Archive for December 2013

Ostrich Financial Cycle

The World Ostrich Association was formed in September, 2002.  The 100th edition of the newsletter was first published in July 2011.  It reported, with regret, that the industry continued to witness slow development in production when demand for our products remains strong.   It reported how over the years the newsletters have discussed many of the reasons for this.

The saying "No Production No Industry" is proving to be so true - a statement made by a speaker more than a decade ago by an MD of a South African tannery who was working hard to build a market....and frustrated by the unreliability of production.  The production on farm has to be in place, efficiently producing sufficient number of birds to provide a regular, consistent supply to the markets.

The illustration below is a simplistic illustration that clearly shows the interdependency of all activities in the production chain and the importance of ensuring end markets.  The relevance of this is that all too often ostrich farming was introduced to a new country, too much focus was placed on selling offspring to new farmers - rather than developing the full infrastructure to ensure slaughter and marketing of the products of ostrich were in place.  This resulted in no continuity of sales revenue entering the industry generating profits available for each sector to re-invest at every step of the way to support further production.

Ostrich Financial Cycle

Ostrich Finacial Cycle

Where sales have developed, the standards of farming were too poor to maintain consistency of supply of slaughter birds and therefore the supply of product.  This is especially evident in South Africa where volume was not the issue further proving that whilst production standards remain poor on farm, it is impossible to produce the commercially viable birds and a sustainable supply of product to the markets.

Understanding the causes for the poor production remains the first step to putting in place the solutions to satisfy the market's interest in our products.

Farmer Slaughter Bird Payment Systems

When a farmer is selling to a processor it is essential that the payment structure rewards quality birds and penalises poor quality birds with minimal meat yield as the cost of processing these poor quality birds are significantly higher.  Poor quality, low yielding birds, all too often, also have poorer quality skins and feathers. The following are descriptions of the different payment methods that are or have been used over the years.

Slaughter Bird – based on live or deadweight:
The farmer is paid a price per bird, usually based on liveweight.  Over the years this has proved unsuccessful.  Currently liveweight is a poor guide to meat yield or quality of that meat.  Some birds carry an extensive amount of fat and others little or no fat. Genetics are also extremely variable at this time.  As the ostrich skin is paid on a grading system, there is no way to assess the quality of that skin while the bird is alive.  This method of farmer payment does not reward the quality bird adequately to encourage or support production of high yielding birds producing quality meat and skin.

All other payment systems currently used separate the payment of the skin and the carcass for assessing the total value of the farmer payment.   The skin may be retained by the farmer to sell directly or the slaughter facility will pay the farmer directly.   In some slaughter facilities where volume is sufficient, the feathers will be valued independently, but usually they are included in the price paid to the farmer for the carcass and meat.  While volumes are low, the market opportunities for the feathers are low in relation to the handling costs.

Carcass weight:   WOA Ostrich Benchmark Production Targets provides the definition of a carcass.

Payment by carcass weight maybe a set amount at the same weight per kilo for all birds, or it may be split into different weight classifications for a tiered payment structure.  The latter is preferable as it is much fairer to the good farmer.  It also encourages production of birds carrying higher meat yields, which are cheaper to process and return more revenue as illustrated in Figure 1.

77_processing_cost_br

Figure 2: Comparative Processing Costs relating to Meat Yield [Newsletter 77]

Boneless meat yield:  WOA Meat Yield Classifications provides the WOA standards.  This payment is based on the weight of the saleable meat removed from the carcass.  If offered payment in this way, the producer should ensure there is a very clear definition of all that is included and how it is calculated.  Payment on boneless meat yield basis will also have a weight classification system to enable a tiered payment structure to pay according to the yield class.

This tiered payment structure passes on savings made in the processing back to the farmer as he produced a better quality bird.  Figure 1 illustrated the savings in processing costs when valued on a per kilo basis.  Figure 2 illustrates comparative carcasses, illustrating different weights.

comparative carcasses

Figure 2: Comparative Carcasses

Figure 2 illustrates 2 carcasses.  The left hand carcass yielded 38% more meat, therefore 38% increased meat revenue and will have cost the same to slaughter and process.

Apart from weight the other difference in these birds is the days they took to reach this stage.  Clearly the increased yield was achieved as the bird was fed for 60 more days and that adds additional costs for the producer.  Another good reason for paying an increased price to represent the savings made on the kilo processing costs.

Carcass Grade:  The WOA Carcass Grading System provides definitions for the different grades in addition to payment structure based on yield classification, carcasses should be graded for quality. Grading will consider Bird Age, Fat Colour, Muscle Colouration, Heart Condition, Liver Condition, Presence of any Disease and any other condition that is not acceptable – such as bruising.  Carcass grade can be applied to any of the above payment systems.  This also helps differentiate the age of the birds to ensure older birds are not slipped into a batch of slaughter birds.

This discussion relates to payment systems for payments to the producer of birds by buyers of slaughter birds to encourage the production of better quality birds.   Many of the South African slaughter plants were owned by the producers.  These test birds were slaughtered in such a slaughter plant.  Whilst the managers the farmer’s employed to slaughter and market their birds could see these benefits, the challenge was the getting the farmers to understand the benefits and how they could achieve the improved production.

How do Buyers of Slaughter Birds verify the Age of Birds?
The answer to this question currently is very simple. The supplying farm must have verifiable records that record the date of hatch.

Ostrich do change their feathers at particular stages of growth. The diet the birds are fed and the management of the birds influence the stages of growth and these can be extremely variable.

In the mid 1990s some South African scientists produced data based on bone development as a means of verifying the age of birds. However bone development is also diet dependent, so is not a reliable method to determine bird age accurately without comparative studies.