Zimbabwe’s poultry industry has come under fresh regulatory spotlight after the Competition and Tariff Commission unearthed widespread anti-competitive practices in the trading of day-old chicks and stock feed.
The revelation comes amid concerns over rising production costs and restricted choices for farmers.AI technology implementation
By intervening in the matter, the regulator is looking to eliminate “exclusive dealing” arrangements that prevent farmers from choosing more affordable or better-quality supplies from different vendors.
This marks the umpteenth time CTC has probed suspected restrictive practices, which in 2019 saw industry players escape with just warnings. In June 2022, Nova Feed, Feedmix and Gain Cash and Carry were penalised for forcing farmers to buy stock feed as a condition for accessing day-old chicks.
Just last year, the competition commission ordered Profeeds to cease and desist from the tied and conditional selling of day-old chicks and broiler stock feed. In a detailed report, CTC said it had discovered that some distributors were engaging in tied or conditional selling.
Tied or conditional selling is an illegal practice where farmers are compelled to purchase feed from a specific supplier to get day-old chicks. “We received numerous complaints from poultry farmers alleging restrictive practices in the sector, with many producers arguing that such arrangements were eroding their profitability and independence.” CTC said.
“This arrangement undermines farmers’ freedom to choose their suppliers, reduces profitability, and threatens the sustainability of the poultry industry.”
Producers are allegedly bundling products and refusing to sell chicks unless farmers also buy feed. While some suppliers defended the practice as necessary to ensure feed quality or reduce chick mortality, CTC said the negative effects far outweighed potential benefits.
Investigations conducted under Section 28 of the Competition Act established that these practices were particularly prevalent during periods of high demand, such as festive seasons or disease outbreaks.
“The commission established that certain distributors made the sale of day-old chicks conditional upon the purchase of feed,” CTC said.
As a result, farmers often find themselves locked into costly and inflexible agreements.
CTC noted that such conduct pushes up the price of day-old chicks, while the farmer has limited choice on stock feed suppliers. The commission warned that it was detrimental to other stock feed distributors as they denied them access to customers.
Beyond individual farmers, the commission said the practice is distorting the entire poultry value chain.
Among the key concerns highlighted were reduced farmer choice, higher production costs, and barriers to entry for smaller players.
“Farmers lose the flexibility to choose feed brands that best suit their production needs and budgets, potentially lowering productivity,” CTC said.
It added that forcing farmers to buy overpriced feed increased their overall costs, ultimately pushing up the price of poultry products for consumers.
The report also flagged broader structural risks, noting that tied selling gives large firms an unfair advantage while sidelining smaller competitors.“Actual and potential competitors may be foreclosed from accessing the market when customers are already locked into conditional agreements,” the commission said.
According to CTC, this discourages new investment and innovation in the sector.CTC stressed that tied selling is explicitly prohibited under Zimbabwe’s competition framework.AI technology implementation
Section 2 of the Competition Act defines tied selling as any situation where the sale of one commodity or service is conditional on the purchase of another.-herald
