Financial analysis of beef cattle fattening systems in Nakaseke District, Central Uganda

Abstract

No studies had been done regarding the financial analysis of beef cattle fattening systems in Uganda. This study therefore assessed the financial performance of beef cattle fattening systems in Nakaseke District, Central Uganda. A total of 144 cattle fatteners were randomly interviewed. Socio-economic data as well as data on beef cattle fattening systems were cited using structured questionnaire; Key informant interviews; and secondary data. Descriptive statistics was used to summarize and present results on socio-economic characteristics, and challenges hindering extensive fatteners from adopting the more efficient cattle fattening systems. The Gross Margin (GM) and Return On Investment (ROI) models were used to compare and analyze the economic viability of different beef cattle fattening systems in the study area. The major output from cattle fattening enterprises was fattened cattle, and its contribution to the total output was highest 23.7±1.8% (2018) and 24.5±3.7% (2019) for feedlot large scale fatteners; and only 0.6±0.2% (2018) and 0.5±0.1% (2019) for extensive large scale fatteners. On the other hand, the main inputs were; (a) feeds among feedlot large scale fatteners contributing 22.5±1.9% (2018) and 22.6±2.2% (2019) to the total variable costs, and 21.3±1.8% (2018) and 21.3±2.0% (2019) to the overall total cost of production; and (b) labor among extensive small scale fatteners constituting 11.6±0.5% (2018) and 11.5±0.4% (2019) to the total variable costs, and 9.5±0.4% (2018) and 9.3±0.4% (2019) to the overall total cost of production. Feedlot large scale cattle fatteners had the highest GM, and ROI of about 72.0% (2018) and 68.0% (2019); and 70.0% (2018) and 66.0% (2019) respectively. The outstanding challenges (100.0%, N=144) which hindered extensive beef cattle fatteners from adopting more efficient finishing systems were; (i) lack of techno-economic knowledge and information on the viability of more efficient cattle fattening systems; (ii) shortage of capital to invest in such capital intensive systems; (iii) high cost of feeds; (iv) inadequate extension services; and (v) unorganized market systems coupled with unstable cattle prices and inadequate market information. This study found that in 2018 and 2019 the intensive and semi-intensive cattle fattening systems were the most economically viable systems. This study recommends for the adoption of those two cattle fattening systems in cattle corridor districts like Nakaseke to reduce on uncontrolled cattle movements in searching for water and pastures which facilitates transmission of trans boundary animal diseases. However, the GM and ROI for extensive systems were also higher than the prevailing nominal bank lending rates (16-20%). This implies that cattle fattening enterprises are profitable, and also credit worthy. Therefore, the Government need to continue encouraging and supporting more cattle producers to fatten their cattle prior to selling them, but also to provide them with seasonal softer loans that require little or no security. Frontline extension workers should fulfill their obligation of constantly sensitizing cattle fatteners to adequately understand the financial Performance of cattle fattening practice such that they are able to select the most efficient system for use. To improve on the meat output per cattle in shortest possible time, extensive cattle fatteners should focus on accessing and utilizing the readily available supplementary feeds such as crop residues and agro industrial byproducts which have remained untapped in the area.