The novel Coronavirus, a respiratory viral infection, continues to spread across the world, bringing havoc to economies and markets across the globe. Markets in developing countries are particularly susceptible to taking huge hits from this global pandemic, which is slowly making its way into the continent.
The world’s livestock sector – a significant part of the global economy, contributing to economic growth, poverty reduction and nutrition – has not been spared from this growing viral threat.
Kenya’s livestock industry supports about 10 million people, mainly pastoralists, employing about half of the agricultural labour force while contributing between 10-13 per cent of the national GDP. For these pastoralists, livestock provides income and employment, acts as a store of wealth, resilience to shocks, and food security, as well as holding cultural significance.
The recent infestation by locusts across the Horn of Africa has left near major devastation on the forage available for livestock and wildlife.
Even though the disease has not affected the human capital in livestock production areas directly, their livelihoods have been affected by these two phenomena in several ways.
Firstly, the containment efforts involving quarantines and widespread restrictions on mobility, massively disrupt pastoralist livelihoods necessitating humanitarian intervention.
Secondly, the government’s interest in flattening the epidemic curve has led to the closure of live animal markets due to the risky environment it provides.
Thirdly, the introduction of the 7 PM to 5 AM curfew will affect the movement of livestock from aggregation points to terminal markets. This may lead to increased food prices as traders seek to absorb these interruptions amidst the rising demand of the same commodities in urban areas.
Fourthly, the closure of export destination markets in the Middle East, where Kenya exports about 8,000 sheep and goats daily, means reduced income for the pastoralists. Saudi Arabia, the second-largest market for Kenya’s meat, closed its doors way too early, followed by Dubai, Oman, Qatar and Kuwait.
Fifthly, the closure of international flights which are the primary support structures to the supply chain of exported meat has ground these businesses to a halt. Exclusive cargo flights are normally expensive and cannot support food commodities such as meat from an inefficient system such as Kenya.
Considering these impacts, a liquidity challenge is looming in the north.
Many livestock keepers depend on the sale of small stock to cater to their immediate family needs. Kenya sells approximately 500,000 heads of small stock per month valued at KES 2.527 billion.
The withdrawal of these ‘household ATM’s’ through the closure of live animal markets and curfew restrictions will, and has already, exposed liquidity issues at the household level in pastoralist areas.
If trade and associated movement restrictions continue for a longer period, the impact would be far-reaching to these already exposed livelihoods, and more specifically to the livestock sector.
The rapid succession of liquidity and solvency challenges must be addressed in the near to long term.
In the short term, this could be in the form of providing organised markets and aggregation points for producers. Most livestock-producing counties have public livestock holding grounds which lie idle. Could these be leased or availed to buyers and aggregators who can turn them into buying centres for livestock from livestock keepers?
Livestock industry associations, county governments and other key stakeholders can explore innovative ways of using these holding grounds while maintaining the needed social distancing and hygiene requirements.
The governments can keep the foreign markets open by negotiating with cargo planes for reduced rates on behalf of exporters.
In the long term, those businesses who will survive post-pandemic will have to increase their efficiencies and cut down wastages from production to retail through the uptake of technologies that enhance efficiencies.
The meat industry will need to modernise and place value-addition as a solution to offering affordable animal protein solutions to low-income earners.
The livestock sector was least prepared for e-commerce, and it need to quickly rethink its strategies and embrace technology or innovate towards e-commerce which is now viewed a solution to social distancing. Online commerce allows sellers of animals to interact virtually with buyers and transporters. The county governments need to facilitate innovation towards e-commerce in the long run.
Efforts to rethink marketing or consumer engagement and how technology can be employed should be the focus of the future.
Article by: Patrick Obath – Board Chair, Kenya Markets Trust