Newsletter No. 74

The items in this newsletter discussed a new develpment that provided a great practical example of a value chain and the importance of working in a collaborative manner.  For ease of reading in the blog environment, we will split the segments over several blogs.

Introduction
We receive many emails from people asking for assistance when wishing to join the industry – usually as a farmer.  The first question we always ask is “what is the scale you wish to enter?” and “is there an infrastructure in place to slip into?”.  If the answer is no sufficient resources are required to build the infrastructure, volume required for viability and market development.

Unfortunately as our industry has developed over the last couple of decades, the approach has generally been to sell a trio or a few chicks to new farmers before the building of sufficient infrastructure to support new producers.   Earlier newsletters have discussed the principals and importance of value chains.  A new initiative came into being in March (2008) that incorporates those principles and illustrates one route to accomplish them.

Developments in Southern Africa
Many of you will be familiar with the ostrich operation run by Peter Cunningham in Bulawayo, Zimbabwe.  In recent years a project based on this operation has been developed to help small farmers into viable ostrich production in South Africa.  They have recently published their business plan and presentation on the internet, the company started trading under the current infrastructure in March.  The home page is http://www.khula-sizwe.com (web site no longer active).  The plan addresses many of the issues required to provide sufficient infrastructure to support small producers.  They list the following key points as barriers to entry for small farmers:

a)   Lack of infrastructure & collateral for production loans

b)   Lack of Industry and market information

c)   Lack of technical knowledge and experience

d)   High Industry entry costs

e)   Inability to supply high volumes demanded by the industry

f)    Inability to comply to quality standards and registration requirements for market access

The above list can be consolidated into 3 major areas that we will discuss in this newsletter.

Markets
Before investing in ostrich farming or an ostrich project, it is extremely important to know the markets to be serviced as different markets have different requirements relating to such things as:

a) State Veterinary Requirements
b) Buyer Veterinary Requirements
c) Type of Meat Cuts, Skin, Fat etc.
d) Traceability
e) Residue Testing

This business plan illustrates just how important knowing your markets is before building the infrastructure.  For example their target market is the EU and to supply that market the supplying farms require registration by the EU, so it will be essential to know the regulations prior to construction. You will note the requirement of quarantine pens.  These are required in Southern Africa to satisfy the EU in relation to Congo Fever, a tick born infection.

Even when supplying domestic markets only, it will still be essential to know the requirements of the local veterinary authorities and local buyers.  Do your buyers require you to be part of an assurance scheme, if they do, what are the requirements?  Assurance schemes are discussed here and here.