Poultry is one of the most affordable sources of protein for the growing populations in East and Southern Africa. This makes soybeans a vital part of the region’s food security since they are a key ingredient in poultry feed. However, soybean production and pricing challenges in Zambia and Malawi have put pressure on the poultry sector, threatening its stability and growth.
The cost of poultry feed accounts for about 60% to 70% of total production expenses, making soybean prices a crucial factor in determining the affordability and competitiveness of poultry products. Small-scale poultry farmers are particularly vulnerable because they rely on the open market for feed and have little control over prices. In contrast, larger producers, who often grow their own feed, have more influence over soybean pricing. Zambia and Malawi are the region’s main soybean producers, but both countries faced significant setbacks in 2024 due to adverse weather and market manipulation by processors and traders.
In Zambia, soybean production plummeted by 74% in 2024. Poor rainfall and low prices offered by major buyers in previous years discouraged farmers from planting more soybeans. Large buyers had negotiated prices below $400 per tonne in 2023, which was significantly lower than the South African benchmark. This led farmers to reduce soybean planting by half for the 2024 season. The combination of unfavorable weather and limited market power for small farmers resulted in a severe decline in production.
The greatest drought to hit Malawi in a century caused a 20% decline in soybean production in 2024. Nonetheless, Malawi’s price increase was out of proportion to the drop in output. Malawi’s soybean prices rose 48% between May and November 2024, overtaking Zambia’s and becoming the highest in the region. Malawi produced enough soybeans to export, but this price increase still happened. Because a small number of powerful dealers and processors control the market, they are able to establish high prices regardless of production levels, which is highlighted by the inflated prices.
Economists at the African Market Observatory, who monitor staple food prices and market dynamics, have identified competition issues as a major factor behind these price increases. The ability of large buyers to manipulate prices, combined with high margins, has made it difficult for small-scale poultry producers to remain competitive. Climate change has added to these challenges, with the 2023/24 El Niño weather pattern causing drought in southern Africa and excessive rainfall in eastern Africa, disrupting agricultural production across the region.
Poultry remains one of the most sustainable and affordable protein sources. As demand for poultry in sub-Saharan Africa is expected to increase fourfold by 2050, affordable feed will be critical to meeting this demand. However, rising soybean and feed prices in Malawi since late 2021 have resulted in negative profit margins for small poultry producers. High feed costs have weakened the competitiveness of Malawi’s poultry industry, forcing some producers to reduce output or exit the market altogether.
Notwithstanding these obstacles, Zambia and Malawi continue to be the region’s leading producers of soybeans, shipping both soybeans and soymeal to Tanzania and Kenya, two nearby nations. From 297,000 tonnes in 2020 to 650,000 tonnes in 2023, Zambia’s output rose gradually. However, the impact of low prices and unfavorable weather conditions is seen in the steep decline to 170,000 tonnes in 2024. Due to a lack of storage facilities, Zambian farmers, who primarily work on a local scale, are compelled to sell their crops as soon as they are harvested. Large processors are able to control terms and control the market as a result.
Malawi’s soybean prices soared to over $700 per tonne by June 2024 and nearly $900 per tonne by the end of the year, far above prices in other regional markets. This increase could not be justified by reduced production since Malawi produced enough soybeans to meet local demand. The Malawian government imposed export restrictions on soybeans but not soymeal, which further distorted the market. In contrast, Zambia’s prices remained stable due to soybean imports and reduced demand from processors who had built up stockpiles from the previous season. Power shortages in Zambia also contributed to lower soybean processing activity.
The developments in 2024 underscore the need for a coordinated regional response to address competition issues and market inefficiencies. Zambia has launched an investigation into its commercial poultry market, but a broader regional strategy is necessary. Tackling anti-competitive practices and enhancing market transparency will be crucial in building a resilient food market and supporting small-scale poultry producers in the region.
