Journal of Mathematical Finance, 2021, 11, 84-106 https://www.scirp.org/journal/jmf ISSN Online: 2162-2442 ISSN Print: 2162-2434 DOI: 10.4236/jmf.2021.111004 Feb. 24, 2021 84 Journal of Mathematical Finance Modeling Botswana Beef-Cattle Price Dynamics Paul Kundai Ziwakaya, Edward M. Lungu Department of Mathematics and Statistical Sciences, Botswana International University of Science and Technology, Private Bag 16 Palapye, Botswana Abstract We investigate the dynamics of the beef-cattle pricing which is affected by several factors such as beef supply, demand for foreign currency, etc. The model incorporates mean-reversion to give insights into the relationship be- tween supply to a developed region (or country) and a third world country’s demand for hard currency. We consider the beef-cattle industry which is segmented into two markets: the Farmer-Local Cattle Agency (LCA) market in which the LCA buys cattle from the farmers and the LCA-European Union (EU) market in which the LCA exports beef to the EU. Using the Botswa- na-EU as an example, we investigate the performance of the Botswana Meat Commission (BMC) which buys cattle from the farmers and exports beef to the EU based on the price acceptable to the EU and ask whether the agreed price between the BMC and the EU can ever translate into fair price between the farmer and the BMC. Our study has concluded that the operational prob- lems faced by the BMC are an indication that the BMC is passing on the bulk of what it receives from the EU to the farmers. We have made suggestions on how the BMC can reduce its operational risks. Keywords Stochastic Mean, Mean-Reversion, Geometric Mean Reversion, Beef-Cattle 1. Introduction The Botswana-European Union (EU) beef-cattle trade is an outstanding example of cooperation between a Western block and a third world country (Botswana). Although this trade showed promise, it has of late exhibited cracks as the EU has forged more trade agreements with other beef exporters such as South America, Australia, New Zealand, etc. An example of this occurred when the EU stopped all meat imports from Botswana and demanded a thorough cleanup of the abat- toirs [1]. The beef-cattle industry is of strategic importance to Botswana as a How to cite this paper: Ziwakaya, P.K. and Lungu, E.M. (2021) Modeling Botswa- na Beef-Cattle Price Dynamics. Journal of Mathematical Finance, 11, 84-106. https://doi.org/10.4236/jmf.2021.111004 Received: December 8, 2020 Accepted: February 21, 2021 Published: February 24, 2021 Copyright © 2021 by author(s) and Scientific Research Publishing Inc. This work is licensed under the Creative Commons Attribution International License (CC BY 4.0). http://creativecommons.org/licenses/by/4.0/ Open Access