswana Cooperative Bank. Total membership between 1995 to 1997 decreased by 8 percent with the marketing cooperative loosing the highest proportion of their members (24 percent). However the 2000 to 2002 period witnessed a decline in membership as much as 10 percent of the total membership. This decline has continued since then with occasional fluctuations of increase and stagnation (Figure 3).  



Figure 3.  Membership and types of cooperatives in Botswana 1986 to 2008


Livestock production activities were constrained from the poor climatic conditions and profits from the society dwindled.

 

Turnover of cooperative societies

 

High profits for the multi purpose, marketing, producers and savings cooperatives between 1986 and 1990 is due to income generated from sales of basic commodities which is accountable for about 70 percent of the gross income (100 Million BWP). This diversification widened the income base of the societies. The turnover of societies declined between 1993 and 1995, this can be attributed to the collapse of Botswana Cooperative Union and Botswana Cooperative Bank. The two were the apex body for the cooperatives in the country that provided support and financial services to the various cooperative societies. Also, marketing, producers and consumer cooperatives retail experienced competition from chain stores established in Botswana from South Africa. From 1995 to 1997, turnover increased by 3.4 percent with the consumer cooperative having the highest turnover of 46.8 percent. In 1998 to 2000 turnover decreased by 8 percent, which was attributed to the financial difficulties facing many of the big cooperatives in existence at that time. From 2000 to 2002 there is a decrease in turnover of cooperatives as many were closing their retail outlets or finally collapsed. The dominance of chain stores from South Africa is has taken grip of the activities which hitherto have been associated with cooperative societies.  From 2002, it has been marked with serious fluctuations that have made the trend of turnover unpredictable (Figure 4). 



Figure 4.  Turnover among cooperatives types 1986 to 2008


Conclusions 

 

References 

Chernichovsky D, Robert E B and Mueller E 1985 Household Economy of Rural Botswana: An African Case. World Bank Staff Working Paper 715. World Bank, Washington, DC, USA. pp. 1-12.

 

Department of Cooperatives 2002 Annual report 2001-2002. Department of Co-operative Development, Ministry of Agriculture Government Printers Gaborone. Pp10-13

  

MFDP (Ministry of Finance and Development Planning). 1991 National Development Plan 7 (1991-1997). Government Printer, Gaborone, Botswana. pp. 239-267.

 

Mrema M and Rannobe S 1996 Goat production in Botswana: Factors affecting production and marketing among small-scale farmers. In Small Ruminant Research and Development in Africa. Proceedings of the Third Biennial Conference of the African Small Ruminant Research Network UICC, Kampala, Uganda 5-9 December 1994 Edited by: S H B Lebbie and E Kagwini July 1996 International Livestock Research Institute (ILRI) Nairobi, Kenya 105-109 http://www.fao.org/wairdocs/ilri/x5473b/x5473b0v.htm

 

Tumagole L O 1993 The assessment of marketing of livestock in Botswana: a case study of cooperative societies. Department of Cooperatives. Government  Printers, Gaborone.

 

World Bank 2001 Livestock Management in Botswana: the Value of Previous Lessons. Independent Evaluation Group (IEG). The World Bank Group. http://lnweb90.worldbank.org/oed/oeddoclib.nsf/DocUNIDViewForJavaSearch/59C4E0A8651629CE85256BD40064F6E7   Accessed June 2008



Received 29 January 2009; Accepted 2 March 2009; Published 1 June 2009

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