1.
World Ostrich Marketing, Research and Development (WOMRAD)
2. Member Question
3.
No Production - No Industry
4. Benchmarking
5.
How do we get Meat Prices up and keep them up?
6. How do we establish our meat as a Niche Healthy Product?
7. Cranking up Production - What is the potential rate of growth?
8. Development of WOMRAD
9. Avian Influenza update and advise
10. Contributions
1. World Ostrich Marketing, Research and Development (WOMRAD)
We introduced the idea of WOMRAD to you a few months ago. During this newsletter I will develop some of the areas were a commercial organisation such as this could make a major contribution to the development of our industry into a proper world wide agri-processing business that can compete with other mainstream livestock producing businesses.
A member made the statement a few weeks ago that "we need to crank up production". He went onto ask the following questions:
"How do we get meat
prices up and keep them up?"
"How do we establish our meat as a "niche healthy"
product?"
This newsletter will focus on discussing these questions as I am sure we all agree that we do need to crank up production to become a commercially viable industry and with those questions answered, we will have an industry.
3. No Production - No Industry
Newsletter No. 25 asked the question:
"Are you setting your Goals high enough?"
Lack of production is currently enemy number one blocking industry development. Sustainable production volume is essential to be able to develop markets.
It was the meat that interested me when I joined the industry in 1994. It clearly was an excellent product offering good profit potential supplying Niche markets. Lack of supply and hearing concerns over rearing difficulties led me to search for solutions to the production difficulties. When presenting these solutions to producers, I was being told "we are doing OK" - that is because they were setting their standards by those they had been told were usual for the industry. They were not prepared to "set their goals high enough" to become commercially viable.
This apathy led me to develop the Production targets comparison table for the current industry and the New Ostrich Industry in 1999. These targets are laid out in Table 1 in the paper "Commercial Ostrich Production - Economics" available at the Web site http://www.world-ostrich.org/chile2003/chile_economics_ostrich_production.html
The South African industry has Skins as the Primary (driving) product, aimed at exclusive markets. Exclusive markets are also subject to the different fashion trends. The methods of production that resulted in low yielding meat birds placed a dependency on retaining the high value for skins. How many readers have heard various speakers from South Africa over the years talk about over production? I can remember several; the first for me was at the World Congress in Hengelo in 1996. Moving to volume production has been seen by many as destroying that market as it was and has held back industry development for too long.
With meat as the Primary product, rather than skins, it would provide the opportunity for sustainable growth as the meat market is more stable than the fashion markets. In the early years the meat will be a niche product due to the low volume. However, to supply niche markets the product must be to the highest quality.
WOMRAD will set High Goals
A benchmark is: a standard by which something can be measured or judged.
Benchmarking is the process of determining who is the very best, who sets the standard, and what that standard is.
Benchmarking is a management tool used by many businesses to measure their performance against the standards or other businesses. In the case of agriculture, performance is measured against other producers.
This is one reason why maintaining good records is essential in agriculture. Monitoring methods and costs, benchmarking helps farmers have a greater understanding of their production systems and how one or two changes can make a significant difference to their bottom line.
To help UK red meat producers become more competitive with the changes in the subsidies, the Red Meat Industry Forum has set up a benchmarking scheme. A quote for the discussion on the benefits to producers:
Quote: One issue is very clear. The meat industry will no longer be able to afford to produce over 50% of its product outside market conformation and fat class, or 20% outside the target weight range. By using this free benchmarking system, we can help producers understand just how crucial this is to profitability. End quote
There is a very good reason that increased supply of the food on the market is coming from a decreasing number of suppliers, who are growing progressively larger. That reason is not confined to the fact that the major buyers require large scale producers. The reason is that they are the suppliers (producers/processors) who recognise the current market needs. They also operate to a high degree of precision with high standards of management.
That fact became very clear to me the very first time I entered an ostrich abattoir. An excellent abattoir working to get the best product they could to the market - but they had no control over the birds offered for slaughter. They had to do the best with what they were presented with. Quality production starts on the farm.
WOMRAD will incorporate benchmarking
This question needs to be answered in two sections:
a: How do we get
Meat prices up?
There are a number of ways:
Grading
Meat Grades provide the consumer with clear guide lines as to the quality of
the meat they are being sold. It is necessary to educate the market on
the grades. It is also necessary to educate producers on the importance
of meat grades as a mechanism to improve their revenue.
Educating producers on the need to improve their product is most difficult since most think the product they produce is already top quality. One can talk quality, consistency and grade for ever, but if producers do not understand were the product they produce fits into the overall quality index then they will never take steps to improve.
It is important we all understand that it is the consumer who drives the market and sets the price.
If we, as producers, do not take steps necessary to produce true high quality and truly consistent meat, the consumer led marketplace will never pay more for ostrich meat than they are paying now. If every other time the consumer buys ostrich meat it is discoloured and with 'off tastes', we will never get the price of ostrich meat to the profitable level necessary to secure production.
The first major hurdle is
to educate the producer to understand that simply because his meat is ostrich
does not automatically mean he has a quality product. Just because it is
ostrich does not make it worth any more than any other low quality meat product
if his present production methods are such that produce low quality and
inconsistent products.
This education of producers and the market is a task the WOA has set
itself. To do this adequately requires the right resources that clearly
are not available on a $100 membership fee. Revenue generated
through WOMRAD may be the way to fund this part of the marketing program.
Consistency - Supply
A sustainable and consistent supply is essential.
To date our industry has a poor record for consistency of supply. Figure 1 shows comparative production in South Africa by month over a 5 year period. It shows very significant variations in the same month from year to year. This situation of inconsistency in supply I discussed in the Bulletin: "Understanding the Difficulties of Economic Ostrich Processing". http://www.blue-mountain.net/bulletin/bull82.htm This article contains more graphical illustrations to prove the problem of current inconsistencies in supply.
Figure 1: South African Comparative Slaughter by month
Consistency – Product
It is well known that ostrich meat often is seen either with some pale meat, is very dark, develops black spots on oxidation and other inconsistencies. One major European marketer was explaining to a conference audience how he has educational sessions for his customers to explain that this is usual for Ostrich meat. These inconsistencies are all controllable and need to be controlled in order to achieve a high value. It has been proven in other meat products that if TRUE QUALITY is built in through changes in production methods and TRUE CONSISTENCY is built in through programmed changes in animal production, the consumer will unquestionably pay a premium for that quality and consistency.
WOMRAD production methods will include the most advanced feed technology to address the consumer perceptions of meat quality as discussed in Item 4 of Newsletter No. 22. http://www.world-ostrich.org/member/news22.htm
Quality
Servicing Niche Markets requires a product of the highest standards. The
quality control systems in place are an important part of any marketing
program.
All the factors, throughout the production chain, that influence meat quality are discussed in the document "Factors Affecting Meat Quality" and can be viewed at: "http://www.world-ostrich.org/meatqual.htm"
b: How do we keep meat
prices up?
Answer - by producing a quality product combined with strong marketing.
Convincing producers that they can produce a better product is the first step. The next step is to ensure we have the required standards in place to guarantee the quality and consistency proven to appeal to the consumer and they in turn signal a readiness to buy it. That is when the price will finally reward the producer with a profitable production operation.
To be remembered in this discussion is the "the long run marginal cost vs the long run marginal revenue principal". As volume increases, efficiency improves, prices come down and profits increase. It is therefore inevitable that over time prices will come down, but increased efficiency will bring about increased profits.
Excellent marketing strategy can help keep the prices up, but that is not essential to survival once our industry has finally made the transition from breeder market to commercial production.
Of course it is in every member of this industry's interest to work hard to achieve the right marketing program to keep the prices up for as long as possible. Selling against each other with small volume results in selling on price and has been a major problem. We need to be continually developing markets as volume increases. Working together brings collective bargaining power for producers.
WOMRAD can achieve this
Above discusses a few basics as to what is required to produce the correct product as that is of primary importance. Packaging and presentation are of course extremely important also. Meat colour falls under presentation. Many of us will have seen ostrich meat swimming in liquids, or packed in excellent packaging but almost black in colour and most unattractive.
The best product still requires a strong marketing campaign. This again is where WOMRAD can help. We have discussed previously the fact that our competition should not be each other, but rather other meat specie. Working through WOMRAD in collaboration will provide greater resources to support a strong marketing campaign.
When discussing Marketing, it must always be remembered that "on farm" production methods are a critical part of any marketing campaign. Quality Assurance marks, Branding, use of Best Practices and so on are all important marketing tools.
WOMRAD would introduce its own branding and quality assurance program
Figure 1 demonstrates the potential growth in production when the correct technology and management systems are incorporated. The breeder numbers remain constant, but of course the right management systems include heavy culling and genetic selection. One can see the potential for growth in meat production, not only from an increased number of slaughter birds/hen but also through a progressive increase in average meat yields from 25kgs to 45kgs in the 10 year period.
Figure 2: Potential Growth Rate of Production
Growth of the industry will be dependent on market conditions and the correct coordination of growth…but what is the production potential?
Taking a scenario:
In 10 years there could be in excess of 20 million slaughter birds and 1 million tonnes of meat production.
Production starts with the Breeders
The principals of WOMRAD have brought only positive responses. WOMRAD currently is in the conceptual stage and needs to become a reality. It is a concept that can help all "crank up" production to take up the opportunities available to all serious about producing ostrich commercially.
To move forward requires a strong team to lead it. This team can come from existing players, it can come from employed professionals or a combination of both. It requires people dedicated and able to work full time for the company and not only available on a part time basis.
The principles of WOMRAD are that it puts in place an infrastructure to address most of the difficulties currently blocking development of an Ostrich industry by steering it through this transition phase through cooperation on a sound commercial basis.
To be successful WOMRAD will need to coordinate:
§ those with finance
§ those with production
§ those with experience and expertise
§ those looking for increased and reliable production
§ the markets
To do this successfully requires strong leadership and a management team that are all working on the same page and "working for the good of all and not the good of self alone". The first step is to develop a well structured business plan. Any members who would like to take part in a brainstorming/business planning development process are invited to contact the secretary at [email protected].
WOMRAD can awaken this sleeping Giant
9. Avian Influenza Update and advise
The ban on export of meat from South African has been moved to June 30th,
and the country has still not been declared free. The WOA board of
directors advice remains as before. We advise regular testing of your
breeder herd to establish records of an Avian Influenza Free status.
We also advise any producers who have imported chicks or breeders since 2002 to
have their birds tested, especially if you imported any stock from South Africa.
10. Contributions
As always, I ask for contributions from Country Liaisons and other members. A sharing of your experiences, what is happening in your area - anything you believe that would be of interest to other members. Any contributions for inclusion in future news letters please send to Fiona at [email protected].
Any comments or suggestions, please post either to the members list [email protected] or Craig at [email protected]
Ask not only what the WOA can do for you but also what you can do for the WOA.
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