News 92

Included in this edition:
Annual General Meeting
Review
- Markets
- Finance
- Standards
- Genetics
- Infrastructure

Annual General Meeting
The AGM was held on Thursday/Friday (depending on your time zone). The minutes of the meeting are available on line here. During Any Other Business the question of how the WOA can assist with marketing was discussed. This newsletter will focus on that and the issues discussed in our Chairman’s report as they remain fundamental to the success of our industry with particular focus on how they relate to developing our markets.

The founders of the WOA recognised that solving these issues as essential to the success of our industry. Examining these issues led me to review in detail the many items discussed over the years through our newsletters. With very little news directly relating to ostrich, given the very small size of our industry, the newsletters have attempted to identify how those issues are addressed by other industries. This approach assists members to gain a better understanding of all that is required to transition our industry from a small industry focusing on leather to become a major supplier of meat protein.

As I reviewed the newsletters I can see that most issues discussed are as relevant today as at the time they were first written. The only changes over the years are the people involved who are no longer involved in our industry and some links to articles discussed are no longer available as web sites are updated and modernised. Over the next few weeks I will endeavour to categorise items to enable readers to access different articles by category – such as infrastructure, category, genetics, markets and so on.

Review - Markets
When our industry was first opened up almost 20 years ago, there was great excitement in the market in anticipation of this wonderful new meat. Over the years our buyers have been disappointed as supplies have proven unreliable. They are unreliable in supply and quality. As an industry this is the number 1 issue to be addressed. There is no single factor that is required to address this; it requires many factors working together. The following are a reminder of some of these factors as they relate to ostrich.

Over these 20 years our buyers have changed dramatically. Newsletter 45 discussed the expansion of the leading world supermarkets to illustrate how rapidly our markets are changing. The leading livestock producing companies have adapted to these changing market conditions. They have consistently improved their genetics to meet consumer demands. The major buyers have introduced assurance schemes to ensure the efficacy and traceability of their products. A number of newsletters over the years have discussed the importance of these difference schemes in our market place, illustrating the importance of understanding how Marketing starts on the farm. Newsletter No. 78 provided a summary of different schemes and their requirements. This illustrated how important it is to know the market you are supplying BEFORE starting production, to ensure that everything is in place to meet all the requirements of your markets.

Review - Finance
Item 4 of Newsletter No. 75 discussed the MISSING ‘F’ WORD. In this case the ‘F’ Word is FINANCE. Figure 1 is as we presented this cycle in that article. Maybe we should put marketing first as illustrated in Figure 2. As mentioned above, one must know one’s markets and their requirements prior to going into production.

It is a catch 22 situation when establishing a new livestock production industry in the modern environment and building volume.

When going into production to produce widgets – all that is required is the correct materials at the right price and the manufacturing equipment to produce those widgets at a commercial price. From day one it is possible to produce the manufactured product to the standard and volume required.

When going into production with livestock there is a production cycle to produce the offspring and grow those offspring – this takes time with heavy demand for working capital. As an immature livestock industry, we have no proven breeding stock – these have to be developed, thus creating an extended time scale required to develop the genetics and build the production to commercial levels. This requires that input of investment capital for a longer period of time as it is unlikely that sales revenue will be sufficient in early years to cover the production costs until the stock are performing.

Standards
A major way the World Ostrich Association can support members is the development of standards. Standards provide guidelines for every stage of the production as well as buyers to identify a quality product from a substandard product. Many years ago a number of us remember being told that pale and uneven coloured muscles were normal. Pale and uneven coloured meat is a very clear indication of nutritional deficiencies and is controllable in the same way it is with other red meat production specie.

The WOA now has a number of documents that define standards for members and our buyers to use. They are:

Review - Genetics
Over these 20 years the meat markets in other species have changed significantly. Pig and Poultry producers have become increasingly efficient through improved methods of production, which includes significant development of genetics. Today the geneticists are so efficient that they are able to adapt their genetics very quickly to suit the changes in market demands.

With ostrich, we have the same potential to improve production – in fact, for success of our industry this is essential. Newsletters 59, 60, 75 and 89 are newsletters that have discussed the role of genetics and their importance in commercial livestock production.

Figure 5 illustrates the importance of genetics, but at the same time illustrates all the other aspects that must be in place for optimum bird performance and therefore commercial success.

Figure 3 - Factors that Influence bird Performance
[source: World Poultry Vol.24 No 7, 2009]

Review - Infrastructure
Our chairman discussed the importance of having the full infrastructure in place before producing ostrich and the need for collaboration amongst all producers.

An error we have witnessed repeatedly over the past 20 years is the importation of breeder birds with a business plan based on selling their offspring to other farmers. Various buy back schemes have been proposed, but not one of these schemes has proven successful. The reasons are many but can usually be summarised as a combination of insufficient capital, poor production methods, lack of support infrastructure and poor market development.

Newsletters 30 and 43 discuss the difference between a Supply Chain and a Value Chain. A supply chain has each element of chain operating as price takers (buying in at best price and selling at best price, with little attention paid to quality) as opposed to a Value Chain where each member is adding value to provide a consistent product at best price with all elements able to take a fair profit.

Figures 3 and 4 illustrate the different elements of the chain and infrastructure required. A failure of any one of those elements results in a failure of all. Even in the supply chain situation, all elements must be in place for any one of those activities to be profitable.

Newsletter No. 74 discussed this in relation to a new project developing in South Africa. The South African project produced some great illustrations to illustrate the importance of collaboration and working to economies of scale.

Any individual or company wishing to build their business in Ostrich needs to ensure that all aspects are in place. If their business plan is just a single aspect, such as feed manufacture, meat processing, producing chicks, providing incubation facilities then they must be confident that all the other aspects are in place or they will have no supply or market. They must also be sure that every element is adequately funded and the management is experienced.