cattle farming in Swaziland,south Africa

Livestock Production and Processing

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Livestock Production and Processing

Country
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Beverage
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Agriculture
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
5% - 10% (in GPM)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Short Term (0–5 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
< USD 50 million
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
USD 1 million - USD 10 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Zero Hunger (SDG 2) No Poverty (SDG 1)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Gender Equality (SDG 5) Good health and well-being (SDG 3) Life on Land (SDG 15)

Business Model Description

Establish and operate livestock production and processing plants, including dairy, meat, poultry and hog farming, sourced from smallholder farmers, to meet domestic demand and export to international markets.

Expected Impact

Increase competitiveness and sustainability of the livestock sector for greater economic activities especially in rural areas.

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

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Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Region
  • Eswatini: Shiselweni
  • Eswatini: Lubombo
  • Eswatini: Manzini
  • Eswatini: Hhohho
Learn more

Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Food and Beverage

Development need
Eswatini is a food-deficit country, depending on imports for domestic demand (1). Total food imports reached 291,529 metric tons in 2020-21, declining by 20% due to interruptions in cross-border trade (34). 30% of the population is food insecure, with 70% involved in agriculture (3). Poor farming practices contribute to a 30-40% loss of annual produce (11).

Policy priority
Agriculture is identified as one of the five key growth sectors in the government's Strategic Roadmap (12). The key targets include eliminating hunger, halving poverty, strengthening value chains and develop a smallholder-led food economy (5), as well as import substitution and improved irrigation and infrastructure (3).

Gender inequalities and marginalization issues
Smallholder agriculture remains the backbone of rural livelihoods in Eswatini, with over 70% of the country’s people, 60% of whom are women, relying on subsistence and small-scale farming to support their livelihoods (6). Investments in agriculture is key to driving poverty alleviation and empower youth and women in rural areas (7).

Investment opportunities introduction
The government has proposed 21 projects worth E 5.362 billion (USD 352.7 million) for the agriculture sector in the Post Covid-19 Economic Recovery plan (3). Opportunities include improving water resource management, climate-smart agriculture, diversifying agricultural production, investing in pre- and post-harvest infrastructure and strengthening value chains.

Key bottlenecks introduction
Reoccurring droughts and flooding which is exacerbated by dependency on rainfed agriculture (3). A land tenure system that reduces security of smallholder farmers as a result of no land rights and encroachment of settlements and a lack of appropriate financing for smallholder farmers to afford basic inputs (6).

Sub Sector

Food and Agriculture

Development need
Agricultural productivity has decreased contributing to only 9% of GDP (2) due to dependency on rainfed agriculture and restricted access to technology and financing (5,8). Majority of infrastructure is owned by large scale farmers limiting access to value chains and infrastructure for smallholder farmers (4, 6, 7).

Policy priority
Policy Priority: The Swaziland National Agricultural Investment Plan (SNAIP) prioritizes investments to enhance agricultural productivity and climate resilience (4). Diversifying agricultural production for advancing sustainable livelihoods is also emphasized by the Zero Hunger Strategic Review and the Strategy for Sustainable Development and Inclusive Growth (SSDIG) (7, 8).

Gender inequalities and marginalization issues
Despite women making up 70% of agriculture labor force in Eswatini, gender inequality persists with women lacking access to land ownership, financing, inputs and means of production (6, 4). Agriculture development could reduce poverty as many rural households depend on it to support their livelihoods.

Investment opportunities introduction
Projects listed in the Covid-19 recovery plan include investing in climate-smart agriculture techniques and infrastructure and diversifying agriculture to include more high value- and drought tolerant crops (11). Investing in agro-processing and strengthening the value chain can minimize waste and develop smallholder farmers (4).

Key bottlenecks introduction
Persistent and reoccurring droughts prevent rain-fed farmers from producing sufficiently. High cost of agricultural inputs and a lack of financing opportunities restrict smallholder farmers from upscaling their operations, access to markets and diversification of value chains.

Industry

Meat, Poultry and Dairy

Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Livestock Production and Processing

Business Model

Establish and operate livestock production and processing plants, including dairy, meat, poultry and hog farming, sourced from smallholder farmers, to meet domestic demand and export to international markets.

Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Market Size (USD)
Describes the value in USD of a potential addressable market of the IOA.

< USD 50 million

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

Eswatini has a total population of livestock of 527,153

Emaswati beef exports were valued at E 38.869 million (USD 2.43 million) in 2019, with main importing countries as European Union (Norway), Mozambique, and South Africa (17).

Eswatini's total population of livestock production reached 527,153 in 2019, of which 522,012 was beef herds and 5,141 dairy herds (17). 80% of Emaswati households own livestock (19).

Indicative Return

GPM
Describes an expected percentage of revenue (that is actual profit before adjusting for operating cost) from the IOA investment.

5% - 10%

According to the European Commission's Beef Value Chain Analysis in Eswatini, at the slaughtering and processing stage, the profit rate for a large-scale slaughterer is 6-7% for a small abattoir and 35% for a butchery business (18).

A licensed export slaughterer selling a broad range of meat products in Eswatini and Mozambique has an expected revenue calculated in terms of gross profit of 2-5% (35).

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Short Term (0–5 years)

According to a global study, investments in the construction and equipping of a medium sized dairy farm (adequate for raising 12 dairy cows) are expected to entail a payback period shorter than five years (36).

The new dairy farm set up by Eswatini Dairy, owned by Old Mutual Swaziland Agricultural Fund, was completed and fully operational in four years following start of construction (13).

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

USD 1 million - USD 10 million

Market Risks & Scale Obstacles

Business - Supply Chain Constraints

Due to climate change, the projected higher temperatures for October-March may result in temperatures that are above the comfort zone for beef and dairy cattle, in addition to challenges associated with access to water (19).

Market - Highly Regulated

Inadequate institutional capacity, conflicting mandates of government ministries, poor monitoring and evaluation of projects and poor inter-sectoral coordination for agricultural development (19) may constitute a challenging regulatory environment.

Capital - Limited Investor Interest

Land tenure and overall land management especially on National Land causes uncertainties for investors and sectoral actors in securing land use (19).

Capital - CapEx Intensive

Livestock producers face high upfront costs, including for high feed expenses (20).

Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

Eswatini's farming systems, including livestock, are mainly subsistence-based and rain-fed, resulting in low productivity levels with gaps between current and potential yields. About 25% of the population is food insecure and dependent on assistance, and over 30% of children under five are stunted. Food security is also affected by environmental fragility leading to crop failure and loss of livestock (23).

More than 80% of the livestock (beef) is sourced from smallholder farmers on Swazi National Land, who are burdened by water shortages, inadequate feed resources, insufficient capital to use improved technologies, and lack of access to markets (17, 19).

Eswatini is not meeting its allocated quotas for beef exports to international markets and domestic meat demand is met by large imports from South Africa. The livestock value chain is crucial for the labor market, supporting around 62,000 jobs (24).

Gender & Marginalisation

Women, youth and people living in vulnerable situations are facing higher barriers to investment and agribusiness opportunities, while access to inputs and natural resources including land and water, affecting crops and animals, are key constraints (24).

Female farmers are involved in both crop and livestock husbandries. Women account for 11% of the agriculture labor force and are responsible for farming and livestock rearing in rural agriculture, as male household heads attend to off-farm employment (25).

Local traditional agricultural markets are mainly served by women, revealing the importance of women in both production and marketing functions (25).

Expected Development Outcome

Livestock production and processing leads to increased off-take of cattle, and increased production of dairy and poultry production to meet market demand and reduce reliance on imports (19).

Systematic grazing practices from organized livestock production and processing leads to improved land management and prevention of land degradation due to overgrazing (19).

Livestock production and processing results in improved quality and condition of livestock produce due to good breeding and selection practices and improved participation of smallholder producers in the value chain (14, 19).

Gender & Marginalisation

Greater focus on livestock production increases participation of women and youth in the livestock value chain, especially in larger livestock, including beef cattle, rearing (14).

Livestock production reduces poverty and improved resilience, combatting food insecurity and malnutrition in rural communities, who are dependent on livestock for their livelihood (26).

Primary SDGs addressed

Zero Hunger (SDG 2)
2 - Zero Hunger

2.1.1 Prevalence of undernourishment

2.3.2 Average income of small-scale food producers, by sex and indigenous status

Current Value

27% of population are severely food insecure (IPC phase 3 and above) (27).

N/A

Target Value

The Government seeks to end hunger by 2030 (7).

The Government aims to double agricultural productivity and the income of small-scale farmers by 2030 (27).

No Poverty (SDG 1)
1 - No Poverty

1.2.1 Proportion of population living below the national poverty line, by sex and age

1.5.2 Direct economic loss attributed to disasters in relation to global gross domestic product (GDP)

Current Value

58.9% of population live below the international poverty line (28).

Direct economic loss attributed to disasters of USD 4.249 million and loss in agriculture of USD 1.624 million (29).

Target Value

Reduce percentage of people living in poverty from 58.9% to at least 54% by 2021 (14).

N/A

Secondary SDGs addressed

Gender Equality (SDG 5)
5 - Gender Equality
Good health and well-being (SDG 3)
3 - Good Health and Well-Being
Life on Land (SDG 15)
15 - Life on Land

Directly impacted stakeholders

People

Smallholder farmers enjoy better livelihoods, with 40-50% of homesteads owning cattle. Unemployment population groups enjoy new opportunities as the sector currently supports more than 62,000 jobs (29, 31).

Gender inequality and/or marginalization

Smallholder farmers in rural areas, owning 80% of livestock, benefit from enhanced market opportunities (29).

Planet

The environment benefits from reduced overgrazing and biodiversity loss resulting from current, unregulated open grazing and livestock farming practices (31).

Corporates

Livestock farmers and actors in the value chain benefit from greater capacity to produce higher quality livestock products that adhere to international market standards, resulting in greater domestic markets and higher exports (31).

Public sector

The Government benefits due to contributions to sectoral development plans of the Ministry of Agriculture where increase in yield per unit area under livestock activities and improving livestock management practices are identified as key priorities (4).

Indirectly impacted stakeholders

People

The general population benefits from greater availability and affordability of meat products.

Gender inequality and/or marginalization

Vulnerable population groups enjoy greater food security (7).

Planet

The environment enjoys a generally reduced overall burden of livestock with an additionally lower disease potential (29).

Corporates

Processing machinery and equipment providers, livestock wholesalers, local retailers and animal feedstock suppliers.

Outcome Risks

If not managed sustainably, livestock production may place increasing strains on already limited water resources, increase agro-chemical pollution and lead to overgrazing and loss of biodiversity (24).

Impact Risks

There is a risk of excluding smallholder farmers from the profitable roles in livestock value chain unless they are explicitly included in the supply chain of production and processing plants.

Quality standard requirements and high costs associated with acquiring livestock export licenses may exclude smallholder producers from catering to international markets.

Impact Classification

B—Benefit Stakeholders

What

Livestock production and processing increases competitiveness and sustainability of Eswatini's livestock sector, reduces dependency on imports and creates employment opportunities especially in rural areas.

Who

Smallholder farmers, owning most of the country's livestock, agribusinesses, the general population and the planet benefit from sustainable and efficient livestock production and processing.

Risk

While the livestock production and processing model is proven, costs associated with quality assurance requirements and exclusion of smallholder farmers from the supply chain require consideration.

How Much

Livestock production and processing contributes to ending hunger by 2030, with approximately 25% of the population remaining food insecure (23).

Impact Thesis

Increase competitiveness and sustainability of the livestock sector for greater economic activities especially in rural areas.

Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

Ministry of Agriculture Strategic Plan, 2018- 2023: Livestock, specifically livestock value chains, is identified as a strategic subsector in the ministry's strategic plan (5).

Swaziland National Agricultural Investment Plan (SNAIP), 2015: Increasing livestock production and strengthening value chains are highlighted as key strategies in SNAIP for developing the sector (4).

Eswatini Zero Hunger Strategic Review, 2020: An increase in smallholder livestock productivity and their inclusion in the food system is highlighted as a key strategic pillar to reduce poverty and address existing inequalities (7).

Financial Environment

Financial incentives: Dairy processing and promotion of milk production for a total investment of E 130 million (USD 8.3 million) is listed among the planned manufacturing projects in the Post COVID-19 Economic Recovery Plan (3).

Fiscal incentives: The Development Approval Order (DOA) Income Tax Order including corporate tax reduction reaching 10% for ten years, and exemption for withholding tax on dividends includes investments in manufacturing, including livestock production and dairy processing (32).

Other incentives: Small Enterprise Development Company (SEDCO) through the financial assistance of E 2.2 million (USD 146,000) by the African Union Development Agency and the Spanish government operationalized a women-owned chicken abattoir processing plant in Shiselweni under the Business Incubator for African Women Entrepreneurs (BIAWE) project (33). BIAWE targets 145 African women entrepreneurs from COMESA Member States, including 50 incubatees in agro-processing and poultry processing in Eswatini (37).

Regulatory Environment

Livestock Identification Act, 2001: Oversees the registration of livestock identification marks and the compulsory marking of livestock with registered livestock identification; an amendment on the law is underway (4).

Commercialization of Agriculture Land Bill, 2019: Aims to increase the number of farmers with formal ownership and titles of the land for advancing commercial agriculture for livestock and conventional crops (31).

Veterinary Public Health Act, 2013: Ensures provision of high level consumer protection with regard to food safety by facilitating advanced methods of primary production in the food chain of food of animal origin (4) .

Marketplace Participants

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Private Sector

Parmalat, Gege Farm, Old Mutual, Swaziland Meat Industries, Esus Farm, Africa Chicks, Swazi Milk, Lactalis, Feed Master Swaziland, ENAU, Standard bank, Fincorp, Swazi Bank, Ludwala Insurance company, Cimbresh Investments.

Government

Ministry of Agriculture, National Agricultural Marketing Board (NAMBoard), Eswatini Water and Agricultural Development Enterprise (ESWADE).

Multilaterals

Food and Agriculture Organization (FAO), World Food Programme (WFP), European Union (EU), EUROPEAID.

Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map
rural

Eswatini: Shiselweni

Livestock, particularly cattle, plays an important role economically especially in dry areas of the country, including Shiselweni, which are unsuitable for crops but where grass quality is suitable for grazing (22).
rural

Eswatini: Lubombo

Grasslands are moderately sour, yielding less nutritional value, but livestock farming is extensively practiced as a result of a large rural population living in the region who is engaged in smallholder livestock farming (17).
semi-urban

Eswatini: Manzini

During the summer, the highveld area, which covers Manzini and Hhohho, produces good quality grazing and has a high carrying capacity, with middleveld mixed between palatable and unpalatable rangeland (17). Additionally, major meat and dairy processing plants are located in Matsapha.
semi-urban

Eswatini: Hhohho

During the summer, the highveld area, which covers Manzini and Hhohho, produces good quality grazing and has a high carrying capacity, with middleveld mixed between palatable and unpalatable rangeland (17).

References

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