Livestock: Any Time Money (ATM) and Cash Options for farmers

Livetsock Sector: Any Time Money (ATM) or Cash Options for Farmers - Round the Year

You must be familiar with Cash Cow, Piggy Bank, Golden Goose. How to get them, please read on...

Livestock Sector is like ATM Machine for Poor Farmers and Gold Mine for Business Houses

There was strong consensus that despite the ongoing structural changes and scaling up of livestock production in many parts of the region, smallholder producers continue to be an important and critical part of livestock production systems and market chains. To service these small holders, there is an opportunity for innovation and service. For designing smarter products and policies, however, there is a need to better understand the ‘risks and incentives’ faced by smallholder producers and other value chain agents. At a fundamental level, policy mechanisms should aim at mitigating the downside risk to increase smallholder capacity to specialize in and raise the returns to their enterprises. The growing consumption of livestock products is a positive development.

According to Food Surveys, 70% of India is non-vegetarian in food habits and the similar or more percentage is non-vegetarian in other South Asian countries. This is a clear message that poultry, dairy and other livestock products have market opportunity in South Asia and also very bright future.

When it comes to business opportunity and income generation activities there is no better sector than livestock sector. It provides daily cash flow and assured market. Like any other business this also needs proper planning and understanding of business aspects of livestock sector.

South Asia houses approximately one fifth of the world’s human and as well as livestock populations.

It also harbours the largest number of poor; based on the international poverty line of $1 a day, the World Bank estimates that 43 percent of the world’s poor live in this region. Although the incidence of poverty has declined in recent years, the decline has not been sufficient to lead to a reduction in the absolute number of poor. Over 80 percent of all poor in South Asia live in rural areas, and directly or indirectly depend on agriculture and livestock for their livelihood. So far focus of all government programs is agriculture, whereas livestock holds more promise for the cause of poverty and malnutrition elimination.

The linkage between poor peoples’ livelihoods and livestock is perhaps stronger in South Asia than in any other region of the world. For example, in India, more than 55 percent of cows and buffaloes and more than 60 percent of sheep are kept on farms of less than two hectares. Similarly in Bangladesh, 58 percent of cows and 68 percent of sheep and goats are held on farms below one hectare, making a significant contribution to poor people’s livelihoods.

An important element of the Livestock Policy Initiative in South Asia work program should be to have livestock policy-oriented research and analysis in policy areas targeted towards the specific needs and characteristics of the region’s poor and integration of livestock sector to address the issue.

Besides farmers many others will also gain.

Food Security and Livestock Sector:

Recent instability of food prices has drawn attention to food security issues around the world and particularly in South Asian economies. Across the developing world, a high proportion of household income is dedicated to the purchase of food products. For this reason, rising costs of such products disproportionately burden lower income earners, causing many such households to decrease amounts of daily food intake or sell productive assets to purchase food. This in turn means increased number of people experiencing nutrition vulnerability worldwide and worsening economic conditions in the poorest countries.

Such vulnerability is concentrated among the poor, who spend much larger percentages of their real incomes on food.

Decline industrial, growth rate is a clear cause effect relation of food inflation on other sectors of industry. When more and more household income is going for food, health, housing and education, where is the money to buy cars, houses, travel and other non-essential services?

Unless we revise agriculture and livestock sector and control food inflation, no economic policy can deliver.

Livestock Sector has maximum Multiplier Effect:

Based on global experience, it is the conventional wisdom, that agricultural and rural growth that increases employment and reduces poverty. The famous Mellor hypothesis maintains that the impact on poverty comes from the contribution of agricultural growth to the non-tradeable, rural non-farm sector. Economists call this the ‘multiplier effect’ (Mellor 1976; Mellor 2004); if the basis of this growth is more equitable and wider, usually the multiplier effect and the impact on poverty are higher.

In this process, the role of livestock becomes very important. It is clear that in nearly all parts of the world, primary livestock production generates the highest multiplier effect. According to FAO studies, in South Asia, it is estimated of household multipliers from livestock production are about 4.7 and from other sectors of the economy like manufacturing and services it is 2.9 and 3.1 respectively.

This is at least partly because livestock is generally more equitably distributed than land and also because smallholder livestock production is more labour intensive than crop production.

Incentives should be designed to promote livestock effectively.

How much money is there in livestock sector?

For details click here: 
http://sardanavijay.blogspot.in/2013/06/usd-150-billion-opportunity-by-2020-are.html

Now multiply this with value of output and multiply with factor of value addition options plus inflation. It is not less than a trillion dollar business in India. Try to calculate. 

Challenges for Livestock Sector:

Smallholder livestock producers and other small entrepreneurs in the livestock product value chain also suffer from poor access to credit and high interest rates.

Another peculiarity of the policy discussions is to equate the ‘private sector’ with large scale industry. In reality however small-scale actors in Asian livestock markets control by far the largest market share in aggregate. In many cases small-scale private actors are regarded as ‘exploiters’ while the large-scale private actors are regarded as ‘investors’, even though they may be playing very similar roles in providing market access, credit, technical support, etc.

Any livestock policy needs to proactively engage with small-scale actors in terms of capacity development in terms of product handling for quality and safety, as well as business skills, adoption of standards, organization and collective action to upgrade value chains.

Business Opportunities in Livestock Sector:

There was strong consensus that despite the ongoing structural changes and scaling up of livestock production in many parts of the region, smallholder producers continue to be an important and critical part of livestock production systems and market chains.

To service these small holders, there is an opportunity for innovation and service. For designing smarter products and policies, however, there is a need to better understand the ‘risks and incentives’ faced by smallholder producers and other value chain agents. At a fundamental level, policy mechanisms should aim at mitigating the downside risk to increase smallholder capacity to specialize in and raise the returns to their enterprises. The growing consumption of livestock products is a positive development.

Investors must focus on innovation by identifying market specific experiences throughout the value chain and the mechanisms to address them so as to facilitate better uptake of their products, services and technologies by smallholders to enable them to move into more commercial production systems and market chains.

The diversity of local markets and peoples’ preferences and choices should be considered while developing business models.

While developing business models, the classic models of collective action such as cooperatives and producer groups will remain important. There is a continuing need for public support for these models in terms of finance, credit, capacity building and mechanisms to reduce risks. This must include private sector initiatives and organizational modeling to support changing market needs.

A closer understanding of these initiatives and models can help discover new opportunities for involving smallholders through innovative public-private partnerships and for refocusing pure public support measures to areas which may not yet be sufficiently attractive for private investors. Attractive public policy should encourage private sector participation in feed, fodder, healthcare, etc.

Innovation and entrepreneurship is the need of the hour in all aspects of livestock sector starting from housing to product development.

Structure of Livestock sector:

Production for own or domestic consumption

The number of animals raised is minimal but enough for family consumption and surplus animals can be sold for cash income. Basic bio-security measures should be adopted even in this system as the animals produced are raised in close contact with the farmers. This practice is applicable to almost all South Asian countries where small-scale and marginal farmers live.

Business Opportunity: This offers business opportunity for hatcheries, breeding companies, bio-security firms, feed companies, healthcare companies, and housing companies. This also opens up opportunity for trading and marketing companies for consolidating small volumes for business purposes.

Commercial production: A cluster of farmers raise their livestock for own consumption until they are experienced and extend their production for sale in their localities. This production system is more developed with systematic and standard animal housing, husbandry and management. A higher level of bio-security and Good Farming Practices are required in such systems. These farmer clusters could be further strengthened through the formation of farmer cooperatives. This will enhance production volumes and the bargaining power of these farmers.

Business Opportunity: This offers business opportunity for hatcheries, breeding companies, bio-security firms, feed companies, healthcare companies, and housing companies.

Industrialized or intensive production: This category produces large volumes of livestock products and uses sophisticated technology in production practices. Farmers under this category are mostly contract farmers under production scheme(s) of major entrepreneurs. This production category requires productive breeds of animals. Good examples are poultry and pig production by conglomerate groups of companies such as the Suguna, Godrej, CP, Venky’s, etc.

Business Opportunity: This offers business opportunity for bio-security firms, raw material suppliers, healthcare companies, and housing companies.

What is the way forward?

It is important that people looking for investments and diversification into other areas, they should seriously look at feed, dairy, poultry and other livestock sectors.

Opportunities are there in the areas of:

• Animal Breeding

• Animal Trading

• Animal Feed and Fodder

• Animal Healthcare

• Animal Health Supplements

• Animal Nutrition Products

• Animal Housing & Environment

• Animal Transportation

• Animal Products Processing

• Animal Waste Management

• Animal Biosecurity

• Animal Traceability

• Animal Welfare Systems

• Others.

While exploring investment opportunities, investors should be creative and innovative in approach. Markets always respect innovation and creativity.

Policy makers should also promote livestock sector as a hedging mechanism against crop failure. Livestock can also offer food, nutrition, income security, insurance against risk mitigation in case of crop failure.

What is your opinion... share it with your friends.. they may get some ideas for business..

@  @ @