ECONOMIC GROWTH – BEEF & CATTLE VALUE CHAIN
THE SARAMI PROJECT AN ALTERNATIVE APPROACH TO BEEF SECTOR DEVELOPMENT
ESPIRITU SANTO, VANUATU
APRIL 2013
PREPARED BY
PROAND ASSOCIATES AUSTRALIA PTY LTD
FOR
THE AUSAID ENTERPRISE CHALLENGE FUND MANAGED BY COFFEY INTERNATIONAL DEVELOPMENT PTY LTD
ENTERPRISE CHALLENGE FUND SARAMI BEEF PROJECT
CONTENTS Executive Summary ...... i 1 Introduction ...... 1 1.1 Sarami Project ...... 1 1.2 Assignment ...... 1 1.3 Deliverables ...... 1 2 Background ...... 2 2.1 Beef Sector Development ...... 2 2.2 Beef Cattle Production ...... 2 2.3 Beef in Vanuatu ...... 3 2.3.1 Beef Production ...... 3 2.3.2 Beef Trade ...... 5 2.3.3 Cattle Purchasing ...... 6 2.4 Sarami Beef Project Overview ...... 7 3 Sarami Estate Operations ...... 8 3.1 Overview ...... 8 3.2 Genetic Development ...... 9 3.3 Cattle Purchase & Transport ...... 9 3.4 Cattle Handling & Management ...... 11 3.5 Pasture Improvement ...... 12 3.5.1 Pastures ...... 13 3.5.2 Weeds ...... 13 3.6 Supplementary Feeding - Forage Crop and Silage ...... 14 3.6.1 Forage Crop ...... 14 3.6.2 Silage ...... 14 3.6.3 Supplementary Feeding ...... 15 3.7 Cattle Purchases for Fattening Program ...... 16 3.8 Sarami Project Value Add ...... 18 3.9 Live Cattle to Solomon Islands ...... 18 4 Smallholder Operations ...... 18 4.1 Overview ...... 18 4.2 Sarami Project Impact ...... 19 4.3 Future Growth for Smallholders ...... 21 5 Commercial Outcomes of the Sarami Project ...... 22 5.1 Assumptions ...... 23 5.1.1 Santo Meat Packers ...... 23 5.1.2 Sarami Estate ...... 23 5.1.3 Smallholders ...... 23 5.2 Analyses ...... 24 5.2.1 Smallholder Outcomes ...... 24 5.2.2 Sarami Outcomes ...... 24 5.3 Commercial Outcome Conclusion ...... 25 6 Expansion and Replicability of the approach ...... 26 6.1 Pacific Islands ...... 26 6.2 Vanuatu ...... 26 6.3 Fiji ...... 27 6.3.1 Profile of Fijian Cattle/Beef Sector ...... 28 6.3.2 Opportunity for Replication in Fiji ...... 33 6.4 Papua New Guinea ...... 35 6.4.1 Profile of PNG Cattle/Beef Sector ...... 35 6.4.2 Leron Plains Cattle Ranch ...... 36
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6.4.3 Price Premiums for Quality Beef Carcases ...... 37 6.4.4 Opportunity for replication in PNG ...... 37 6.5 Opportunities for Replication in Other Pacific Islands ...... 37 Annex 1 – Data Tables ...... 38 Annex 2 – Program Schedule, Meetings Attended and People Met ...... 39 Annex 3 – Detailed Benefits from Improved Herd Productivity ...... 41
LIST OF FIGURES Figure 1 –Map of Vanuatu ...... 6 Figure 2 – Location of Site Visits ...... 7 Figure 3 - Farm Size Distribution ...... 3 Figure 4 - Cattle Population & Beef Production ...... 4 Figure 5 - Quarterly Slaughter at Major Abattoirs ...... 5 Figure 6 - Beef Import & Export Statistics ...... 5 Figure 7 - Santo Meat Packers Cattle Purchase Price Schedule ...... 6 Figure 8 - Smallholder Cattle Purchase Mechanism ...... 10 Figure 9 - Heavy Tractor used to Prepare Land for Improved Pasture ...... 13 Figure 10 - Standard Herd Structure Sales Outcomes ...... 21 Figure 11 - Improved Herd Structure Sales Outcomes ...... 22 Figure 12 - Sarami Project Business Partners ...... 22 Figure 13 - Current SMP Price Schedule ...... 23 Figure 14 - Sarami Estate Cattle Buying Price Schedule ...... 23 Figure 15 - Smallholder Benefits from Selling Steers to Sarami Estate ...... 24 Figure 16 - Smallholder Benefits from Selling Heifers to Sarami Estate ...... 24 Figure 17 – Sarami Estate Benefits from Growing Out Steers ...... 25 Figure 18 – Sarami Estate Benefits from Growing Out Heifers...... 25 Figure 19 - Impact of Abattoir (SMP) Price Schedule ...... 25 Figure 20 - Pacific Island Cattle Populations ...... 26 Figure 21 - Farm Size and Cattle Populations - Vanuatu ...... 26 Figure 22 - Fijian Beef Value Chain ...... 27 Figure 23 - Fijian Cattle Sector Structure ...... 28 Figure 24 - Profile of Formal Fijian Beef Slaughter 2011 ...... 31 Figure 25 - Retail Prices for Rump Steak - Fiji Jan 2013 ...... 31 Figure 26 - Detailed Sales Outcomes from Standard Herd Structure ...... 41 Figure 27 - Detailed Sales Benefits from Improved Herd Structure ...... 42
LIST OF TABLES Table 1 - Sarami Project Business Process ...... 7 Table 2 – Sarami Project Investment and Expected Outcome ...... 8 Table 3 - Cattle Purchase Timetable ...... 16 Table 4 - Cattle Purchase by Source Location ...... 16 Table 5 - Cattle per Sales Transaction ...... 17 Table 6 - Profile of Cattle Sold ...... 17 Table 7 - Cattle Purchase Price Range ...... 17 Table 8 - Major Beef Cattle Producers in Fiji ...... 29 Table 9 - Fijian Beef Retailer/Wholesalers as at January 2013 ...... 32 Table 10 - Possible Yaqara Ranch Interventions ...... 34 Table 11 - FAO Statistics Cattle & Beef - PNG ...... 35 Table 12 - Percentage of Rural Households Owning Livestock by Region - PNG...... 35 Table 13 – Beef Import Data - Vanuatu ...... 38
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Table 14 – Beef Export Data - VAnuatu ...... 38
LIST OF PICTURES Picture 1 - Cattle on Sarami & Leconte Properties ...... 8 Picture 2 - Cattle on Leemans Property ...... 8 Picture 3 - Cattle Transport Vehicle ...... 11 Picture 4 - Sarami Estate Cattle Yards ...... 12 Picture 5 - Silage Production ...... 15 Picture 6 - Smallholder Farmers at Port Orly ...... 19 Picture 7 - Smallholder Cattle – Espiritu Santo ...... 20
Acknowledgement
We are extremely grateful to the many people in government, the private sector and the development community who generously gave us their time and opinion during the mission and after, both formally and informally. We know from our own experience just how many consultants come through asking the same people similar questions, and we admire your patience and understanding.
Disclaimer
This document has been prepared from information provided from numerous sources. Our procedures do not necessarily include confirmation or validation procedures of that information and this document is provided to the client for its exclusive use and benefit only. No other party should rely on it for inferences or forecasts made therein. The authors accept no responsibility to such parties.
In addition, certain inferences and forecasts have been drawn and made on the above basis. Although every effort has been made to ensure that such inferences and forecasts are reasonable, no responsibility can be accepted by the authors for any eventual outcomes.
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ABBREVIATIONS
AusAID Australian Agency for International Development BJD Bovine Johnes Disease COMTRADE United Nations Commodity Trade Statistics Database CW Carcase weight DoA Vanuatu Department of Agriculture ECF Enterprise Challenge Fund ETT Embryo Transfer Technology EU European Union FAO Food and Agriculture Organisation FAOSTAT FAO Statistics Division FMIB Fiji Meat Industry Board LW Liveweight NZ New Zealand OTH Over the hooks purchasing of cattle for slaughter based on carcase weight SME Small Medium Enterprise SMP Santo Meat Packers SPC South Pacific Community
CURRENCY EQUIVALENTS
US $1.00 VTU 90 Aus $1.00 = VTU 94 NZ $1.00 = VTU 75
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FIGURE 1 –MAP OF VANUATU
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FIGURE 2 – LOCATION OF SITE VISITS
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EXECUTIVE SUMMARY THE SARAMI PROJECT
The Enterprise Challenge Fund (ECF) supported Sarami Project has been a very successful private sector intervention that has established a sustainable business model that benefits smallholder cattle producers on the island of Espiritu Santo in Vanuatu.
The AusAID funded ECF provided a $A1.375 million grant to Sarami to fund 30% of the project’s upgrading.
The ECF funds made available to the project have allowed the development of infrastructure and the establishment of sound business practices addressing:
In field purchasing of steers and heifers from smallholders; Cattle transport from smallholder properties to Sarami Estate; Establishment and maintenance of improved pastures; Production of silage from forage sorghum; Use of silage as a cattle feed component; and On farm integration and management of cattle for finishing.
Funding provided by ECF included:
Assistance with purchase of improved infrastructure (e.g. transport vehicles, cattle handling yards, harvester, feed mixer), and Contribution to the costs associated with the establishment of the sound business practices.
SARAMI PROJECT INVESTMENT AND OUTCOMES
INVESTMENT EXPECTED OUTCOMES ACTUAL OUTCOMES Cattle genetics at Improved cattle genetics Demonstration that current smallholder genetics with good both smallholder resulting in a robust herd; nutrition are capable of producing carcase weights in excess and Sarami Estate more cattle able to reach of 300kg. levels over 260kg carcase Improved commercial bulls have been provided to weight; faster growth smallholders under an incentive program. Problems with rates. the age of the bulls at delivery are being addressed so that they are easier for smallholder farmers to manage. Arrangement are in place to establish a stud Brahman herd using embryo transfer technology and Brahman genetics sourced from Australia to further improve the genetic base of the Sarami cattle herd.
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INVESTMENT EXPECTED OUTCOMES ACTUAL OUTCOMES Cattle purchase & Implementation of The in-field purchasing logistics put in place under the transport purchasing and transport Sarami project are highly preferred by smallholders due to: infrastructure. logistics that are Improved returns for small cattle preferred by smallholders. Reduced need to attempt to grow out cattle to abattoir target weights In field negotiation and cash payments No need to deal with transport logistics or costs Benefits that flow from confidence in management, technical and commercial advice provided to smallholders from the Sarami buyer who is also producing cattle Opportunity to participate in the commercial bull incentive program Cattle handling, Improved cattle handling Improved cattle yards have been constructed that work well management and facilities (stockyards) and with cattle that are unfamiliar with yards. The yards have induction procedures and ability to been fitted with weigh and crush pens to assist with collect commercial herd smallholder cattle induction processes and to allow drafting information that can be to ensure that the cattle liveweights are sufficient to used for future planning. achieve abattoir’s requirements and standards and achieve the price premium available prior to delivery. Pasture Establishment of robust, Approximately 600 hectares of improved pasture has been improvement nutritious pastures with established using heavy tractor machinery for ploughing development of sound and paddock preparation. Most of the improved pasture weed control practices. consists of Signal grass inter-grown with Hetero legume. Utilisation of heavy Trails have also been conducted with Hamil and Mulato machinery for efficient grasses established, as well as Centro (Centrosema molle) as ploughing to establish an alternative legume. All three provide good options for improved pasture. future pasture improvements at Sarami. Stocking rates and periods on the improved pasture need to be actively managed to be sustainable. Sound weed control practices are highly important in maintaining improved pasture. After weeds are brought under control, Sarami conducts manual weeding practices as a maintenance program. Forage crop and Production of forage crop Forage sorghum has been grown and utilized for the silage production and silage to provide production of silage. secondary cattle feed Silage was produced using a mechanical harvester and resources for both regular treating the silage with a high quality enzyme additive to use and to minimise risk enhance fermentation. from drought and poor A silage heap of 7000 tonnes has been produced. pasture growth. Cattle feeding using silage as the main component (supplemented with copra meal and rock salt and mixed in a feed mixer) has been successfully demonstrated. Trails were conducted using root crops as a supplement in the feed formula. This was discontinued due to the logistics of accumulating sufficient root crop when required.
CATTLE PURCHASES FROM SMALLHOLDERS
During the period 2010 to end 2012 Sarami Estate purchased 2013 cattle from 241 cattle producers - of these 128 could be considered small holders as they supplied less than 25 cattle over the 3 year period.
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These cattle were purchased at a total cost of VTU57.5 ($A0.61) million during 558 sales events from 21 locations across Santo Espiritu at an overall average price of VTU28,650 ($A305) per head, considerably more than could be obtained from sales to other buyers.
The total sales value of cattle sold to the local abattoir between May 2010 and December 2012 was approximately VTU100 ($A1.1) million. This indicates that the added value arising from the Sarami project during this period would be in the region of VTU42.5 ($A0.45) million.
PROJECT BENEFITS
An important benefit of the Sarami model is the relationship that is built between the Sarami cattle buyer and the smallholder cattle producers. Information provided by the Sarami buyer is highly respected by smallholders because the buyer is involved in the cattle business and not simply searching out cattle for slaughter. The provision of technical, management and commercial advice from the Sarami buyer to smallholders fulfills a need that cannot be provided by agricultural extension officers who are not engaged in the cattle business.
A further supplementary benefit of the Sarami project has been the delivery of heifers to the Solomon Islands. In 2011 the sale of four hundred heifers from Sarami was negotiated with the Government of the Solomon Islands and due to the success of this first delivery the sale of a further 400 artificially inseminated heifers and 20 commercial European bred bulls is under negotiation. these cattle will provide sound, well adapted genetics for the production of heavyweight carcases in a Pacific environment.
SARAMI BUSINESS MODEL
The business driver that makes the Sarami project successful is the premium price schedule offered by the abattoir, Santo Meat Packers (SMP) that encourages the production of heavy carcase weight steers and heifers. These price premiums allow Sarami to purchase steers and heifers from smallholders at a higher price and then to add value to these animals by growing them out to heavy carcase weights to take advantage of the abattoir’s premium.
The gradual evolution of the abattoir price schedule over the period has been influenced by discussions between Sarami and the abattoir. A significant outcome of the Sarami project can be considered to be the input into changes in the abattoir price schedule to improve the price premiums available for young heavyweight steer and heifer carcases.
The economic growth that results from this strategy is significant and dependent on a private sector driven approach that responds to a cattle market that pays a premium price for improved quality cattle and which is structured into breeding/back grounding (by smallholders) and finishing operations (by Sarami).
The major risk associated with the sustainability of this business is a restructuring of the SMP price schedule that reduces the premium available for heavyweight steers and heifers due to changes in market conditions. The secondary risks are normal farming risks associated with poor rainfall (mitigated by the retention of a silage feed stock) and animal disease (not of significant concern in Vanuatu).
Now that this innovative value chain has been soundly established on a commercial basis it would be expected to continue as a sustainable business operation and make further contribution to economic activity in Vanuatu, especially in Espiritu Santo, over future years.
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BENEFITS TO SMALLHOLDER SUPPLIERS
Analysis of the business model also shows that
Smallholders that sell steers to Sarami at the preferred live weight around 300kg stand to earn an additional VTU9,400 to VTU12,400 ($A100 - 132) per head because of the higher price and free transport provided by Sarami (Distant farmers benefit more because the higher transport savings) ). Smallholders that sell heifers to Sarami at the preferred live weight around 300kg stand to benefit by in the region of VTU14,750 to VTU17,750/head delivered depending on the transport distance (Sarami currently has a price incentive in place to purchase heifers due to the recent opportunity provided by alterations to the SMP price schedule). Steers that Sarami grow out from 300kg to 600kg live weight provide a contribution to farm overhead and fixed costs of VTU18,725 ($A199) per head ( after deducting overheads and all direct farm costs, including transport from smallholder and to the abattoir and the provision of free bulls to smallholders incentive). Heifers that Sarami grow out from 250kg to 550kg live weight provide a contribution to farm overhead and all other costs of VTU12,225 ($A130) per head (Note heifers finished weights will be consistently some 50kg less than steer finished weights).
This shows that the Sarami project is a sustainable business model whereby both smallholders and Sarami benefit.
It also demonstrates that there is a business driver for smallholders to restructure their cattle herds to increase the number of cows in the herd, to reduce the numbers of steers and surplus heifers through selling younger lightweight cattle to Sarami and to improve weaning rates. It is considered possible for smallholder farmers in the short to medium term to increase the cow percentage in the herd to say 70% and improving weaning rates to say 60%. This strategy provides the following outcomes for smallholders:
Those with an average of 6 cattle that produce an average of 2 more animals per year can increase their incomes by VTU54,000 ($A574) per year. Those with an average of 24 cattle that produce an average of 5 more animals per year can increase their incomes by VTU70,000 ($A745) per year, and Smallholders with an average of 60 cattle that produce an average of 11 more animals per year can increase their incomes by VTU142,000 ($A1,510) per year.
These significant income benefits do not occur if the cattle are sold direct to the abattoir rather than to Sarami for finishing. In fact, the strategy to increase herd productivity (number of cattle produced divided by the cattle population) and sell at lighter weights when selling to the abattoir would result in losses to smallholder producers.
OPPORTUNITIES FOR REPLICATION 0F SARAMI MODEL
REPLICATION IN VANUATU
While it would be desirable to have a competitor on Espiritu Santo to provide competition for lightweight cattle purchased by Sarami it is considered that the cattle numbers available are currently insufficient for two viable operations.It is desirable for Sarami to work with smallholders over the short to medium term (up to 10 years) to establish a sound base for this alternative approach to beef sector development.
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However the same market and production conditions exist throughout Vanuatu and if a suitable private sector cattle ranch or estate is interested in adopting the model then it is desirable that this alternative approach be encouraged on the Island of Efate.
REPLICATION IN FIJI
Due to the different market conditions for slaughter cattle in Fiji, along with the absence of formal price premiums for quality cattle, there is limited opportunity for direct replication of the Sarami project. To establish a sustainable business model in Fiji there is a need to work in both the cattle raising and the meat processing/wholesaling spaces.
Fiji has a beef supply deficiency and although there is a market for quality beef in tourism and for more discerning local customers there is no structure in place for identification of indigenously produced improved quality beef. This means that customers sourcing quality beef must rely on the supplier’s reputation. This market mechanism has inherent problems as purchasing managers (particularly in the hotel and resort sector) have a high level of distrust of single supplier arrangements Without some control/accreditation? system that is embedded in the value chain it is too easy for meat traders to substitute inferior product.
There is therefore a need for the development of a third party beef quality grading system in Fiji. This need not be complex but similar to that which the Sarami project depends on in Vanuatu; i.e. - a simple system that relates carcase weight (say over 250kgCW) to animal age (say less than 6 permanent incisors) with perhaps some low impact exclusions for poor fat cover, dark meat and yellow fat that is able to be applied and monitored through to the customer. This mechanism would provide the basis for price premiums for young heavyweight carcases as exist in Vanuatu.
Yaqara Ranch is the biggest cattle operation in Fiji and the holder of a base of improved cattle genetics. Possible improvements at Yaqara that could result in similar positive outcomes to those of the Sarami project include:
Improved commercial bulls provided to smallholders under a delivery incentive program. Further development of the Yaqara stud herd with possible sourcing of genetic material from Sarami. Implement in-field purchasing logistics preferred by smallholders through: o Improved returns for small cattle o In field negotiation and cash payment o Use of transport contractors by Yaqara to reduce smallholder costs o Opportunity to participate in a commercial bull incentive program o Improved confidence in the management, technical and commercial advice provided to smallholders. (This will require a cattle buyer/s with good technical, management and commercial knowledge of the Fiji cattle and beef sector and an ability to work within both the Fijian and Indo-Fijian ethnic sectors).
Some upgrade of cattle handling yards may be required. Implementation of pasture improvement program with advice and support from Sarami. Possible use of farm machinery contractors for land preparation and pasture improvement Implementation of forage crop and silage production program with advice and support from Sarami Development and trial of cattle feeding rations utilizing sugar sector byproducts in conjunction with silage.
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REPLICATION IN PAPUA NEW GUINEA
Leron Plains Cattle Ranch is an obvious target for replication of the Sarami project in PNG. The model would, however, need to be adapted because it is likely that Leron Plains would prefer to finish the cattle on a feedlot rather than on improved pasture.
The opportunity to create a sustainable business out of purchasing lightweight cattle from smallholders for growing out by Leron Plains Cattle Ranch will depend on the premiums achieved for the finished cattle.
It is recommended that further investigation of the possibility of replication of the Sarami project with an increased emphasis on feedlot finishing be undertaken with Leron Plains Cattle Ranch.
There may also be an opportunity to supply Sarami genetics to improve the genetic base of cattle in PNG.
REPLICATION IN OTHER PACIFIC ISLANDS
Cattle populations in the other Pacific Islands are generally low (with the exception of New Caledonia). The slaughter off take of cattle is almost totally informal and as a result the opportunity to organize premiums for improved quality cattle will be difficult to achieve in the medium term.
As a consequence the opportunity for direct replication of the Sarami model is considered to be very low.
However there will likely be further opportunities for the export of Sarami live cattle to improve the cattle herds in other Pacific Island nations. This will be further enhanced with the eventual establishment of a stud herd at Sarami.
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1 INTRODUCTION Sarami Estate (Sarami) has been breeding cattle in Vanuatu for 30 years and was the first property in Santo to introduce cross Brahman bulls on their breeding property. In 2009 Sarami was awarded an Enterprise Challenge Fund (ECF) grant to work with small holder cattle farmers to improve beef production in Vanuatu, while at the same time increasing their incomes through purchasing cattle at higher average prices.
1.1 SARAMI PROJECT The Sarami project has been implemented over a three year period and the outcomes and lessons to date can provide practical guidance for those interested in similar commercial ventures in the Pacific.
The ECF also provided support to Sarami to improve the quality of cattle using improved pastures and silage and undergo a genetic improvement program to develop an improved cattle genotype to suit Santo and the neighbouring islands climatic conditions.
The ECF assessment panel that approved the grant believed that the project model – improved pastures, silage production, genetic improvements and mutually beneficial collaboration with small holder suppliers – could be replicated elsewhere in the Pacific Islands with positive import replacement, food security, economic and rural livelihoods benefits.
There has been interest expressed by both the private sector and national governments in applying the model to improve cattle industry practices in similar environments in the Pacific, such as Fiji, Solomon Islands and Papua New Guinea. Market demand cannot be met by current market players and there has been interest by other countries in purchasing live cattle for export.
1.2 ASSIGNMENT This assignment required visiting the Sarami project and undertaking an independent assessment of the outcomes including:
Gaining a clear understanding of all technical aspects of the project Reviewing the development impacts from the purchasing arrangements with small holder suppliers and the merits of this approach. Analysis of the commercial outcomes from the improvements made at Sarami. Assessment of replicability of the approach
1.3 DELIVERABLES Deliverables include:
1. A brief outline of the results of the visit to Vanuatu and the key findings. 2. An independent assessment report on the Sarami project from a technical commercial and development perspective. 3. A separate report that draws on the assessment of the project and the replication potential in the Pacific and Fiji.
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2 BACKGROUND
2.1 BEEF SECTOR DEVELOPMENT Beef sector growth in developing countries has largely been directed towards animal health management, genetic improvement and construction of processing facilities. Almost all of these endeavours have involved public sector based interventions and the success rate on creating sustainable impact has at best been questionable and at worst been abject failure.
Examples include:
Animal health management projects administered through central and regional government programs that have impact while supported with donor monies but disappear when donor support is withdrawn generally as a result of lack of support funding from the public sector – e.g. Veterinary & Extension Officers are retained but they have no money for fuel to get into the field and no incentive to deliver appropriate services. Genetic improvement programs that involve donor and public sector donation of genetically improved livestock (including semen and embryos) to livestock producers (generally smallholders) on the basis that they will be used to spread improved genetics through the herd but instead they end up in the cooking pot as there are inadequate services to assist with the necessary animal husbandry advice (see above). There is also generally a lack of sufficient nutrition resource for the genetically improved animals to take advantage of their improved genetics. Donor and public sector support of construction of improved abattoirs that end up being abandoned “white elephant” sites because there is a belief that technology will improve the situation and people and business driver issues are ignored.
Growth in the beef sector in developing countries is likely to be more successful when the focus of the intervention is on increasing herd productivity (number of cattle slaughtered as a percent of the cattle population) and improvement in the availability of livestock nutrition resources (both extensive and intensive) to produce improved quality beef from heavier carcase weights (higher value for every animal produced).
Poor outcomes for livestock development programs, which are far too common, can possibly be dramatically improved in a situation where:
Strong private sector business drivers are in place, The private sector is deeply involved, and External financial support is provided to take advantage of the private sector opportunity to establish sustainable business operations.
2.2 BEEF CATTLE PRODUCTION Beef cattle production is essentially a three stage process involving:
Breeding – Retention and management of a cow herd and commercial bull resource that produces calves to provide cattle for growing out for slaughter and heifers for cow replacement; Backgrounding – Retention of beef cattle calves to allow them to grow to maturity with a satisfactory level of nutrition and to reach maturity within 24 to 36 months; Finishing – Mature cattle at the completion of backgrounding are retained on very good nutrition resources to maximize the genetic potential of the animal to produce beef (better quality beef from heavier carcase weights).
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Beef production in developed countries is increasingly moving to separate farming operations for breeding, backgrounding and finishing (generally intensive feedlot operations).
However, in developing countries the standard operation involves producers breeding cattle and hold onto the animal until they make a decision to sell when it is generally sold for slaughter. Most livestock in developing countries are retained in mixed farming operations where they are regarded as a bank rather than a business (therefore more animals are better) and the breeding, backgrounding and finishing operations are combined. Sell decisions are generally related to the producers need for cash rather than optimal condition of the animal for sale. Sell decisions are made without consideration of maximizing the genetic potential of the animal.
The great majority of animals slaughtered in developing countries have the genetic capacity to produce more beef but there is a lack of available nutrition resource and insufficient business drivers to encourage improved finishing of the animals.
2.3 BEEF IN VANUATU 2.3.1 BEEF PRODUCTION Beef production in Vanuatu is characterized by a small number of large estates at one level and a large number of smallholder producers at the other level (see Figure 31 derived from the 2002 cattle census). The only statistics sourced on the cattle population in each sector indicates that the cattle are roughly split 40:60 between large estates and smallholders, however this information dates from 19982.
FIGURE 3 - FARM SIZE DISTRIBUTION
It is important to note that several aspects differentiate Vanuatu beef sector from many other developing country environments:
1. Animal disease does not have any significant impact on cattle production;
1 Vanuatu Country Report Animal Genetic Resources
2 Macfarlane, D.C. (1998). South-west Pacific Forage Based Livestock Systems. FAO, SAPA Publication No. 1998/1. pp. 99
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2. The genetic base of the current cattle herd is relatively good and carcase weights over 300kg can be regularly achieved on improved pasture; 3. Dairy farming is almost nonexistent meaning that there is essentially no beef production as a byproduct of the dairy sector; 4. There is no significant use of bullocks for draft purposes meaning that there is a reduced incentive to hold onto cattle. This compares with environments such as Fiji where many large cattle for slaughter are sourced from redundant working bullocks.
Figure 4 provides a ten year trend for cattle population and beef production in Vanuatu.
The graphs in Figure 4 indicate:
A growing cattle population in the order of 130,000 to 170,000 head; Stable number of animals slaughtered in the two official abattoirs of around 14,000 head/annum; Average carcase weight decline from 220kg/Head to 200kg/head. Beef production at the two major abattoirs has been reasonably stable at around 3,000 tonnes/annum.
FIGURE 4 - CATTLE POPULATION & BEEF PRODUCTION
Source: FAOSTAT Source: FAOSTAT Cattle Population & Slaughterings Beef Production & Carcase Weights 200 18 4,000 235 230 180 16 3,500 160 225 14 3,000
140 220 Kg -
12 Tonnes
- 2,500 215 Thousand Thousand Head
120 Thousand Head - 10 - 210 100 2,000 8 205 80 1,500 6 200 60
195 Carcase Weight 4 1,000 40 ProductionBeef 190 20 2 500
Cattle Population 185 Cattle SlaughteredCattle 0 0 0 180 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Stocks (Head) Animals Slaughtered (Head) Production (tonnes) Carcase Weight (Kg)
Figure 5 provides trend lines for slaughter at Port Vila and Santo abattoirs, the two major beef processing operations in Vanuatu.
While it is understood that both these abattoir perform service operations for third parties, the major component of beef production is on their own behalf (i.e. the abattoirs purchase cattle, process cattle into beef products and sell products in their own right). The abattoirs are integrated processors that include on-site boning operations.
Port Vila and Santo abattoirs therefore survive on private sector business principles (as distinct from public abattoirs that essentially provide slaughter service operations (abattoir only; no boning) for third parties).
From Figure 5 it is observed that:
Cattle slaughter is reasonably consistent throughout the year at around 3,500 Head/quarter; Port Orly abattoir processes around 2000 Head/quarter while Santo Meat Packers (SMP) processes about 1500 Head/quarter.
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FIGURE 5 - QUARTERLY SLAUGHTER AT MAJOR ABATTOIRS
Vanuatu Beef Slaughter 6,000
5,000
4,000 Head - 3,000
Cattle 2,000
1,000
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q3 Q4 Q1 Q2 Q4 Q1 2005 2006 2007 2008 2009 2010 2011
Santo Abattoir Port Vila Abattoir
2.3.2 BEEF TRADE Figure 6 provides a series of graphs on Vanuatu beef imports and exports.
FIGURE 6 - BEEF IMPORT & EXPORT STATISTICS
Vanuatu - Beef Imports Vanuatu - Beef Imports Chilled/Frozen Import Source 8 8
7 7 Tonnes Tonnes 6 6 5 5 4 4 3 3 2 2 1 1 0 0 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011
Frozen Volume Chilled Volume Source: COMTRADE New Zealand Australia Source: COMTRADE
Vanuatu - Beef Exports Vanuatu - Beef Exports Chilled/Frozen Export Destination
1,200 1200
Tonnes Tonnes 1,000 1000
800 800
600 600
400 400
200 200
0 0 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 Frozen Chilled Source: COMTRADE Papua New Guinea Japan Solomons Australia Singapore Wallis and Futuna Isds Fiji Kiribati New Caledonia New Zealand Tuvalu Source: COMTRADE It is observed from Figure 6 that:
Imports at around 3 tonnes/annum are negligible compared to exports at around 1,000 tonnes/annum; Exports make up about 30% of beef production at Port Vila and Santo abattoirs; The major destinations for exports in order of importance are: 1. Papua New Guinea, 2. Japan, and 3. Solomon Islands
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Export receipts therefore make an important contribution to the business performance of the abattoirs at Port Vila and Santo. The shift in export markets (e.g. from Japan to PNG) in recent years is not surprising as the Japanese beef market has been undergoing difficult trading conditions and would likely only be interested in the high quality primal cuts (e.g. tenderloin, striploin, cube roll). The PNG market has a wider market demand and will take a much greater range of cuts including high quality primals through to lean beef. As a result salable packages of product to PNG would be easier to compile and transport logistics will further improve. As the economy grows in PNG in the future this will be a growth market while the Japanese market is currently stagnant.
Live cattle exports are limited (however see later comments on Sarami Estate export of live cattle to the Solomon Islands).
2.3.3 CATTLE PURCHASING Santo Meat Packers purchase the majority of cattle produced on Espiritu Santo. While some cattle are transported live to Port Vila this is only a limited number due to transport costs and the potential for losses to be incurred by the seller during loading, transport by sea barge and unloading at Port Vila. As an alternative to live cattle transport, SMP produce a significant amount of beef that is then transported to the Port Vila market.
SMP purchase cattle on an “over-the-hooks” (OTH) basis making payment according to the weight of the hot dressed carcase. Although no grading system is applied, the SMP OTH system provides a proxy for a grading system by buying on carcase weight in an environment where there is essentially no supply of dairy beef or working bullocks.
The graduated pricing system implemented by SMP provides the business driving mechanism for the Sarami Estate Project. Figure 7 provides the prices that currently apply and outlines how the schedule has evolved since May 2009. The evolution of this price schedule has been influenced by discussions between Sarami Estate and SMP and a significant outcome of the Sarami Project can be considered to be the input into the price schedule to improve the premiums available for young heavyweight carcases.
FIGURE 7 - SANTO MEAT PACKERS CATTLE PURCHASE PRICE SCHEDULE
SANTO MEAT PACKERS - STEER PRICES May-09 Mar-11 May-12 VT/kg VT/kg VT/kg 300kg and Over 180 190 270kg and Over 190 260kg to 299.5kg 160 170 240kg to 269.5kg 170 230kg to 259.5kg 130 140 200kg to 239.5kg 130 190kg to 229.5kg 110 110 199.5 and under 90 189.5 and under 80 80
SANTO MEAT PACKERS - HEIFER PRICES May-09 Mar-11 May-12 VT/kg VT/kg VT/kg 250kg and Over 150 150 260kg and Over 190 230kg to 249.5kg 130 140 240kg to 259.5kg 170 190kg to 229.5kg 110 110 200kg to 239.5kg 130 189.5 and under 80 80 199.5 and under 80 While no grading is applied at SMP a simple system that defined animal age as being less than eight permanent incisors and a minimum fat cover of 5mm would be expected to be achieved by the great majority if not all of the cattle that present at a carcase weight in excess of 270kg.
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The cattle price schedule offered by SMP:
Discourages slaughter of cattle under 190kg to 200kg carcase weight (360kg to 380kg liveweight) Encourages cattle to be grown out and finished to at least 240kg carcase weight (approx 450kg liveweight), and Provides a further incentive for carcases over 270kg (steers) and 260kg (heifers). Carcase weights over 260kg essentially comply with a commonly used “Jap Ox” specification3. Many of the finished steer carcases slaughtered at SMP exceed 300kg carcase weight.
In May 2012 the SMP price schedule for heifers was significantly altered to encourage delivery of heavier carcase weights. This change in the price schedule has now made it viable for Sarami Estate to purchase and finish heifers.
The SMP cattle purchase schedule provides the business incentive to the Sarami Estate Project (and others) to purchase steers and heifers that have been backgrounded to a weight in excess of 300kg liveweight and to finish these animals to a liveweight in excess of 500kg to achieve carcase weights that exceed 260kg (heifers) and 270kg (steers) that comply with the premium price offered by SMP.
2.4 SARAMI BEEF PROJECT OVERVIEW In the above production and value chain circumstances the support provided by the ECF to the Sarami project has been to enable the development of Sarami Estate as a secure finishing property which is able to continue as a sustainable business through buying backgrounded cattle from small holders on Espiritu Santo and selling to the abattoir (SMP).
TABLE 1 - SARAMI PROJECT BUSINESS PROCESS
Smallholder Cattle Santo Meat Packers Producers Sarami Estate
• Breeding • Finishing • Purchase • Retain breeding cows • Place cattle on improved • Purchase cattle on a • Improve genetics through pasture to optimise weight price schedule that access to improved bulls growth rates encourages larger carcases form Sarami Estate • Genetics and improved quality beef • Background • Improve genetics and • Process & Export • Grow out steers and make bulls available to • Slaughter and process into heifers for finishing smallholders the full range of beef • Sell • Nutrition primals and other products • In field sale to Sarami • Pasture Improvement Estate • Weed management • Sell • Forage crop • Sell full range of beef products to local and • Silage export markets and • Sell optimise returns • Sell to Santo Meat Packers when cattle can achieve price premium.
Table 2 provides an overview of the investment and expected outcomes flowing from the Sarami Project.
3 ‘Jap ox’ - grass-finished steers with carcase weights of 300 to 420 kg and 7 to 22 mm P8 fat are slaughtered for lower value Asian markets. There are no breed or age restrictions for this market, although steers with 6 or more permanent teeth can be heavily discounted.
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TABLE 2 – SARAMI PROJECT INVESTMENT AND EXPECTED OUTCOME
INVESTMENT EXPECTED OUTCOME Cattle genetics at both Improved cattle genetics resulting in a robust herd; more cattle able to reach smallholder and Sarami over 260kg carcase weight; faster growth rates. Estate levels Cattle purchase & transport Implementation of purchasing and transport logistics that are preferred by infrastructure smallholders. Cattle handling, Improved cattle handling facilities (stockyards) and procedures and ability to management and induction collect commercial herd information that can be used for future planning. Pasture improvement Establishment of robust, nutritious pastures with development of sound weed control practices. Utilisation of heavy machinery for efficient ploughing to establish improved pasture. Forage crop and silage Production of forage crop and silage to provide secondary cattle feed resources production for both regular use and to minimise risk from drought and poor pasture growth.
3 SARAMI ESTATE OPERATIONS
3.1 OVERVIEW Sarami Estate carries in the region of 11,000 cattle and includes 4,650Ha in three properties:
Sarami 2000Ha Leconte 2000Ha Leemans 650Ha
Sarami and Leconte are adjacent and operated as one entity and Leemans is used as a breeding property.
The Sarami and Leconte properties are divided into approximately 100Ha paddocks and cattle are rotated on the basis of condition of the pasture.
PICTURE 1 - CATTLE ON SARAMI & LECONTE PROPERTIES
PICTURE 2 - CATTLE ON LEEMANS PROPERTY
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3.2 GENETIC DEVELOPMENT Sarami Estate has established a breeding herd with sound genetics however the intention is to establish a Brahman Stud herd using embryo transfer (ET) technology to make further improvements.
The establishment of the Stud herd is yet to be realized due to access to embryos and embryo transfer technology in Vanuatu. It was expected that a program to ET cows would be conducted in 2013; however an outbreak of Bovine Johnes Disease in Queensland is likely to cause further delays to the program.
Sarami Estate produces sound commercial bulls with significant Brahman content that are well adapted to the Vanuatu environment.
A scheme was included in the project to provide a sound commercial bull at no cost to smallholders who delivered 40 cattle to Sarami Estate for finishing. This scheme was implemented to assist smallholders to upgrade the genetic base of their herds. Sarami Estate also agreed that several smallholders could cooperate to deliver 40 cattle and receive a bull, allowing smallholders with small cattle numbers to access improved genetics.
While a number of bulls have been distributed under this program the number does not fulfill the original intention. During the project smallholders found that older bulls that were delivered were difficult to control and did not meet their herd management requirements. During 2012 a number of younger commercial bulls were delivered under this program and these underwent a period of familiarisation with the smallholders prior to be used for breeding purposes. This strategy improved the acceptability of the commercial bulls supplied by Sarami. It is intended that in the future younger bulls will be delivered to fulfill the genetic improvement program.
3.3 CATTLE PURCHASE & TRANSPORT The logistics and mechanisms for the purchase of cattle from smallholders are clearly critical to a successful project.
The logistics and trust relationships in trading with smallholders are extremely important to a successful program. In the Sarami Estate example the purchasing program outlined in Figure 8 is followed.
This purchase model is highly appreciated by smallholders since:
Cattle are purchased onsite; The Sarami Buyer provides an estimated liveweight for the cattle that can be used to compare with the published SMP price schedule; The seller has the opportunity to negotiate; Cash is made available straight away; There is no need to arrange loading and transport; The whole transaction is convenient, quick with no hassle; There is the added bonus of supply of a commercial bull after delivery of 40 cattle.
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FIGURE 8 - SMALLHOLDER CATTLE PURCHASE MECHANISM
Sarami Estate Buyer talks with smallholders to determine if there is a truckload of cattle available (8-12 small cattle)
Sarami Estate Buyer visits smallholders, selects cattle to purchase and makes and offer to the smallholder
Smallholder agrees to sell and Sarami Estate Buyer pays the smallholder in cash
Purchased cattle are loaded into the truck for transport and delivery to Sarami Estate
Once 40 cattle have been purchased from Smallholders an improved commercial bull from Sarami Estate is delivered to improve herd genetics
While the above is the standard model, other activities can and do take place:
The Sarami Buyer can and does provide technical, management and commercial advice while in the field; Smallholders with insufficient cattle for a truck load can search out other smallholders or even purchase cattle off other smallholders to accumulate a truckload. Smallholders who have gathered more than a truckload can be assisted to trek the cattle to Sarami Estate (An example was observed where 87 cattle from Big Bay were trekked down to Sarami with the associated costs shared – The cattle were selected by the Sarami Buyer and a 50% payment made in cash prior to commencing the trek).
An important indirect benefit of the Sarami Project model is the relationship that is built between the Sarami cattle buyer and the smallholder cattle producers. Information provided by the Sarami buyer is highly respected by smallholders because the buyer in involved in the cattle business and not simply searching out cattle for slaughter. The intercommunication and provision of technical, management and commercial advice from the Sarami buyer to smallholders fulfils a need that cannot be provided by agricultural extension officers not engaged in the cattle business.
While the focus of the Sarami Project to date has been on the purchase of steers, recent changes to the SMP price schedule (see Figure 7) have now made it viable to purchase heifers. This is of great benefit as the Sarami Buyer is now able to purchase more of the cohort of cattle that a smallholder may wish to sell.
Two cattle/silage/multi-purpose 4WD transport trucks (see Picture 3) were supplied under the project principally to assist collection of cattle from smallholders. These trucks were also configured to be able to be utilized for silage production and general farm transport purposes. The trucks can transport between 6 and 12 cattle depending on size (liveweight).
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PICTURE 3 - CATTLE TRANSPORT VEHICLE
The trucks are well constructed for loading, unloading and transport of cattle. While the leadup ramp into the vehicle is steep it is a practical solution for an environment where cattle need to be loaded without the benefit of loading ramps. Both loading and unloading was observed to progress smoothly without significant stress on the cattle.
4WD is absolutely necessary to access smallholder cattle only accessible via rudimentary bush tracks.
3.4 CATTLE HANDLING & MANAGEMENT Cattle purchased from smallholders in the field are delivered to the cattle yards at Sarami Estate where they are inducted (weighed, dewormed and drafted). The cattle yards are well constructed and cattle work well through the races (cattle unfamiliar with yards were observed to move through the races well without significant input from farm staff which could cause animal stress).
The weighing provides an objective reference point for the Sarami Buyer to continually correct his in-field liveweight estimations. The weighing also allows the cattle to be drafted into appropriate classes (sex and liveweight) to be placed with other Sarami cattle.
At this stage no identifiers are being used to track individual cattle performance during the finishing operation.
Prior to delivery to SMP cattle are weighed to ensure that they will meet the necessary carcase weight to achieve the price premium on offer.
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PICTURE 4 - SARAMI ESTATE CATTLE YARDS
3.5 PASTURE IMPROVEMENT While pasture improvement can result in significant benefits for cattle production, perhaps the most important consideration for utilization of improved pastures are sound weed control practices.
Weeds and rapid weed growth and colonization cause significant problems on Espiritu Santo which can be observed on a number of other cattle estates. To improve pastures firstly weeds must be brought under control, and then when improved pasture is established weed control must be maintained.
Once weeds are under reasonable control then the land is ploughed and the selected grass and legume is planted. Once the improved pasture is established then weed maintenance commences.
The principal benefits of improved pasture are:
Increased stocking rate: o Paddocks with improved pasture can be stocked at 4 cattle units/Ha compared with unimproved pasture that can only take up to 2 cattle units/Ha. Increased cattle growth rate o Cattle growth rates on improved pasture are in the order of 0.5kgLW/head/day, while on unimproved pasture are in the region of 0.3 to 0.4kgLW/head/day.
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FIGURE 9 - HEAVY TRACTOR USED TO PREPARE LAND FOR IMPROVED PASTURE
3.5.1 PASTURES Pasture improvement on Sarami Estate to date has involved development of Signal grass intergrown with Hetero (a creeping perennial legume) to assist nitrogen fixation.
Signal grass (Brachiaria decumbens) o Well-adapted to acid and neutral soils in the humid tropics (above 1500 mm AAR) o Very persistent, including under seasonally dry conditions o Maintains green leaf well into seasonally dry periods o Productive, capable of sustaining high stocking rates and grazing pressures o Tolerant of low fertility o Excellent seed producer: inexpensive and high-quality seed usually available Hetero o Resistant to heavy grazing o Compatible with Signal grass under grazing
In recent times Hamil (Panicum maximum) and Mulato (Brachiaria hybrid) grasses have been established as alternatives to Signal grass and Centro (Centrosema molle) has been established as an alternative legume to Hetero. It is considered that all three provide good options for future pasture improvement on Sarami Estate.
Stylo has also been trialed as a pasture species but with less success and it will not be considered for future pasture improvement.
A deep plough is used to rip the land prior to pasture improvement. After ripping the land is
3.5.2 WEEDS Invasive weeds are a major problem that requires significant investment in control prior to pasture improvement and also require intensive ongoing maintenance programs.
Major invasive weeds of concern on Sarami Estate include:
Wild Aubergine o Spread by bird vector o If extensive and the plants are big then 2,4-D herbicide is used
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o If less intensive invasion then hand pulling is preferred o Reasonably easy to control Hibiscus Burr o Spread via cattle hooves o If extensive then 2,4-D herbicide is used but it is very important to get the spray rate correct o When bringing cattle in it is preferred to keep them in controlled paddocks for a period o Difficult to control Wild Peanut o Seeds can be viable for up to 20 years o Is a legume and 2,4-D is ineffective o Best controlled through slashing and/or smothering o Doesn’t like competition (Best competition is buffalo grass)
On Sarami Estate, once weeds are under control and improved pasture is established, then weed maintenance involves the use of hand pulling teams.
Weed Control Teams o 8 people permanently employed o Up to 25 people at peak demand o Generally female employees o Pay rate VTU1350/person and access to house, water, electricity and garden at no cost
3.6 SUPPLEMENTARY FEEDING - FORAGE CROP AND SILAGE 3.6.1 FORAGE CROP A forage sorghum crop (Grazensile) has been grown by Sarami Estate, principally for silage production (see below).
However it has been decided that in the future forage crops will be grown to be used as both green feed and for silage production. It is considered that this will result in better business outcomes overall.
3.6.2 SILAGE Some 7000 tonnes of silage have been successfully produced at Sarami . This silage store provides risk coverage for a prolonged drought period when the pasture growth is unable to sustain the number of cattle on the property.
The silage has been produced from a forage sorghum crop which was treated with an enzyme additive during mechanical harvesting to improve silage fermentation quality. The silage was produced using a mechanical harvester (see Picture 5) and the multipurpose 4WD trucks are used to transport the cut forage from the paddock to the silage heap.
The steps followed to make sound silage included:
Forage sorghum crop (Grazensile) was harvested after wilting to 30%DM; The forage was chopped into short lengths and an enzyme supplement was added to improve fermentation during mechanical harvesting; The chopped forage crop was placed in the storage heap and compacted as tightly as possible using the heaviest tractor available;
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The silage heap was completed as quickly as possible and covered with double plastic overlay to maintain an airtight seal; A woven protection layer was place over the plastic seal and it was all held in place with used tyres; Following maturation the silage was fed out from the face of the storage heap.
By observation the silage has remained in a sound condition for as long as 2 years making this a viable technique for mitigating the risk of poor pasture growth during periods of drought.
PICTURE 5 - SILAGE PRODUCTION
3.6.3 SUPPLEMENTARY FEEDING Silage has been feed to cattle. In the preferred technique silage was combined with copra meal (good energy source) and rock salt in a feed mixer (see Picture 5). After a period of adaption to the feed the cattle performed satisfactorily. This compounded feed would be intended to be used as both a finishing ration and as a technique to minimize the risk of poor pasture supply.
Root crops tubers have also been used as a supplementary feed component but this was discontinued as it was considered too difficult to manage with current resources. It will be reconsidered once infrastructure improvements have been made. The root tubers were purchased off smallholder farmers and this provided another opportunity for the Sarami Project to have beneficial economic impact. While the feed was acceptable to the cattle, the logistics of sourcing sufficient root tuber raw material were complex compared to the sourcing of copra meal, and for the moment the use of copra meal as the supplementary feed component provides the technique with the least impact on Sarami management.
Sarami Estate considers that for efficient use of supplementary feeding (either green feed or silage) further infrastructure is required to allow efficient feedout. It is intended that this will involve the future construction of pads, feed troughs and access laneways. The intention would be to set up feeding infrastructure in the intersecting corner of four paddocks so that the use of the infrastructure would be maximized.
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In the meantime the silage store (some of which has been laid down for over 2 years) provides a feed resource for the cattle to assist in managing the property during a period of drought.
3.7 CATTLE PURCHASES FOR FATTENING PROGRAM From April 2010 until December 2012, 2013 cattle were purchased from other farmers for fattening on Sarami Estate.
Table 3 shows that around 600 cattle were purchased by Sarami Estate in 2010 and 2011 and this increased to over 800 cattle in 2012. The total outlayed to purchase the cattle was VUV57.5 million (approx $A0.6 million) and the average purchase price was VUV28,560 (approx $A300 per head).
TABLE 3 - CATTLE PURCHASE TIMETABLE
Cattle Average Price Year Total Paid Purchased Paid per head 2010 602 19,355,000 32,151 2011 581 16,157,000 27,809 2012 830 21,980,200 26,482 Grand Total 2013 57,492,200 28,560
Table 4 demonstrates that the 2013 cattle were purchased in 558 sales events from 21 locations across Santo Espiritu. While the average number of cattle purchased from each farmer was 4, the average purchase per seller was much higher from Aore and South Santo due to purchases of cattle for fattening from other estates.
TABLE 4 - CATTLE PURCHASE BY SOURCE LOCATION
Source of Cattle Number of Average Cattle Cattle Purchased Sales Events Sold per Farmer Aore 213 2 107 Arotkal 13 12 1 Big Bay 439 143 3 Cape Queiros 26 16 2 Hog Harbour 291 87 3 Kole 56 15 4 Lapita 10 1 10 Lathi 10 9 1 Liaro 17 10 2 Lolowilco 79 11 7 Luvakar 52 23 2 Matantas 15 2 8 Najara 50 4 13 Pesena 30 2 15 Port Olry 255 141 2 Rovilco 10 2 5 Sara 100 42 2 South Santo 217 3 72 Unknown 28 14 2 Vatnale 15 8 2 Veeana 3 1 3 White Grass 84 10 8 Grand Total 2013 558 4
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Table 5 shows that 711 (35%) were purchased in mobs of less than 5 cattle and 993 cattle (49%) were purchased in mobs of less than 10 cattle.
TABLE 5 - CATTLE PER SALES TRANSACTION
Cattle per Sales No of Cattle % Transaction Purchased 1 to 4 711 35% 5 to 9 272 14% 10 to 29 368 18% 30 to 50 222 11% >50 440 22% Grand Total 2013
Table 6 shows that 241 farmers sold 2013 cattle; an average of 8 cattle per farmer indicating that each farmer sold cattle to Sarami Estate on average twice during the period April 2010 until December 2012. 193 (80%) of the 241 farmers sold less than 10 cattle to Sarami Estate over the 3 year period and supplied 567 cattle indicating that the project is likely to have had significant impact on income for in excess of 200 smallholders. It should be noted that some of the larger cattle suppliers to Sarami Estate actually operated as accumulators who purchased off other smallholders and assembled a truckload or more for sale; therefore the total number of small holders impacted would be increased.
TABLE 6 - PROFILE OF CATTLE SOLD
Number of Cattle Number of Total Cattle Average Number Sold per Farmer Farmers Sold of Cattle Sold 1 to 4 153 323 2 5 to 9 40 244 6 10 to 24 35 476 14 25 to 50 9 312 35 >50 4 658 165 Grand Total 241 2013 8
Table 7 provides an analysis of the number of cattle purchased by Sarami Estate in 5 price ranges. 80% of the cattle purchased fell into the VTU20,000 to VTU40,000 per head price range.
TABLE 7 - CATTLE PURCHASE PRICE RANGE
Cattle Purchase No of % of Price Range Cattle Cattle 10,000 to 20,000 184 9% 20,000 to 30,000 954 47% 30,000 to 40,000 664 33% 40,000 to 50,000 203 10% >50,000 8 0% Grand Total 2013
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3.8 SARAMI PROJECT VALUE ADD From the analysis of cattle purchased during the duration of the Sarami Project and assuming that on average a carcase weight of 275kg was obtained when Sarami Estate sold the cattle to SMP and an average sales price of VTU185/kg CW was achieved then sales value of the 2013 cattle would have been in the region of VTU100 million.
This indicates that the added value arising from the Sarami project, over the three years of operation, would be in the region of VTU42.5 million ($A0.45 million).
3.9 LIVE CATTLE TO SOLOMON ISLANDS In 2011 the sale of four hundred heifers from Sarami Estate to the Solomon Islands was negotiated with the Government of the Solomon Islands.
Four hundred 360kg liveweight heifers were duly delivered at a price to Sarami equivalent to the sale value of heifers sold to SMP at around 500kg liveweight. Sarami Estate benefitted from selling the animals without having to grow them out for a further 12 months prior to delivery to SMP. The total sales value of the heifers was in excess of VTU12 million.
Testament to the success of this first delivery is that in late 2012 the Solomon Islands government was in negotiation with Sarami Estate for delivery of a further 400 heifers that had been artificially inseminated and 20 commercial European bred bulls.
The cattle population in the Solomon Islands in 2010 was 14,500 cattle (see Figure 20). The delivery of 800 heifers is equivalent to a herd expansion in the Solomon Islands of 5.5% with the benefit of sound, well adapted genetics for the production of heavyweight carcases.
Significant benefit has therefore been derived by both Sarami Estate and the Solomon Islands beef sector from the delivery of cattle of sound genetic base well adapted to the tropical environment of the Pacific Islands.
4 SMALLHOLDER OPERATIONS
4.1 OVERVIEW While 96% of farms producing cattle have less than 100 animals, these farms only represent around 30% of the cattle in Vanuatu (derived from Figure 3 and expected to be similar on Espiritu Santo).
A significant proportion of smallholder cattle are held on pasture under coconut palms and these smallholders operate mixed farm operations (copra and cattle).
For the purposes of this report smallholders are considered to be those cattle enterprises that have less than 100 cattle.
Cattle enterprises can often be operated as family businesses where various parts of the family individually retain and manage a number of cattle but decisions are made at a family level. As a result some families make management decisions relating to more than 100 cattle.
Most of the smallholders interviewed had their own houses and their children attended school. They had access to tank, stream or town water for domestic purposes and access to health clinics.
While steers and heifers that are 2.5 to 3.5 years old are generally sold into the cattle market, older animals including culled cows are generally slaughtered or sold to village butchers or other villagers for home consumption.
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Smallholder farmers on Espiritu Santo often have access to fenced paddocks but the major constraint for both fenced and unfenced cattle is access to water. Without access to water cattle will grow when feed is lush from good rains but will be held back during periods of low rainfall and drought. Even in good rainfall conditions it is difficult to finish cattle unless they have free access to water it is even more difficult when rainfall is poor and the pasture is less lush.
Smallholders sell steers and heifers direct to Sarami Estate and SMP for slaughter and also sell through agent traders and direct to meat processors and butchers in Port Vila. Live cattle sales to Port Vila are restricted due to the associated transport costs and risks, however a significant portion of SMP beef products are delivered to Port Vila.
4.2 SARAMI PROJECT IMPACT Sarami Estate is now a significant and preferred buyer of steers produced by smallholders, and in the future will increase the number of heifers purchased.
PICTURE 6 - SMALLHOLDER FARMERS AT PORT ORLY
The interviewees gave a consistent impression that the Sarami Project has improved their confidence that the beef cattle sector will provide better returns in the future than some of their other farming activities. The market opportunity provided by the Sarami Project is considered to be the key motivator for these positive impressions of the future of the sector.
An impression was gained from smallholder interviews that, as a result of improved confidence in the beef industry resulting from the impact of the Sarami Project, the majority are either interested or have begun to invest in increasing/improving their cattle production. This has been somewhat influenced by poor returns from copra production, however the interventions mentioned included:
Improved fencing is seen as a priority; Some mentioned water infrastructure; Some with more than 20 cattle have begun to invest in improved pasture using both signal and buffalo grass; Some of the larger cattle holders mentioned setting aside funds from cattle sales to be reinvested in farm infrastructure.
Interviews with farmers indicate that animal health is not a big issue for them and the animals are quiet from regular handing and animal husbandry during pregnancy, birth and weaning and these activities do not cause significant losses.
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The only veterinary drug treatment mentioned by any of the smallholder farmers was occasional deworming. It is however reported that reproductive diseases including Vibriosis and Trichomoniasis exist in the cattle and are as a result cause a reduction in conception and birth rates. A vaccination program for Vibriosis has been recommended by the Vanuatu Livestock & Quarantine Department but no action has been taken to date (Sarami Estate vaccinate all bulls for Vibriosis including those that are given to smallholders under the incentive program).
PICTURE 7 - SMALLHOLDER CATTLE – ESPIRITU SANTO
Interviews with smallholders with less than 100 cattle revealed that:
All smallholders agreed that cattle had become more important to them in recent times due to poor copra prices. Smallholder properties with less than 20 head o Most if not all of the cattle on are held as a cash resource meaning that sell decisions are not based on maximizing cattle returns but are based on the need for cash (e.g. school fees, weddings, funerals and other family expenses). Smallholders holding cattle in the 20 to 100 head range: o Are much more likely to consider cattle as a business and are more likely to sell cattle when appropriate and reinvest cash in both cattle and farm infrastructure improvements; o Generally understand that it is better to sell more younger cattle than it is to hold cattle hoping that they will grow out to reach premium prices (In other words used in this document they see themselves as breeding and backgrounding operations). Transport costs are a significant restraint for smallholders. As an example it can cost smallholders up to VTU9000/head to transport cattle from Big Bay to Luganville.
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When delivering to SMP smallholders achieve the prices as per the SMP price schedule however an inspection charge of VTU5/kgCW is then deducted. The return from the sale of cattle to SMP is therefore the price schedule minus VTU5/kgCW for inspection minus the transport cost. Some enterprising smallholders are beginning to purchase small animals from other small holders for backgrounding prior to sale to Sarami. The Sarami Project has made more cattle producers with over 20 head of cattle aware of the business benefits of concentrating on breeding and backgrounding and many of these smallholders want to grow their businesses by acquiring more land, increasing the number of breeders and holding more cattle for backgrounding.
4.3 FUTURE GROWTH FOR SMALLHOLDERS A number of the smallholders interviewed clearly saw a pathway to future growth of their cattle businesses through increasing the proportion of breeding cows in their herds.
The logic is that:
More breeding cows in the herd produces more calves; Less steers and heifers in the herd provides more nutrition for the cows and improves conception and weaning rates; Smallholder farms sell steers and surplus heifers after say 2 years to Sarami at liveweights around 300kg instead of holding onto the cattle for longer in an attempt to reach liveweights in excess of 400kg; More steers and heifers are sold improving the returns for the smallholder farmer; Breeding herd productivity increases; After finishing at Sarami Estate the total quantity of beef produced increases.
During interviews Smallholders indicated that their current herd structure is about 40% cows and weaning rates improve as the herd size increases. Figure 10 provides an estimate of the sales outcome that would be expected from the standard herd structure.
FIGURE 10 - STANDARD HERD STRUCTURE SALES OUTCOMES
STANDARD HERD STRUCTURE Head in Herd Number 6 24 60 Mix Cows/Steers and Heifers Percent 40% 40% 40% Cow Numbers Number 2 10 24 Steer & Heifer Numbers Number 4 14 36 Weaning Rate Percent 40% 50% 60% Calves Produced per Year Number 1 5 14
Annual Sales (Average) Number 1 5 14
Herd Productivity (Average) Percent 17% 21% 23%
Pasture Years/Head Produced (Average) Years 6.0 4.8 4.3
AVERAGE SALES Income Assuming Sold at 400kg LW to Abattoir (Far) Vatu/Annum 18,250 91,250 255,500 Income Assuming Sold at 400kg LW to Abattoir (Near) Vatu/Annum 21,250 106,250 297,500 Income Assuming Sold at 400kg LW to Sarami (Far) Vatu/Annum 22,000 110,000 308,000 Income Assuming Sold at 400kg LW to Sarami (Near) Vatu/Annum 22,000 110,000 308,000 It is considered possible for smallholder farmers in the short to medium term to increase the cow percentage in the herd to say 70% and improving weaning rates to say 60%. Figure 11 provides an estimate of the outcome for smallholders that improve their herd productivity and sell cattle at 300kg liveweight to Sarami Estate.
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The benefits from the results of the estimate are significant:
Smallholders with an average of 6 cattle produce an average of 2 more animals per year and improve income when selling to Sarami by VTU54,000/annum. Smallholders with an average of 24 cattle produce an average of 5 more animals per year and improve income when selling to Sarami by VTU70,000/annum. Smallholders with an average of 60 cattle produce an average of 11 more animals per year and improve income when selling to Sarami by VTU142,000/annum.
FIGURE 11 - IMPROVED HERD STRUCTURE SALES OUTCOMES
Further detailed analyses of the outcomes for standard and improved herd structures are provided in Annex 3.
It is also noticeable from this analysis that benefits do not occur if the cattle are sold direct to SMP rather than to Sarami Estate for finishing. In fact this strategy when selling to SMP would result in a loss to smallholder producers.
The economic growth that results from this strategy is significant and dependent on a private sector driven approach that responds to a cattle market that pays a premium price for improved quality cattle (higher carcase weights in younger cattle).
5 COMMERCIAL OUTCOMES OF THE SARAMI PROJECT For the Sarami Project to be successful it is necessary that each of the components of the value chain is able to sustain successful commercial enterprises. In this case this involves smallholder cattle producers, Sarami Estate and Santo Meat Packers.
FIGURE 12 - SARAMI PROJECT BUSINESS PARTNERS
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5.1 ASSUMPTIONS 5.1.1 SANTO MEAT PACKERS No analysis has been conducted of SMP business operation or performance however it can be assumed that the business performance is reflected in the prices offered for raw material (cattle).
The price schedule offered by SMP (see Figure 13) clearly demonstrates that SMP offers premium prices for large cattle.
FIGURE 13 - CURRENT SMP PRICE SCHEDULE
Steers Abattoir Heifers Abattoir Price V/Kg CW Price V/Kg CW Under 200kgCW 90 Under 200kgCW 90 200kgDW and over 130 200kgDW and over 130 240kgCW and over 170 240kgCW and over 170 270kgCW and over 190 260kgCW and over 190 300kgCW and over 190
5.1.2 SARAMI ESTATE Sarami Estate is capable of producing large cattle and heavy carcase weights due to access to improved pasture, infrastructure and cattle management practices.
Sarami Estate currently offer prices for live cattle supplied by smallholders on a sliding scale as outlined in Figure 14.
FIGURE 14 - SARAMI ESTATE CATTLE BUYING PRICE SCHEDULE
Steers Sarami Heifers Sarami Price V/Kg LW Price V/Kg LW Under 250kgLW 90 85 250kgLW and over 80 75 350kgLW and over 75 70 450kgLW and over 70 65
Analyses of the business outcomes for Sarami Estate have been performed based on the following assumptions which have been confirmed by Sarami Estate.
An on-farm cattle growth rate average of 0.50KgLW/day, Farm operating costs of VTU250/Head cattle/Month, A working capital interest rate of 15%/annum, Transport cost (Average) for both collection from the field and delivery to SMP of VTU5,500/Head, and A gift bull value of VTU25,000/Bull.
5.1.3 SMALLHOLDERS Smallholders have difficulty producing the large cattle preferred by SMP due to poor infrastructure, and limited access to services and inputs, but more particularly due to limited access to water and improved pasture.
When producers sell to SMP they incur the following costs:
Inspection Costs of VTU5/KgCW Transport Costs (Near) VTU5000 and (Far) VTU8000/Head
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When producers sell to Sarami Estate they do not incur inspection or transport costs.
5.2 ANALYSES An Excel spreadsheet has been created and analyses performed based on the above assumptions.
5.2.1 SMALLHOLDER OUTCOMES
5.2.1.1 SPREADSHEET ANALYSIS Figure 15 provides the spreadsheet analysis outcomes for smallholders selling steers to Sarami Estate rather than SMP.
FIGURE 15 - SMALLHOLDER BENEFITS FROM SELLING STEERS TO SARAMI ESTATE
Liveweight Kg 200 250 300 350 400 450 500 550 600 Benefit to Producer from Selling to Sarami rather than SMP (Far) V/Head 13,500 11,950 12,400 11,950 3,750 1,750 -9,900 -18,150 -19,350 Benefit to Producer from Selling to Sarami (Far) Percent Improvement Percent 392% 221% 164% 21% 8% -28% -40% -39% Benefit to Producer from Selling to Sarami rather then SMP (Near) V/Head 10,500 8,950 9,400 8,950 750 -1,250 -12,900 -21,150 -22,350 Benefit to Producer from Selling to Sarami (Near) Percent Improvement Percent 300% 148% 109% 87% 4% -5% -34% -43% -43% For the steer analysis provided in Figure 15 it is indicated that:
Smallholders benefit from selling all steers under 450kgLW to Sarami Estate rather than direct to SMP At the preferred smallholder/Sarami transaction weight for steers around 300kgLW, the smallholder receives benefits in the region of VTU9,400 to VTU12,400 per head and an percent improvement in return of between 109% and 221% Smallholders should sell all steers over 500kgLW direct to SMP, however achieving these weights is extremely difficult for the majority of smallholders.
Figure 16 provides the outcomes for smallholders selling heifers to Sarami Estate rather than SMP.
FIGURE 16 - SMALLHOLDER BENEFITS FROM SELLING HEIFERS TO SARAMI ESTATE
Liveweight Kg 200 250 300 350 400 450 500 550 Benefit to Producer from Selling to Sarami rather than SMP (Far) V/Head 16,500 15,700 17,750 17,200 19,000 8,500 -750 -8,050 Benefit to Producer from Selling to Sarami (Far) Percent Improvement 515% 374% 236% 211% 41% -2% -18% Benefit to Producer from Selling to Sarami rather then SMP (Near) V/Head 13,500 12,700 14,750 14,200 16,000 5,500 -3,750 -11,050 Benefit to Producer from Selling to Sarami (Near) Percent Improvement 386% 210% 190% 138% 133% 23% -10% -24% For the heifer analysis provided in Figure 16 it is clear that:
Smallholders benefit from selling all heifers under 450kgLW to Sarami Estate rather than direct to SMP At the preferred smallholder/Sarami transaction weight for heifers around 400kgLW, the smallholder receives benefits in the region of VTU16,000 to VTU19,000 per head and an percent improvement in return of between 133% and 211% Smallholders should sell all heifers over 500kgLW direct to SMP, however achieving these weights is difficult for the majority of smallholders.
5.2.2 SARAMI OUTCOMES The spreadsheet analyses for Sarami Estate outcomes based on the above assumptions are provided in Figure 17 & Figure 18. It needs to be noted that the Sarami Estate costs taken into account only include direct costs and do not include overheads. Benefits to Sarami Estate will be further reduced when overhead costs are taken into account.
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FIGURE 17 – SARAMI ESTATE BENEFITS FROM GROWING OUT STEERS
Start Weight Kg 200 250 300 350 400 450 500 550 600 Nett Benefit to Sarami Finished Weight 550kgLW V 18,625 18,725 16,525 16,775 15,225 16,425 15,725 15,025 12,525 Nett Benefit to Sarami Finished Weight 600kgLW V 20,825 21,025 18,725 18,775 17,225 18,425 17,425 16,825 16,225 Nett Benefit to Sarami Finished Weight 650kgLW V 24,975 25,075 22,675 22,725 20,975 22,175 21,175 20,275 19,675 For steers that are grown out by Sarami Estate and sold to SMP it is indicated from Figure 17 that:
The SMP price schedule clearly pushes Sarami Estate to achieve liveweights for steers in excess of 650kg, and After overheads are taken into account it would be wise for Sarami to concentrate on purchasing steers from smallholders that are under 500kgLW.
FIGURE 18 – SARAMI ESTATE BENEFITS FROM GROWING OUT HEIFERS
Start Weight Kg 200 250 300 350 400 450 500 550 Nett Benefit to Sarami Finished Weight 500kgLW V 3,825 3,275 525 25 -1,875 -1,125 -2,375 -5,625 Nett Benefit to Sarami Finished Weight 550kgLW V 12,875 12,225 9,275 8,775 6,675 7,325 5,975 4,925 For heifers that are grown out by Sarami Estate and sold to SMP it is indicated from Figure 18 that:
The SMP price schedule clearly pushes Sarami Estate to achieve liveweights for heifers in excess of 550kg, and After overheads are taken into account it would be wise for Sarami to concentrate on purchasing heifers from smallholders that are under 400kgLW.
5.3 COMMERCIAL OUTCOME CONCLUSION Figure 19 provides an analysis of benefit to Sarami Estate as achieved under the current price schedule offered by SMP with various scenarios where the prices offered are for all cattle above 240kgCW are VTU170/kgCW, VTU150/kgCW and VTU130/kgCW.
In this scenario returns per head for Sarami fall by almost VTU6000/head for each step reduction. Once overheads and fixed costs are deducted from the Sarami Estate nett benefit then it is likely that this business model would only be sustainable with SMP prices better than VTU170/kg for all carcases over 240kgCW.
FIGURE 19 - IMPACT OF ABATTOIR (SMP) PRICE SCHEDULE
Impact of SMP Price Schedule 25,000
20,000
15,000
10,000
5,000
0 200 250 300 350 400 -5,000
Liveweight at Induction to Sarami KG Nettto Benfit Sarami Estate VTU/Head
Finished LW 600 kg- Santo Abattoir Weight Price Schedule Finished Liveweight 600kg - Abattoir Price V170/kgCW for all above 240kgCW Finished Liveweight 600kg - Abattoir Price V150/kgCW for all above 240kgCW Finished Liveweight 600kg - Abattoir Price V130/kgCW for all above 240kgCW
On this basis Sarami Estate would be forced to reduce its buying price by up to VTU20/kg. The result of this price reduction would be to reduce the viability of smallholders to sell to Sarami Estate.
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It is clear from this analysis that the commercial outcomes and sustainability of the Sarami Project are highly dependent on not only the actual prices but on the jumps in the price schedule offered by SMP that provide premiums for heavier carcase weights.
In reality the price jumps are a recognition of beef quality attributes (well grown animal, cut size, and high meat yield). In Espiritu Santo these cattle are also relatively young as very limited numbers of large cattle are supplied from a working bullock background (Observation of SMP kill sheet was that many of these cattle only have 4 permanent incisors indicating they are less than 4 years old).
It is the lack of recognition of price/quality relationships for beef cattle in many developing countries (With the exception of countries that have access to developed markets e.g. Vanuatu to Japan, Botswana and Namibia to Europe) that provides the challenge to replication of this approach.
6 EXPANSION AND REPLICABILITY OF THE APPROACH
6.1 PACIFIC ISLANDS Cattle populations in the Pacific Islands are provided in Figure 20. The cattle populations in the islands are small and it is considered that the only Pacific Islands that have cattle populations of relevance to the possible introduction of strategies similar to the Sarami Project would be Fiji, Papua New Guinea and possibly Samoa and the Solomon Islands.
FIGURE 20 - PACIFIC ISLAND CATTLE POPULATIONS
6.2 VANUATU Figure 3 provides information on the farm sizes in Vanuatu. From this information estimates can be made of the population of cattle in each of the farm sizes (see Figure 21).
FIGURE 21 - FARM SIZE AND CATTLE POPULATIONS - VANUATU
Vanuatu Farm Size Distribution Description Total 101 to 501 to 1001 to Over Farm Size 1 to 5 6 to 10 11 to 20 21 to 50 51 to 100 500 1000 5000 5000 Number of Farms 1302 698 576 386 108 89 16 8 4 3187 Percent of Farms 41% 22% 18% 12% 3% 3% 1% 0% 0% Number of Smallholder Farms 3070 Percent of Smallholder Farms 96% Average Farm Size 2.5 8 15 35 75 300 750 3000 7500 Number of Cattle 3,255 5,584 8,640 13,510 8,100 26,700 12,000 24,000 30,000 131,789 Percent of Cattle 2% 4% 7% 10% 6% 20% 9% 18% 23% Number of Cattle on Smallholder Farms 39,089 Percent of Cattle on Smallholder Farms 30%
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While smallholder farms (just over 3000) make up 96% of the farms in Vanuatu they only control 30% of the cattle population (just under 40,000 head).
Assuming that around 60% of these farms are on Espiritu Santo then the cattle population on Espiritu Santo controlled by smallholders is in the order of 24,000 head. At a herd productivity levels of say 15% then the smallholder farmers of Espiritu Santo produce around 3600 cattle/annum. Some of these will be consumed at the household level and some sold to local village butchers meaning that it is likely that less than 3,000 cattle would be traded into the open market. Some of these cattle will be sold direct to SMP and some direct live to Port Vila.
While it would be desirable to have a competitor on Espiritu Santo to provide competition for lightweight cattle purchased by Sarami Estate it is considered that the cattle numbers available are currently insufficient and it is desirable for Sarami Estate to work with smallholders over the next short to medium term period (up to 10 years) to establish a sound base for this alternative approach to beef sector development.
However the same market and production conditions exist throughout Vanuatu and if a suitable private sector cattle ranch or estate could be recruited then it is considered desirable that this alternative approach be encouraged on the Island of Efate. Should this be successful then an alternative market would be established for lightweight cattle in Vanuatu against which smallholder producers could at least make price comparisons even if difficult to deliver due to transport costs and logistics.
6.3 FIJI The beef value chain has been estimated for a project conducted in 2011 for the AusAid MDF project. The value chain diagram is reproduced in Figure 22.
FIGURE 22 - FIJIAN BEEF VALUE CHAIN
TOURISM BEEF VALUE CHAIN 650 tonnes
IN FIJI HOUSEHOLD/ MAQITI RETAIL FOOD SERVICE EXPORT ARROW SIZES REPRESENT 2,000 tonnes 2,150 tonnes 1,500t 1,000t VOLUME/VALUE FLOWS
CONSUMER F40 MILLION MARKET 2,000 tonnes 1,500 tonnes 2,500 tonnes 650 t
RETAIL VALUE ADD F4 MILLION
MARKET HOUSEHOLD / FRESH F36 MILLION PROCESSED MECHANISM MAGITI MARKET MEAT
IMPORTER/ PROCESSOR/ WHOLESALER WHOLESALER WHOLESALE/ VALUE ADD PROCESS F11 MILLION FMIB
3,500t 200t 200t 150t 1,100 t 1,500 tonnes
6,650 TONNES LARGE SUPPLY SMALL/MEDIIUM SMALLHOLDERS DAIRY FARMS COMMERCIAL BEEF OFFAL F25 MILLION COMMERCIAL 21,000 FARMS 700 FARMS 1 FARMS IMPORTS IMPORTS 55 FARMS 105,000 CATTLE 18,000 CATTLE 4,500CATTLE FROM FROM 4,000 CATTLE 5 CATTLE/FARM 26CATTLE/FARM 4,500 AUS & NZ AUS & NZ 70 CATTLE/FARM CATTLE/FARM
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The Fijian beef market depends on imported product to meet the market demand and the beef demand for the tourism sector of the market is estimated to be about 650 tonnes (about 10% of the total market).
The cattle production sector in Fiji is dominated by smallholder farmers. Figure 23 provides data extracted from the 2009 National Agriculture Census. This analysis shows that compared to Vanuatu:
80% of cattle are held in smallholder farms with an average of 5 head (Vanuatu – 6% of cattle are held in smallholder farms - see Figure 21), the majority of these smallholder cattle holdings are held by Indo Fijian farmers in the sugar cane production areas and have traditionally been utilized for draft and dairy purposes; There is only one large cattle operation in Fiji – Yaqara Ranch with 4,500 cattle (Vanuatu has 4 similar size or larger operations see Figure 21); There is a limited number of farms (55) with an average of 70 cattle per farm in Fiji, There are a number of medium size commercial ranches in Fiji (see further information provided in Section 6.3.1.4 below).
FIGURE 23 - FIJIAN CATTLE SECTOR STRUCTURE
LARGE SMALL/MEDIIUM SMALLHOLDERS DAIRY FARMS COMMERCIAL COMMERCIAL 21,000 FARMS 700 FARMS 1 FARMS 55 FARMS 105,000 CATTLE 18,000 CATTLE 4,500CATTLE 4,000 CATTLE 5 CATTLE/FARM 26CATTLE/FARM 4,500 70 CATTLE/FARM CATTLE/FARM
6.3.1 PROFILE OF FIJIAN CATTLE/BEEF SECTOR
6.3.1.1 CATTLE PRODUCTION The bulk of the commercial beef is derived from culled working bullocks or house cows that predominate in the cane areas. As cane has declined, the volume of cattle from this source has also declined.
A secondary source of beef is culled cows from the Dairy sector mainly in the Central division in the East of Viti Levu.
The locally produced premium steer beef market is dominated by output from the Yaqara Pastoral Company, a government owned and run enterprise in the North West of Viti Levu. There are a number of other smaller commercial producers mainly in the North on Vanua Levu and Taveuni.
The balance of the national requirement for Premium quality beef, mainly from the tourist industry, is imported as high quality boned out primal cuts.
Many Fijian communities maintain their own beef herds for village consumption. The exact volume of this sector is difficult to quantify because they do not enter the formal sector.
The premium beef market is strongly influenced by Santa Gertrudus with some Limousin and boss indicus varieties. Considerable effort has been spent on improved genetics and Yaqara is the repository of improved beef breeds. Further imports of new genetic material would be beneficial but the impact of AI on this sector is likely to be very slow.
The majority of the dairy beef is derived from old cull cows that are derived from non beef breeds (Friesen, Jersey and Shorthorn).
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6.3.1.2 PASTURE Fiji pastures are characterised by the tropical environment in which they grow. For this reason grasses need to grow fast to compete out the weeds. Fast growth relies on laying down high quantities of cellulose enclosing large volumes of water. Improved pastures (Para and Setaria) are no quality match for the grass types in temperate regions. These pastures are not energy or protein dense and contain large percentages of fibre. Improved pastures in the dryer areas include:
Signal grass which appears to be a strong competitive species, and Nadi Blue grass known for its drought resistance.
A lot of the beef industry is informally grazed on vacant unimproved land and cane tops during the harvesting season.
6.3.1.3 REARING SYSTEMS Local premium beef is predominantly single suckled and then ranged on poor quality pastures. It may be possible rear an animal in 3 years, but 4 years is not uncommon. The rest of the steer beef industry exists in a number of old coconut estates particularly in the Northern division.
There is no evidence of back grounding and no market currently exists to buy and sell this stock. A few people have tried feedlotting with mixed results. There are currently no feed lots operating in Fiji though some farmers supplement the grass ration with molasses mill mix and coconut if drought persists or stocking densities are too high.
Cull beef is reared in the same way as all local animals but has also been a working animal for up to 10 years. Working bullocks, pulling heavy equipment, may be well muscled, but working muscle is by definition tough.
Cull cows are of low quality and often very lean at slaughter.
It is difficult to determine the efficiencies of the majority of the beef industry due to its extensive and unstructured nature and the fact that much of the local beef is a byproduct from another sector. However previous figures characterise the beef industry with a 40% calving index, low mortality but high losses due to theft. Farms in the North claim as higher calving percentage closer to 80%.
Turn off for steers is claimed to be as low as 18 months, but is known to go as far as 4 years.
6.3.1.4 SIGNIFICANT CATTLE PRODUCING ENTERPRISES Table 8 provides profile of the major beef producers in Fiji.
TABLE 8 - MAJOR BEEF CATTLE PRODUCERS IN FIJI
PRODUCER PROFILE YAQARA Yaqara is an extensively ranched property on the dry side of Viti Levu the main island in Fiji. It has operated as the nations breeding centre for a number of years using the flat land of the Caboni block for this purpose. Otherwise it ranches its cattle on the back blocks of the property mustering once a year to wean and identify steers for fattening on the flatter blocks nearer the Coast. The Ranch is trying to improve its fencing in order to give it more management options in the control of its cattle. Yaqara has spent considerable money on weed control in recent years. It has also established Koronivia, Nadi blue and Signal grass which all do well in dryer conditions. Yaqara runs some 4500 head of cattle.
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PRODUCER PROFILE HAINES ESTATE The Haines estate comprises 2 blocks near Savusavu. The primary breeding estate uses Signal grass on hills and Batiki grass on the flats. Total current stock numbers are around 300 cattle down from higher numbers because of the infiltration of Lekunta grass in the flat land areas. After weaning the young cattle are fattened on Signal and Seteria. The Estate has trialed nutrifeed (a type of millet) and concentrate feeds and achieved growth rates of 1.6 kg per day. The price of feed has proved to be a barrier. Cattle turn off is between 18 and 24 months at around 240 kgCW. The cattle breeds in Savusavu are based on the Yaqara breeds (predominantly Santa Getrudis and Limousin types). The price paid for cattle in the North is some $1.50 per kg below Viti Levu prices, but the cost to ship an animal to the main island is at least $1.50 per kg. Whilst Haines Estate is able to slaughter the farm is not allowed to sell beef slaughtered in the North into the main island of Viti Levu. TARTES ESTATE Similar to the Haines Estate the Tartes farm the flat land old coconut plantations on Taveuni. These pastures have been improved by Batiki. Both farms purchase breeding bulls from Yaqara but are also using Friesian genetics. They operate a small abattoir that sells to hotels and shops on Taveuni.
6.3.1.5 COMPETITION FOR CATTLE IN FIJI A large number of animals are sold directly into the Maqiti market or are consumed in the Village system. These are possibly quality animals but there is little expectation or differentiation of quality in the slaughtering process. Cattle sold into the maqiti market fetch between F$800 to F$1,200 on the hoof.
Similarly the Muslim community purchases beef on the hoof for the Gurbani festival. These animals must be 2 teeth or bigger as per the Koran most people buy on price at around $1,000 to $1,200 per beast which targets smaller animals.
Cull cows and working bullocks are collected by a network of middle men who pay cash on the nose for animals collected from their travels throughout the Dairy and Cane areas. These dealers go out into the farm areas and buy cattle for cash on the hoof. There is no weighing or grading at this point.
The middle men that sell the animals to the butchers and are paid on a per kilo basis as per the official killing sheet. Working together as a group, they tend to dominate the market. They are also accused of profiting at the expense of the farmer. However they provide a service and resolve a logistical nightmare of collecting individual animals from many locations. They play an important part in the industry.
6.3.1.6 BEEF PROCESSING The breakdown of formal slaughter at the FMIB abattoirs of 7027 cattle during 2011 is provided in Figure 24 below. The following comments can be made:
While Fiji has twice as many cattle as Vanuatu only some 7,000 are formally slaughtered in Fiji compared with over 12,000 cattle formally processed in Vanuatu. The informal market (Magiti market) demand for cattle in Fiji is very high. Some 2,000 of the formal cattle slaughter in Fiji are steers which average around 260kg carcase weight. The average carcase weights demonstrate that these steers are able to achieve in excess of 260kgCW. A large proportion of these steers are produced at Yaqara ranch. 4,700 slaughter cattle are working bullocks, cows or bulls.
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This profile indicates that heavy carcase weights can be achieved for steers in Fiji and that there are currently very few produced and formally slaughtered (2000 steers from a cattle herd numbering in excess of 300,000).
FIGURE 24 - PROFILE OF FORMAL FIJIAN BEEF SLAUGHTER 2011
Profile of Beef Slaughter at FMIB (Head) Profile of Beef Slaughter at FMIB (Weight) 2500 800 400 700 350 2000 600 300 1500 500 250 400 200 Head 1000 300 150 200 100 500 (Tonnes) Weight
100 50 Carcase Weight (Kg) 0 0 0
Head Total Weight Carcase Weight
6.3.1.7 RETAIL/WHOLESALE There are over thirty beef processors/butchers in Fiji but over 60%, of the formally processed beef passes through just five operators.
For a simple comparative analysis butchers prices for Rump Steak in January 2013 have been compared (see Figure 25). It was noted, while collecting this information, no butcher attempted to differentiate steer beef from other supplies. Price appears to be the main indicator of quality beef and Yaqara cattle production appears to be supplying the best quality product.
FIGURE 25 - RETAIL PRICES FOR RUMP STEAK - FIJI JAN 2013
Rump Price Retailer/Wholesaler Market Served $/kg South Pacific Butcher $25.90 Nadi Fiji Meats $18.50 Lautoka Morris Hedstrom $17.49 Nation Wide Whaleys $16.30 Suva Leylands $14.00 Suva Tebara $13.50 Suva, Nausori Nausori Meats $13.50 Nausori Haines $13.00 Savusavu Ali’s Halal $11.65 Suva A brief description of the major retail/wholesalers of beef in Fiji is provided in Table 9.
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TABLE 9 - FIJIAN BEEF RETAILER/WHOLESALERS AS AT JANUARY 2013
RETAILER PROFILE WHOLESALER TEBARA MEATS With outlets close to the largest Municipal markets in Suva and Nausori, Tebara Meats account for in the region of one quarter of all beef slaughtered in Fiji. Retail presentation is clean but basic. Main target market is retail sales at the middle to lower end of the market hence the location near the municipal markets. The company also processes and wholesales both lamb and beef sausages to major resorts and supermarkets throughout Fiji. The company also relies on the network of middle men to collect stock from throughout Fiji. Tebara has recently purchased a 600 acre dairy farm but currently minimal supplies come from this source. ALI’S HALAL Ali’s Halal is the next largest processor and is currently supplying Morris Hedstrom, a major supermarket chain, and the only nationwide supermarket chain that handles beef in Fiji as most others are owned by members of the Hindu religion. The company has its own retail outlet just outside Suva. The company relies on a network of middle men for its cattle supply. FIJI MEATS Fiji Meats is a large processing butcher handling both local Beef and Pork. The company relies on the middle man network for supplies but tries to specify steer beef. Fiji Meats and also relies on traditional links with old family estates in the North of Fiji to supply improved quality steer beef. Steer beef represents only 20% of total throughput and the company does not attempt to differentiate this quality product from its main supplies which is large steers that have been used as working animals. Fiji Meats market is evenly split between the hotel trade and their retail outlets. Fiji Meats, like Tabera has a retail outlet next to the Lautoka Municipal market, the largest in the West, where it retails to the middle to lower end of the market. SOUTH PACIFIC Similar throughput to Fiji Meats SPB has secured the country’s largest supply of Steer BUTCHERY beef from the Yaqara Ranch. However Yaqara is not able to supply all the requirements so the company also relies on the middle man network for supplies. Yaqara beef typically kills out at 220 kg carcasses. Middle man steer beef averages 350 kg but yield can often be poor due to too much fat. SPB is strategically placed at the entrance to Denarau, the largest high class subdivision in Fiji. It specialises in retailing the best cuts and attracts the best prices. The company also sells up to 50% of its total throughput to the hotel trade to balance out primal cut supply and demand. The company has imported quality beef but prefers to seek local supplies. WHALEY’S Another long established processing butcher handling local pork and beef. Whaleys processes and wholesales its beef products nationwide through a number of supermarket chains. The company also has a number of retails outlets around the capital city Suva presenting quality beef. NAUSORI MEATS Located close to the Nausori Municipal market Nausori Meats. Nausori Meats purchases both beef from the Dairy industry as well as typical beef cattle sourced from the middle men. LEYLANDS Similar to Whaleys and Fiji Meats Leylands is a major processing butcher handling both Beef and Pork. The company has processing facilities in Lami just outside Suva and retail outlets in Suva. The company processes a complete range of Beef products including sausages, patties, pastramis and a range of corned products. Leylands relies on the middleman network for its supplies and often buys cattle from the North. CITY HALAL Located near the Municipal market in Lautoka, City Halal focuses on rapid turnover of beef with no pretentious presentation. Beef is not aged, simply received, deboned and sold which is typical of most small Muslim butcher shops in Fiji. City Halal does not process or wholesale beef. The company often purchases culled cows from the Yaqara Ranch but also relies on the middle man network for cattle supply.
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RETAILER PROFILE WHOLESALER MARAVU Maravu slaughters, processes, wholesales and retails product in Savusavu. The company predominantly handles quality steer beef sold exclusively in Savusavu to the hotel trade and through a retail shop outlet. Because the meat is not slaughtered at a registered abattoir, though it is slaughtered in and approved slaughter house under the jurisdiction of the Min of Ag, this top quality meat is not allowed to be sold outside Vanua Levu.
6.3.2 OPPORTUNITY FOR REPLICATION IN FIJI Due to the different market conditions for slaughter cattle in Fiji with the absence of formal price premiums for quality cattle there is little opportunity for direct replication of the Sarami Project. To establish a sustainable business model in Fiji there is a need to work in both the cattle raising and the meat processing/wholesaling spaces.
Fiji has a beef supply deficiency and although there is a market for quality beef in tourism and upmarket local demand there is no structure in place for identification of indigenously produced improved quality beef. This means that customers sourcing quality beef must rely on reputation. This market mechanism has inherent problems as purchasing managers have a high level of distrust of single supplier arrangements (particularly in the hotel and resort sector) and without some system that is embedded in the value chain it is too easy for meat traders to substitute inferior product.
There is therefore a need for the development of a third party beef quality grading system. This need not be complex but similar to that which the Sarami Project depends on in Vanuatu; i.e. - a simple system that relates carcase weight (say over 250kgCW) to animal age (say less than 6 permanent incisors) with perhaps some low impact exclusions for poor fat cover, dark meat and yellow fat that is able to be applied and monitored through to the customer. This mechanism would provide the basis for price premiums for young heavyweight carcases as exist in Vanuatu.
The partners for replication of the Sarami project in Fiji are considered to be:
Primary Partners o Yaqara Ranch – The biggest cattle operation in Fiji and the holder of a base of improved cattle genetics. o Other Ranches with over 250 cattle. Secondary Partners o South Pacific Butchery based in Nadi – The current primary supplier of indigenously produced quality beef to the tourism sector in Fiji. o Fiji Meats based in Lautoka – The secondary supplier of quality beef to the tourism sector. o Other meat processors (see Table 9) o Livestock & Crop Council of Fiji – Possible owner of a simple beef quality description system o Fiji Meat Industry Board (FMIB) – Operator of two service abattoirs on Viti Levu as a possible third party implementer of a simple beef quality description system.
One of the significant challenges of this approach is that Yaqara Ranch is a Fiji Government owned property with significantly less private sector flexibility to raise and expend funds than Sarami Estate.
The capacity to increase stocking rates on Yaqara Ranch is not known and the likely economic growth impact of replication would need to be assessed. It could however be expected to be less
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than half the economic impact of the Sarami Project as the Yaqara herd (4,500 cattle) is less than half the size of the Sarami Estate herd (11,000 cattle).
Possible interventions at Yaqara Ranch that relate to the Sarami Project are provided in Table 10
TABLE 10 - POSSIBLE YAQARA RANCH INTERVENTIONS
INTERVENTION EXPECTED OUTCOMES POSSIBLE ACTIVITIES Cattle genetics at Improved cattle genetics Demonstration that current smallholder genetics with good both smallholder resulting in a robust herd; nutrition are capable of producing carcase weights in excess and Yaqara Ranch more cattle able to reach of 300kg. levels over 260kg carcase Improved commercial bulls provided to smallholders under weight; faster growth a delivery incentive program. rates. Further development of the Yaqara stud herd with possible sourcing of genetic material form Sarami Estate. Cattle purchase & Implementation of Implement in-field purchasing logistics preferred by transport purchasing and transport smallholders through: infrastructure logistics that are Improved returns for small cattle preferred by smallholders. In field negotiation and cash payment No need for smallholders to deal with transport logistics or costs (use of transport contractors by Yaqara) Improved confidence in management, technical and commercial advice provided to smallholders Opportunity to participate in the commercial bull incentive program This will require a cattle buyer/s with good technical, management and commercial knowledge of the Fiji cattle and beef sector and able to work in both the Fijian and Indo-Fijian ethnic sectors. Cattle handling, Improved cattle handling Some upgrade of cattle handling yards may be required. management and facilities (stockyards) and induction procedures and ability to collect commercial herd information that can be used for future planning. Pasture Establishment of robust, Implementation of pasture improvement program with improvement nutritious pastures with advice and support from Sarami Project development of sound Possible use of farm machinery contractors for land weed control practices. preparation and pasture improvement (Farm machinery Utilisation of heavy contractors operate in Nadi/Lautoka area supporting the machinery for efficient sugar and horticulture sectors). ploughing to establish improved pasture. Forage crop and Production of forage crop Implementation of forage crop and silage production silage production and silage to provide program with advice and support from Sarami Project secondary cattle feed Development and trial of cattle feeding rations utilizing resources for both regular sugar sector byproducts in conjunction with silage. use and to minimise risk Possible use of farm machinery contractors for forage from drought and poor cropping and silage manufacture (Farm machinery pasture growth. contractors operate in Nadi/Lautoka area supporting the sugar and horticulture sectors).
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It is also considered worthwhile investigating the following to assess their degree of interest in participating in uptake of components of the Sarami Project, particularly those associated with pasture improvement and silage production:
Maravu (Graeme Haines) – Vanua Levy Tarte Bros – Taveuni
Both these enterprises are integrated cattle beef operations and may be interested in accessing a program that supports an increase in product availability. They can determine their own internal quality standards but at present have geographically limited market access for their beef products.
6.4 PAPUA NEW GUINEA 6.4.1 PROFILE OF PNG CATTLE/BEEF SECTOR The following information has been primarily sourced from the Country Pasture/Forage Resource Profile published by FAO.
FAOSTATS (see Table 11) indicates that over the 10 years (2000 to 2010) cattle numbers in PNG increased from about 85,000 head to 95,000 head and that domestic production has been less than the quantity of beef imported. In each year.
TABLE 11 - FAO STATISTICS CATTLE & BEEF - PNG
Item 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Cattle nos. ( ,000) 87.0 86.0 87.0 87.0 88.0 89.0 90.0 91.0 92.0 93.0 94.0 Beef & veal prod. (mt) 2,475 2,550 2,550 2,700 3,000 3,000 3,075 3,105 3,135 3,200 3,200 Beef & veal imports (mt) 4,506 4,700 3,400 8,046 5,601 4, 397 4,043 3,898 4,264
Based on 1994 data 77.6% of commercial cattle are in Mamose 18.7% in the Southern Region 3% in the Islands Region and 0.6% in the Highlands Region. Over 70% of cattle are estimated to be in Morobe and Madang Provinces; particularly in the Markham-Ramu valleys.
Table 12 demonstrates that only a small number of rural households own cattle with the preferred livestock ownership being pigs and chickens.
In 1996 it was estimated that about 570-620 smallholders kept cattle commercially and an average small cattle farmer runs some 34 head of cattle.
TABLE 12 - PERCENTAGE OF RURAL HOUSEHOLDS OWNING LIVESTOCK BY REGION - PNG.
% LIVESTOCK OWNING HOUSEHOLDS BY REGION TYPE Mamose Southern Highlands Islands PIGS 44.1 48.6 77.5 47.1 CHICKENS 35.9 36.8 13.4 44.4 CATTLE 2.5 2.1 1.1* 0.2 GOATS 1.3 0.7 2.6 0.5 SHEEP 0.5 0.4 0.8 0.1 HOUSEHOLDS 160 252 87 840 255 589 70 587
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% BY REGION 27.9 15.3 44.5 12.3
It is reported that in the Markham and Ramu valleys smallholders working on estates gain livestock expertise, income and/or breeding stock to establish their own herds. In some cases they sell stores or finished cattle to estates who market their own and smallholder-finished cattle; in an alternative approach some estates have leased grazing land to smallholders but there has been damage through over-grazing.
It is reported that animal reproductive and growth performance could be greatly improved and pasture degradation minimised during long dry periods with readily available supplementary feed. Supplementary feed include palm oil, sugar cane and copra byproducts.
The main constraints to ruminant production at smallholder level are low weaning rates and low average growth rates of 0.25-0.3 kg/head/day; the causes of poor performance are mainly nutritional.
Large farms have raised steer growth rates on predominantly Signal pastures from 0.4 to 0.6 kg/head/day by supplementary feeding palm kernel cake and molasses.
Overgrazing and the uncontrolled use of fire reduce production by causing weed invasion or species shifts to less palatable, lower quality grasses.
Management factors of critical importance in lifting the efficiency of beef production enterprises at the smallholder level were considered to be:
seasonal mating to concentrate calving at the onset of the wet season; cow culling for age (Max 10 years) and infertility; weaning at 4-5 months onto top quality pastures with supplementary feeding of weaners; achievement of calving intervals of 12 months including supplementary feeding if required to ensure adequate body condition for conception; ensuring post-weaning average growth rates of 0.45 kg/head/day or greater; first mating of heifers at 270-300 kg liveweight, ideally by 18 months of age; replacement of herd bulls every 3-4 years, using adapted genotypes; calving in confined, carefully monitored areas, to treat for screw-worm fly attack of navel areas, facilitate management and the control of wild dogs; timely castration, dehorning and drenching if parasite burdens reach economic thresholds, particularly in calves during the wet season; ready availability of water, sodium and other deficient minerals;
Commercial cattle production will continue to be concentrated in productive areas within economic freighting distances of markets. There is considerable opportunity to lower the total unit costs of beef production by raising production per hectare through cost-effective pasture improvement and targeted supplementary feeding.
6.4.2 LERON PLAINS CATTLE RANCH Leron Plains Cattle Ranch (Manager Bruce Guaran), is the biggest cattle operation in Papua new Guinea and is owned by Ramu Agri Industries Ltd (General Manager Jamie Graham), which is part of the New Britain Palm Oil Ltd (NBPOL) Group. In 2102 it was reported to have more than 20,000 head on 9000Has of land in two separate locations (16,500 head at Leron Plains in the Markham Valley of Morobe province and 3,500 head in West New Britain). Backgrounded cattle are taken to a feedlot at Gusap in Ramu Valley of Madang province, to be fattened ready for slaughter. The feed ration may contain palm kernel cake cane tops, molasses and copra meal.
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Cattle are raised on grass but they are also fed forage sorghum grown on site. Calves were raised for six months before being weaned (and grown out until they weigh about 300kg liveweight. The cattle are then moved to Gusap, fattened in the feedlot until they weigh in excess of 400kg before they are taken to the abattoir to be slaughtered at about 18 months to two years.
The Leron Plains Cattle Ranch has about 30 fulltime staff and 45 casual staff.
6.4.3 PRICE PREMIUMS FOR QUALITY BEEF CARCASES As discussed under the analysis section of this report the sustainability of the Sarami Project depends on the price premiums obtained for the quality carcases (nominally similar to Jap Ox specifications).
No evidence has been unearthed during this desktop study as to whether a premium is achieved and if so what is the quantum of the premium.
It would be expected that any premium would be a commercially confidential between Leron Plains Cattle Ranch and the meat processor.
It is however clear that beef exported to PNG is produced from carcases that fetch the quality premium in Vanuatu.
6.4.4 OPPORTUNITY FOR REPLICATION IN PNG Leron Plains Cattle Ranch is an obvious target for replication of the Sarami Project in PNG. The model would however be different in that it is likely that Leron Plains would appear to prefer to finish the cattle on a feedlot rather than on improved pasture.
The opportunity to create a sustainable business out of purchasing lightweight cattle from smallholders for growing out by Leron Plains Cattle Ranch will depend on the premiums achieved for the finished cattle.
It is recommended that further investigation of the possibility of replication of the Sarami Project with an increased emphasis on feedlot finishing be undertaken with Leron Plains Cattle Ranch.
There may be a further opportunity in the possibility of supplying Sarami genetics to improve the genetic base of cattle in PNG.
6.5 OPPORTUNITIES FOR REPLICATION IN OTHER PACIFIC ISLANDS Cattle populations in Pacific Islands other than Fiji, Vanuatu, Papua New Guinea and New Caledonia are less than 30,000 head (See Figure 20). The slaughter off take of cattle is almost totally informal and as a result the opportunity to organize premiums for improved quality cattle extremely difficult to impossible.
As a consequence the opportunity for replication is considered to be extremely low.
There will however likely be further opportunities for the export of Sarami Estate live cattle to improve the cattle herds in these other Pacific Island nations. This will be further enhanced with the eventual establishment of a stud herd at Sarami Estate.
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ANNEX 1 – DATA TABLES
TABLE 13 – BEEF IMPORT DATA - VANUATU
Beef Frozen Frozen Chilled Chilled Total New Imports Value Volume Value Volume Total Value Volume Australia Zealand 2006 $1,940 313 $1,586 190 $3,526 503 401 0 2007 $606 125 $2,427 77 $3,033 202 202 0 2008 0 0 2009 $9,573 809 $63,783 6,203 $73,356 7012 6762 187 2010 $11,820 1,217 $15,807 1,377 $27,627 2594 716 1872 2011 $13,099 1,358 $25,161 2,769 $38,260 4127 2069 1951
TABLE 14 – BEEF EXPORT DATA - VANUATU
BEEF EXPORTS Total 2006 2007 2008 2009 2010 2011 Papua New Guinea 96,270 97,323 0 445,315 496,129 602,499 Japan 536,522 283,659 0 271,965 329,875 346,950 Solomons 144,792 56,461 0 170,116 242,811 152,065 Australia 172,791 29,309 0 0 42,790 0 Singapore 0 0 0 0 7,927 0 Wallis and Futuna Isds 2,298 1,278 0 4,848 2,800 3,400 Fiji 495 0 0 3 734 0 Kiribati 2,735 10,174 0 0 0 0 New Caledonia 93,771 0 0 5,150 0 0 New Zealand 0 16,803 0 6,137 0 0 Tuvalu 63 0 0 0 0 0 TOTAL 1,049,737 495,007 0 903,534 1,123,066 1,104,914
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ANNEX 2 – PROGRAM SCHEDULE, MEETINGS ATTENDED AND PEOPLE MET Program Schedule
Location of site visits provided in Figure 2.
Date Activities 9TH December Travel – Sydney to Port Vila; Port Vila to Luganville 2012 Visit Sarami breeding property 10TH December Visits & meetings included Smallholders who had trekked cattle to Sarami from 2012 Big Bay, comprehensive visit and review of Sarami operations. 11TH December Visits & Meetings included Melei Estate, Santo Meat Packers & Smallholder 2012 meeting and production sites in Port Orly. 12TH December Preparation of Sarami Project performance spreadsheets 2012 Meeting with Peter Hoyle Area Veterinarian; Ministry of Agriculture Review spreadsheets with Peter Colmar Meeting with Sarami Farm Manager 13TH December Meeting Peter Colmar – Sarami 2012 Commence analysis Travel Luganville to Port Vila 14TH December Travel Port Vila to Sydney 2012
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Contacts
Full Name Company E-mail Business Phone Business Fax Mobile Phone Peter Colmar Sarami Estate [email protected] +678 37817 +678 37812 +678 5485801 Managing Director Luganville, Santo Christopher Colmar Sarami Estate +678 37817 +678 37812 Executive Luganville, Santo Michael Louze Sarami Estate +678 37817 +678 37812 Farm Manager Luganville, Santo Vanuatu Livestock & Dr Peter HOYLE Quarantine Department Senior Veterinary [email protected] +678 7743211 P.O. Box 271 Officer (North) Luganville, Santo Santo Meat Packers Ltd Gary Young PO Box 195 gary@[email protected] +678 36139 +678 36 746 Operations Manager Espiritu Santo
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ANNEX 3 – DETAILED BENEFITS FROM IMPROVED HERD PRODUCTIVITY
FIGURE 26 - DETAILED SALES OUTCOMES FROM STANDARD HERD STRUCTURE
STANDARD HERD STRUCTURE Head in Herd Number 6 24 60 Mix Cows/Steers and Heifers Percent 40% 40% 40% Cow Numbers Number 2 10 24 Steer & Heifer Numbers Number 4 14 36 Weaning Rate Percent 40% 50% 60% Calves Produced per Year Number 1 5 14
Annual Sales (High) Number 2 7 16 Annual Sales (Average) Number 1 5 14 Annual Sales (Low) Number 0 3 12
Herd Productivity (High) Percent 33% 29% 27% Herd Productivity (Average) Percent 17% 21% 23% Herd Productivity (Low) Percent 0% 13% 20%
Pasture Years/Head Produced (Low) Years 3.0 3.4 3.8 Pasture Years/Head Produced (Average) Years 6.0 4.8 4.3 Pasture Years/Head Produced (High) Years #DIV/0! 8.0 5.0
HIGH SALES Income Assuming Sold at 400kg LW to Abattoir (Far) Vatu/Annum 36,500 127,750 292,000 Income Assuming Sold at 400kg LW to Abattoir (Near) Vatu/Annum 42,500 148,750 340,000 Income Assuming Sold at 400kg LW to Sarami (Far) Vatu/Annum 44,000 154,000 352,000 Income Assuming Sold at 400kg LW to Sarami (Near) Vatu/Annum 44,000 154,000 352,000
AVERAGE SALES Income Assuming Sold at 400kg LW to Abattoir (Far) Vatu/Annum 18,250 91,250 255,500 Income Assuming Sold at 400kg LW to Abattoir (Near) Vatu/Annum 21,250 106,250 297,500 Income Assuming Sold at 400kg LW to Sarami (Far) Vatu/Annum 22,000 110,000 308,000 Income Assuming Sold at 400kg LW to Sarami (Near) Vatu/Annum 22,000 110,000 308,000
LOW SALES Income Assuming Sold at 400kg LW to Abattoir (Far) Vatu/Annum 0 54,750 219,000 Income Assuming Sold at 400kg LW to Abattoir (Near) Vatu/Annum 0 63,750 255,000 Income Assuming Sold at 400kg LW to Sarami (Far) Vatu/Annum 22,000 110,000 308,000 Income Assuming Sold at 400kg LW to Sarami (Near) Vatu/Annum 22,000 110,000 308,000
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FIGURE 27 - DETAILED SALES BENEFITS FROM IMPROVED HERD STRUCTURE
IMPROVED HERD STRUCTURE Head in Herd Number 6 24 60 Mix Cows/Steers and Heifers Percent 70% 70% 70% Cow Numbers Number 4 17 42 Steer & Heifer Numbers Number 2 7 18 Weaning Rate Percent 60% 60% 60% Calves Produced per Year Number 3 10 25
Annual Sales (High) Number 4 14 30 Annual Sales (Average) Number 3 10 25 Annual Sales (Low) Number 2 6 20
Herd Productivity (High) Percent 67% 58% 50% Herd Productivity (Average) Percent 50% 42% 42% Herd Productivity (Low) Percent 33% 25% 33%
Pasture Years/Head Produced (Low) Years 1.5 1.7 2.0 Pasture Years/Head Produced (Average) Years 2.0 2.4 2.4 Pasture Years/Head Produced (High) Years 3.0 4.0 3.0
HIGH SALES Income Assuming Sold at 350kg LW to Abattoir (Far) Vatu/Annum 29,200 102,200 219,000 Income Assuming Sold at 350kg LW to Abattoir (Near) Vatu/Annum 41,200 144,200 309,000 Income Assuming Sold at 350kg LW to Sarami (Far) Vatu/Annum 77,000 269,500 577,500 Income Assuming Sold at 350kg LW to Sarami (Near) Vatu/Annum 77,000 269,500 577,500
AVERAGE SALES Income Assuming Sold at 300kg LW to Abattoir (Far) Vatu/Annum 16,800 56,000 140,000 Income Assuming Sold at 300kg LW to Abattoir (Near) Vatu/Annum 25,800 86,000 215,000 Income Assuming Sold at 300kg LW to Sarami (Far) Vatu/Annum 54,000 180,000 450,000 Income Assuming Sold at 300kg LW to Sarami (Near) Vatu/Annum 54,000 180,000 450,000
LOW SALES Income Assuming Sold at 350kg LW to Abattoir (Far) Vatu/Annum 11,200 33,600 112,000 Income Assuming Sold at 350kg LW to Abattoir (Near) Vatu/Annum 17,200 51,600 172,000 Income Assuming Sold at 350kg LW to Sarami (Far) Vatu/Annum 36,000 108,000 360,000 Income Assuming Sold at 350kg LW to Sarami (Near) Vatu/Annum 36,000 108,000 360,000
HIGH SALES Improved Smallholder Farm Income Assuming Sold at 300kg LW to Abattoir (Far) Vatu/Annum -7,300 -25,550 -73,000 Improved Smallholder Farm Income Assuming Sold at 300kg LW to Abattoir (Near) Vatu/Annum -1,300 -4,550 -31,000 Improved Smallholder Farm Income Assuming Sold at 300kg LW to Sarami (Far) Vatu/Annum 33,000 115,500 225,500 Improved Smallholder Farm Income Assuming Sold at 300kg LW to Sarami (Near) Vatu/Annum 33,000 115,500 225,500
AVERAGE SALES Improved Smallholder Farm Income Assuming Sold at 300kg LW to Abattoir (Far) Vatu/Annum -1,450 -35,250 -115,500 Improved Smallholder Farm Income Assuming Sold at 300kg LW to Abattoir (Near) Vatu/Annum 4,550 -20,250 -82,500 Improved Smallholder Farm Income Assuming Sold at 300kg LW to Sarami (Far) Vatu/Annum 32,000 70,000 142,000 Improved Smallholder Farm Income Assuming Sold at 300kg LW to Sarami (Near) Vatu/Annum 32,000 70,000 142,000
LOW SALES Improved Smallholder Farm Income Assuming Sold at 300kg LW to Abattoir (Far) Vatu/Annum 11,200 -21,150 -107,000 Improved Smallholder Farm Income Assuming Sold at 300kg LW to Abattoir (Near) Vatu/Annum 17,200 -12,150 -83,000 Improved Smallholder Farm Income Assuming Sold at 300kg LW to Sarami (Far) Vatu/Annum 36,000 42,000 96,000 Improved Smallholder Farm Income Assuming Sold at 300kg LW to Sarami (Near) Vatu/Annum 36,000 42,000 96,000
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