Jan 11
21
What do we understand by “volume” in today’s livestock markets? When discussing volume with some farming friends starting out in ostrich farming, we calculated the annual tonnage of pig meat they produced on their 200 hectare farm. The farm included breeding sows and rearing all production to slaughter. The farm had their own feed mill, with the slaughter pigs shipped to the owner company’s slaughter plant. They bought in all their feed ingredients.
Total annual meat tonnage from their pigs shipped from that 200 hectare farm related to the total annual volume of ostrich meat from all South African ostrich production – at the time slaughter ostrich in South Africa was around approximately 5,200 tonnes of all meat.
Many starting ostrich farming begin with just a few breeders or young birds. We regularly hear from individuals and companies wanting to start small while they learn. Working in low volume presents significant challenges to both controlling production costs and optimizing revenue, as it is not possible to achieve economies of scale. When operating on too small a scale establishing reliable markets becomes a major challenge for a number of reasons.
Feed is the highest input cost of all livestock production and has the greatest control over production, product quality and profitability. Using feed costs to illustrate further the influence of economies of scale on input costs. In such a discussion we can only talk in general principles as costs do vary on location and are dependent on volume.
Main ingredient prices are similar throughout the world; reasons for price variances are mainly volume related, but local transport costs, subsidies and duties can also have an influence. The following are some examples of variables in purchasing scale that have a significant influence on input costs to any livestock production unit/farm.
Sourcing Ingredients
o Bag (25 or 50 kilo)
o Tonne
o Truck Load
o Ship Load
o Frequency(Daily/Weekly/Monthly/Seasonal/Annual)
o Local subsidies/duties
o Mixing costs/farm feed milling efficiency
o Home Produced
Scale of operation and location has a significant influence on production costs of crops
Purchasing supplements/finished feeds:
o Bags
o Bulk
o Pelleted
o Ground
o Mixing Costs
Transport Costs
o Distance from supplier
o Distance from port, if importing
o Distance from mill if not milling own feed
o Local fuel costs
Benefits of working in Collaboration [Copyright: Khula Sizwe South Africa]
Page 9 of the “How to Start A Successful Ostrich Farm Ebook” discusses how a group of small farmers can benefit working in collaboration to achieve greater economies of scale. Our illustration shows how farmers working together build their value chain. he same applies for any ostrich farming venture.
