The Importance of Livestock Markets
Accurate market information empowers producers to make informed decisions on enterprise selection and appropriate production focus.
Understanding of such issues as the ability of producers, processors, retailers and consumers to respond to economic incentives, and the degree to which markets are influenced by external conditions allow for the reliable calculation of the costs and benefits of the adoption of new technologies, of advertising campaigns or of the imposition or reduction of domestic or trade policy instruments. The development of efficient livestock marketing will increase the efficiency of the whole livestock production system and contribute to the raising of the living standards of producers. Inefficiencies in production and marketing limits the competitiveness of producers in both local and global markets. Market liberalisation through the reduction in trade barriers under the World Trade Organisation (WTO) will require a greater degree of competitiveness through improved quality and delivery.
The ability of producers, consumers and other market participants to share in the economic benefits of market interventions such as new technologies depends on the economic conditions in the markets for agricultural products. Reliable estimates of relevant market characteristics such as elasticity values are crucial in accurately calculating the expected impacts of such interventions. Sustained agricultural development and rural economic growth will require more active and effectual rural institutions and financial systems, the liberalisation of production, pricing and marketing policies, the promotion of a marketing environment and better targeted investments in rural infrastructure and public services.
ILRIC can provide significant expertise with regard to understanding and developing livestock markets and environments within which a livestock industry can function efficiently. ILRIC can provide services to assist in the shift from subsistence production to commercial agriculture and from a quantity-driven production system to one driven by a quantity-driven production system to one driven by quality. Such a shift must be based on an integrated approach that incorporates existing or traditional practices with modern technology and ecological understanding, and an efficient market system with social or policy considerations and increased local participation.
Areas of expertise include development of pricing policies, market structures, market forecasting, industry development, farm management economics and rural infrastructure planning and technology adoption. The ability of producers to respond to market signals will be enhanced by training that integrates feed and forage management, breeding, sales and financial planning skills. ILRIC can provide staff with agricultural and resource economics expertise who have worked for multilateral and bilateral research and project implementation agencies including the World Bank, ADB, FAO, AusAID, ACIAR, plus many CGIAR centres and other UN agencies.
These consultants have worked throughout the world with specific skills and experience in Asia (China, India) South- East Asia (Indonesia, The Philippines, East Timor, Viet Nam), South and North America, and the Pacific. Through its expertise ILRIC can deliver:
- Analysis of livestock sector competition and market policy.
- Development of market infrastructure and improved market transparency processes.
- Increased efficiency and profit through market chain analysis.
- Increased income-generation through an emphasis on quality of production (via quality standards development and adoption).
- The development of local and global marketing initiatives by industry groups.
- The development of livestock markets in accordance with market signals.
- Training and extension services for local farmers canvassing buying and selling skills and effective budgeting for small holder enterprises.
Do contracts between multinational companies and smallholders provide benefits for all stakeholders? A study surveyed 800 smallholders in East Java, Bali and Lombok to answer this question. The study showed that when developing contracts the following considerations need to be included if they are to provide benetits to all stakeholders;
- Develop appropriate contractor groups.
- Provide credit, inputs and technical and management advice in order to maximise productivity.
- Ensure smallholders repay loans to ensure accountability and sustainability.
- Spread risk (price and yield) between smallholder and firm.
- Develop and implement quick and transparent payment systems.
- Allow contractors and contractees to come and go from the contract and allow the contract to evolve over time as capability, institutions and infrastructure develop.
Policy and Market Analysis and Development
To ensure a functioning market place it is necessary that an appropriate policy and institutional environment is established. This environment must allow market signals to influence production decisions and benefits and costs to accrue to the appropriate stakeholders. ILRIC can provide significant market analysis expertise which can be utilised to both research the market chain and provides advice concerning appropriate policy initiatives. ILRIC can provide particular skills in the:
- Development of frameworks for measuring the benefits from investments in research and development and from promotion and policy changes.
- Development of quantitative economic models of agricultural industries, based on both time series econometric and synthetic modelling methodologies.
- Evaluation of expected impacts of new technology adoption.
- Market chain and market share analysis.
- Development of integrated marketing systems for agricultural commodities establishing linkages between rural producers and urban markets.
- Applied agricultural commodity supply and demand analysis.
- Assessment of the benefits of new technologies, and the potential shares between producers, processors and consumers.
- Evaluation of the performance of statutory marketing authorities.
- Development and role of cooperatives and other alternative or intermediate marketing structures.
- Assessment of production risk in grazing models.
- Assessment of externalities and the longer term sustainability of grazing systems.
Agricultural and Rural Development
The agriculture sector in developing countries is referred to as the ‘driver of development’. It is the sector that provides the majority of employment opportunities, provides raw materials and food for the urban sectors as well as providing welfare and social stability. The agriculture sector is usually the major export income earner. It is necessary that it is supported and developed in order to fulfill these roles. With specific emphasis on agricultural sector planning and management ILRIC can assist through the:
- Formulation and management of appropriate agricultural development strategies.
- Management of agricultural research in developing countries and socio-economic monitoring and evaluation of research and development.
- Rural development planning and policy making.
- Examination of the economics of smallholder production and marketing with particular emphasis on how smallholder households can overcome constraints and exploit economic opportunities.
- Improvement of research and development processes in production and marketing in domestic markets.
- Rural poverty may be alleviated through the improvement of the capacity of households to enhance their income through improved animal husbandry skills and improvements in breeding.
Farm Management
ILRIC can also play an important role at the farm level. Producers must have confidence that the market will support their investment decisions and provide the right incentives. This will require training in farm management and farm planning. These skills form the bases of a viable livestock sector. ILRIC can provide skills in the following areas:
- Improved farm management decision making due to a better understanding of how markets work.
- Development of farm management skills including gross margins, whole-farm planning, discounted cash-flows at the enterprise, farm and industry level.
- Farm-level surveying and analysis.
- Importance and role of alternative market structures (eg contract farming, cooperatives) on farmer welfare.
