ON

ANALYSIS OF BEEF CATTLE VALUE CHAIN IN SELECTED AREAS OF NORTHERN BANGLADESH

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Presented By: Paresh Kumar SharmaPhD Research Fellow, Dept. of Agribusiness and Marketingand Senior Scientific Officer, BAU Research SystemBAU, Mymensingh-2202Bangladesh

WELCOME TO

MY PRESENTATION

Bangladesh Economic Association (BEA)

Contents of the Study• Background of the Study• Justification• Objectives• Methodology• Results• Conclusion

Bangladesh Economic Association (BEA)

Background of the Study• Beef cattle rearing are creating opportunities for additional employment and

alternative source of income in rural areas of Bangladesh. Cattle fattening has become a source of dependable income for poor farmers. Among the livestock beef cattle enterprise is the quick money making and profitable business

• Bangladesh has the seventh largest cattle population in the world, but has one of the lowest per capita meat consumption

• Contribution of livestock sector to agricultural GDP has been decreasing from 3.12% in 1998-99 to 2.45% in 2012-13.

• Growth of livestock population is also decreasing from 0.53 % in 2001-2012 to 0.34 % in 2012-13

• Availability of beef increased from 344 000 M ton in 2000-2001 to 4000 000 M ton in 2011-2012

• Percapita consumption of all meat increased from 4.42 kg in 2000-2001 to 4.80 kg in 2011-2012

Bangladesh Economic Association (BEA)

Contribution of sector wise in agriculture GDP at constant price (base year 1995-96 to 2012-2013)

Year Crops and Vegetables Livestock Forestry Fisheries

1998-1999 14.33 3.12 1.90 5.931999-2000 14.59 3.02 1.88 6.092000-2001 14.70 2.95 1.87 5.512001-2002 13.75 2.96 1.88 5.402002-2003 13.43 2.93 1.86 5.252003-2004 13.23 2.91 1.83 5.112005-2005 12.51 2.95 1.82 5.002005-2006 12.28 2.92 1.79 4.862006-2007 12.00 2.88 1.75 4.732007-2008 11.94 2.79 1.75 4.652008-2009 11.43 2.73 1.75 4.582009-2010 11.42 2.65 1.73 4.492010-2011 11.32 2.58 1.69 4.432011-2012 10.86 2.51 1.66 4.392012-2013 10.25 2.45 1.63 4.37

Source: Ministry of Finance, 2013

Livestock Population of Bangladesh

Sources: BBS 2011, BER 2014,

Profile of Livestock in Bangladesh (In millions) Year Cattle Growth

(%)Buffalo Growth

(%)Goat Growth

(%)Sheep Growth

(%)2001-2002 22.46 - 0.97 - 16.96 - 2.2 -2002-2003 22.58 0.53 1.01 4.1 17.69 4.30 2.29 4.092003-2004 22.6 0.09 1.06 5.0 18.41 4.07 2.38 3.932004-2005 22.67 0.31 1.11 4.7 19.16 4.07 2.47 3.782005-2006 22.8 0.57 1.16 4.5 19.94 4.07 2.57 4.052006-2007 22.87 0.31 1.21 4.3 20.75 4.06 2.68 4.282007-2008 22.9 0.13 1.26 4.1 21.56 3.90 2.78 3.732008-2009 22.98 0.35 1.3 3.2 22.4 3.90 2.88 3.602009-2010 23.05 0.30 1.35 3.8 23.28 3.93 2.98 3.472010-2011 23.12 0.30 1.4 3.7 24.15 3.74 3.02 1.342011-2012 23.2 0.35 1.44 2.9 25.12 4.02 3.08 1.992012-2013 23.34 0.60 1.45 0.7 25.28 0.64 3.14 1.952013-2014 23.44 0.43 1.45 0.0 25.61 1.31 3.16 0.64

Average 0.36 3.4 3.5 3.1

Bangladesh Economic Association (BEA)

Year Meat production (‘000’M. tons) Per Capita

(Kg)Livestock Poultry Grand

totalBeef Buffalo Goat Sheep Total Poultry

2000-2001

344.00(59.83%)

7.00(1.22%)

46.00(8.00%

)

5.00(0.87%)

402.00(69.91%)

173.00(30.09%)

575.00(100.00%)

4.42

2001-2002

349.00(48.47%)

8.00(1.11%)

46.00(6.39%

)

6.00(0.83%)

409.00(56.81 %)

311.00(43.19%)

720.00(100.00 %)

5.42

2002-2003

353.00(45.43%)

8.00(1.03%)

46.00(5.92%

)

6.00(0.77%)

413.00(53.15 %)

364.00(46.85 %)

777.00(100.00 %)

6.90

2003-2004

358.00(42.32%)

8.00(0.95%)

46.00(5.44%

)

7.00(0.83%)

419.00(49.53 %)

427.00(50.47 %)

846.00(100.00 %)

7.40

2004-2005

363.00(37.46%)

8.00(0.83%)

47.00(4.85%

)

7.00(0.72%)

425.00(43.86%)

544.00(56.14 %)

969.00(100.00 %)

8.50

2005-2006

368.00(39.91%)

9.00(0.98%)

47.00(5.10%

)

8.00(0.87%)

432.00(46.85%)

490.00(53.15%)

922.00(100.00%)

8.00

2006-2007

374.00(31.86%)

8.80(0.75%)

47.30(4.03%

)

8.60(0.73%)

438.70(37.37%)

735.30(62.63%)

1174.00(100.00 %)

8.30

2007-2008

379.00(31.76%)

9.10(0.76%)

47.70(4.00%

)

9.40(0.79%)

445.20(37.31%)

748.20(62.69 %)

1193.40(100.00 %)

8.40

2008-2009

384.00(30.95%)

9.40(0.76%)

48.00(3.87%

)

10.20(0.82%)

451.60(36.40%)

789.00(63.60%)

1240.60(100.00 %)

8.60

2009-2010

398.00(71.40%)

9.70(1.74%)

49.80(8.93%

)

10.50(1.88%)

468.00(83.96%)

89.40(16.04%)

557.40(100.00 %)

8.80

2010-2011

413.00(38.74%)

10.00(0.94%)

51.70(4.85%

)

10.90(1.02%)

485.60(45.55 %)

580.40(54.45%)

1066.00(100.00 %)

8.90

2011-2012

400.00(54.55%)

10.00(1.36%)

49.00(6.68%

)

13.00(1.77%)

472.00(64.37 %)

261.30(35.63%)

733.30(100.00 %)

4.80

Meat availability for domestic consumption

Sources: BBS 2012

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Bangladesh Economic Association (BEA)

Anandajayasekera

m and Berhanu,

2009

Value chain analysis facilitates- 1) Improved understanding of competitive challenges, 2) Helps in the identification of relationships and coordination mechanisms, and;3) Assists in understanding how chain actors deal with powers and who governs or influences the chain. 4) Improving access to markets and ensuring product flow so that all actors in the chain benefit.

Kaplinsky and

Morris (2001)

The main sets of reasons why value chain analysis is important in this era of rapid globalization.1) Growing division of labour and the global dispersion of the production of components, systemic

competitiveness has become increasingly important2) Efficiency in production is only a necessary condition for successfully penetrating global markets.3) Entry in to global markets which allows for sustained income growth requires an understanding of

dynamic factors within the whole value chain.

Teshager et al, 2013, GTZ, 2007

Value chain analysis identifies and investigates;1) Bottlenecks.2) Holistic strategies for upgrading.3) How actors are influenced by the business environment in which they operate.4) Focus on key growth and upgrading opportunities.5) Goes beyond linkages between suppliers and buyers.

UNIDO, 2012

It is increasingly used by donors and development assistance agencies, including UNIDO, to better target theirsupport and investments in various areas such as trade capacity, enterprise competitiveness, income distribution

and equity among value chain participants. Mlote et al., 2012; Neves et al., 2012

Value chain analysis is important to;1) Examine the profitability in each node and factors affecting profitability and willingness to adopt improved

production technologies.2) Important evidence which indicates a strive for some actors in the beef cattle value chain to shift from

subsistence to more commercialized agribusiness.3) Identify market opportunities and linkages for selling cattle and beef products to inform policies and

decisions on which parts of the beef cattle value chain need strategies interventions.4) Identify appropriate production technologies and marketing strategies of beef cattle.

Why value chain important?

Justification of the study• This study generated useful information in order to develop

beef cattle value chain in the study area.

• The potential users of the findings are farmers, traders, butcheries, slaughterhouse, hotel and restaurants, consumers, government and non-government organizations that have an interest in improving the beef cattle value chain.

• The value chain analysis of the beef cattle initiates to understand the sources of the problems and recommend viable options to the households to overcome the problems and improve the production and supply value added products.

• The study gives insight to researchers and students interested in the topic to stimulate further investigations of the problems.

Bangladesh Economic Association (BEA)

Justification of the study (cont.)

Bangladesh Economic Association (BEA)

1. Why beef cattle?i) Economic factors, ii) Rational for genderiii) Other Factors a) Nutritional value, b) Exports potential, c) Religious culture 2. Increase in demand3. Beef cattle agribusiness is the ‘pathway of poverty’.4. Beef cattle sector is highly dualistic.But

1. Beef supply is dominated by Low productive Indigenous breeds.

2. Small scale cattle farmers are still predominant of beef cattle supply.

3. Rapidly growing retail industries in Bangladesh.

4. Export potential of beef and beef products.

5. Lack of year round adequate feed supply

6. Poor herd health management

7. Scope of beef cattle production.

Objectives of the study

10 Bangladesh Economic Association (BEA)

The specific objectives of the study are:

1) To identify main actors of the beef cattle value chain and their roles and interrelationships.

2) To identify the major challenges and opportunities for improving the value chain; and

3) To recommend to policy markers on how to promote beef cattle based agribusiness and their value added products.

Methodology

Sam

ple

Size

SL. No. Population Sample Size

1 Producers 180

2 Cattle traders 24

3 Brokers 6

4 Butcher shop 3

5 Supermarket 2

6 Meat Processing Company 2

7 Hotel and restaurant owner 3

Total Sample Size 220

Data collectio

n method

Survey

Key Informant Interview (KII)

Observation

Focus Group Discussions(FGD)

Study

Areas

District UpazilaPabna District Sathia Upazila

Sirajgonj District Raigonj Upazila

Methodology (cont.)

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Analytical tools

Value Chain Mapping Analysis

SWOT (Strengths , Weakness, Opportunities and Threat ) Matrix analysis

Bangladesh Economic Association (BEA)

Processing

Input supply

Trading

Trading

Retailing

Consumption

Production

HH ,H&R Expor

Road side meat stall Butcher or Meat Shop Supermarkets:

• vehicle• Loading• Transportation• Unloading

• Slaughtering,• Chilling • and Packing etc.

• Buying• Transporting,• Distribution to consumer

etc.• Vehicles• Loading and • Unloading etc.

• Selection• Feeding• Management etc.

• Feed• Fodder• Calf• V. Medicine• Finance and • technology etc

Beef Cattle Value Chain

Distribution

Retailing

Processing

Consumtion

Transportation

Marketing

Production

Input supply

Benefit of Value Chain• Value creation• Employment for livelihood• Creating profit• Competiveness• Improved customer service• Productivity

A ‘value chain’ describes the full range of activities which are required to bring a product or service from conception, through the different phases of production (involving a combination of physical transformation and the input of various producer services), delivery to final consumers and final disposal after use Kaplinsky and Morris (2000) .

Results and Discussion

Beef cattle value chain is the sequential set of primary and support activities that an enterprise performs to turn inputs into value added outputs for its external customers

Actors Functions and Interactions Activity

Processors /Abattors

Institutional Consumers

(Hotels, restaurants etc)

Input Suppliers(Calves, Feeds, Medicine & veterinary, Technology, Credit. Market

information etc)

IntensiveProduction System

Village CattleMarket

Extensive Production System

Semi-intensive Production System

Secondary Cattle Market

TerminalCattle Market

Primary Cattle Market

Butchers Shop

Roadside Butcher stall

Urbanslaughter slabs

Rural Slaughter slabs

Household consumers

Exports(Dubai, Kuwait,

Malaysia, Saudi Arabia, Europe (some countries)

etc

Supermarket Meat Corner

Inputs Supply

Consumption

Distribution/Retailing

Processing

Live cattleMarketing

Production

Inpu

t S

uppl

ier

Pro

cess

ors

Trad

ers

Pro

duce

rs D

istri

buto

rsC

onsu

mer

s

Beef Cattle Value Chain Map

Results and Discussion (cont.)

The information gathered during the study enabled the longitudinal Mapping of the beef cattle value chain in the study area is presented in this figure. The VCM illustrates the way in which beef cattle and their products flow from production areas in the study areas to end markets and how the overall beef cattle sector operates.

This is the core process of VC. The figure shows that the visualize networks to get understanding of the connection and interdependency among the VC actors of beef cattle agribusiness.

Bangladesh Economic Association (BEA)

Results and Discussion (cont.)

Actors Buying Price Selling price Value Addition PercentageFarmers 29138.76 50747.61 21608.85 74.16%

Traders 50198.33 62568.71 12370.38 20.34%

Butcher 62568.71 70465.11 7896.40 12.62%

Processor 62568.71 72285.05 9716.34 15.53%

Restaurant/Hotel 76423.55 114320.31 37896.76 49.59%

74.16%

20.34%

12.62%

15.53%

49.59%

Farmers Traders Butcher Processor Restaurant/Hotel

Value additions of beef cattle at different stages in value (in BDT.)

The figure shows various actors who are involved in the beef cattle value chain and also indicates value addition by farmer (74.15%), trader(20.34%), butcher (12.62%), meat processor (15.53%) and restaurant or hotel (49.51%). The highest value was added by farmer followed by hotel and restaurant owner, trader, processor was the second largest and lowest value was added by butcher.

Results and Discussion (cont.)

Farmer’s contribution was 49.36% of value added cost but received only 21.58% of revenue which is lower than the cost. In the live animal trading stage, trader contributes to 9.50% costs of value addition activities and received 21.37% of total revenue.

Butcher, processing industry and hotel or restaurant owner contributed cost at 4.39%, 6.50% and 29.71% and received profit or revenue at 14.19%, 17.25% and 25.61%.

Profit share farmer 21.58% in 3-5 months, traders 21.37% in 7-10 days, butcher 14.19% in 2-3 days, meat processor 17.25% in 2-7days and restaurant share 25.61% during the value added activities. Among the actors, butcher and meat processor gain more profit in terms of time involvement the chain.

Sources: Field Survey 2014

Farmer Traders Butcher Meat processor Hotel and Restaurent owner

0

10

20

30

40

50

60

49.36

9.5

4.396.5

27.71

15.46 15.31

10.1712.36

46.7Cost Share Share of Return in the chain

Actors

%

Share of Costs sand Returns of different actors in the chain

17 Bangladesh Economic Association (BEA)

Strengths1) Domestically produced2) Beef cattle are renewable natural resource 3) Large number of labour force.4) Government is committed to develop the sector5) High interest in beef cattle rearing among

respondents6) Rapid growth of supermarkets, superstore, restaurant

and tourist hotel.7) Availability of innovative technology 8) Availability of crossbred calves9) Consumers preference for beef

Weakness1) Lack of feed and fodder2) Lack of meat processing knowledge 3) Prevalence of Anthrax diseases 4) Lack of sufficient and proper slaughter houses5) Limitations of supporting institutions related to beef

cattle6) Inadequate institutional support7) Lack of working capital8) Absence of beef cattle breed9) No organized marketing system

Threats1) Increase in feed prices2) Govt. regulative in law safety and standards3) Absence of pasture lands4) Poor access to credit 5) High transportation cost (Illegal toll for cattle

marketing)6) Beef cattle smuggling and credit sale by Indian traders 7) Spread of cattle diseases8) Lack of veterinary check up of animal before and

after slaughter and 9) Low hygienic handling the meat lead to health risk

for consumers.

Opportunities1) Potential demand for beef over the country2) Government support to develop beef cattle3) Scope for investment by national and international

farm.4) High potential for profitable slaughter and processing

business5) High value addition potential 6) Consumers express more interest and are willing to

pay for safe food7) Options for private public partnership in domestic

market for product differentiation & diversification.8) Labor intensive and employment opportunities 9) Scope exists for developing backward and forward

linkage.

Challenges and opportunities in the value chain Results and Discussion (cont.)

Bottlenecks and intervention of beef cattle value chain development

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Bottlenecks/ Challenges Level Possible intervention and Strategies

1) Inadequate access to calf, feed and veterinary services.

2) Lack of grazing land.

Input suppliers

1. Linkage between cattle producers and input sellers

2.Facilitate development of entrepreneurs in input sector.

3. Provide feed processing techniques for preservation cattle feed

4.Allotment of Khas land to actual users

.

Bangladesh Economic Association (BEA)

Bottlenecks and intervention ------------- (Cont.)

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Bottlenecks/ Challenges Level Possible intervention1. Lack of access to market

information and appropriate fattening technologies.

2. Lack of capital 3. Low productivity.4. Lack of support services.

Producers

1. Promotion of market information & production technologies by DLS and NGOs

2. Provide easy access to finance to farmers for purchase of inputs and other related services.

3. Facilitate introduction and adoption of crossbred calves and fattening technologies that will improve productivity

4. Development of cattle producers group, contractual arrangements and needs advocacy for support services

Bangladesh Economic Association (BEA)

Bottlenecks and intervention ------------- (Cont.)

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Bottlenecks/ Challenges Level Possible intervention1) Poor access to market

information and transportation.

2) Lack of access to finance of cattle traders.

3) Illegal highway toll or market toll.

4) High risk to carry cash during the marketing.

5) Lack of market infrastructures.

Live Anima

l Trader

s

1) Establish MIS and disseminate information on price, demand-supply situation & road conditions through SMS & national media.

2) Provide specialized cattle transport vehicle.

3) Provide credit to traders without land grantee .

4) Establish low and force.5) Explore possibility of extension

banking hour during the hat day.6) Develop cattle market

infrastructures including cattle holding space, drainage, and water supply etc.

Bangladesh Economic Association (BEA)

Bottlenecks and intervention ------------- (Cont.)

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Bottlenecks/ Challenges Level Possible intervention1) Importation of beef processing equipment2) Lack of sustainable beef

cattle supply3) Lack of easy access to

Hallal Certificate4) Lack of investment in

establishment of meat processing firm

5) Lack of hygienic cattle slaughtering slab

Processors

1) Tax free import of beef processing equipment.

2. Linkage development with contract farmers and Processing plant / wholesale beef traders

3. Smoothing the process of issuing certificates by veterinary surgeon and Islamic foundation

4. Encourage establishment of meat processing firm through public-Private partnership model

5. Establish and use hygienic cattle slaughtering slab

Bangladesh Economic Association (BEA)

Bottlenecks and intervention ----------development

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Bottlenecks/ Challenges Level Possible intervention1) Unwilling to pay for quality

beef2) Lack of hygienic beef retail

place 3) Lack of transportation4) Buffalo meat mix with beef

Distribution/

Retailer

s

1) Awareness development among the customer about safe and quality beef and price

2) Develop hygienic retail store and beef packaging system.

3) Arrange transportation facilities to carry beef from slaughterhouse to store in the market

4) Monitoring and provide punishment of dishonest beef seller.

1) Lack of fresh, hygienic and Hallal beef.

2) Lack of quality3) High price

Consumers

1) Provide training to butcher for ensuring fresh, hygienic and Hallal beef.

2) Dissemination of information about safe and quality beef

3) Ensure supply of quality beef by following govt. rules

4) Promotion of consumerism .

Bangladesh Economic Association (BEA)

Conclusion• Value chain actors in beef cattle are butchers, hotel and restaurant owners,

smaller traders and larger traders. Butchers purchase fattened beef cattle from producers or small traders to slaughter at abattoirs and provide their value added product to hotel and restaurant owners and consumers.

• Hotels and restaurants owners are also part of the value chain who invest, controls etc. hotel or restaurant which belongs to them. These hotels and restaurants were owned by both gender groups.

• Traders are also other major actors in the beef cattle value chain. They are of two types‟ small traders and larger traders. Small traders are the one who trade or purchase beef cattle to sell to the other value chain actors. Larger traders can afford and they often sell to other larger traders out of the district.

• Farmers have adopted this enterprise as profitable venture in their own line• Scope exists for up scaling of activities at different stages in value chain• Generates income, and employment for farmers, traders, service providers,

butchers, processors and exporters etc• BVCA still remain a challenge which calls for proper marketing strategies such as

linking farmers with supermarkets. Inadequate slaughterhouse, packaging and labeling are other challenges that require urgent attention through acquiring Hallal certification from Islamic Foundation.

Conclusion (Cont.)• Farmers have adopted this enterprise as profitable venture in

their own line• Scope exists for up scaling of activities at different stages in value

chain• Generates income, and employment for farmers, traders, service

providers, butchers, processors and exporters etc• BVCA still remain a challenge which calls for proper marketing

strategies such as linking farmers with supermarkets. Inadequate slaughter, quality and safety, and labeling are other challenges that require urgent attention through acquiring Hallal certification from Islamic Foundation.

Bangladesh Economic Association (BEA)

Policy RecommendationsFor the different actors to benefit from value chain, the policymakers should take the following issues into consideration. • Beef cattle value addition has the potential of increasing farmers‟ income

and as such the poor smallholder farmers should be encouraged to take up the cattle fattening technology so as to get better prices for their cattle which translate to increased income thereby increasing their purchasing power and improving their living standards.

• Comprehensive research should be undertaken to develop one of the most important and profitable area of livestock sector

• Value chain approach may serve as effective means for development of beef cattle enterprise and other related areas

• Arrangement of training for all the concerned stakeholders will be prerequisite for proper development

• Policy for creating supply sources of calves , establishment of processing plants, compliance of criteria of safe and quality beef, and other support services

Some Picture During The Field Study

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