Africa’s population is growing, and will continue to grow rapidly over the coming decades, outpacing the world’s rate of population growth. The need for food is thus increasing in Africa at a greater rate. Increasing household income and the rise of a growing middle class is associated with an increase in the demand for certain types of food such as meat. This paper adopts a holistic approach to analysing the growing demand for animal food sources in Africa. The methodology synthesises socio-economic research with philosophical thinking about Africa’s growth potential through strategic market intelligence aimed at business. The goat industry is taken as a case study.

The hungry continent

Africa is a hungry continent. It is hungry for investment, which it is getting in ever increasing figures. In the year 2000 investment as a percentage of gross domestic product (GDP) in sub-Saharan Africa (SSA) was at 17.48%, while it was 21.63% in the most advanced economies (taken as the G7), and the world average was 22.51%.(2) In 2011 the respective percentages were 21.25%, 17.69% and 23.48%.(3) Africa is hungry for growth, which it is experiencing at high levels. Again, GDP growth, measured at constant prices, reflected as a percentage change, shows how SSA’s 3.56% in 2000 (below the world average, below other emerging and developing economies and below the G7) grew to 5.29% in 2010, above the world average (5.26%) and the G7 (3.21%), yet was below the average of other emerging and developing economies (7.5%).(4) Regardless, SSA is catching up and by 2017 it is expected that its GDP growth will be 5.52% compared to the 6.35% of other emerging and developing economies.(5) Africa is also hungry for infrastructure, market access, sound leadership and salubrious polices.(6) The generally poor state of these factors is the major constraint to increased trade, both international and intra-African.

Most of all, however, Africa is hungry for food.(7) It is this hunger that is poignantly linked to all the other hungers. Increased food supply and security can, by virtue of itself, facilitate change through incentives in those aspects that are lacking, while the improvement of those structural deficits will benefit the production and trade of food produce. As it happens, Africa, excluding South Africa and North African, is still the region in the world in which the population receives the lowest intake of calories.(8) Without food, labour cannot function efficiently and effectively. If labour cannot function then the capital investment will be less advantageous to the hungry unemployed. And if this is the case, then technology cannot be used to its utmost benefit. With a burgeoning population and a rising middle class, Africa needs to reconcile key issues on its socio-economic agenda, so that opportunities are appreciated as no longer existing at the bottom of the proverbial pyramid but in the middle as well.(9)

Food security is a concern for Africa.(10) It is a concern linked to the idea of economic security: those interests of a state pursued to ensure welfare generating capacity and answering the seemingly eternal question of scarcity. Demographic changes on the continent factor in at this point.(11) Africa’s population will grow at a pace of 2.27% from 2010 to 2015 and sub-Saharan Africa’s will expand at an even greater rate of 2.44% in the same period.(12) This is greater than the world’s rate of 1.10% (2010-2015).(13) The need for food is consequently increasing in Africa at a greater rate, in some cases outstripping production capacity.(14) Considering the increase in income and the rise of a veritable and growing middle class, there is a concomitant increase in the demand for certain types of food. This is best evidenced in the consumption of meat - goat meat being an apposite example.

The humble goat as financial instrument

Not always appreciated as a traditional source of meat in the developed world, ‘chevon’, ‘mutton’, ‘cabrito’, as goat meat is called, is becoming an ever more popular meat for consumption.(15) It is mostly consumed in the populous developing world and emerging markets.(16) Most immediately relevant, goat meat is an important ‘animal food source’ (AFS) in Africa, where cultural and financial considerations make it the meat of choice alongside chicken. The biggest export market in Africa is Eastern Africa, with Ethiopia, Tanzania and Kenya being the largest. The biggest import market is North Africa, while the biggest markets outside of Africa are the United States of America, the United Arab Emirates, Qatar, China and Hong Kong. An elementary demand-and-supply analysis of this AFS in Africa reveals more salient points for consideration in terms of general market growth potential, especially in terms of intra-Africa trade, poverty alleviation and solutions to food security issues.(17) However, before looking into this, it is necessary to consider the economic rationale behind the goat industry in Africa.

As livestock, goats are capital. They can be used for breeding stock as a capital investment or as AFS. One might thus say that there are two production alternatives for the allocation of this capital, although more will be explored later. Goats are uniquely attractive as investments. They are low risk on a continent still gripped by periodic conflict and unstable politics.(18) The hardy constitution of goats is one reason for this being the case. Goats eat brush and weeds (they are browsers as apposed to grazers) and are able to adapt to very contrasting pastoral conditions, thereby utilising land that is unsuitable for other animals.(19) The liquidity of goats is another reason, together with their store of value, which acts as protection against inflation, a particularly poignant topic in Africa.(20) The liquidity characteristic also means that contingencies will allow for land to be restocked rapidly: goats are very liquid assets and are used to fund short term expenses and are treated as sources of capital for small, yet vitally important, investments and business initiatives. Goats thus become quasi-financial instruments, strange as it may sound at first.

Last but not least is the short production cycle of goats, which means that there is an increased capability to build reserves and so decrease risk. Taken together, goats represent an important investment industry on a continent that makes livestock farming appear to be risky business, whether that is because of the instability created by conflict, vacillating prices or uncertain property rights.

Additional elements of the economic rationale behind the goat industry are the multitude products and direct benefits derived from goats. The meat, firstly, not only alleviates pervasive hunger in the communities in which the goats are reared but is also exported. Two of the best meat goat breeds in the world happen to be denizens of the continent: the Kalahari Red and the Boerbok.(21) Diary products, including those from goats, are experiencing increased demand and represent ever increasing growth prospects and export potential.(22) Fibre is an example of a true export success story, as the mohair/cashmere from Angora goats is exported the world over.(23) It is only a pity that more value is not added to the fibre-chain within Africa’s borders. Goat hides are also attractive to the automobile industry because of the soft quality of the leather.

Africa represents an estimated 60% of potentially arable land in the world but clearing this land for crops poses a difficulty when specialised equipment is not available.(24) Goats, however, are rented out, to clear land for farming, thus killing two birds with one stone by feeding the goat and clearing more land for cultivation. Transport, is an oft overlooked use for goats. Many Africans who cannot afford other transport still use goats as pack animals to navigate those bountiful areas of the continent without adequate roads. Other value-added products also exist in the form of apparel, accessories and compliments to even more items that can be augmented by hide. (25)
 

Goat economics 101: Demand and supply

On the demand side, goat AFS is driven mainly by cultural and financial considerations. In both of these there exists regional differentiation, so that the products differ in economic importance on a regional basis. One instance of this is that goat AFS is subject to the least cultural bias. It is used and consumed by a broad spectrum of religious groups and its characteristics make it a healthy option for consumption.(26) African countries with large Muslim populations have a greater demand for goat AFS for cultural reasons. Then Ethiopia’s proximity to the big goat AFS importers in North Africa and the Middle East boost the importance and viability of the industry there. The same is true for Tanzania and Kenya, each possessing Muslim populations large enough to affect demand and neighbouring importers of goat AFS to affect supply.

Worldwide, the increase in AFS consumption is driven by emerging markets.(27) Even though there is no single and generic ‘Africa’ in an analytical sense or otherwise (with countries as disparate as South Africa and Sudan) one can see the continent as a collective market in the sense of AFS and the assignation of the ‘developing world’ or ‘emerging markets’, broadly speaking. The GDP growth experienced by this market of over a billion people is following the economic expectations of increasing demand for AFS.(28) Increasing income is one facet hereof, with SSA’s GDP measured at constant prices, changing from US$ 329.84 million in the year 2000 to US$ 1043.624 million in 2010, to US$ 1201.285 million in 2011, and expected to be US$ 1828.747 in 2017. Thus, in terms of GDP measured in this manner SSA is growing at a faster rate than the world average.(29) There is a mutually reinforcing relationship at work, as increases in economic welfare are linked to nutritional factors, so that while an increase in income will lead to increased demand for AFS, any increase in AFS consumption will lead to increased income for the industry and increased productivity as the economy’s labour force is now better nourished.(30) This affects labour productivity, which can increase income generating capability, and so the cycle is reinforced.

The importance of AFS is compounded when one considers that population growth has historically been associated with increased income and increased urbanisation, which are all being seen in Africa.(31) Linked to these three phenomena, and occurring in parallel with them, are production responses to livestock systems, which relate to AFS production: As demographics change and political stability increases, or decreases, production systems respond accordingly in order to target markets.(32) Herein lies part of the rationale for the aforementioned growth potential.

On the supply side, goat AFS in Africa faces several constraints. The most noticeable three are economic, cultural and biological.(33) The economic constraint consists of income constraints, difficulty of accessing capital, lacking infrastructure, problems of market access, and shortage of production management skills.(34) As an example, one manifestation of this is fence-to-land cost ratios, which become painful concerns for those pursuing intensive production systems, as opposed to extensive production systems. To elaborate, one of the difficulties in goat farming is fencing, which is expensive in Africa. This is compounded by the fact that production systems may necessitate management systems that require increased and better fencing. This occurs on a continent where land rights and land ownership are not as well established as one might wish for optimal growth and where farming is still done largely on an extensive basis. The biological constraint includes difficulties relating to breeding techniques, especially in terms of performance recording and genetic evaluation schemes, as well as poor nutrition.

In terms of cultural constraints the focus is on the culture of production systems. Africa has 32.11% of the world goat population, second only to Asia, but traditional farming methods (production systems) are aimed at subsistence farming or as secondary farming schemes that augment other mixed production endeavours.(35) Linking these together, one is faced with the issue of how future production will be affected by the ‘risk society’ wherein competition for natural resources, as well as competition between ‘food versus feed’ will affect AFS production.(36) In the former case, competition for water and land is most immediately relevant to Africa. In the latter case one is dealing with issues relating to how environmentalist and ‘green movement’ concerns affect AFS by critiquing both the use of produce in feed for AFS production that may have been used as food for humans and methane production by livestock.

Linking up the supply-demand analysis, it is perhaps ironic that a solution might be found in increasing prices. This would increase returns to farmers that would increase the incentive to invest. At the same time, increases in herd productivity would increase production. The increase in production, perhaps through technology, would lower production costs, in turn lowering market prices and so lowering retail prices. This would increase a consumption incentive, driving both a demand and supply side response.

Concluding with philosophy

The economic exigencies and contingencies sketched above can be viewed from another perspective when one considers them from within Africa’s ‘developmental’ and ‘emerging market’ paradigm. These socio-economic paradigms are linked to objectives of human security, such as food security, alongside global developmental agendas and questions of economic security. The onus to ensure economic security in a world that no longer permits the protectionism and disregard for the environment, through which it was previously possible to achieve modernisation, is placed on African Governments by their citizens and the international community (through other states and international organisations).(37)

The African continent, more than any other collective entity in the international arena may be forced to think about development ‘reflexively’. By this is meant the process of modernisation whereby greater consideration is accorded to the current environmental agenda, human security, food security and innovating and adapting to global trends instead of only seeking to deepen and increase the extractive and exploitative capacity of a state’s resources.(38) Even more beneficial would be to adopt this thinking in entrepreneurship and business. The goat industry, for the reasons outlined above relating to economics and culture, represents a simple case study in how reflexive modernisation is already taking place and how it can be furthered.

Written by André Dumon ⁽¹⁾

NOTES:

(1) Contact André Dumon through Consultancy Africa Intelligence’s Finance and Economy Unit ( finance.economy@consultancyafrica.com ).
(2) World Economic Outlook Database, International Monetary Fund, April 2012, http://www.imf.org.
(3) Ibid.
(4) Ibid.
(5) Ibid.
(6) Leke, A., et al., ‘What’s Driving Africa’s Growth?’, McKinsey Quarterly, June 2010, http://www.mckinseyquarterly.com.
(7) ‘The challenge of hunger: Taming price spikes and excessive food price volatility’, Global Hunger Index, International Food Policy Research Institute, 2011, http://www.ifpri.org.
(8) Wesenbeeck , C., Keyzer, M. and Nubé, M., 2009. Estimation of undernutrition and mean calorie intake in Africa: Methodology, findings and implications. International Journal of Health Geographics, 8(37), http://www.ncbi.nlm.nih.gov; ‘World Hunger and Poverty Statistics’, World Hunger Education Service, http://www.worldhunger.org.
(9) ‘The Middle of the Pyramid: Dynamics of the Middle Class in Africa’, African Development Bank, Market Brief, 2011; ‘Pleased to be bourgeois’, The Economist, 12 May 2011, http://www.economist.com.
(10) Grebmer, K., 2011. Global Hunger Index. International Food and Policy Research Institute: Bonn; Nwanze, K., 2011. The State of Food Insecurity in the World. Food and Agriculture Organisation: Rome.
(11) ‘The Sun Shines Bright’, The Economist, 3 December 2011, http://www.economist.com.
(12) ‘Population Division, Population Estimates, and Projections’, United Nations. Department of Economic and Social Affairs, http://esa.un.org .
(13) Ibid.
(14) Thornton, P., 2010. Livestock production: Recent trends, future prospects. Philosophical Transactions of the Royal Society Biological Sciences, 365(1554), pp. 2853-2867, http://rstb.royalsocietypublishing.org.
(15) Alford, H., ‘How I learned to love goat meat’, New York Times, 31 March 2009, http://www.nytimes.com; Scarborough, M. and Weinstein, P., ‘Goat meat, the final frontier’, Washington Post, 5 April 2011, http://www.washingtonpost.com.
(16) Stigler, M., 2012. Statistical Yearbook, 2012. United Nations Food and Agriculture Organisation: Geneva.
(17) ‘The Importance of Livestock’, World Bank, http://www.worldbank.org.
(18) Gutierrez, N., ‘Economic constraints on sheep and goat production in developing countries’, Food and Agriculture Organisation, http://www.fao.org.
(19) Bull, B., ‘Using Goats for Vegetation Management’, Samuel Roberts Noble Foundation, 2000, http://www.noble.org; Gipson, T., ‘Demand for Goat Meat: Implications for the Future of the Industry’, Langston University, 1999, http://www.luresext.edu.
(20) Rosenberg, J., ‘A plea from India’, GGAP, 27 October 2009, http://technology.cgap.org.
(21) ‘Goat Breeds’, Oklahoma State University Department of Animal Science, http://www.ansi.okstate.edu.
(22) ‘Emerging markets forecasted to drive diary industry boom’, Food Stuff South Africa, 9 May 2012, http://www.foodstuffsa.co.za; Gerosa, S. and Skoet, J., Milk Availability: Trends in production and demand and medium-term outlook, Food and Agriculture Organisation of the United Nations ESA Working Paper 12-01, February 2012, http://www.fao.org; McGraw, R., ‘African dairies set to milk growing global processing opportunity’, Tetra Pak, http://www.tetrapak.com/za .
(23) Leach, I. and Wilson, T., ‘Higher value addition through hides and skins’, Food and Agriculture Organisation of the United Nations, Diversification booklet no. 8 2009, ftp://ftp.fao.org.
(24) ‘Can Africa Feed the World?’, African Trader, http://www.africantrader.com;, ‘Agricultural Land’, Trading Economics, http://www.tradingeconomics.com; Ahlenius, H., ‘Current and potential arable land use in Africa’, United Nations Environment Programme, 2006, http://www.grida.no.
(25) Berry Boers ATS website, http://www.aerots.com; Faith Mountain Farm website, http://faithmountainfarm.com; ‘Global hides and skins markets: A review and short-term outlook, (As of November 2009)’, Food and Agriculture Organisation , http://www.fao.org; Goat connection website, http://goatconnection.com.
(26) ‘A Profile of the South African Goat Value Chain’, Department of Agriculture, Forestry and Fisheries, 2011, http://www.nda.agric.za; Tardiff, M., ‘Goat Meat Nutrition Facts’, Live Strong, 26 May 2011, http://www.livestrong.com.
(27) ‘How much is enough?’, The Economist, 24 February 2011, http://www.economist.com; ‘King of the Carnivores’, The Economist, 30 April 2012, http://www.economist.com;. Statistical Yearbook, 2012. Food and Agriculture Organisation: Rome, http://www.fao.org.
(28) ‘How much is enough?’, The Economist, 24 February 2011, http://www.economist.com; ‘Food & farming’, The Economist, 22 November 201, http://www.economist.com.
(29) ‘World Economic Outlook Database’, International Monetary Fund, April 2012, http://www.imf.org.
(30) Speedy, A., 2003. Global production and consumption of animal source foods. Journal of Nutrition, 133(11), pp. 40485-40535, http://jn.nutrition.org.
(31) Bruinsma, J., 2003. World Agriculture: Towards 2015/2030, An FAO Perspective. Earthscan Publications: London; Thornton, P., 2010. Livestock production: Recent trends, future prospects. Philosophical Transactions of the Royal Society Biological Sciences, 365(1554), pp. 2853-2867, http://rstb.royalsocietypublishing.org.
(32) Robinson, T., et al., ‘Global Livestock Production Systems’, Food and Agriculture Organisation, 2011, http://www.fao.org.
(33) Gutierrez, N., ‘Economic constraints on sheep and goat production in developing countries’, Food and Agriculture Organisation, http://www.fao.org.
(34) A Profile of the South African Goat Value Chain’, Department of Agriculture, Forestry and Fisheries, 2011, http://www.nda.agric.za.
(35) United Nations Food and Agriculture Organisation website, http://faostat3.fao.org.
(36) Ward, C., 2011. L’Etat des Ressources en Terres et en Eau pour l’Alimentation et l’Agriculture dans le Monde: Gérer les Systemes en Danger. Organisation des Nations Unies Pour l’Alimentation et l’Agriculture: Rome.
(37) Peter, C., ‘Explorations of Sustainability in an Unfair World’, University of Stellenbosch.
(38) Beck, U., 2003. The Theory of Reflexive Modernisation. Theory, Culture, Society, 20(3), pp. 1-34; Bram, B. and Grin, J., 2008. Doing’ Reflexive Modernization in Pig Husbandry. Science, Technology and Human Values, 33(4), pp. 480-507.