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CHAPTER 3: Marketing systems and losses

Holding people accountable for losses
Segmented markets and piecework

Holding people accountable for losses

During the production chain from farm to market of meat and by-products, there may be considerable loss in the quality and quantity of meat and by-products. These losses may be in the form of:

· Carcass and meat condemnations due to bruising, injuries and deaths;
· Downgrading and unsuitability of hides and skins due to damage;
· Loss of meat quality due to DFD or PSE;
· Spoilage of meat due to stress and poor animal welfare of livestock.
In many developing countries, these losses are high because the marketing system does not always provide an economic incentive to reduce losses. One of the most efficient methods for improving welfare and reducing losses is to design marketing and payment system that hold people and organisations involved in the marketing chain of livestock accountable for these losses.

One of the worst marketing systems, from both welfare and an economic loss perspective, is to sell slaughter animals on a live mass or per head basis. This system does not provide an economic incentive to prevent bruising, injuries, stress or hide damage or other meat quality problems. When animals are sold to a slaughter plant on a live mass basis, the producer or transporter is not held accountable for losses due to bruises, injuries and other damages. These losses are paid for by the slaughter plant. It is a common observation that cattle sold on a live mass basis have twice as many bruises as those sold on a carcass mass basis.

However, when cattle are sold based on the carcass mass and quality, both the producer and transporter have an economic incentive to reduce bruising and injuries, much greater care is taken of the handling and welfare conditions. Changing payment systems is one of the most effective ways to improve handling and transport practices.

The same applies to transport insurance. If animals on a transport vehicle are insured, the policy must be designed to encourage good handling practices and discourage poor practices. If a policy pays for all the bruised, crippled or dead animals, the transport operator has no incentive to handle animals carefully. Policies should have a deductible clause to pay only for a catastrophic loss, such as a truck accident, but will not pay for bruised animals or pigs dead from heat stroke. In another scheme, producers pay a bruising levy, which goes into a fund that pays for serious bruising, of say over 2 kg, or downgrading.

Only first-grade hides and skins can be used to make high quality leather. Hides and skins are graded according to the extent and distribution of damage. A bonus should be offered to owners and transporters for better grades, thus encouraging them to ensure that damage from various causes is kept to a minimum. In addition, slaughterhouse skinners should be charged a penalty for skins cut during flaying.

Segmented markets and piecework

Livestock marketing systems that have one or more agents between the producer and slaughter plant will usually result in more damage to livestock than market systems where animals are sold directly from the producer to slaughter plant or butcher. There are two reasons for this:

· First of all, the agents or middlemen have little incentive to ensure that damage to livestock is kept to a minimum;

· Secondly every time an animal is handled by a different middleman, it increases the likelihood of injury and stress. Animals taken to an auction before moving to the slaughterhouse will have to be loaded and unloaded an extra time.

Payment systems for people handling animals can greatly affect the way the animals are treated. Handling animals on a “piece work” basis provides the incentive for handling animals as fast as possible. This encourages abuse and reduces care. Producers have found that paying truck-loading workers on an incentive basis to reduce damages greatly reduced losses. In conclusion, it should be emphasised that appropriately changing payment and marketing systems is one of the best methods for reducing livestock damage and improving animal welfare during handling and transport. Anyone, who causes an animal to become injured, damaged, bruised or die must be held economically accountable for the losses.

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