Livestock Economics Marketing & Business Management

Livestock Economics Marketing & Business Management

1.0        INTRODUCTION

Livestock Economics is a discipline that provides a comprehensive range of Economic skills and Techniques tailored to the specific requirements of the livestock sector. The service range reflects the diversity of the Economics discipline spanning both quantitative and qualitative analytical methods as diverse as disease, modeling and household as well as farming systems.

This can be looked at through the following

Economic analysis of different livestock production systems
Identification of potential marketing channels for livestock and livestock products
To develop understanding of future needs of livestock related business and industry
Feasibility analysis of livestock farming versus crop farming
Agriculture, being the basic industry, has certain characteristics which distinguish it from other industries. These characteristics are as follows:

Small Units of Production: In agricultural industry, the units of productions are very small particularly in developing countries, where it is made up of very small numbers of relatively small units. A small size of the farming units which is prevalent in agricultural production limits the degree of specialization and size of labour. It also limits the amount of capital invested, the amount of labour employed and the amount of output.
The Biological Nature of Agriculture:    Agriculture deals with living things – animals and plants – which cannot be handled on a timely basis. As a biological industry, it is subject to ravages of disease and pests. Only partial control has been devised to control these ravages. Consequently, agricultural industries cannot be controlled. Hence, there is a divergence between estimated land output and realized
Instability of Agriculture due to the effect of Climatic Conditions: Climatic conditions not only change the character of work done, on the farm but also form destructive bases. There may be drought that may kill animals and crops. Changes in weather condition can also affect agricultural industries in that when the weather is good, there is bumper harvest, but when the weather is bad, the reverse is the case -harvest failure.
Seasonality of Agricultural Production: This affects employment and income as well as output. During the slack periods, agricultural labour is unemployed and the farming process remain idle. This is not the case with manufacturing industries. The seasonality of agricultural production leads to seasonal or friction unemployment.
Inelasticity of Supply of Agricultural Products: The output of agricultural industries is supply-inelastic. Agricultural production has biological links, and once production is underway, little can be done to adjust it to changes in price in the market. Production cannot be doubled or tripled. For example, production of beef cannot be doubled or tripled by putting one or more shifts to work on the ranch or nor can production be closed down to meet new situations. This means that supply is relatively inelastic. Similarly the demand for food is relatively price inelastic in that the consumer buys the same quantity of food irrespective of the price.
RESOURCES AND WANTS

Most of the economic problems, which economists deal with, arise out of the use of resources to satisfy human wants. The resources of the society consist not only of those goods which can be considered as free gifts of nature, namely, land, forest and minerals, but also of humans resources, both mental and physical, and of all sorts of artificial aids to production of such as tools, machinery and building.

The resources of any country can be divided into three main groups:

Land:   This consists of all those natural resources used in production; that is, land, minerals and forest. These resources are collectively known as land.
Labour: All human efforts of any land, mental, or physical are known collectively to the economists as labour.
Capital: The third  group  of resources  comprises  all  those  artificial  aids  to production. Such aids include tools, machinery, plant and equipment, including everything which is not consumed for its own sake but which is used up in the process of making other goods, such resources are collectively known to the economist as capital.
All the resources discussed above are what the economist call factors of production. This is because, the resources are used to produce those things that people desire in order to satisfy their wants. The things that are produced are called commodities and they may be divided into two categories. These two categories are Goods and Services. Goods are tangible, like food, cars, clothes, shoes, books whereas services are intangible like Banking, barbing, hairdressing, insurance etc.

1.1       THE PLACE OF LIVESTOCK IN NIGERIAN ECONOMY

The economy of Nigeria was booming from agricultural produce especially the oil palm, cocoa plantation, groundnut pyramid, cattle, sheep, goats, poultry and piggery farms between 1960 – 1970. However, this agro-based economy started dwindling with the emergence of crude oil discovery till date.

This development led to the abandonment and progressive collapse of these agricultural establishments in the crude oil economy.

The causes of decline in production and supply of livestock products in Nigeria were as a result of the followings:

Near complete dependence on sale of crude oil to sustain the economy
Poor or total lack of implementation of policies that relate to Animal production.
Economic Depression emanating from poor resource management by Government and low purchasing power of the currency (Naira).
High cost of inputs – live animals, building materials, feed, labour etc leading to reduced involvement of increased investors at various levels.
Lack of genetic improvement of existing stock leading to low feed to gain ratio and poor production efficiency
Inconsistent financial assistance to fanners by governments.
The place of agriculture in the development of any nation cannot be over looked. It is a fact that agriculture provides a strong background for industrial and technological take-off, growth and sustainability of a nation’s economy. A country that is not able to feed ^inhabitants has a myriad of problems which will blur its visions for industrialization and sustainable development.

The position of livestock sub-sector has far become more precarious in the last fifteen years. Within this period, the percentage contribution of the livestock sub-sector of the economy has drastically declined. The CBN annual report and statement of account for 1995 showed for instance, a decline in percentage contribution of livestock subsector to the total gross domestic product from 5.34 in 1991 to 5.11% in 1995. The report actually revealed that there was an absolute drop in the index of livestock production between 1991 to 1992 and a marginal increase up to 1995. This marginal increase cannot commensurate the growth rate index of the human population.

This unfortunate state of affairs is reinforced by the fact that the average Nigerian consumes 5g animal protein per day against the recommended figure of 35g per day by FAO.

1.2       CURRENT STATE OF LIVESTOCK INDUSTRY IN NIGERIAN POPULATIONS

(a) Livestock Population: Most of the farms established in the 1970s and 1980s have folded-up and the infrastructure of the surviving ones are being highly under-utilized. Inspite of these set-backs, there seems to be a marginal increase in the livestock population reflecting some what slight development of the industry now compared to what obtained in the past decades.

The population of livestock in Nigeria as at 1994 was estimated at 175,950,000 poultry, 40, 834,000 goats; 19,590,000 sheep, 16,286,000 cattle and 1,350,000 pigs as given by the Federal Office of Statistics (FOS, 1997).

These estimates did not consider the very promising novel area of animal protein supply, the mini-livestock and what-proportions of the figures are under organized production system. It is commonly known that, in Nigeria and in most of the third World countries, a very high percentage of over 70% of animal protein supply comes from the peasant farmers that practice subsistence agriculture in the rural areas. The question now is, will this rudimentary production system be able to address the food security question?

Regional Distribution of Livestock: Nigeria is currently divided into six Geo-political zones for administrative convenience and these regions differ in the importance attached to the raising of livestock. While the Northern sector of the country are predominantly livestock farmers, the Southern regions has predominantly been a crop oriented sector.

Ownership Patterns and Breed of Animals: It is commonly accepted that up to 60% of livestock in Nigeria is owned by resource-poor small-scale farmers. For instance, the average cattle owner may have anywhere from 6-20 animals in the South and much more than that in the North. The sheep and Great Farmer from 10-50 and the poultry farmer from less than 100 to 1000 depending on whether he is into village rearing or urban and peri-urban commercial rearing. Pig number vary from less than 10 – 50, while most of the ruminant species are kept in rural settings. Urban and peri-urban ownership has become common, these animals being fed largely on harvested fodder and sometimes wet breweries bi-products like spent gram.

In several cases, the animals belonging to different households are herded together by children. Ruminant animals are kept largely as emergency financial resources to be slaughtered in time of financial need. There is increased emphasis on revenue generation in the pig and poultry sector.

The predominant breeds of cattle in Nigeria are the Ndama, muturi, white Fulani, West Africa Dwarf sheep and goats, Balami, Ouda, Sokoto red, crosses of large white and landrace, native pig and several strains of chicken like ANAK, HYBRO, SHAVERS, STARCROSS, ISA&IOWN, S&D, BABCOOK, LOTTMAN etc. Local attempts at breeding have resulted in the release of Shika brown layers Their performance are perceived to be comparable with the exotic strains and have the added advantage of saving scarce foreign currency.

System of Management: Irrespective of species of livestock, there are two systems of management:

The Traditional (rural or village) system characterized by low input – low output relationship and
The commercialized or intensive system with its emphasis on profit acquisition. In the traditional system, the animals roam about, male and female together.   Ruminants will generally be herded to pasture along streams or roadsides and are retained to their fences or pens in the evenings.
Rural poultry depend on scratching the ground for worms, insectsand termites and on the leftovers from house meals. In-breeding is a common feature of this system of husbandry and the animals are characterized by low reproductive and growth performance. In the commercialized or intensive system and this is strictly for pigs and poultry in Nigeria, management includes the provision of essential inputs like feed, water, medication and shelter and the aim is to make profits. Labour demands are high and expensive and efficiency is a prerequisite for making it.

Most of the commercial poultry and pig farms are cited in the main urban centres. Ruminants are kept solely for meat, although herdsmen may milk cows and the milk is sold and the money used as supplement lo their salaries, which are low.

Poultry are kept for eggs except in the urban centres where there is a considerable market for broilers. Rural poultry are cherished because of the tough meat and the fact that the birds and eggs find use in religious rituals. They lay on the average only 30 eggs per year and reach mature weight of only 1.5kg,

PROBLEMS AND PROSPECTS OF ANIMAL PRODUCTION

The problems facing the animal industry in Nigeria are undoubtedly multi-faceted and it seems that they have not changed much. While the intensity of these constraints varies from species to species, there are common problems that can be cited and include the followings:-

Availability and quality of feed resource: The problem of two well defined seasons are faced by ruminants.   In the rainy season, there is a very rapid growth of grass and other herbage. For a while, there is luxuriant growth with high nutritive value and animals are generally well fed and gain considerable weight. On the other hand, rapid forage growth   is   accompanied  by   rapid   maturation and accumulation of non-starch polysaccharides (NSP). Thus, late in the rainy season, the digestibility of forage is reduced. By far, however, the main problem occurs in the dry harmattan season, which may last from November – March.    During this period, there is a drastic decline in both the quantity and quality of forages and there may be deficiencies of protein and other nutrients.
In many areas of the Northern Savanna, there may be a complete absence of forage, a situation that has become more or less customary. The seasoned variations in food availability lead to a zig-zag growth pattern. It worth mentioning in here that, there are no cultivated pastures, except at institutional farm and ruminants have to fend for themselves on communal grazing grounds near water bodies and along road sides.

Mongastric animals (poultry and pig) compete with humans for maize and fish (meal) which are not produced in adequate amount to meet the needs of man and his animals. Consequently, each year, there is considerable importation of both commodities to make up for the short falls. Scarce foreign currency resources must be used to support this importation.

Inadequate Veterinary Support: There is a relative absence of veterinary support especially in the areas of preventive health. This coupled with the poor managerial skills of local livestock farmers has provided afertile ground for the spread of diseases with disastrous results.
Low Productivity: Low productivity among animals is a reflection of the absence of breeding and selection programmes aimed at improving the indigenous breeds of cattle, sheep and goats. Local animals have low birth weights, grow slow and attain puberty relatively late in life.   In addition, there are long inter parturition intervals in all specie. Low productivity also   indicates   poor   feeding,   housing   inadequacies   and   poor management.
Poor Housing:  Ruminants even on institutional farms are commonly housed at nights in open padlocks, with no shelter against the vagaries of weather. In traditional systems, the animals may stand in their own excrement for long periods, and this is an open invitation to diseases and parasites.   In the Northern region of the country, animals may be housed in fenced areas away from households and this encourages stealing at night.
Inadequate Manpower Training:   Most farmers have little or no formal education and are handicapped by not having even the basic knowledge of the management of animals including feeding, sanitation and housing. One might even argue that there is no incentive for farmers to learn since animals are largely kept as secondary source of income except commercial poultry and pigs.  Extension coverage is inadequate and many farmers are ignored.  Many farmers are averse to employing skilled manpower because of cost.
Lack of Ready Market and Storage Facilities:   Animal products are highly perishable and have shortshelf lives even with the best of presentation methods.   Farmers do not always have the marketing channels since most of them operate on a small scale and cooperatives are not well organized to market member’s products.
Poultry farmers are the worse hit when it comes to marketing since eggs do not store well and most consumers may not have fridges. Farmers are frequently forced to reduce the prices of eggs in order to dispose of the glut. Broilers are still considered as seasonal animals to be used during Easter and Christmas. The low purchasing power of the Nigerian is also a serious block to the profitability of the animal industry.

Lack of Credit Support: Farmers are handicapped by not having any dependable source of credit support.  These farmers are small scale and they are not always able to meet the demand of financial institutions, especially for security or collateral.
Socio-economic attitudes:   A major problem in Nigeria is that there is no indigenous pastoral ethnic group in the country while normadism is of no significance.   Owners of ruminant animals even in the Northern sector of the country are primarily crop farmers and have nor really deep knowledge of animal husbandry that can be compared with the Fulani herdsmen.   In addition, herding is generally left to small Boys and girls or hired Fulani herdsmen.   Owners of cattle consider it as a secondary source of revenue and as such emphasis is higher in number rather than on productivity.   Animals may be sold or slaughtered only in Financial emergency or when they are too old and apparently have no further use.
The Way forward

Animal Feed Resources:   It’s  accepted generally that the potential  for animal agriculture depends very importantly on available feed resources. For ruminants, there are considerable quantities of the so-called non-conventional feed ingredients produced each year from the crop sector. These crop residues can find use as nutritional supplements. Some of these are maize stover, rice straw, groundnut tops, etc. Some of these are high in fibre and low in digestibility, but novel techniques for treating them to enhance their nutritive value are available and can be used to great advantage. Indeed, some of these methods are already being used, including the use of urea, sodium hydroxide and ammoniation. For monogastric animals too, there is available, a variety of alternative feedstuffs that can be utilized in place of maize and fishmeal, groundnut cake, soyabean meal, cassava tubers, sorghum etc there are some alternatives, energy and protein ingredients.
Animal Health/Veterinary Support: Attempts aimed at providing training for local farmers in basic areas of disease recognition and prevention are laudable.   Practice like house cleaning, and disinfection are not beyond the grasp of farmers. Volunteers may also be given training in the administration of vaccines and other medications. In the villages, it should be possible to organize community leaders in programmes aimed at elimination of diseases.
Low Productivity/Unimproved genetic Material:    Attempts at large scale gene transfer of genetic breeds particularly of the dairy type have failed miserably in the past. Emphasis on improving our local strains by crossbreeding with exotic ones is a welcome venture.
Lack of Credit Support:  Farmers can form viable co-operatives to pull their resources together.  These cooperatives are not only to be interested in securing loans for members but may also act as procurement agencies which can derive benefits of the economics of scale.  Farmers also need to adopt a savings attitude if they need to seek the help of banking institutions.
Marketing Facilities and Storage:  Farmers cooperative can also develop marketing channels and even negotiate prices on behalf of their members.   A large association may be in a position to build storage facilities or even set-up slaughter houses in vantage locations in the country.
Socio-economic attitudes: Farmers need to recognize that livestock farming can be a lucrative source of income just like crops and thus move away from subsistence to income generation. The same applies to rural poultry and pig farmers.
Manpower Training: Most livestock farmers in Nigeria are not in a position to engage the services of highly trained personnel, because they are apprehensive. They can on the other hand be offered informed or even formal basic training in the critical aspects of animal husbandry.  Such training is actually taking place at various places, including the universities, research institutes and the Ministry of Agriculture itself. There is a pressing need to strengthen the extension services to make them capable of carrying the appropriate messages to farmers and bringing their problems to the researchers and policy makers for the required solution.
(8)        Government Role:  The Nigerian government has a primary responsibility to ensure the long term viability and sustainability of the animal industry in the country since the industry plays a very significant role in the nutrition and economic health of the citizenry.    Government has to formulate policies and programmes that will make animal farmers feel important and appreciated.   One big area in which government can be of immense benefit is the provision of subsidies against the cost of imported feed ingredients, drugs and equipment.