Auctions in markets herald higher incomes for Malawi’s crop-livestock farmers
It was the competition among buyers that increased the price for heavier goats of good quality, while the goats of poor quality fetched low prices,” observed Mr Bictor Chimtondo, a goat rearing farmer, during an auction at Kachala market in Malawi.
With vibrant goat markets and growing goat populations, the demand for goat meat is increasing in urban and rural areas in Malawi. Despite their growing importance as source of nutritious meat and income, goat value chains remain poorly commercialized.
Goats are of high value for farmers in the southern Malawi. One-in-three farmers own goats; a flock size of up to 10 goats provides regular supplementary income. Women and men seem equally successful in raising profits from goats. The money from goat sales is used to buy inputs for crop production or food during periods of shortage and to pay for the education of children. However, farmers benefit very little from their sales especially due to low prices that they fetch through farm-gate sales, the predominant market channel. For instance, at the beginning of planting season, goat prices usually plummet due to increased supply. The demand for goat meat peaks only two months after, during the festive season towards the end of the year.
To push for higher quality in goat markets and better reward farmers for investing in enhancing quality of their goats, the CLIM2project piloted goat auction sales between October 2019 and February 2020 in the three project districts – Balaka, Chiradzulu and Thyolo.
Direct impacts of goat auction sales
Sales records illustrate that goats sold through auctions where they are weighed and the weight announced fetched on average 6% higher prices than those through conventional sales.
“The use of weighing scale worked to our advantage as we knew the weight of the live goat before selling. Knowing the weight of the goat helped determine the price,” says Mrs. Chisinga, who sold her goat of 24 kg at a price of K 17, 000 (US$ 23) on the market day.
|Table 1. Average selling/buying prices per kg
live-weight of goats at different markets
|Market site||Type of market||Number of goats traded||Average selling price per kg live weight (Mk)|
The prospect of securing higher prices at goat auction sales motivate farmers to give supplementary feed to their livestock. Even though supplementary feeding leads to substantial weight gains, conventional market sales do not pay off the cost of feed. Feed technology improvement alone is thus not sufficient. It has to go hand in hand with market improvement, for farmers to improve their goat business at a profit.
How auction sales work?
The success of auctions hinges on collaboration between all stakeholders in Malawi’s goat value chain. The CLIM2 project initiated pilot auction sales that brought together farmers wanting to sell their goats, vendors, butchers and government extension.
Understanding goat quality:
- The auction sale opened with farmers and buyers exchanging information on goat quality that they believed would sell well.
- Farmers and buyers described attributes of a good quality goat from their perspectives.
- They identified a goat that represented good quality.
- Both farmers and buyers discovered that they shared the same understanding. A good quality goat has attributes of sleek skin, high weight and visible fat on the bone.
The auctioning process: A portable digital scale was used to determine the weight of goats. The animal owners then indicated an expected price, which the auctioneer, represented by the local agricultural extension officer, announced to the buyers. The bidding continued until the final price was reached. The farmer had a final say to sell their goat or not incase buyers bid prices lower than the expected price. A record of the number of farmers and buyers was kept.
Benefits from auction sales: Buyers competed for good-quality goats and those goats sold faster, indicating to farmers what type of goat the market wants and the prices they can expect. Farmers appreciated transparent price setting at the auction and understood that it can help keep theft under control. Buyers found quality products easily and at reduced transport costs, when normally they would spend time and resources searching for goats at farm gates. Government’s extension staff witnessed how this simple model conveyed higher returns to farmer and buyers.
While goats are high value for farmers in the southern region of Malawi, they fall lowest on the priority list in terms of government support relative to other commodities in the agricultural sector. Absence of adequate goat market facilities significantly hinders efforts to alleviate poverty, improve nutrition and food security. Agricultural interventions must therefore go beyond increasing productivity; active support of goat markets is required with conditions conducive for investing in goat markets and for farmers to be rewarded for their efforts.
- With conventional goat markets not distinguishing goat meat quality, consumers fail to get the meat quality that they would be willing to pay for; the high demand for goat meat is also reflected in higher prices of goat meat than beef. Furthermore, transparent weighing mechanisms, e.g. through mobile scales, bring objectivity in the pricing.
- Creating parallel channels through the auction model is a way to make available quality meat to consumers with benefits to the entire value chain. Gross margin analyses illustrated that auction sales conveyed higher returns to farmers, vendors and butchers.
- By bidding for better quality goats, everyone quickly learned what the market wants. The auction model can also be used to instill an understanding of market criteria, the use of mobile scales and facilities for interactions between farmers and buyers.
- Goat auctions present business opportunities for farmers and individual entrepreneurs. Agricultural extension services could use the model as strategic tool for stimulating productivity and profitability at a large scale in the smallholder sector.
- Incentives can be introduced for farmers to organize themselves around goat markets, e.g. the auction model to stipulate quality production and pricing. For local empowerment, district level farmer groups and authorities must regularly conduct auction sales