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Urban butchers' costs and returns under existing procurement strategies

23. Enterprise budgets are a useful tool for gauging the profitability of agricultural and livestock marketing activities. Cost and net return data are sensitive and need to be obtained in a skilful way. This study used periodic, structured informal interviews with Mokolo butchers to elicit information on costs of procuring cattle for slaughter and of providing marketing services. Gross returns were calculated from beef quantity (carcass weight) and retail price data obtained by weighing carcasses at slaughterhouses and beef purchased by consumers. Table 5 presents enterprise budgets that show representative costs and returns for butchering and retailing of range-fed and stall-fed cattle at Mokolo from September 1980 through March 1981.

Figure 3: Retail prices of beef with bones at four markets in the Mandara Mountains

Figure 4: Retail prices of beef without bones at four markets in the Mandara mountains

(i) Returns to slaughtering grange-fed cattle

24. Gross returns to butchers' labor and management and to the labor of the apprentices depend upon the cattle carcass weight times retail prices per kilogram for each type of beef, as well as the prices butchers are able to obtain for the parts of the carcass not sold at a fixed price per kilogram. Cattle acquisition prices and slaughter and retailing costs are then deducted to arrive at net returns. As shown in Table 5, the average net return for butchering and retailing of range-fed cattle which were acquired at an average price of 39,513 FCFA is approximately 1,600 FCFA per head. This return is divided between the wholesale butcher and his apprentices. The average return to the wholesale butchers' labor and management is 1,000 FCFA per head, which is only 2.5% of the average acquisition price paid for range-fed cattle.7/

25. Mokolo survey data and Livestock Service slaughter statistics show that the seven principal wholesale butchers at Mokolo slaughter an average of 237 head per year, of which 231 head are range-fed cattle. If the average net return to wholesale butchers' labor and management is 1,000 FCFA per head of range-fed cattle, their annual income from slaughtering range-fed cattle is 231,000 FCFA ($960).

(ii) Returns to slaughtering stall-fed cattle

26. Only nine of the 220 cattle slaughtered at Mokolo on market day from September 1980 through March 1981 were stall-fed bulls; estimates of costs and returns are based on a small sample of 8 head. Stall-fed cattle are only slaughtered at Mokolo from October through December when the supply of stall-fed cattle is plentiful and butchers are able to procure cattle at relatively low prices per kilogram. The Mokolo butchers paid 326 FCFA per kilogram (for the four quarters plus offals) for 8 stall-fed bulls, while they paid 320 FCFA per kilogram for the 211 range-fed cattle.

27. Net returns to the labor, management and capital of the wholesale butcher and to the labor of the apprentices average 3500 FCFA per stall-fed bull, of which 2500 FCFA is a return to the wholesale butcher's labor and management. Each of the seven principal wholesale butchers at Mokolo slaughters an average of no more than six head of stall-fed cattle per year. Given an average net return of 2500 FCFA per head of stall-fed cattle, the wholesale butchers earn 15,000 FCFA from slaughtering the stall-fed bulls.

Table 5: Representative costs and returns of slaughtering range-fed cattle and stall-fed cattle (in FCFA)

Cost and Return Categories

Range-Fed Cattle

Stall-Fed Cattle

Costs



1. Purchase of animal

39,513

65,250

2. Market tax plus cattle movement permit

200

0

3. Transport of butcher to and from place of purchase

700

200-500

4. Transport of animal from place of purchase of Mokolo

150-300

500-1,000

5. Trucking of weak or injured cattle to Mokolo

127

0

6. Payment to herder for herding animal near Mokolo

200-400

200-400

7. Slaughter tax

100

100

8. Retail marketing tax

400

400

9. Payment to mallam to cut throat

100

100

10. Payment to apprentices for dressing out animal

500-1,000

500-1,000

11. Transport of meat from slaughter slab to market

300

300

12. Amortization of butcher's license

99

99

13. Loss through condemnation, death en route (Gazawa-Mokolo), flight of animal

834

0

14. Opportunity cost of capital

63

63

Total cost - value range

42,714-43,564

67,712-69,212

- average value

43,139

68,462

Receipts



1. Beef sold bone-in at 300 FCFA/kg.

24,000

37,500

2. Beef sold bone-out at 350 FCFA/kg.

3,350

10,500

3. Filet sold at 525 FCFA/kg.

1,470

3,045

4. Liver (3-5 kg.)

1,200-2, 000

2, 000

5. Head

700-2,000

2,000

6. Hide

500-700

700

7. Tail (1-3 kg.)

250-400

400

8. Hooves

600-1,000

1,000

9. Hump

500-1,200

2,000

10. Tongue

500-1,000

1,000

11. Other offals; intestines, spleen, heart, kidneys, lungs (sold at 350 FCFA/kg.)

8,160

11,730

Total receipts - value range

42,730-46,780

71,875

- average value

44,755


Net Return to Butcher's Labour and Management - value range

-834 to 4,066

2,663 to 4,163

- average value

1,616

3,413

Net return/total receipts

-1.9% to 8.7%

3.7% to 5.8%

28. The average rate of return to slaughtering stall-fed bulls is higher than that to slaughtering range-fed cattle, reflecting the experience and good judgement of the Mokolo butchers, who respond to the opportunity to procure these cattle at low prices per kilogram liveweight during the immediate post-harvest period (October-December) of abundant supply. The Mokolo butchers report that these opportunities arise infrequently during other periods of the year; no slaughter of stall-fed cattle was observed after the month of December. Cattle traders and rural butchers, whose offer prices are not constrained by retail price controls, are able to offer higher prices than urban butchers, who must sell most of the carcass at 300-350 FCFA per kilogram. Therefore, it is important to note that Table 5 illustrates the maximum return urban butchers are able to earn when opportunities arise to procure stall-fed cattle at low cost. At average acquisition prices of 350 FCFA per kilogram paid by rural butchers at Soulede, returns to urban slaughter of stall-fed cattle are negative.

(iii) Annual return to labor and management

29. By combining returns to slaughtering stall-fed cattle and range-fed cattle, the annual net return to labor and management in slaughtering the 237 range-fed and stall-fed cattle is 246,000 FCFA or $1,025 (US$ 1.00 = 240 FCFA). Wholesale butchers earn a net return to labor and management of 984 FCFA per day.8/ This return is higher than the average peak agricultural season wage rate of 300-500 FCFA per man-day, but it is somewhat less than the salary of a primary school teacher, who earned 30,000 FCFA per month in 1980-81, or a daily wage rate of 1200 FCFA. The butcher's return is significantly lower than the remuneration of a secondary school teacher or civil servant.

30. Although some policy-makers are quick to charge that urban butchers and other marketing agents earn excessive profits, our empirical findings show that they earn an acceptable but rather low return for slaughtering cattle. In order to compete successfully in urban butchering and retailing enterprises, butchers must be skilful in judging the returns a live animal will bring once it is slaughtered. They must also provide capital and absorb the risks of mortality or forced slaughter and sale when trekking range-fed cattle from distant markets such as Gazawa to Mokolo.9/ These risks are quite high during periods of nutritional stress and inadequate water supply, particularly during the hot dry season (February-April).


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