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Measuring competitiveness of beef and sheep production on national and international level


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Presented by Claus Deblitz (Thünen Institute of Farm Economics) and Sirak Bahta (ILRI) at the Conference on Policies for Competitive Smallholder Livestock Production, Gaborone, Botswana, 4-6 March 2015

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Measuring competitiveness of beef and sheep production on national and international level

  1. 1. Bahta / Deblitz Policies for competitive smallholder production Gaborone March 2015 Measuring competitiveness of beef and sheep production on national and international level Conference on Policiesfor Competitive Smallholder Livestock Production Gaborone, Botswana, 4-6 March 2015 Claus Deblitz (Thünen Institute of Farm Economics) and Sirak Bahta (ILRI)
  2. 2. Bahta / Deblitz Contents Definitions and relevance for farm analysis The network at a glance Method and data Selected results March 2015 agri benchmark Beef and Sheep Page 2
  3. 3. Bahta / Deblitz Definitions and relevance of farm analysis
  4. 4. Bahta / Deblitz Definition of competitiveness March 2015 agri benchmark Beef and Sheep Page 4 „Competitiveness is the sustained ability of a firm, a company or a sector, to obtain and maintain market shares in regional, national and international markets under liberalised market conditions.“ Own translation based on Zeddies et al. (1999)
  5. 5. Bahta / Deblitz Levels of competitiveness March 2015 agri benchmark Beef and Sheep Page 5 Competitiveness Sectoral level Intrasectoral Intersectoral Observation level Product / Production system Farm-level ― Supply chain ― Farm-level Household Supply chain Spatial level Interregional, International Content level Productivity, economic, environment, animal welfare, social Reference unit Land Output (return to land) (Product) Labour (Wages and returns to labour) Temporal dimension Short-, medium-, long-term Source: Own illustration based on Brandes (1991) and Schmitt (1991)
  6. 6. Bahta / Deblitz How to measure and address competitiveness March 2015 agri benchmark Beef and Sheep Page 6 • Market shares  High or growing market share = high competitiveness  A first indicator and required to describe the framework  Can be distorted by market and policy regulation  Reasons for differences typically missing • Farm level analysis  Competitiveness starts at farm level  Millions of producers decide every day to continue, stop or change  Measures of competitiveness are productivity, cost of production, profitability  Without knowledge of production systems analysis is difficult Understanding agriculture worldwide is the motto of agri benchmark
  7. 7. Bahta / Deblitz The network at a glance
  8. 8. Bahta / Deblitz agri benchmark Beef and Sheep: an expert network March 2015 agri benchmark Beef and Sheep Page 8
  9. 9. Bahta / Deblitz Target groups and relevance March 2015 agri benchmark Beef and Sheep Page 9 • Address global challenges with global overview and systematic expertise locally Non-profit organisations • Align future production through benchmarking and positioning Producers and their organisations • Operate successfully through in-depth understanding of markets and customers (Agri)Businesses
  10. 10. Bahta / Deblitz Countries in the agri benchmark Network 2015 March 2015 Page 10 Measuring competitiveness Countries with beef and sheep farm data Countries with beef data only Countries with sheep data only 2014 Countries Farms Cow-calf 25 58 Beef finishing 31 76 Sheep 16 35
  11. 11. Bahta / Deblitz Partners and supporters March 2015 Page 11 Main supporter Institutional partners Measuring competitiveness
  12. 12. Bahta / Deblitz Methods and data
  13. 13. Bahta / Deblitz Typical farms – the principle March 2015 Page 13 Measuring competitiveness Imagine you have a guest from a foreign country who is interested to see how beef farming is done in your country. You would want to show your guest a farm that is • … located in an important beef producing region, • … using the common technology for beef production, • … running the prevailing production system, • … having a not too small and not too big size, • … using the prevailing combination of labour, land and capital. In other words, you want to show your guest a typical farm!
  14. 14. Bahta / Deblitz Typical farms – reasons to choose the concept March 2015 Page 14 Measuring competitiveness … results can be generalised (contrary to individual farm data) … data sets reflect quantities (production systems data) and not just moentary figures … data sets are consistent and reflecting reality of production systems (contrary to surveys and averages) … it uses a feedback and vailidation loop with producers and advisors … it has proven to be applicable on a global scale and in countries without or limited statistics and accounting data … it is cost-effective
  15. 15. Bahta / Deblitz 3. Expertise of researchers + advisors + producers > production system knowledge > explore adjustments to changes in frame work conditions (forward looking results) 1. Statistics available to determine > important regions (‘hot spots’) > farm sizes and distribution According to farm size Large sized farm Basis: All farms in a region % Farm size Moderate sized farm % of farms % of production 2. Focus groups of producers and advisors to > define prevailing production systems > collect data in a standardised way > validate results Typical farms – three sources of data March 2015 Page 15 Measuring competitiveness
  16. 16. Bahta / Deblitz Typical farms – how to include smallholders March 2015 Page 16 Measuring competitiveness  Productivity and performance indicators in small herds are difficult to measure (for example mortality, calving percentages). Approach: use the data of a whole village to estimate productivity and performance data  Include off-farm and household income where necessary  Estimate/allocate common grazing land to particular herders  Identify driving forces and incentives that go beyond enterprise and production system analysis
  17. 17. Bahta / Deblitz Selected results
  18. 18. Bahta / Deblitz March 2015 Page 18 0 50 100 150 200 250 300 350 400 450 500 ID-3 ID-4 BR-2500 CO-220 ID-2 MX-120 CO-1100 CO-400 UY-220 NA-290 BR-1200 AR-1100 BW-30 RU-450 AR-850 AU-560 UY-115 ZA-200 ES-150 ES-80 KZ-500 AR-800 CA-800B ZA-350 CN-140 UA-410 ZA-250 AU-880 CA-800A AU-350 AU-200 CA-200B UA-295 US-500 ZA-400 DE-300 CA-200A US-160A PL-45 AU-990 DE-1400 US-160B SE-100C AU-600 CZ-420 CN-2 FR-80 UK-70 UK-100 IE-30 DE-100 FR-85 UK-105 SE-95 AT-25C DE-1100 FR-80B AT-30 Adult cattle sold / going to finishing Weaners sold / going to finishing Breeding animals Cull animals < 200 kg 200 – 300 kg > 300 kg kg live weight (LW) produced per cow and year Total weight produced per cow from 100-400 kgs, weaners are main part but not all … Measuring competitiveness
  19. 19. Bahta / Deblitz Cow-calf enterprise not profitable long-term (total returns vs. total costs 2013) 0 100 200 300 400 500 600 700 800 AT-25C AT-30 DE-100 DE-300 DE-1100 DE-1400 FR-80B FR-80 FR-85 ES-80 ES-150 UK-70 UK-100 UK-105 IE-30 SE-95 SE-100C PL-45 CZ-420 UA-295 UA-410 RU-450 CA-200A CA-200B CA-800B CA-800A US-160A US-160B US-500 MX-120 AR-800 AR-850 AR-1100 UY-220 UY-115 BR-1200 BR-2500 CO-220 CO-400 CO-1100 CN-2 CN-140 ID-2 ID-3 ID-4 KZ-500 AU-200 AU-350 AU-560 AU-600 AU-880 AU-990 ZA-200 ZA-250 ZA-350 ZA-400 NA-290 BW-30 Opportunity costs Cash costs + depreciation Total returns USD per 100 kg live weight sold Measuring competitivenessMarch 2015 Page 19
  20. 20. Bahta / Deblitz Production systems of beef finishing Feed % in > 30% > 30% > 50% grains > 30% dry matter pasture silage and and other freshly cut grass other forages energy feed & other vegetation Management/ Outdoor Closed or semi- Confined, large, Mix of pens and Housing year round or open barns with open pens, grazing of paths part of the year slatted floors partially with and paddies and/or straw bedding sun-covers Extent of Low Medium High Low purchase feed Pasture Silage Feedlot Cut & Carry Measuring competitivenessMarch 2015 Page 20
  21. 21. Bahta / Deblitz Daily weight gain and net gain by production system (net gain = carcass weight divided by age at slaughter) March 2015 Page 21 g per day 0 200 400 600 800 1000 1200 1400 1600 1800 2000 ID-4 ID-2 CN-940 CN-2000 AR-630 ES-430 MX-1500 ES-520 ES-5500 AR-26K US-7200 PE-1700 CA-28K ZA-75K BW-2000 US-75K ZA-3000 NA-25K BR-680 AU-15K UY-75 NA-600 BR-400 AU-320 BR-360 AU-150 BR-60 AU-375 AU-415 CO-350 BR-800 CO-130 BR-1750 CO-160 ID-100 AR-380 AR-800 AU-85 IE-40 UK-80 NZ-375 AU-540 UA-275 KZ-800 UK-45 UK-90 PL-30 CZ-500 PL-20 UK-750 DE-285 UA-5600 SE-230 CO-800 DE-800 RU-640 DE-280 CN-300 CN-150 FR-70 MA-280 DE-260 DE-525T AT-35 AT-25F AT-120 TN-45 CN-70 FR-200 AT-175T IT-910 SE-100 IT-2660T FR-60 SE-150 Daily weight gain (g per day) Net gain (g per day) Pasture Feedlot Silage Cut&Carry Measuring competitiveness
  22. 22. Bahta / Deblitz 0 200 400 600 800 1000 1200 ID-4 ID-2 NA-25K ZA-75K ZA-3000 BW-2000 BR-680 MX-1500 PE-1700 AR-26K AU-15K AR-630 US-75K US-7200 ES-5500 CA-28K ES-430 ES-520 CN-2000 CN-940 NA-600 NZ-375 UA-275 CO-160 BR-1750 BR-400 BR-360 BR-800 UY-90 AU-375 AR-380 CO-350 AR-800 BR-60 CO-130 AU-540 ID-100 AU-150 AU-85 AU-320 IE-40 AU-415 UK-80 CO-800 UA-5600 DE-285 CN-300 DE-525T UK-90 RU-640 CZ-500 PL-30 TN-45 DE-280 FR-200 AT-175T CN-150 CN-70 IT-2660T IT-910 MA-280 DE-260 SE-230 KZ-800 UK-750 FR-60 AT-120 SE-150 AT-35 FR-70 SE-100 PL-20 UK-45 DE-800 AT-25F Other costs Land costs Feed related costs (incl. labour) Animal purchase Different cost composition but high and low cost in all production systems USD per 100 kg carcass weight PastureFeedlot Silage Cut&Carry Measuring competitivenessMarch 2015 Page 22
  23. 23. Bahta / Deblitz 0 100 200 300 400 500 600 700 800 900 '05 '06 '07 '08 '09 '10 '11 '12 '13 South Africa Australia Austria Spain Germany UK Italy France Cost developments of selected farms and countries 2005-2013 (USD and %) USD per 100 kg carcass weight '05 '06 '07 '08 '09 '10 '11 '12 '13 USA Argentina Poland Argentina Brazil China 110 % 130 % 150 % 290 % Measuring competitivenessMarch 2015 Page 23 Botswana cost development similar to ZA?
  24. 24. Bahta / Deblitz Most finishing farms are profitable on whole-farm level – other enterprise and direct payments reflected Percentage of costs in total returns 0% 20% 40% 60% 80% 100% 120% 140% 160% 180% AT-25FAT-35 AT-120 AT-175T DE-260 DE-280 DE-285 DE-525TDE-800 FR-60 FR-70FR-200 ES-430 ES-520ES-5500 IT-910 IT-2660T UK-45UK-80 UK-90UK-750 IE-40 SE-100 SE-150SE-230 PL-20 PL-30 CZ-500 UA-275UA-5600 RU-640 CA-28K US-7200 US-75K MX-1.5K AR-380 AR-630AR-800 AR-26K UY-75 BR-60BR-360 BR-400 BR-680 BR-800BR-1750 CO-130 CO-160CO-350 CO-800 PE-1700 CN-70 CN-300 CN-940CN-2000 CN-150 ID-2ID-4 ID-100 KZ-800 AU-85AU-150 AU-320AU-375 AU-415AU-540 AU-15K NZ-375 MA-280 TN-45 ZA-3000ZA-75K NA-600 NA-25K BW-2K % of opportunity cost in returns % of cash costs + depreciation in returns Europe Asia, OceaniaAmericas Africa Measuring competitivenessMarch 2015 Page 24
  25. 25. Bahta / Deblitz -200 0 200 400 600 800 1000 1200 DE- 280 FR-70 PL-30 US- 7200 AR- 26K CN- 940 ZA- 75K AR- 800 BR- 800 CO- 350 Returns Margin Animal purchase Feed costs Land costs Feedlot Main drivers of costs and margins 2005-2013 USD per 100 kg carcass weight Pasture Silage Measuring competitivenessMarch 2015 Page 25
  26. 26. Bahta / Deblitz Conclusions Measuring competitivenessMarch 2015 Page 26 agri benchmark offers a framework to measure and assess  methods for comparable farm (and sector) analysis which have proven successful for more than 15 years on a global level  tools for in depth analysis of data  a platform for the exchange of experts and their knowledge agri benchmark can make a contribution to informed decision making  policy analysis (what if?)  policy makers  farm development and strategy  producers and their organisations  monitoring projects and programmes  aid / funding organisations
  27. 27. Bahta / Deblitz For further information Measuring competitivenessMarch 2015 Page 27 understanding agriculture worldwide Claus Deblitz Thünen Institute of Farm Economics Bundesallee 50, 38116 Braunschweig Germany Tel.: +49-531-596-5141 Fax: +49-531-596-5199 E-mail: Internet: Sirak Bahta International Livestock Research Institute Private bag, 0033, Gaborone, Botswana Tel.: +267-77586169 Fax: +267-xx E-mail: Internet: Better lives through livestock!!