The CARICOM Regional Transformation Programme for Agriculture. Competitiveness & Industry Development Strategies

Transcription

1 The CARICOM Regional Transformation Programme for Agriculture The Small Ruminant Meat Industry in CARICOM Competitiveness & Industry Development Strategies Core Team of Consultants Singh, R.H. (Ph.D) Seepersad, G. (Ph.D) Rankine, L.B. (Ph.D) December 2006 Department of Agricultural Economics and Extension University of the West Indies, St. Augustine i

2 ACKNOWLEDGEMENTS The core team takes the opportunity to express its appreciation to all those who provided logistical and technical support for the completion of this exercise. We firstly like to thank the RTP Coordinator / Agricultural Advisor, Mr. Sam Lawrence as well as the country officers for their logistical and other support in the completion of this exercise. Field visits allowed us to verify and update the information base on small ruminants. Small ruminant investors particularly in the case of Jamaica, Trinidad and Tobago and Guyana provided valuable information in shaping the review of the Regional Sheep and Goat industry. The database on small ruminants worldwide, as well as in the Caribbean, contains significant gaps and took considerable time in their verification and validation. Our discussion with officials in the Ministries of Agriculture in the Region proved helpful in reconciling some of the deficiencies we encountered in the review. Technical support was provided through the assistance of Brent Theophille, Rebecca Gookool, Jai Rampersad and David Hanson, to which the Core Team also expresses support. To Ms. Martha Jiminez-Spence and Ms. Indira Buchoon-Ousman, we express our sincere thanks for their logistical organizational and communication support. Although we tried to ensure accuracy of the database used for the review, nonetheless we accept responsibility for any errors that may be discovered. This may be the result of the multiple databases from which we had to access the data. The small ruminants sector in the Caribbean is just emerging unlike countries such as Australia and systems of data recording for this commodity have not yet entered the mainstream databases. This gap we recommend should be addressed with urgency. The Core Team i

3 DEDICATION We dedicate this work to the Memory of our Colleague and member of the study team, Dr Lloyd B. Rankine. Dr Rankine passed away on October 25, He was a colleague with whom we shared many long hours in dialogue, in the field and in the class room. His life long endeavours and dedication reflect his passion for agriculture in the Caribbean. Dr. Rankine was an integral part of the University of the West Indies having served the University (both Mona and St. Augustine campuses) from 2 nd December 1968 to June 3, 2006 when he suffered a debilitating stroke. He served as Head of the Department of Agricultural Economics and Extension from 1977 to 1990 and taught in the capacity of Senior Lecturer up until 2003, when he retired. From 2003 to June 3, 2006, he lectured part-time in the Department Dr. Rankine also served as Director and Chairman on many Boards in Trinidad and Tobago.. Ranjit H. Singh & Govind Seepersad ii

4 TABLE OF CONTENTS LIST OF TABLES... VI LIST OF FIGURES... VII GLOSSARY OF TERMS... IX GLOSSARY OF GOAT AND SHEEP: BREEDS AND BODY CONFORMATION... X RECOMMENDATIONS FOR SMALL RUMINANTS INDUSTRY DEVELOPMENT...XIII 1 PROJECT PROFILE: DEVELOPMENT OF THE NUCLEUS HERD... XIII 1.1 Herd Build Up... xiii 1.2 Capital Investment...xiv 13 Annual Farm Recurrent Cost...xiv 1.4 Revenue...xvi 1.5 Cash Flow and Profitability...xvii 1.6 Financing...xvii 1.7 Strategic Partnerships...xviii SECTION INTRODUCTION INTRODUCTION... 1 SECTION MARKET ASSESSMENT: KEY ISSUES, OPPORTUNITIES AND COMPETITION INTRODUCTION THE CARICOM MARKET FOR SMALL RUMINANT MEATS THE GLOBAL MARKET FOR SMALL RUMINANT MEATS KEY COMPETITIVENESS ISSUES TRADE REGULATIONS... 8 SECTION PROFILE OF THE SMALL RUMINANT INDUSTRY IN SELECTED CARICOM COUNTRIES INTRODUCTION JAMAICA BELIZE BARBADOS TRINIDAD AND TOBAGO ST. LUCIA ST. VINCENT GUYANA SECTION iii

5 COSTS IN THE CARICOM SMALL RUMINANT INDUSTRY INTRODUCTION SHEEP PRODUCTION Cost of Production of Live Animals: All Models & Breeds Cost of Production of Meat Cost of Production Differentiated by Technology Cost of Production Differentiated by Breeds & Breed / Technology GOAT PRODUCTION Cost of Production: Fattening Operations for Goats Cost of Production: Goat Meat Cost of Production: Differentiated by Production Technology SUMMARY SECTION TRADE COMPETITIVENESS: CARICOM SMALL RUMINANT PRODUCTION INTRODUCTION METHODOLOGY FOR MEASURING COMPETITIVENESS Defining Market Competitiveness COST OF LOCALLY PRODUCED MEAT CARCASSES: ENTREPRENEURIAL MARGINS FOR LOCAL PRODUCTION: CALCULATING COST OF IMPORTED MEATS: PRICE COMPETITIVENESS Overview of Small Ruminants Competitiveness in the Various CARICOM Countries: Comparison among Countries Sheep Goat The Influence of Technology and Breeds on Competitiveness COMPETITIVENESS BASED ON QUALITY FACTORS SUMMARY SECTION PROFITABILITY OF SMALL RUMINANT FARMING INTRODCTION RETURNS ON INVESTMENT IN PRODUCTION Sheep Fattening Enterprise Goat Fattening Enterprise GROSS ENTERPRISE INCOME: SHEEP & GOAT ENTERPRISES CONCLUSION OPTIMAL FARM SIZE iv

6 SECTION INDUSTRY PERFORMANCE: THE CARICOM SMALL RUMINANT INDUSTRY INTRODUCTION SHEEP PERFORMANCE Average Daily Gain Average Number of Lambs per Lambing - Sheep Post Weaning Mortality Sheep Other Key Industry Parameters Sheep GOAT PERFORMANCE Average Daily Gain - Goat Mortality Goat Other Industry Key Parameters Goat SUMMARY SECTION INDUSTRY DEVELOPMENT STRATEGY: THE WAY FORWARD INTRODUCTION OPPORTUNITIES THE STRENGTHS / ADVANTAGES OF DEVELOPING THE SMALL RUMINANT INDUSTRY CONSTRAINTS / CHALLENGES TO THE DEVELOPMENT OF A SMALL RUMINANT INDUSTRY INDUSTRY DEVELOPMENT: CHALLENGES AND BINDING CONSTRAINTS THE WAY FORWARD: A STRATEGY FOR THE INDUSTRIALIZATION OF SMALL RUMINANT PRODUCTION PROPOSED TECHNICAL SUPPORT MODEL AT THE FARM LEVEL PROJECT PROFILE: DEVELOPMENT OF THE NUCLEUS HERD Herd Build Up Capital Investment Annual Farm Recurrent Cost Revenue Cash Flow and Profitability Financing Strategic Partnerships REFERENCES REFERENCES ANNEXES v

7 LIST OF TABLES Item Page No. Table 2.1 CARICOM Consumption of Goat and Sheep Meat (2003 & 2004) 3 Table 2.2: Per Capita Consumption of Sheep & Goat Meat : CARICOM 4 countries Table 2.3: Summary of Imports of Sheep and Goat Meats into Various 5 CARICOM Countries in 2004 Table 4.1: Sheep Production Cost: Live weight Cost for Various Production 34 Technologies (inc. 20% farmer s margin) Table 4.2 Summary: Sheep Cost of production in Various CARICOM 37 Countries (USD) Table 4.3: Goat Production Cost: Cost Differentiated by Production 39 Technology (USD/kg live wt inc.20% profit) Table 4.4 Summary: Goats Cost of Production in Various CARICOM 42 countries Table 5.1: Benchmark Data on Cost of Production of Mutton in Selected 48 CARICOM Countries (USD/kg meat carcass basis) Table 5.2: Benchmark Data on Cost of Production of Goat Meat in Selected 48 CARICOM Countries (USD/kg meat-carcass basis) Table 5.3: Items of Cost re: Importation of Sheep & Goat Meats from 51 Australia & New Zealand Table 5.4: Spread in the Cost of Small Ruminant Meat at the Wholesale 60 Level: Local vs. Imported Meat Table 6.2: Projected Annual Goat Enterprise Income Distribution Amongst Farms Surveyed (USD /farm / year): (Assumes a 50 Ewe Breeding / Fattening Operation) ANNEX TABLES Annex Table 4.2 Summary: Sheep Cost of production in Various CARICOM Countries (USD) Annex Table 5.7 Production Parameters for Sheep and Goat Production in Trinidad and Tobago Annex Table 6.1: Summary: Sheep Cost of production in Various CARICOM Countries (USD) Annex Table 6.2: Summary: Goats Cost of Production in Various CARICOM countries Annex Table 7.1: Sheep: Industry Performance Benchmarks Annex Table 7.2: Goat: Industry Performance Summary Various CARICOM Countries Annex Table 7.3 Benchmark: Production parameters for the Barbados Black Belly and the West African sheep breeds Annex Table 7.4: Average Daily Gain: Goat Production in various CARICOM Countries Annex Table 7.5: Goat Industry Performance Summary Various CARICOM Countries - vi -

8 LIST OF FIGURES Item Figure 4.1: Cost of Production per Kg Liveweight Sheep Production in Various CARICOM Countries (2006/7 data) Figure 4.2: Cost of Production per Kg Meat Sheep Production in Various CARICOM Countries (2006/7 data) Figure 4.3: Cost of Production per Kg Dressed Sheep Production in Various CARICOM Countries; Data Sorted by Type of Breed (2006/7 data) Figure 4.4: Cost of Production per Kg Dressed Sheep Production in Various CARICOM Countries; Data Sorted by Type of Breed and Farming System (2006/7 data) Figure 4.X: Cost of Production per Kg Liveweight Goat Production in Various CARICOM Countries (2006/7 data) Figure 4.X: Cost of Production per Kg Meat Goat Production in Various CARICOM Countries (2006/7 data) Figure 5.1: Typical Intermediaries and Cost Items of the Local Value Chain Small Ruminants Figure 5.2: Flow Chart Showing Major Supply Operations from Australia/New Zealand to CARICOM Market Figure 5.3: Competitiveness Gap (%): Sheep Meat Production in CARICOM (Basis: Cost at Wholesale Level of Carcass, highlighted by Country) Figure 5.4: Competitiveness Gap (USD): Sheep Meat Production in CARICOM (Basis: Cost at Wholesale Level of Carcass, highlighted by Country) Figure 5.5: Competitiveness Gap (%): Goat Production in CARICOM (Basis: Cost at Wholesale Level of Carcass) Figure 5.6: Competitiveness Gap (USD): Goat Production in CARICOM (Basis: Cost at Wholesale Level of Carcass) Figure 5.7: Competitiveness Gap (%): Sheep Meat Production in CARICOM (Basis: Cost at Wholesale Level of Carcass, highlighted by Technology) Figure 5.8: Competitiveness Gap (%): Sheep Meat Production in CARICOM (Basis: Cost at Wholesale Level of Carcass, highlighted by Major Crosses/Breeds) Figure 5.9: Competitiveness Gap (%): Goat Production in CARICOM (Basis: Cost at Wholesale Level of Carcass, sorted by Technology) Figure 5.10: Goat Production in CARICOM (Basis: Cost at Wholesale Level of Carcass, sorted by Major Crosses/Breeds) Figure 5.11: Spread of Cost of Small Ruminant Meat at the Wholesale Level Local vs. Imported Meat (2006/07) Figure 6.1: Market Price for Sheep Meat (Fresh) in various CARICOM Countries (2006/07 data) Figure 6.2: Returns to Investment (%) Sheep Production in Various CARICOM Countries (2006/07 data) Figure 6.3: Gross Margin Kg of Meat Sheep Production in Various CARICOM Countries (2006/07 data) Figure 6.4: Gross Margin per Head Basis Sheep Production in Various CARICOM Countries (2006/07 data) Figure 6.5: Returns to Labour, Management and Investment per Head Basis Sheep Production in Various CARICOM Countries (2006/07 data) Figure 6.6: Returns to Investment (%) Goat Production in Various CARICOM Countries (2006/07 data) Page No vii -

9 Figure 6.7: Gross Margin per Kg Meat Goat Production in Various CARICOM Countries (2006/07 data) Figure 6.8: Gross Margin per Head Basis Goat Production in Various CARICOM Countries (2006/07 data) Figure 6.9: Gross Returns to Labour, Management and Investment per Head Basis (incl. Mortality) Goat Meat in Various CARICOM Countries Figure 7.1: Average Daily Gain: Sheep Production in Various CARICOM Countries (2005/06) Figure 7.2: Average Number of Lambs per Lambing: Sheep Production in Various CARICOM Countries (2005/06) Figure 7.3: Dress Out Performance (%): Sheep Production in Various CARICOM Countries (2005/06) Figure 7.4: Average Daily Gain: Goat Production in Various CARICOM Countries (2005/06) Figure 7.5: Dress Out Performance (%): Goat Production in Various CARICOM Countries (2005/06) Figure 8.1: Proposed Small Ruminant Industry Development Strategy Figure 8.2: Proposed Nucleus Herd Model: CARICOM Level Activity: Breeding Stock Supply and technology Generation Figure 8.3: Proposed Country Level Small Ruminant Development Model - viii -

10 GLOSSARY OF TERMS BSE Capretto Caprine Chevron EU FOB Goats HACCP HS HS 0204 HS HS HS HS HS HS HS HS HS Lamb Mutton OIE PM grade carcass Prime goat meat Sheep Small ruminants SSOP TSE UK USA USD Zoonoses Bovine Spongiform Encephalopathy or Mad Cow Disease The Italian name for tender, milk-fed kid Goat. Goat meat European Union Free on board Capra hircus Hazard Analysis and Critical Control Point Harmonized System of Classification Meat of sheep or goats, fresh, chilled or frozen Lamb carcasses and half carcasses, fresh or chilled Sheep carcasses and half carcasses, fresh or chilled Sheep cuts, bone in, fresh or chilled Sheep cuts, boneless, fresh or chilled Lamb carcasses and half carcasses, frozen Sheep carcasses and half carcasses, frozen Sheep cuts, bone in, frozen Sheep cuts, boneless, frozen Goat meat, fresh, chilled or frozen Meat of young sheep, less than one year old Meat of mature sheep, greater than one year old Office International des Epizooties Prime sheep carcass lamb high in tenderness, juiciness and flavour Regarded as lean, tender and juicy goat meat. Ovis aries Refers to Sheep and Goats in this study Sanitary Standard Operating Procedures Transmissible Spongiform Encephalopathy United Kingdom United States of America United States Dollar A disease communicable from lower animals to man under natural conditions - ix -

11 GLOSSARY OF GOAT AND SHEEP: BREEDS AND BODY CONFORMATION Boer Buck Oaklahoma State University Pelibuey Rancho El Tossoro ( m.mx/) Boer Doe Oklahoma State University Pelibuey Ewe Toggenburg Buck shamrockdairygoatfarm.com/forsale.html Katahdin Ram ut%20us.htm - x - Katahdin Ewe

12 Toggenburg Doe Oklahoma State Univeristy Saanen Buck Anglo-Nubian Buck ns.htm Saanen Doe Barbados Black Belly Buck rps.uvi.edu/aes/animal/ans Alpine Buck joshalivestock.com/alpine- Barbados Black Belly Ewe dos.htm Alpine Doe or_does_1.htm - xi -

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14 RECOMMENDATIONS FOR SMALL RUMINANTS INDUSTRY DEVELOPMENT 1 PROJECT PROFILE: DEVELOPMENT OF THE NUCLEUS HERD 1.1 Herd Build Up Each of the Nucleus farms being proposed, one for sheep and the other for goat, comprises a breeding herd of approximately 5,000 females at maturity. The Assumption is that the farms will be stocked initially with approximately 1,000 young females. The breeds of animal to comprise the herd will depend on the cross breeding programme planned. It is recommended that only high quality breeding stock should be acquired. Given the limited supply of such animals in the Caribbean, it is envisaged that the majority of the acquisition would need to be imported from extra-regional sources. The herd build-up model is presented in Table 1.1. The model assumes that the nucleus herd stabilizes at about year 5 with a population of approximately 5,000 breeding animals. Through a well monitored programme of rigorous culling we expect that the quality of breeding stock will be continuously upgraded. Young pregnant females will be available for sale to the region commencing in about year 4 of the project. When the herd stabilizes from year 5 onwards the model projects a total of approximately 3,000 pregnant ewes will be available for sale. - xiii -

15 Year Table 1: Nucleus Herd Projection: Annual Production and Sale of Pregnant Ewes Total Breeding Herd (Female) Total Offspring s Yield Males lambs (Assume 2% mortality) Selected Females Lambs (assume 2% mortality and 5% culled) Culled Females Lambs (to be fattened) (5%) Year Year Year Sale of Pregnant ewe Year Year Year Year Year Year Year Assumptions: No of lambing /yr =1.5; No of lambs /lambing = 1.5; Conception rate = 0.85; Annual production =1.5 *1.5 * 0.85 = 1.91offsprings /yr; Mortality =2% male and 2% female lambs and 5% of female lambs are culled from those selected for introduction into the genetic multiplier programme. The culled female lambs are to be fattened for the meat market. Key Principles of Seed Stock Operation 1. Project assumes 1,000 ewes to start nucleus herd at Year 1, which is the year rearing of animals for the production of seed stock will commence. 2. All females offspring will be retained until the end of Year 4 when 68% is retained for breeding and 32% sold to farmers/entrepreneurs. 3. Sale of offspring will thus commence in Year The project will therefore reach an ewe population of about 5,000 ewes during year 4 and this nuclear herd will be maintained from that year. 5. Ewe replacement at a rate of 20% will begin from Year The project will release about 1,035 pregnant females during year 4 and about 3,000 annually thereafter. 7. All males / rams will be sold after 6 8 months for breeding (excess sold for slaughter). 1.2 Capital Investment The estimate of the approximate projected cost and returns for each of the Centralized Nucleus herd is presented here. The initial capital investment for each Nucleus Farm is estimated at approximately USD 5 million comprising the cost of breeding stock, buildings, equipment and infrastructure (such as pasture, roads and utilities) for the establishment of the farm (Table 2). The total for the two farms (sheep and goat) being proposed is thus USD 10 million. 1.3 Annual Farm Recurrent Cost The annual operating cost for each farm is shown in Table 3. At year 5, when the herd stabilizes the total recurrent cost is estimated at approximately USD 1.7 million. Recurrent cost comprises staff cost, feed and other production input costs and administrative overheads. With respect to professional staff, we propose farm management personnel, as well as a compliment of scientists - xiv -

16 in the relevant specialization, to ensure high quality research emanating from the Farm. We estimate an annual staff cost of approximately USD 0.4 mn. Production cost for animals was estimated at the rate of USD 3.50 /kg live weight per annum, based on cost of production studies reported earlier. Total cost is therefore approximated on the basis of the total mass of animals on the farm in a given year. Table 2: Nucleus Farms: Approximate Initial Capital Investment Item Amount in USD Million Animal Housing & Buildings 0.6 Pasture Establishment 0.5 Equipment 1.5 Labs 0.4 Road & Utilities 1.0 Purchase of Breeding Stock 1.0 Total xv -

17 Table 3: Nucleus Herd Annual Operating Cost Each Farm (USD 1000) Year Total Farm Population 1/ Feed & Med Cost for Breeding Herd 2/ Fattening Cost (Male & culled females) 3/ Total Animal Prodn Cost ( Feed, Med & Labour) Staff + Admin Cost 4/ Annual farm Recurrent Cost Year Year Year ,286 Year ,737 Year ,743 Year ,744 Year ,745 Year ,745 Year ,745 Year ,745 Key Assumptions: 1/ Rams kept for 6 months while ewes are fed for 12 months 2/ USD 105 / animal / year feed etc 35kg ewe 3/ USD / animal to 7.5 months market weight 4/ Technical Staff and Technical Assistants estimated at $252,000 plus admin = $400,000 Cost items 1. Cost per ewe for breeding USD 1,000 each. 2. Professional, technical and support will cost USD 400,000/annum 3. Males sold at 40 kg bodyweight and culled female fatteners and spent ewes at 25kg. 4. Rams budgeted to be sold at USD 3.75/kg and culled females at USD 1.50/kg. 5. Pregnant females are sold at a price of USD 700 / head. 1.4 Revenue At year 5 when the animal population stabilizes annual revenue from animal sales is estimated at approximately USD 2.9 million. Revenue is based on returns from the sale of the various classes of animals as follows: (i) Male offspring and culled female offspring that have been fattened for market up to an average age of 7 8 months reaching an approximate weight of 40 kg. These animals would be destined for the mutton market attracting and average price of USD 3.50 /kg liveweight (ii) Culled spent female animals from the breeding herd. The price assumed here is USD 1.50 /kg liveweight (iii) Select pregnant lamb offspring to be sold as high quality breeding stock. The assumed price is USD 700 / animal. - xvi -

18 1.5 Cash Flow and Profitability The Cash Flow projections for each farm are presented in Table 4. Operating deficits are expected for the first four years, respectively USD 0.5, 0.6, 0.8 and 0.3 million. The cumulative deficit at the end of year 4 is therefore approximately USD 2.2 million. From year five onwards a positive cash flow of USD 1.1 million is estimated. The economic viability of this project primarily depends on the price of breeding stock. While we have suggested a price of USD 700 /animal, a policy decision could be taken with respect this price. The profitability of investment in the Nucleus herd was estimated using two scenarios: Scenario one assumes 50% of the initial investment is provided by grant funding; and Scenario two assumes that 100% of the initial investment is provided by grant funding. The internal rate of return of the investments and the net present value based on these assumptions are as follows: (i.) Scenario 1 - IRR = 14.5% and NPV = USD mn (ii.) Scenario 2 IRR = 31.5% and NPV = USD 4.45 mn 1.6 Financing On the basis of the parameters employed in the analysis and the assumptions of the model, the revenue base of the project is inadequate to support the initial investment proposed. We suggest an investment strategy aimed at mobilizing approximately 50 % of the total investment form donor funding. For the two farms this amounts to USD 5 million. The remaining 50 % of investment and the required working capital we suggest should be mobilized through equity participation of governments and private sector in region in the project. - xvii -

19 Table 4: Cash Flow: Nucleus Breeding Herd (USD 1000) CASH OUTFLOW CASH INFLOW Year Establishment Cost Annual Staff & Admin Cost Annual Farm Prodn Cost Total Cash Outflow Total Revenue* CASH FLOW Year Year ($526) Year ($630) Year , ($818) Year ,737 1,431 ($306) Year ,743 2,907 $1,163 Year ,744 2,917 $1,172 Year ,745 2,919 $1,174 Year ,745 2,919 $1,175 Year ,745 2,919 $1,175 Year ,745 2,919 $1,175 * Assume: (i) Males sold at 40 kg bodyweight and culled female fatteners and spent ewes at 25kg. (ii) Rams budgeted to be sold at USD 3.75/kg and culled females at USD 1.50/kg. (iii)pregnant females are sold at a price of USD 700 / head. 1.7 Strategic Partnerships Given the developmental role of this project, we strongly urge the participation of a wide cross section of private investors as a measure to ensure that the project remains focused on maintaining commercial viability. In this regard we are of the view that among the various stakeholder groups, the current processors/ integrators in the broiler industry in CARICOM should be considered strategic investors and potential business partners since the CARICOM mutton industry could benefit from the meat handling and distribution know how and infrastructure of these entrepreneurs. - xviii -

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21 Section 1 INTRODUCTION 1.0 INTRODUCTION This study is part of a larger study commissioned by the CARICOM Regional Transformation Programme for Agriculture to evaluate the international competitiveness of selected agricultural commodities. The other commodities included were, hot pepper, sweet potato, coconuts and papaya. This Report is the final component of the overall study on the competitiveness of the Small Ruminant meat industry in CARICOM. It was preceded by a Review of the Policies in the CARICOM countries included in the study and a Market Intelligence Report on the global Small Ruminant meat industry. The Study focused on the following countries: Barbados, Belize, Jamaica, Trinidad and Tobago, St Lucia and St. Vincent. The report is structured into eight sections. Section two summarizes the key market issues f4rom the Market Study (reported separately). Section three provides a profile of the industry in the seven CARICOM countries studied. The analysis in this report is presented in sections four to seven as follows: Section four presents the Cost of Production estimate for the sample of farms; Section five presents the results of the Competitiveness Analysis; Section six looks t profitability of Small Ruminants production; and Section seven reviews Technical performance parameters. Proposals for Industry Development are given in the final section (Section eight)

22 Section 2 MARKET ASSESSMENT: KEY ISSUES, OPPORTUNITIES AND COMPETITION 2.0 INTRODUCTION This Section of the Report presents findings from the Market Report for Small Ruminant meats. The section begins with an overview of the CARICOM and global market/competitive environment, with emphasis on the CARICOM small ruminant market as it relates to development of the Regional industry. Further examination of trade of sheep and goat meat is done within this context. A concise discussion on the main issues with respect to competitiveness in the Region is then presented, noting problematic areas within the production and supply systems in the member countries. 2.1 THE CARICOM MARKET FOR SMALL RUMINANT MEATS As a net importer of sheep and goat meat, strategies for allowing regional producers to capitalize on existing opportunities are essential. We now review the key market features of the CARICOM market. Market Size & Imports: Overall, the Region imports approximately 75 % of its consumption requirements of goat and sheep meat from Australia and New Zealand. In 2004, imports were valued at USD 23.3 mn with over 88 % being sheep meat. Our estimate is that the total value of the industry with respect to ONLY meat is approximately USD mn. Estimated CARICOM consumption is approximately 15,000 tonnes. However, the actual levels of consumption and self sufficiency vary among countries, as well as between mutton and chevron.. Imports of mutton and chevron into the CARICOM Region averaged 10,343 tonnes (2002/04) with 64% of the total value of imports coming from Australia and 30% from New Zealand. The USA s market share in the Region was estimated at only just about 5% in value terms. The main import product into the Region was sheep cuts, bone in frozen (HS ) representing 72% of imports in value terms

23 Jamaica is the largest importer in the Region, followed by Trinidad and Tobago. Jamaica, as do other relatively large importers (The Bahamas, Barbados) imports mostly meats of sheep while Trinidad and Tobago s imports are mixed - about 65% sheep meat and 35% goat. Tables 2.1 and 2.2 summarize CARICOM s per capita consumption of goat and sheep meats. CARICOM consumption of Sheep and Goat meat in 2003/04 was about 2 kg/capita (Table 2.1). Overall the per capita consumption of sheep meat was approximately twice that of goat, 0.6 kg versus 1.4 kg / capita. Significant variation exists in the level of consumption and the type of meat preferred among countries as shown in Table 2.2. Table 2.1 CARICOM Consumption of Goat and Sheep Meat (2003 & 2004) Commodity Year Production (kg) Imports (kg) Total Consumption (kg) Per Capita Consumption (kg) Goat & Sheep ,661,000 11,123,889 14,784, ,668,000 11,287,856 14,955, Goat Meat ,579,535 1,948,338 4,527, ,591,800 1,769,812 4,361, Sheep Meat ,081,465 9,175,551 10,257, ,076,200 9,518,044 10,594, NB: 2003 excludes Antigua & Barbuda, Bahamas and Montserrat 2004 excludes Antigua & Barbuda and Bahamas - 3 -

24 Table 2.2: Per Capita Consumption of Sheep & Goat Meat : CARICOM countries COUNTRY Per capita Consumption (kg) Goat & Sheep Goat Meat Sheep Meat Antigua & Barbuda Bahamas Barbados Belize Dominica Grenada Guyana Jamaica Montserrat St. Kitts & Nevis St. Lucia St. Vincent Suriname Trinidad and Tobago NB: Antigua and Barbuda based on 2005 data available. Bahamas based on 2001 data available. Production: CARICOM per caput supply of goat and sheep meats was estimated at 2.2 kg in 2002, ranging from 0.1 kg in Belize to 6.1 kg for St Lucia 1. Small Ruminant meat production has been dominated by Jamaica, which produces an average of 1,500 tonnes annually. Other significant producers include Guyana, Antigua, St Lucia, St Kitts and Nevis, Barbados, The Bahamas and Grenada. St Vincent, Trinidad and Tobago, Dominica, Suriname, Montserrat and Belize are the smallest producers in the Region. CARICOM countries also produce small quantities of breeding stock for exports. Barbados is a major exporter of the Barbados Black Belly Sheep. Prices: An examination of the prices database shows a range of prices for small ruminant meats. Further, variation exists by species of animal, age of animal and the respective cuts. The industry s market is further segmented by economic and socio-cultural/religious factors. Pricing in the industry is also differentiated by meat product form fresh vs. frozen. Within the Region, freshly slaughtered small ruminant meat attracts premium prices. 1 Resident population in 2002 was estimated at 6,494,000 persons (FAOStat); tourist arrivals 4,857,107 (CTO Tourism Statistics) persons; average stop over assumed at 7 days; eqv tourist popn 1,901,

25 We should indicate that within each of the Harmonized System (HS) custom classifaication of meat there is a range quality and / or grades are possible. For example, within the Customs Category HS : Sheep Cuts Boneless (fresh or chilled) in 2004, the trade data has three CARICOM countries (Jamaica, Trinidad and Tobago and The Bahamas) making purchases from Australia at the following fob prices per tonne, repectively: USD 1,318; USD 1,615 and USD 2,756. We assume these differentials reflect differences in product quality or grade. In the same year, The Bahamas made purchases from the USA for the same HS customs category at USD 3,846 / tonne. This compares with an average price of USD 6,937 / tonne. Similarly, frozen sheep carcasses (HS ) purchased in the same year (2004) from Australia showed prices of USD 712; USD 2,043; USD 2,104 and USD 2,805 per tonne. The average quoted for this category of meat in Figure 4.1 is USD 1,879 / tonne. The import of sheep and goat meat (value terms) is presented in Table 2.1. Table 2.3: Summary of Imports of Sheep and Goat Meats into Various CARICOM Countries in 2004 CARICOM Countries Meat of Sheep (USD 1,000) Meat of Goat (USD 1,000) Total Sheep and Goat Meat Import (USD 1,000) Antigua Bahamas 3,415-3,415 Barbados 3,024-3,024 Belize Dominica Grenada Guyana 5-5 Jamaica 8, ,727 Montserrat St Kitts St Lucia St Vincent Suriname Trinidad & Tobago 4,006 2,272 6,278 Total Imports 20,636 2,603 23,239 Data Source: Comtrade database Market Segmentation & Preferences: While CARICOM countries have ready access to relatively cheap supplies of frozen mutton and chevron from extra-regional sources, most consumers in the Region have a strong preference for fresh mutton and chevron produced from local flocks. This, in part, is reflected by the much higher prices consumers are willing to pay for - 5 -

26 the local meats. This distinction and preference provides the basis for the observed segmentation of the domestic market between locally produced fresh meats and frozen imports. Notwithstanding this segmentation, there is a trigger price at which imports may begin to substitute for fresh. The level of this trigger price depends on the individual s income level, as well as cultural factors. 2.2 THE GLOBAL MARKET FOR SMALL RUMINANT MEATS Global exports of small ruminant meat are dominated by Oceania (New Zealand and Australia) at 64% and by Europe (mostly France) at 31%. Asia and South America accounted for 6% of world trade. With respect to sheep meat, Australia and New Zealand account for 70% of the global exports or 592,159 tones, valued at USD 1.96 billion. Of this amount, New Zealand has a 56% share and Australia 44%. In the case of chevron, the combined exports from both countries are 14,680 tonnes valued at USD 34.7 mn (2003). Australia accounts for most (89 %) of the chevron exports. Sheep flocks in Australia and New Zealand are produced for both meat (including sheep for live export) and wool 2. Australia is the world's largest wool producer, accounting for about 30% of global production 3. The joint product nature of the industry in both countries allows for cost sharing of production expenses between wool and meat. This gives the respective industries tremendous leverage in pricing their products and maintaining a competitive position in global trade. Countries attempting to develop a sheep industry solely for meat production would find it difficult to compete on the basis of price, making quality factors the necessary basis for developing a mutton industry. The sheep and lamb meat industry in New Zealand is considered one of the most efficient. In addition to the joint product nature of the industry, the industry was geared for export marketing with about 50 meat export processing plants in In the case of Goat, New Zealand has consistently worked towards achieving a highly productive and efficient industry. In this regard, the country introduced the Boer Goat from South Africa in 1983 in an attempt to increase flock 2 (Source: Statistics Tasmania Agriculture. Agricultural production., Livestock., Sheep and lambs ) 3 Year Book Australia 2002., 2002., Agriculture., The wool industry -

27 productivity. Today, New Zealand is the third largest exporter of goat meat (about 5%) after Australia and France. In the case of goat meat, Australia s supply is based on both feral (wild) and domesticated species. The former provides a relatively cheap source of meat. Domesticated species include dairy goats and the genetically improved Boer goat. 2.3 KEY COMPETITIVENESS ISSUES As noted earlier, regional production of goat and sheep meat meets only a small fraction of consumption demand, with the Region relying heavily on imports. Given the role that Small Ruminants could play in enhancing food security and increasing farm and rural incomes and given its appropriateness for land scarce economies, there is need for a serious thrust in propelling this industry forward. Strategies must be developed with the following key issues in mind: a) Consumption Patterns and Preferences: An understanding of the drivers of demand in the market is critical to maintaining a strong market presence and optimizing revenues. Ethnic, cultural and religious factors are major factors influencing consumption patterns for goat and sheep meat in the Region. Fresh goat and sheep meat is consumed throughout the year with peaks associated with various celebrations and religious events such as Christmas, Eid Ul Adha and Eid Ul Fitr. In Jamaica, the consumption of goat meat is widespread in the local community and the product is being readily introduced to the tourist trade as part of the local cuisine. b) Product Form and Carcass handling: Product marketing, proper meat handling and product presentation remain largely undeveloped in the Region. Conditions and facilities for slaughter need to be improved, and by-product utilization and value added products need to be exploited. Only a small fraction of locally produced mutton and chevron is marketed through the established supermarkets, significantly limiting consumer access to the product. Standardization and grading need to be established to fully optimize returns, and products need to be promoted to extract maximum value

28 Also, laws regulating the slaughter of animals for human consumption must be updated. Generally, slaughters take place privately, without the requisite health and food safety inspections. The free range system that exists in parts of the Caribbean, together with a praedial larceny problem and the lack of certification and traceability at slaughtering, serves to further expose consumers to health and food safety risks. In addition, systems for slaughtering, meat handling and waste disposal at the public abattoirs in most countries are in dire need of upgrade and modernization. HACCP and Sanitary Standard Operating Procedures (SSOP) practices seem to be absent from such systems, while there exists a number of private abbatoris in the Region. However, not cater for handling of sheep and goats. Although the Region is taking steps to develop its monitoring and diagnostic capabilities, the pace is slow relative to the frequency and the rate at which incidence of diseases are occurring at new locations worldwide. Unless protected, the Region is likely to suffer health, economic and social costs. c) Packaging and Distribution: At the retail level, there is an absence of labeling which impacts on product history and traceability. Moreover, for domestic market channels, improvement in carcass cut and quality will help in promoting sheep and goat meats in more mainstream supermarkets and retail outlets. Summary: In conclusion, the basis for a competitive CARICOM Small Ruminant Industry is the development of a quality product that maximizes value, exploits unique flavours, freshness, wholesomeness and taste. Should CARICOM seek to transpose the level of selfsufficiency of the Region from 25% to a much higher percentage, the industry would need to take on board these issues in its strategic plan. 2.4 TRADE REGULATIONS The Office International des Epizooties (OIE) or the World Animal Health Organization is recognized as the international standard setting organization for promoting animal health by countries in the Region. The Competent Authority for animal health in the respective countries of - 8 -

29 the Region therefore adopts the OIE guidelines, which are used in the development of animal health standards. The guidelines also provide for transparency and equivalence in trade of animals and animal products as set out by the WTO SPS Agreement. The WTO, the SPS Agreement specifies that: a. Disease risk assessments should evaluate the likelihood of entry, establishment or spread of a disease within an importing country according to the measures which might be applied, and the associated biological and economic consequences. b. Food safety risk assessments should evaluate the potential for adverse effects on human or animal health from the presence of pathogenic agents, additives, contaminants or toxins in foods, beverages or feedstuffs. Unlike the regulatory environment existing in the developed countries which includes protection of the consumers, our review of the database did not locate any significant SPS regulations besides those which seek to address tariff at the border. The only exception for the Region was in the case of the Belize Agricultural Health Authority (BAHA), which approves on-farm quarantine stations prior to importation of animals. On arrival, a veterinarian inspects the animal within 24 hours of entry and then at least once weekly. Animals are quarantined for a period of 30 days 4. Belize assesses disease risk on imports of animal products to ensure that diseases and food safety risks posed by imported goods are identified and managed effectively. An import risk analysis is conducted when: The animal product has never been previously imported. The goods originate from a country or region not previously approved. The health status of the country or region changes. There is new information on a particular disease. 4 Source: Belize Agricultural Health Authority. <

30 As part of the health notification requirement, the exporting country must provide evidence that an export good does not represent a significant risk to Belize. Other Caribbean countries, generally follow guidelines reflecting those of the OIE protocols. Systematic protection and safety measures appear to be inadequately addressed

31 Section 3 PROFILE OF THE SMALL RUMINANT INDUSTRY IN SELECTED CARICOM COUNTRIES 3.1 INTRODUCTION Overall, the Region imports approximately 75 % of its consumption requirements of both meats, with imports primarily from New Zealand and Australia. The Caribbean Region however, has been a traditional producer of small ruminant meats and products. In the Region, Jamaica has the largest stock of sheep and goat at 142,000 heads, followed by Guyana estimated at 78,000 heads; Antigua 15,000; and the rest of CARICOM having animals stocks at less than 10,000 heads (FAOStat). Data on domestic production of Sheep and Goat meat in CARICOM countries are not readily available, largely on account of the fact that a significant number of animals are slaughtered at informal facilities such as backyard or roadside venues rather than in the public or other approved abattoir. The only complete database is the FAOStat, which based on our observations in Trinidad and Tobago may be underestimated. In terms of goat meat production, the FAO data show Jamaica as CARICOM s largest producer with 1,559 tonnes, followed by Guyana with 260 tonnes, Antigua 111 tonnes and St Kitts and Nevis 70 tonnes. Production levels for the other identified countries fall below 68 tonnes per annum. However, in the case of sheep meat, Guyana was the largest CARICOM producer with a production of 520 tonnes in 2004, followed by Barbados (92 tonnes) and St Lucia (90 tonnes). 3.2 JAMAICA As mentioned previously, Jamaica is the largest producer of goat meat in the Region. In 2003, the country produced 466 tonnes of chevron representing just about 25% of domestic consumption. In order to supply the production deficit, the country imported 1,413 tonnes. Small ruminants can be found throughout Jamaica, with higher concentrations in the parishes of Clarendon (16.3%), St. Elizabeth (13.6%) and Westmooreland (13%)

32 Westmoreland St. Elizabeth Clarendon Animals are reared using several systems ranging from free range to intensive, and under land and landless systems. Improved pasture normally involves the use of tanner grass and mulberry, fenced and subdivided in about 0.8 ha (2.0 ac) blocks. Animals are allowed to graze during the daylight hours, with supplement fed at night in enclosed housing. Most of the improved forages and fertilized pastures are found in Clarendon (75%), Westmooreland (50%) and St. Elizabeth (25%). Although some farms have irrigated pasture, the majority do not. For example, in Clarendon, just about 7% of the pastures are irrigated. In some of the farms visited, there was very good quality breeding stock being used for genetic upgrade of the herd. The offspring from high quality stock may also be sold to other farmers. A selected stud service programme using various improved breeds is offered by the Ministry of Agriculture at various locations across Jamaica. In addition, a revolving buck and doe are kept in an effort to upgrade the national herd. The Ministry is also conducting experiments in artificial insemination with varying degrees of success. Most housing for small ruminants in Jamaica is constructed very rudimentary, using recycled building materials. Proper housing and improved pastures are key pre-requisites for harnessing the genetic potential of the animals and improving performance, productivity and competitiveness

33 Small ruminants are kept primarily for meat in Jamaica. Small amounts of leather products are also manufactured and efforts are being made towards increasing / evaluating the acceptance of cheese made from goat milk. Most of the goat and sheep meat produced in Jamaica are sold retail either for direct household consumption or for food service. Smaller amounts pass through the supermarket and meat shop channels. Market demand centers around 8 to 12 month old animals. Demand exists for both meat and certain fifth quarter parts such as the head, feet and testicles, which are used to make various delicacies in Jamaica. An estimated 40% of the small ruminants produced in Jamaica are slaughtered at the public abattoirs and 60% through various private facilities. The R& D in Jamaica is primarily done by two institutions: (1) The Ministry of Agriculture and (2) CARDI. Research being done includes: (i) Artificial insemination (ii) Improved forages - mulberry (iii) Cross Breeding and Breed Evaluation / improved crosses for quality and meat content (iv) Screw Worm eradication (v) Appropriate housing design and construction

34 1 Small Ruminants - Jamaica Picture Source: Mocho Goat Development Project: Recovery of Mined-out Bauxite Lands for Goat Production A joint project of IICA, the Jamaica Bauxite Institute (JBI) and the Jamaica Aluminum Company (JAMALCO) Picture Source: Mocho Goat Development Project: Recovery of Mined-out Bauxite Lands for Goat Production A joint project of IICA, the Jamaica Bauxite Institute (JBI) and the Jamaica Aluminum Company (JAMALCO) Picture source : a/mochofacts.pdf Picture source : os/goats_3?full=1 Goats grazing in unimproved pastures Goats: Common sight in the streets of Jamaica Picture source: os/goats_3?full=1-14 -

35 3.3 BELIZE Small ruminant production in Belize is largely focused on sheep production. In 2004, sheep and goat meat production for Belize were estimated at 13 and 1 tonne, respectively. This level of production is locally consumed, channeled via butchers and processors who sell directly to consumers. The most common sheep breed reared is the Barbados Black Belly. However, production reports show a poor meat to bone ratio for Barbados Black Belly reared. The Boer goat is currently being promoted for upgrading local stock (which includes crosses of the Anglo Nubian and local breeds), with respect to meat production The Cayo District and Northern Belize have suitable conditions for sheep production and are thus targeted. The five major problems identified by small ruminant farmers in Belize (CARDI 2003) were predatory animals, poor pastures, internal parasites, poor breeding stock, and marketing. Northern Belize Cayo District In light of this, the Belizean authorities have initiated several improvement and development strategies; among these are the introduction of better quality forage (mulberry) and the development of protein banks, possible use of artificial insemination, and the introduction and cross-breeding of higher quality stock (Barbados Black Belly and Pelebuey). Belize also has a large citrus industry which may also possess some potential for linkages with the small ruminant industry

36 Refer to pictures: Small Ruminants Jamaica. Picture 1: Citrus groves in Belize Picture 2: Citrus pulp dumped in Belize

37 Small Ruminants: Central Farm Experimental Station, Belize Picture 3: Body conformation of Boar Goat Buck for breeding Picture 4: Pregnant Purebred Doe body conformation Picture 5: Weaned upgraded cross-bred offsprings Picture 6: Two Cross-bred Offspring s - Goat Picture 7: Pregnant cross-bred Goat Picture 8: Small Ruminant Housing

38 3.4 BARBADOS Sheep are the preferred small ruminant livestock in Barbados. The goats on the island are largely resident at the Government s breeding and research facility. A range of production systems are utilized, ranging from intensive to an extensive, landless system. Production technology generally comprises of a semi-intensive management system for ewes, and an intensive system for fatteners. Fatteners may comprise of both male and female sheep. In the semi-intensive systems, ewes are grazed and supplement fed on return to the housing on evenings. Although the Government provided a ready market for weaned males, farmers generally retained the stock for fattening. These production systems are usually not labour-intensive, and only one labourer may be kept full-time. Animal nutrition is generally based on farm feed formulations using spent grains. Wheat middling, cotton seed, ground corn, molasses, soybean meal, and hull are common ingredients used. These formulations range in price from Bds $ $0.45/kg (Bds $ $0.20 /lb) compared to Bds $ $0.73/kg (Bds$ $ 0.33/lb) for commercial mixtures. Supplements are fed at a rate if about 0.4 kg (1 lb) per ewe. The market weight at slaughter for the Barbados Black Belly is recommended at about kg. An estimated 60% of Barbados sheep production is slaughtered in backyard abattoirs. Alternatively, the Government of Barbados oversees the operations of the Southern Meats abattoir, which accounts for about 40% of slaughters, which is equal to on average 60 sheep per