15. The objective of the government pricing policy in Zimbabwe is to attain self-sufficiency in beef products and to generate a stable flow of foreign exchange earnings from the beef sector (see Rodriguez, 1985).
16. The agency responsible for implementing the beef price policies is the Cold Storage Commission (CSC). Formally established in 1937, its original mandate was heavily biased towards the synchronization of domestic beef output trends with foreign demand to stabilize export earnings.
17. Cattle are sold to the CSC by the commercial and communal sectors. Commercial producers use modem farm technologies while communal farmers employ less sophisticated techniques and a substantial portion of family labor. Communal farmers also consume a large proportion of their produce on the farm. Both the commercial and communal sectors showed an annual growth rate of 5% for the period 1965-77 in their respective herd inventories but an annual decline of 4% to 7% respectively applicable to the communal and commercial farms occurred during the period 1977-81 due to drought and the deteriorating security situation. In 1984, the beef herd inventory was estimated to be 5,052,650 heads (Central Statistical Office (CSO)) of which 42% was owned by commercial farmers and the rest by communal farmers. Excluding slaughter for subsistence consumption, the CSC accounts on average for about 86% of the national slaughter of mature cattle.
18. The CSC implements two types of purchasing policies. For animals directly sold at CSC pens, a carcass grading scheme is used to determine the producer pay-out price. The Beef Classification System relies on three carcass characteristics:
(i) Age (determined on the basis of the dental structure for young cattle and spinal ossification of more mature cattle);(ii) Flesh cover (determined in terms of the relationship between carcass length and mass);
(iii) Fat cover (determined subjectively).
19. The implicit rationale behind the carcass grade pricing system is to discourage the slaughter of breeding animals crucial in preserving the cattle herd reproduction cycle. In the case of communal areas wherein auctions take place at sites designated by the CSC, purchases are made on a liveweight basis.
20. For the commercial beef sector, producer prices are set by the government on the basis of total production costs (fixed and variable) incurred within alternative beef production systems. The cost data are provided partly by the Commercial Farmers' Union (CFU) and partly by the Ministry of Agriculture. Both sources derive their cost of production estimates from case studies of farming units located at the different ecological zones of Zimbabwe.
21. The CSC usually incurs substantial trade deficits (financed by Government subsidies) because it sells beef at wholesale prices below the domestic producer price. Jansen (1982) indicated that the deficits ranged from ZW$ 6.338 million to ZW$ 25.730 million for the period 1976/77 to 1981/82.
22. The ratio of domestic producer and retail beef prices to the equivalent border price (estimated at the official exchange rate) was examined to determine the beef subsidy (tax) bias. If the domestic producer to the border price ratio is greater than one, this means that a subsidy is implicitly being given to domestic beef producers, while a retail to border price ratio greater than one would mean that consumers are being implicitly taxed. Simple calculations based on actual data indicated that beef consumers are being taxed while producers are being subsidized. For example, during the period 1976-81, the retail to border price ratio was 1.16 while the domestic producer to border price ratio ranged from 1.22 to 1.64 for the period 1975-82 (Rodriguez, 1985). The incentive bias towards beef producers created by the CSC operations seems to be a familiar pattern in the context of South Africa. Anderson and Tyers (1986) noted a rising nominal protection trend granted to South African beef farmers and a declining subsidy trend to domestic consumers for the period 1961-83.
