World Ostrich Association Newsletter No. 95
February, 2011

Included in this edition:
Dioxine Contaminated Animal Feed in Europe
FAO Global Plan of Action for Animal Genetic Resources
The Ostrich Value Pyramid

Dioxine Contaminated Animal Feed in Europe
This scandal first broke on 3rd January.  The problem became public when it was discovered that a consignment of oil destined as bio-fuel containing dioxine was delivered to 25 animal feed mills throughout Germany.  The investigations and full extent of the scandal is ongoing. 

It seems that contaminated feed was shipped to France and Belgium as well as within Germany.  The important issue is the contaminated farm products (meat and eggs) and how they have been exported to a number of countries.  For example eggs were exported to the Netherlands where they were processed and onward sold to food manufacturing companies including several in the UK.  To put this into context – if this happened in the United States it would be an interstate problem as opposed to an international problem.

At the height of the scandal some 4,700 farms in Germany were closed, around 900 remain closed at the time of writing.  Many thousands of pigs and poultry were slaughtered.    The cost to feed companies, farms and food processors is significant.  The event has also damaged the reputation of the German farmers even though the problem was not caused by them.  Ostrich farms would not be immune to such problems if any were customers of the affected feed mills.  

Figure 2 in Newsletter 75  illustrates the various manufacturing processes through the ostrich production process through to the final products that our customers buy.   This shows the importance of feed ingredients at every point in that chain and illustrates just how many processes are seriously affected by such an event.

FAO Global Plan of Action for Animal Genetic Resources
This month the FAO sent the WOA a questionnaire asking if we had a Global Plan of Action for Animal Genetic Resources and if so for information on that plant. The document was drawn up in 2008 and can be viewed here.  The objective is to develop a global framework for managing animal genetic resources for food and agriculture in a sustainable manner and combating the erosion of genetic diversity in livestock species.   

The agricultural revolution following WW2 has witnessed amazing developments in genetic performance of the mainstream meat producing species.   One of the drivers of this revolution has been identification of the high performing genetic breeds and improving those breeds that were specialist to the needs of the market they are servicing.

This has resulted in many breeds of cattle, sheep, pigs, goats and poultry no longer commercially viable in today’s market place.   This genetic pool is under threat of extinction as they are no longer viable to farm on a commercial basis and no longer available in the wild.  Figure 1 illustrates the amazing changes in just one commercial breed from 1959 to 2006. 

Figure 1 - comparative prize winning Aberdeen Angus bulls [source: http://www.aberdeen-angus.co.uk/about/history/]

Ostrich has different challenges.  The majority of domesticated ostrich remain in South Africa where their genetic pool is diversified from local wild stock.  Over the years the genetic development has been limited, with the most notable genetic introductions made when birds from Timbuktu were introduced to improve feather quality.   Currently there are genetic strains in Northern Africa either under pressure or extinct – not from agriculture but as a result of conflict.

The pressures on the genetic pool of ostrich currently remain environmental rather than domestication for agriculture. As an association we have a responsibility to monitor all threats to our genetic pool and genetic diversity. However it will take successful commercialisation to fund any meaningful preservation program of our genetic pool whether from environmental or commercial threats.

The Ostrich Value Pyramid
A speaker from the Klein Karoo Kooperasie (KKK) discussed a value pyramid during a presentation at international industry strategic analysis held in 1997.  The speaker was suggesting that it was important to keep the price of the product high in the same manner that DeBeers had maintained the high value of diamonds.  They achieved this by very strict control of the supply of product to the consumer.  Subsequently they have discovered this does not work so well for ostrich as it is not so easy to switch production on and off with livestock and retain profitability.

In this case discussion related to the value of the skins as that was their vision was limited as to the full profit potential of ostrich.  The fear was witnessing ostrich become a high volume, industrial meat production industry where the meat and skins would become commodities and thus low in value.  Which business model creates real value, sustainable employment ability to growth the business?  

Figure 2 is an illustration of a value pyramid as it can apply to ostrich and other agricultural products. The area in blue in the pyramid illustrates the value Pyramid as presented by the KKK. It illustrates the high value achieved when volume is low and how value reduces when volumes increase. At the bottom end products are sold as a commodity where any competitor can undercut prices.     

Quality Marks and Standards:
At its simplest the grade of your skin and meat represents different values in the market place.  The WOA have guide grading standards for Leather and Meat.

Country or Region of Origin:

• Red Tractor Scheme assures certain welfare standards as well as guarantee raised in UK
• Canadian Salmon, Cold Water Prawns, whilst not certification schemes, they indicate source of supply.
• Melton Mowbray Pork Pie and Champagne are examples of produce that the region of production has created very specific differentiation with the regional name protected by law when marketing. 

Best Practice vs Good Practice

• Good Practice is valuable and important but is becoming too big to bring competitive advantage with the mainstream agriculture. It provides a first step for ostrich producers in product differentiation.  

A practical example in meat production of Good Practice and Best Practice is the introduction of Vitamin E Beef.   When this technology was first introduced those that implemented Vitamin E technology to control meat colour had the competitive advantage producing better meat colour with a longer shelf life.  Today that has become common good practice in beef production.  It is available in Ostrich production, but not yet implemented as common practice. 

Certification Schemes
These include membership of certification schemes that provide further differentiation in the market place such as:

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