H. Baur1, K. Sissoko2 and S. Debrah
ILCA, BP. 60, Bamako, Mali
1 Universitat Hohenheim, 7000 Stuttgart 70, West Germany
2 Projet Sectoriel de l'Elevage de Mali, ILCA, BP. 60, Bamako, Mali
Abstract
Introduction
Economic analysis
Conclusion and implications
Acknowledgements
References
On-farm cattle feeding activities of selected peasant farmers in the semi-arid zone of Mali were followed in the dry seasons of 1984, 1985 and 1986 under the "Embouche paysanne" project, financed jointly by the Government of Mali and the USAID. The abattoir-destined cattle were sample-fed for 80 to 90 days during the dry season and were sold in May when prices were high. Coarse fodder and cottonseed cake were the main feed inputs, and producers benefited from loans provided especially for the project.
The animals gained on average between 0.58 and 0.81 kg/day during the feeding period. Gross returns of approximately 25320 CFA* and 35319 CFA on average were realised in 1984/85 and 1985/86 respectively by the sample taken as a whole. Disaggregating the gross returns into its price and weight components, higher sale prices in May during the 3-year campaign contributed on average about 55% while weight gains and the interactions between weight gains and price changes accounted for 37% and 8% respectively. However, after deducting purchase and production costs, average profit per animal including the value of unsold animals was substantially reduced, affecting the ability of participants to repay loans. In 1985 for example, about 27 of the sample made no profit or lost money in the cattle-feeding programme.
* 1 US$ = 315.5 CFA
Since the fattening programme depended largely on cottonseed cake of limited long-term availability, feed trials were undertaken to determine the economic viability of the project using reduced amounts or partly replacing cottonseed cake with other farmer-produced supplements. Although cattle fed reduced amounts of cottonseed cake gained less weight than those on larger quantities, profitability was increased.
The general absence of good quality feed during the long dry season is a major constraint faced by livestock producers particularly in the arid and semiarid areas of West Africa. Research efforts to match seasonal fluctuations in feed supplies with constant requirements include the promotion of packages which combine various feed resources such as forage legumes, fodder trees, cottonseed cake and agro-industrial byproducts to supplement grazing and to provide adequate feed supplies throughout the year.
In mixed farming systems where crop production and animal husbandry are closely integrated, the availability of cottonseed cake, especially during and after harvest, provide cheap sources of feed for livestock. In Mali, the use of cottonseed cake as livestock feed has long been encouraged in the semi-arid and subhumid zones. In 1975, the ECIBEV (Etablissement de Credit et d'Investissement Betail-Viande) was established with financial assistance from USAID (United States Agency for International Development) to provide credit to peasant farmers to undertake on-farm cattle feeding in the dry season.
"Embouche Paysanne", the smallholder cattle-feeding project in the semi-arid zone of Mali started with 48 peasants involving 107 animals in 1975 and had grown to 1105 peasants and some 3600 animals by the end of 1986. Under the programme, peasants obtained credit for the purchase of mature feeder cattle and supplementary assistance in the form of concentrates and veterinary care from ECIBEV. Animals were then fed on-farm on cottonseed cake and agro-industrial by-products for about three months in the dry season and sold in May when prices normally reached their peak. This paper presents the economic aspects of the feeding project based on observations from 1984 to 1986 within a sample, on average, of 31 farmers.
The study area
The cattle feeding activities were monitored in the Banamba zone of Mali, located west of the Niger river and about 150 km north of Bamako. The zone lies within isohytes of 600 and 800 mm of annual rainfall but has received less than 600 mm in recent years. Between 1975 and 1985 for example, it received an average of about 579 mm, with 1983/84 being particularly dry. In general, the zone experiences a short rainy season between June and September during which about 85% of the total annual rainfall is received. This is followed by a long dry period from October to May. The zone is characterised by mixed crop-livestock production systems. The principal crops grown are millet, sorghum, cowpeas and groundnuts. The average household keeps cattle, sheep and goats, as well as donkeys and some poultry. Producers in the study area have access to three major weekly markets which serve as the main centres of trade for agricultural and livestock products.
The sample
A general criterion for credit and participation in the feeding programme is the ownership of work oxen and/or agricultural equipment. This fulfils the function of a guarantee of credit worthiness, and in the case of work oxen, an indication that the farmer has had previous livestock management experience.
Approximately between 29 and 33 participating farmers and a total of about 125 feeder cattle were observed from 1984 to 1986. Roughly 50% of the farmers fed four or more animals over the study period. In terms of land ownership, the sample owned on average 9.8 ha of crop land per household. They also possessed livestock holdings of 11.5 cattle (including at least 1 ox), 9 sheep and 16 goats, on average, per household. A participating household comprised, on average, 16 members of which approximately 10 were active members of the family labour force.
The animals involved in the fattening programme were generally Peul and Maure Zebu bulls and steers, 7 years of age or older, of which the majority were castrates. In 1986 for example, 58% of the animals were Peuls and 39% Maures. Eighty one percent were castrates, 11% entire males and 8% females. The principal components of the daily ration consisted of millet and sorghum stalks (17%), bush hay (35%), and cottonseed cake supplements (40-60%). These components together constituted between 84% and 97% of total daily feed intakes.
The cattle entering the fattening programme were given routine vaccinations for rinderpest and contagious bovine pleuropneumonia, anthelminthic treatments and prophylactic treatments against trypanosomiasis. A mortality rate of less than 3% was observed during the fattening period.
Purchase of feeder cattle
The procurement of feeder cattle was made possible by a fixed credit in the amount of 45000 CFA per animal. In the Banamba area, the farmers had to supplement the credit from their own resources as average prices usually exceeded the amount of credit. Prior to purchase, the farmers made several trips to livestock markets in the area to ascertain price levels and the general conditions of the animals. Although cattle were not explicitly sold by weight in the local markets, the study showed a strong relationship between actual liveweights of the animals being sold and their total sale prices. Cattle buyers thus bought by estimated liveweights for a reasonably constant price per kilogram. Estimated purchase prices for Maure Zebus averaged 161 CFA and 230 CFA/kg in 1985 and 1986 respectively. Corresponding figures for the Peul Zebus in 1985 and 1986 were 171 and 219 CFA/kg respectively. The average weights of all cattle entering the programme were 339 kg in 1985 and 304 kg in 1986.
Sale of fed cattle
The average weights of finished animals were 370 kg and 356 kg in 1985 and 1986 respectively. They were normally sold by the farmers themselves at home or in nearby local markets. The main buyers were cattle dealers who generally bought for terminal markets in the capital, Bamako, and other urban markets such as Kati. Informal purchase contract arrangements were usually made between buyers and the farmers prior to the end of the feeding period. Animals sold this way were sold on credit of about 30 days duration. The Maure Zebus were sold at estimated unit values of 208 CFA and 288 CFA/kg in 1985 and 1986 respectively while the Peuls were sold at 228 and 302 CFA/kg respectively. Table 1 summarises the purchase and sale weights and prices for the two types of cattle in 1985 and 1986.
Table 1. Purchase and sales summary of Maure and Peul Zebus in the feeding programme.
|
Cattle type |
Maure |
Peul |
||
|
Year |
||||
|
1985 |
1986 |
1985 |
1986 |
|
|
Average purchase weight (kg) |
356 |
308 |
329 |
302 |
|
Average purchase price (CFA) |
57316 |
70840 |
56259 |
66138 |
|
Average purchase price per kg (CFA) |
161 |
230 |
171 |
219 |
|
Average sale weight (kg) |
400 |
3601 |
345 |
351 |
|
Average sale price (CFA) |
83200 |
103680 |
78660 |
106002 |
|
Average sale price per kg (CFA) |
208 |
288 |
228 |
302 |
The economic analysis of the smallholder cattle feeding programme reported here involves the examination of overall profitability, the determinants of profitability and possible measures for improving the economic performance of participating farmers.
Financial and economic viability
The gross financial margin, defined as the difference between the final sate price of a fed animal and its initial purchase price, was 25320 CFA per animal in 1985 and 35319 CFA in 1986. Because this margin excludes feeding costs as well as other cash and opportunity costs of labour and farmer-produced feed during the feeding period, it represents an overestimate of profitability. However, by subtracting direct cash costs for feeding and labour from the gross financial margin, profitability was expressed in terms of the net financial margin per animal. These were 3391 CFA and 4748 CFA in 1985 and 1986 respectively. The net financial margins were then expressed as percentages of total financial costs and multiplied by the fraction of the year animal was fattened to obtain annual financial rates of return of 63% in 1985 and 68% in 1986. Taking further account of the opportunity costs of family labour and of farmer-produced feed, the resulting economic rates of return to fattening were 0% and 21% on average in 1985 and 1986 respectively. Although on average farmers appeared to get high returns to fattening, as much as 27% of the sample for example in 1985 made no profit or actually lost money in cattle feeding. Table 2 shows the distribution of financial and economic returns within the sample population in 1985 and 1986. In 1985, about 61% of the sample made net financial returns of over 10000 CFA per animal, compared with 29% in 1986. Similarly in 1985, 86% of the sample made economic returns of less than 10000 CFA per animal compared with 50% in 1986.
Disaggregation of the gross margin
In order to examine the relative contributions of weight gains and of price changes to the gross margin during the course of the fattening, period the gross financial margin was disaggregated as follows: Let C = cost of purchasing cattle, R = revenue from selling cattle, P = price per kg of liveweight, W = liveweight in kg, and d = change in P or W over the fattening period. For the subscripts, let i = initial period representing the beginning of fattening and f = final period or the end of fattening. Then,
C = Pi * WI (1)
R = Pf * Wf (2)
M = R - C (3)
By definition,
Pf = Pi + d(P) (4)
and
Wf = Wi + d(W) (5)
Substituting equations 4 and 5 for R in 2 and expanding, we have
M = d(P) * Wi + d(W) * Pi + d(P) * d(W) (6)
Dividing equation 6 by M and multiplying by 100% gives
100% = {%(d(P)*Wi) + %(d(W)*Pj) + %(d(P)*d(W))}/M (7)
The first term on the right-hand side defines the price component of the gross margin and is the change in price multiplied by the original weight, the weight component is the second term and is equal to the change in weight multiplied by the original price, and the interaction component is the change in price multiplied by the change in weight. All the components are expressed as percentages of the gross financial margin. In 1985, the weight gain for the sample as a whole accounted for 27% of the gross margin while price changes and the interactions accounted for 67% and 6% respectively. Corresponding figures in 1986 were 45%, 46% and 9% respectively.
Perspectives for improving performance
In the last two years of the feeding campaign, the price component averaged 55% of the gross margin as compared with 37% for weight gains. This suggests that price changes over the feeding period played a relatively important role in the determination of profitability. A regression analysis of the determinants of unit sale prices indicated that liveweight, number of days fed, duration of credit and seller type (i.e. whether seller is ECIBEV-sanctioned seller or not), significantly explained variations in unit sale prices at the 5% level. These factors together accounted for 52% of the total variation. Liveweight and number of days fattened had negative coefficients suggesting that the fatter animals were allowed to get and the longer the feeding period, the lower the unit prices received. The duration of credit and seller type had positive influences, indicating that ECIBEV sanctioned buyers received higher unit prices, and those who gave longer periods of credit obtained higher prices.
Table 2. Distribution of financial and economic benefits within the sample.
|
|
Net financial benefit |
Economic benefit |
||||||
|
1984/85 |
1985/86 |
1984/85 |
1985/86 |
|||||
|
CFA/animal |
n |
% |
n |
% |
n |
% |
n |
% |
|
0<=0 |
8 |
26 |
13 |
46 |
12 |
57 |
4 |
22 |
|
1-10000 |
4 |
13 |
7 |
25 |
6 |
29 |
5 |
28 |
|
10001-20000 |
18 |
58 |
6 |
22 |
3 |
14 |
5 |
28 |
|
>20000 |
1 |
3 |
2 |
7 |
0 |
0 |
4 |
22 |
Source: Baur and Sissoko (1986).
Apart from the purchase of feeder cattle which represented about 70% of total production cost, feeding was the most expensive item ranging from about 22% to 29%. One way farmers might increase profitability is by reducing feeding cost per animal by perhaps reducing the amount of cottonseed cake in the ration since it represented 41% and 53% of total feed costs in 1985 and 1986 respectively. A number of feeding trials were conducted in 1986 in order to determine the economic viability of the programme using reduced amounts of cottonseed cake or partly replacing it with farmer-produced cottonseed cake. It involved 6 rations conducted over 36 animals for 77 days. The rations were:
1. Bush hay (ad lib) + 2 kg cottonseed cake (T1)2. Bush hay (ad lib) + 4 kg cottonseed cake (T2)
3. Bush hay + 40% molasses + urea + 2 kg cottonseed cake (T3)
4. Bush hay + 40% molasses + urea + 4 kg cottonseed cake (T4)
5. Bush hay + 2 kg cowpea haulm + 2 kg cottonseed cake (T5)
6. Bush hay + 4 kg cowpea haulm + 4 kg cottonseed cake (T6)
The effects of these rations on average daily weight gains are shown in Table 3. In general, animals fed on 4 kg cottonseed cake gained more weight than those on 2 kg per day. The addition of molasses and urea to bush hay and cottonseed cake resulted in higher weight gains than the addition of cowpea haulms.
Table 3. The effects of diet on average daily gains.
|
Bush hay (ad libitum) |
Weight gain (kg/day) when fed cottonseed cake |
|
|
2 kg/day |
4 kg/day |
|
|
Bush hay (T1* , T2) |
0.72 |
1.01 |
|
Bush hay + molasses/urea (T3, T4) |
1.00 |
1.12 |
|
Bush hay + 2 kg cowpea haulm (T5, T6) |
0.85 |
1.04 |
* T1 - T6 are rations.
An economic analysis was carried out on the rations using 1985 prices. The results are shown in Table 4. Rations T2 and T1 were the most profitable followed by T3, T4, T5 and T6 in that order. Rations T5 and T6 which replaced molasses and urea in T3 and T4 with farmer-produced cowpea haulms were less profitable, since the opportunity cost of cowpea haulms appear to be higher than the market prices of molasses and urea. A 50% increase in the cost of cottonseed cake was hypothesised and the profitability of the rations re-examined. Although the order of profitability did not change much, ration T1 with lower amounts of cottonseed cake became more profitable than T2.
Table 4. Profitability of alternative rations in the cattle feeding programme.
|
|
Rations |
|||||
|
T1 |
T2 |
T3 |
T4 |
T5 |
T6 |
|
|
Average initial wt (kg) |
266 |
266 |
266 |
266 |
266 |
266 |
|
Average final wt (kg) |
321 |
344 |
343 |
352 |
331 |
346 |
|
Average weight gain (kg) |
55 |
78 |
77 |
86 |
65 |
80 |
|
Gross returns (CFA) |
38055 |
45070 |
44746 |
47510 |
41105 |
45680 |
|
Total ration cost for 77 days (CFA) |
12243 |
18172 |
21637 |
25564 |
20790 |
26026 |
|
Net returns (CFA) |
25812 |
26898 |
23128 |
21946 |
20315 |
19654 |
|
Effect of a 50% increase in the cost of cottonseed cake: Net returns (CFA) |
22411 |
20323 |
19727 |
15865 |
16666 |
12967 |
Source: Baur and Sissoko (1986).
Smallholder beef fattening, especially in the dry season, is a way by which agropastoralists can intensify the traditional system and increase farm income. The majority of the sample farmers in the feeding project made money during the dry season to augment their farm income. The gross margin analysis shows that substantial portions of the margin is made up of gains due to price speculations. One implication of the importance of seasonal price fluctuations in the livestock market is that farmers can strategically raise their animals towards target markets such as dry season markets and religious festivals to take advantage of high prices.
The small negative but statistically significant relationships between unit sale prices and liveweight gains as well as length of feeding period, implies that since sates are made on weight estimates rather than actual weights, it may not be advantageous to get the animals too fat or keep them on feed for too long.
Finally, the results of the feeding trials appear to indicate that the profitability of a ration depends on the relative prices of the components and the final products. For example since the opportunity costs of cowpea haulms at the time of the trial were higher than the market prices of urea and molasses, rations that contained cowpea haulms, designed to replace the industrially produced urea and molasses were less profitable. In 1985 the price of cowpeas in the market was exceptionally high as a result of the particularly dry 1984/85 cropping season. In normal years one would expect the opportunity costs of feeding farmer-produced cowpea haulms to be lower than the price of industrially produced feeds and therefore quite profitable to smallholder cattle feeders.
The current feeding performance of cattle in the programme depends very much on the availability and affordability of cottonseed cake. Even if prices are currently within reach, the profitability of feeding cottonseed cake will eventually drive up its demand hence its cost to farmers. The effects of anticipated increases in its price (a hypothetical 50% increase), clearly indicates that rations with reduced quantities, even though they produce smaller daily weight gains, are more profitable to feeders. The implication is that if farmers could obtain cottonseed cake at lower prices and hence use greater quantities, they would be able to turn out heavier animals over shorter feeding periods. However, since the unit cost of a commercially produced feed on the farmer's field includes transportation costs, feeding animals close to feeds factories where transportation costs are minimal appears to be a good strategy for increasing profitability.
The co-operation of the sample members and the help of the Project Sectoriel team are greatly appreciated.
Baur, H. and Sissoko, K. 1986. Aspects economiques de l'embouche paysanne de bovine: Synthese des resultats de rechereche en zone semi-aride du Mali (1984-1986). Presente aux Commissions Techniques Specialises des Productions Animales, Session de Juin 1987.
