What is our market?

Newsletter 56 - Item 4

After discussing the increasing demand for meat protein this newsletter went onto discuss the markets for Ostrich.  The discussions are as true today - 2013 - as they were when first published.

What is our Market?
Clearly, this large increase in meat demand offers tremendous market potential for ostrich.  To supply that market, volumes have to increase significantly.  I would suggest it requires a phased approach to the markets while building sustainable growth to achieve the volumes required to support that increased demand for meat protein.   The phased approach described below can apply to whichever country one is working in, as every country has a high-end market and many cannot export to the highest value markets.  Establishing the markets in one’s own country first should remain a priority.

Phase 1:
When volumes are low, production costs are high. This is aggravated by the fact that management systems to support the production potential of the current genetics and start a genetic improvement program have not yet been introduced and applied to ostrich. The markets willing to pay above average prices demand a consistent product and reliable supply they can depend on.

Health issues, animal welfare concerns and increasing wealth are among the influences that are changing meat consumption habits in the European, North American and other high end markets.  In these markets, consumers have sufficient wealth that they can afford to be selective in their choices of meat and willing to pay a premium.  Other meats – the category ostrich falls under - as discussed in Newsletter No. 40, currently account for around 4% of total meat consumed worldwide (30% in Europe). This market would be considerably larger if there was a consistent supply in sufficient volume and produced at commercially attractive prices.

Examples of meats classified as alternative meats are Buffalo/Bison, Venison, Kangaroo, Crocodile, Rabbit, Wild Boar and Reindeer.  As illustrated here Ostrich is proven to have the potential for commercial production on sufficient scale to compliment pig and poultry production as major suppliers of meat protein, when applying the right techniques to their production.  Buffalo and Venison are both ruminant meats.  Not only are ruminants less feed efficient, they also have other negative environmental concerns.

This top end of the meat market is willing to pay premium prices.  Supplying these markets provides the additional revenue while volumes are low and production costs are high.   These markets are serviced by specialist buyers supplying the retail and service industry at the top end of the market that purchase in lower volume and willing to pay a premium for a specialist meat.

This puts the industry on the path to sustainable production that is more able to provide data to effectively predict production.  Data is required to support protocols laid down by the larger buyers.  These protocols are becoming increasingly important as pressure increases from not only the animal rights lobbyists but also from the consumer concerned how the animals they eat are raised and fed.

Phase 2:
As production increases, with increasing data becoming available, it will become possible to selectively supply the high end supermarkets. These outlets demand absolute consistency of supply and quality. Some of these are prepared to pay a premium for the quality product that differentiates them from the high volume outlets, but still require greater volume than is currently available or predicted in the first years.

Phase 3:
Phase 3 is reached when there is sufficient volume to supply all demand. At this point the meat becomes a commodity, and some specialist companies will probably differentiate their products to achieve firmer prices, as we currently experience in pig and poultry production.

The production of ostrich meat peaked in 2002 with over 550,000 slaughter birds produced in that year, the number today is less than half.  Production remains around 60% in South Africa with the balance spread amongst a dozen different regions, all lacking coordinated production providing erratic volume and quality.  South African production especially has been disrupted a number of times over the years with health issues in their herd resulting in closure of their export borders.

The European buyers have witnessed their sales halved through lack of supply, not lack of demand.  Ostrich will only get past Phase 1 with the introduction of modern production systems capable of supporting their production potential.


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