Newsletter No. 45 –  Items 2 – 4

This newsletter discussed an article on a page of the FAO (Food and Agriculture Organisation) web site in 2007. As the following introductory statement under the heading of Farm Management is so relevant in livestock production, discussing the issues continues to be important to those actively working to develop their business based on ostrich production.

Quote: Powerful driving forces are changing farming systems across the world. Globalisation and market development are opening up new opportunities for farmers and local markets are challenged and sometimes overwhelmed by lower priced imports; the result is rapid commercialisation of smallholder agriculture in many parts of the developing world.

Urbanisation is increasing the number of people for whom food must be produced by farmers, increasingly delivered through supermarkets.  As a consequence, farmers are intensifying existing patterns of production, diversifying into new lines, seeking off-farm work, expanding business size and even existing agriculture in an attempt to improve their livelihoods and escape poverty. End quote

Livestock producers have tended to go in two different directions over the past few decades, driven by the “green revolution” and the effect of “globalisation” that has brought about changes in market delivery.

The progressive farmers adopted the new technologies and management systems, consolidated and produce in volume with increasingly efficient methods of production.  These efficiencies are a combination of:

–    Production technology inputs (e.g. fertiliser, weed killers, vitamins, minerals, pharmaceuticals)
–    Management systems to support that technology (e.g. machinery, computers, records, systems, biosecurity)
–    Genetic improvement in livestock, fruit, vegetable and grain production (e.g. winter hardy seeds, high yielding grains, fast growing pigs, high yielding dairy cows).

The result of introducing these efficiencies in production is increased yields, reduced unit costs of production and greater consistency of products required by the buyers of these supermarket giants.

The illustration from the USDA Farm Policy 2001 document, illustrates how the farm supply chain has changed over a very short period.  Note how during the last 10 year period of the illustration selling moved from 5% selling direct to processors on contract to nearly 70% in the US.  It is likely that this figure has increased further by 2013.  We see similar trends in other regions and across most livestock production.  Contracting provides greater consistency, economies of scale and enables the ever increasing demands for full traceability in the supply chain to be maintained.

Hogs Sold by Marketing Method

Whilst this graphic was produced a decade ago, it illustrates the rapidly changing market place and the influence on the supply chain in all species of livestock production.   Small holders linked into the supply chain for larger enterprises enables the benefits of economies of scale whilst retaining the independence of the small holder….provided that larger enterprise operates in an ethical manner to ensure payment terms that sustains the whole supply chain.