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Senior Business Reporter
THE Competition Tariff Commission (CTC) has instructed three distributors of day-old chicks to stop imposing conditions for small-scale farmers who intend to procure chicks from them.

According to the regulator, there have been complaints that Nova Feed, Feedmix and Gain Cash and Carry were selling chicks only if one buys all the feed required to raise the birds.
CTC said in its investigation, it was noted that this was a widespread marketing practice that inhibited competition.

The practice was exploitative in nature as it compelled farmers to access chicks on condition they also buy stock feed, it added.

“While conducting market research, the Commission noted that the Nova Feed, Feedmix and Gain Cash and Carry were making the sale of broiler day-old chicks (DOC) conditional upon buying a particular number of stock feed bags,” it said.

“Complaints were also received from small-scale farmers alleging that these outlets were selling chicks only if one buys all the feed required to raise the birds,” said the commission.

CTC described the practice as tied or conditional selling as provided in Section 2 of the Competition Act.

“Such a business practice or arrangement enhances the price DOCs as the farmer has limited choice on stock feed suppliers to buy from.

“This business practice is also detrimental to other stock feed distributors as it denies them access to customers in that they do not have DOC or are not able to supply bundled products of DOC and stock feed,” said CTC.

Stock feed- Image taken from iStock

In its findings, the commission said some of the firms denied that they were conditionally selling citing that they were discouraging customers to buy DOC and stock feeds under one roof.

It said the practice was rife during times of crisis, which include during disease outbreaks such as Avian Influenza, and acute or pronounced shortages in the market when demand outweighs supply of DOC especially during the festive season.

“The Commission further unearthed that this was an industry wide practice engaged in by most distributors in times of DOC shortages,” it said.

Avian Influenza

“Submissions from smallholder farmers, chick breeders, industry representative bodies and the Veterinary Department confirmed the existence of the practice.”

Although some of the firms denied the practice proclaiming that these were actions instituted by sales people without the knowledge of the executives, the Commission negotiated with the firms involved to ensure discontinuance of the practice that existed or that could come into existence.

Farmer

“Firms were thus ordered to forthwith ‘cease and desist’ from tied and conditional selling of DOCs and broiler stock feed.

“They were also to take reasonable actions in ensuring that persons employed should not engage in tied and conditional selling as well as submitting compliance programmes to the Commission within six months of issuance of the Orders,” said the Commission.