ISSUE No. 2

1. Web Site Down
2. Current Membership
3. Newsletter and Mailing List Contributions
4. Chile Conference
5. Markets
6. Standards
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1. Web Site
We have Ostriches on Line to thank for providing and maintaining the web site. A week ago they suffered a hard disk failure. Whilst the site was up and running again in 24 hours, many of the functions have taken time to be re-established. This has included new member applications and the mailing lists. We apologise for the delay in the issuing of this 2nd News letter and lack of communication through the mailing list. If there are any of you who have tried to communicate, receipt of this news letter is an indication that the mailing list is once again operating correctly. Our sympathies also to Steve Warrington and his dedicated team as this failure must have been devastating with the run up to Christmas.
 
2. Current Membership
We are delighted to report the membership of the Association is now in excess of 30 with a few applications still being processed. Even more encouraging is that 19 countries are now represented. This is an indication that this Association is truly an Association representing the World Industry. A common reason given for joining is the wish to be kept informed as to activities within the industry as well as knowledge and understanding of the markets. To achieve this as accurately as possible requires full participation of members to please communicate on activities within your own countries as clearly the Board members cannot be everywhere. Please encourage others to join and participate.
 
3. Newsletter Contributions
Every one of us are busy running our own businesses, be it farming the birds, processing or marketing. Some members are involved in all stages of the production chain. Whatever your perspective we would encourage a few minutes to write a contribution to our newsletter and/or development of discussions on the Membership email list. We welcome members to take on the responsibility to become the Liaison for your country. It may be that there can be several to
share information from your particular perspective.
 
4. Chile Conference
Plans for the conference in Chile are progressing well. Our thanks to Maria Isabel de Silva who is based in Chile and Craig Culley our secretary for their hard work on putting this together. The dates are set at 27th to 29th March, 2003 in Santiago and delegates will be restricted to 200. Details of the program will be published before the end of the month.
 
5. Markets
To open discussions on the Markets I will write a personal viewpoint that I believe provides some background understanding to the current market situation? As an open livestock production industry, the Ostrich industry is in its infancy...we are all pioneers.
 
In 1995 I was handed some internal South African bank documents that provided some most revealing reports on the industry. As most members will probably know, the industry was a controlled monopoly until the end of 1993 and this monopoly was not to be given up easily. There were a number of comments that made extremely interesting and very relevant reading:
 
* It is often said that the mortality factor has been the major factor in controlling the supply of products. ( only last month it was reported to me that this view is still held by some...but not those who have to make a living from farming the birds of course!!!)
 
* KKLK made a point of telling us how they had hit back very hard at the opposition which had sprung up in the wake of deregulation and how they had killed off a major competitor.
 
* They are openly threatening to close down the opposition and to close up the industry again.
 
* They maintain that they have enough clout to eliminate other market participants by using their accumulated reserves.
 
* There are many references to the poor levels of production per breeder bird and the need to keep birds to 14months before slaughter.
 
* There are also many references to the very poor levels of production, no genetic improvement programs and research only being started in 1988.
 
At the time of deregulation Ostrich Skins were the main product and attracting prices as high as $40/sq ft. This is the market that was being so jealously guarded. There have been tremendous fears that development of the meat market would erode those prices as a result of increased numbers of birds...with several attempts made to curtail the rapid development of the meat market. 9 years later, despite many efforts to control production, the skin market is now eroded with prices of skins as low as $12/sq foot for finished leather. In South Africa this drop in price has been somewhat masked by a severe devaluation of the Rand and improved meat prices. Gross revenue per bird at the end of 2001 was averaging around 20% of the Dollar value but 130% of the Rand Value. These last couple of weeks have seen that Rand value eroded with the strengthening Rand.
 
During this period the breeder markets have been going from one country to the next, with most countries not yet having made a successful transition to processing and marketing of products. In livestock terms total world production is extremely low volume. Working with low volume not only creates additional production and marketing costs, it also limits the markets that are available. The result of this fragmentation has been traders competing on price and simply undercutting each other to maintain cash flow.
 
Another major factor that has hindered market development is poor levels of production on farm, both here in SA as well as in the developing countries. Not only has production been below estimates, the quality of birds raised has, for the most part, resulted in inferior quality meat and skins. In many instances this has been compounded by poor processing in many new countries as they go through the learning curve.
 
Last year I demonstrated to the leaders of the SA industry lost additional earnings on meat alone of some $150/bird. This was made up of a combination of increased meat yields/bird and selling at the price the competition were offering instead of undercutting. It did not take into account potential increased prices due to improved quality or reduced processing costs as a result of the increased meat yields. Our local slaughter manager confirmed that he agreed totally with my figure. Some recent statements that have been made in response that clearly demonstrate that certain attitudes are sill present amongst some:
 
* "An increase in production due to better meat yields and markets, will doom this industry, will encourage other countries to increase production".
 
* "High meat prices will eventually harm the South African Ostrich industry".
 
* "The industry should remain focused on Ostrich Leather as the prime reason for producing ostriches".
 
These statements are made by traders not producers with a need to make a living from their production livestock!!! The situation has become so serious that a major and very experienced South African leather marketer made the statement at the recent South African conference "No Raw Material - No Industry." He also made a statement that is totally contrary to the statements we hear all to often emanating from a few in South Africa - that of the fact that in livestock production terms our production is miniscule and until we get production levels up there are markets that the industry cannot hope to access.
 
The message from most all quarters is that as an industry we need to be producing CONSISTENCY IN QUALITY, CONSISTENCY IN SUPPLY AND IN VOLUME. This for skins and meat.
 
In view of the current low volume our only markets available are 'niche' markets. To supply 'niche' markets products must be of the highest quality. My research has clearly shown that for the most part the Ostrich industry is currently processing birds that demonstrate varying degrees of mal-nutrition. During one of my presentations discussing meat colour and showing photos of multicoloured meat and bright red, even coloured meat, a processor present demonstrated complete surprise. The multi-coloured meat was all he had ever seen and assumed it to be the norm.
 
I hope I have given a few clues as to why there is currently confusion within our industry and limited market development? I hope I have also provided some clues as to why all have to pay attention to the detail of all that is required to develop our markets? We all know that we have a specie capable of producing the most superb and highly marketable products and the current 'block' to progress is quality bird production in sufficient volume.
 
6. Standards

Our mission within the WOA is to promote ostrich production and the marketing of ostrich products profitably throughout the world. To survive the industry must move on from just satisfying minor niche markets (badly) to becoming a major force in the market with quality products and in sufficient volume. This can only be achieved if we all work together wherever we are by adopting common standards for production of live birds and their by-products.
 
To help this process the WOA intends to develop and publish these standards. We are now in the process of setting up our first two committees - one for live birds and the second for meat. Members of the Meat Standards committee are: Fiona Benson (Chairman), Yoland de Groot, Daryl Holle, Prof. Hesham Khalifa and Stan Stewart. The Birds committee is not yet finalised and if any of you feel that you would be able to serve on this committee please communicate with Craig Culley. As soon as these committees have produced their findings the results will be published for the full membership
to comment before final adoption by the WOA Board.
 
Any comments or contributions please send either to this list at [email protected] or privately to
[email protected]