6.3.1 Input Prices in Livestock Production
Input prices paid by dairy farmers in Thailand. From Table 6.17, the average price of concentrate feeds is higher (5.0 baht per kg) than the price of roughage (1.1 baht per kg). Medium-scale and large-scale farmers bought concentrate feeds at lower prices compared to the price that the small-scale farmers paid. Prices of roughage appeared to be similar across farm sizes.
Table 6.17 Input prices paid by dairy farm households in Thailand, 2002
Variable |
Farm Size |
|||
Small |
Medium |
Large |
All |
|
Feed Price-concentrate feed) (baht/kg) |
5.4 |
4.6 |
4.9 |
5.0 |
Feed Price-roughage (baht/kg) |
1.2 |
1.0 |
1.2 |
1.1 |
Average Feed Price (baht/kg) |
4.0 |
2.7 |
3.5 |
3.4 |
Average Feed Price (US$/kg) |
0.09 |
0.06 |
0.08 |
0.08 |
Total number of farm households |
35 |
38 |
19 |
92 |
Note: US$1=42.96 baht, based on 2002 foreign exchange rates.
Source: Poapongsakorn, N., et.al., Annex IV.
Input prices paid by dairy farmers in Brazil. Medium-scaled farms paid higher prices of inputs than did small-scale or large-scale farmers. Among sample farms, the small-scale producers paid the least in terms of price of inputs reflecting lower amount spent for inputs per year (Table 6.18). However, it is important to note that, regardless of scale, usage of dry and humid feeds are higher in the southern region than in the central west region, where pasture is the main source of feeds possibly due to favorable weather conditions.
Input prices paid by broiler growers in Thailand. Smallholders reported a higher price for feeds and DOCs than what large-scale growers reported. In terms of feed efficiency, it is clear from Table 6.19 that large-scale farms (with more than 20,000 birds) have better feed conversion ratio (FCR) than smallholders. FCR, as has been previously defined, is the ratio of total feed used and total output. Return per bird is likewise higher for large-scale farms (7.6 baht per bird) than the returns per bird for smallholders (1.5 baht per bird).
Table 6.18 Annual expenditures (reals per year) on feed and other input used in dairy farming, Brazil, 2002
Inputs |
Small |
Medium |
Large |
Feed (dry) |
3,729 |
7,832 |
12,828 |
Feed (Humid) |
8,005 |
14,490 |
39,312 |
Pasture (maintenance and formation) |
3,836 |
7,025 |
13,927 |
Medicine |
1,497 |
2,281 |
5,671 |
Electricity |
722 |
1,368 |
2,898 |
Maintenance on machines, equipment, and other infrastructure facilities |
8,285 |
10,710 |
14,750 |
Source: Camargo Barros, G.S., et.al., Annex V.
Table 6.19 Input prices paid by broiler farm households in Thailand, 2002
Variable |
Farm Size |
||||
1-5,000 |
5,001-10,000 |
10,001-20,000 |
20,000+ |
All |
|
Feed Price* (baht/kg) |
9.25 |
9.11 |
6.88 |
6.53 |
9.07 |
Feed Price* (US$/kg) |
0.22 |
0.21 |
0.16 |
0.15 |
0.21 |
N |
69 |
40 |
25 |
17 |
151 |
Price of day-old chick* (baht) |
7.58 |
6.05 |
6.36 |
6.20 |
7.89 |
N |
68 |
35 |
22 |
17 |
142 |
Feed conversion ratio (FCR) |
2.001 |
2.016 |
2.021 |
1.975 |
2.006 |
N |
55 |
41 |
23 |
14 |
133 |
Return per Bird (baht) |
1.50 |
3.88 |
4.35 |
7.63 |
3.31 |
N |
74 |
51 |
27 |
18 |
170 |
Note: * Data in this category are mainly drawn from forward contracted and independent farms. US$1=42.96 baht, based on 2002 foreign exchange rates.
Source: Poapongsakorn, N., et.al., Annex IV.
Input prices paid by broiler growers in the Philippines. One of the important inputs used in broiler production is the DOCs. It accounts for about 20 percent of the total production costs. Smallholders paid relatively higher prices for day-old chicks (15.3 pesos on average) than commercial raisers, who could purchase the chicks at an average of 13.4 pesos each (Table 6.20). Small contract growers, however, paid even higher prices, at 16.9 pesos per bird, as priced by their small integrators.
The major feed types used were booster, starter, and finisher feeds. Commercial independent producers paid slightly less than smallholder independents per kg of feeds (14.2 pesos per kg compared to 14.3 pesos) (Table 6.20). The difference, however, was not statistically significant. This holds true for feeds that commercial producers purchased on the market and for those they mixed on their own. On average, own mixed feeds cost more (14.3 pesos per kg) than feeds bought on the market (14.2 pesos).
Feed costs comprise 65-70 percent of total production costs. Feed costs per kilogram of output were only slightly lower for large producers, at 29.8 pesos per kilogram live-weight compared to 30.3 pesos for smallholders (Table 6.20). Contract farms in Table 6.20 pertain to profit-sharing contract who pay the full price for feed.
Table 6.20 Input prices paid by broiler producers in the Philippines, 2000
|
Small |
Large |
|||
Independent |
Contract* |
Independent |
Contract* |
||
Input prices |
|
|
|
|
|
|
Day-old-chicks (pesos/kg) |
15.3 |
16.9 |
13.4 |
- |
|
Feed (weighted) (pesos/kg) |
14.3 |
13.1 |
14.2 |
- |
|
Feed (weighted) (US$/kg) |
0.28 |
0.25 |
0.28 |
- |
Feed cost per kg of output |
30.3 |
26.8 |
29.8 |
0.9 |
* Profit-sharing contract farms
Note: 1 US$=51.60 pesos, based on 2002 foreign exchange rates.
Source: Costales, A., et.al., Annex I.
Input prices paid by broiler growers in Brazil. Large-scale farms (with more than 10,000 birds) paid higher prices of inputs than small-scale farms (with 10,000 birds or less). Inputs here included electricity, litter, and labor. One possible explanation for the significant difference is that small-scale producers are mainly located in Santa Catarina, where labor and electricity are cheaper. Large farmers, on the other hand, are located mostly in the Center West, where electricity is either imported from other regions or produced through an expensive thermoelectric process (Camargo Barros et.al., 2003).
Large-scale producers are more efficient in terms of feed use per kg of output compared to small-scale producers. Large-scale farms have an FCR of 1.88 while small-scale farms have an FCR of 1.94. The difference in FCRs is expected since large-scale farms use more intensive technology and have better access to inputs, thus minimizing losses in the production process.
Input prices paid by layer growers in Brazil. Small-scale growers (with 10,000 birds or less) paid a little higher price for feeds at 0.47 real per kg on average, than did large-scale growers (0.46 real per kg). In terms of feed efficiency use, small-scale growers are more efficient (having better or lower FCR) than the large-scale growers. Expenditures on electricity were higher for the large-scale growers who paid 0.17 real per kilowatt than for the smallholders who paid 0.15 real per kilowatt (Camargo Barros et.al., 2003).
Input prices paid by swine producers in Thailand. Large-scale producers paid higher price of feeds compared to what small-scale producers paid. Price-guarantee contract farms paid slightly lower price for feeds than did independent farms (Table 6.21). The average FCR is 2.43, which is slightly better than normal (2.7) used by swine experts. Smaller farms tend to have better feed efficiency as their FCRs are between 2.17 - 2.18, while the FCRs of the larger farms are 2.54 - 2.62 (see Table 6.21). The FCRs, estimated from the actual amount of feed used and weights of pigs sold, show that the average FCR is better (lower) than the FCR reported by the farmers.
Input prices paid by hog producers in the Philippines. The purchase of weanlings for fattening is applicable only to grow-to-finish (Type 3) operations. For this activity, contract growers, regardless of scale, paid higher prices for weanlings than independent producers (Table 6.22). Comparing the different scales of contract growers, the larger-scale producers paid slightly less than small contract growers.
Table 6.21 Price of feeds and feed conversion ratio (FCR) in swine production, Thailand, 2002
Farm size |
Feed price(baht/kg) |
FCR |
|||
Fattening |
Piglets |
Questionnaire |
Calculate |
||
Small |
5.73 |
9.64 |
2.18 |
1.76 |
|
Medium Low |
10.25 |
11.12 |
2.17 |
1.91 |
|
Medium High |
7.7 |
14.32 |
2.62 |
1.92 |
|
Large |
8.83 |
12.97 |
2.54 |
2.41 |
|
Total |
8.82 |
12.56 |
2.43 |
2.21 |
|
Type of Farm |
|
|
|
|
|
|
Independent Farm |
8.63 |
9.35 |
2.59 |
2.31 |
|
Contract Farm |
8.6 |
8.49 |
1.65 |
1.32 |
Hired Farm(baht/kg) |
|
|
2.43 |
|
|
Hired Farm(baht/head) |
|
|
|
1.95 |
Note: FCR is the ratio of total quantity of feeds used and total output per kg.
Source: Poapongsakorn, N., et.al., Annex IV.
Feed prices vary by type (booster, pre-starter, starter, grower, finisher, sow feed) (Table 6.22). Within each type, price also varies by feed grade (premium, standard, regular). Weighted prices per kilogram of feed across types of activity reflect differences in feed quality as well as access to wholesale prices. The smallholder and medium independents paid higher feed prices than contract growers. Consequently, smallholders incurred higher feed costs per unit than large contract growers.
Table 6.22 Input prices paid by hog producers in the Philippines, 2000
|
Small (<100 heads) |
Large/Commercial (>100 heads) |
||||
Independent |
Contract |
Medium Independent |
Large Independent |
Contract |
||
Input prices |
|
|
|
|
|
|
|
Weanling (pesos/kg) |
1,213 |
1,630 |
1,000 |
- |
1,933 |
|
Feed (weighted) (pesos/kg) |
17.20 |
11.63 |
12.50 |
13.06 |
11.56 |
Feed cost per kg of output |
29.35 |
27.18 |
30.66 |
28.36 |
21.98 |
Source: Costales, A. et.al., Annex I
Input prices paid by swine growers in Brazil. The input prices per unit paid by contract farms in Brazil, did not vary between small-scale or large-scale producers.
Feed conversion ratio is slightly higher for large-scale producers (2.3) than for small-scale producers (2.2), but not statistically significant. Among the swine producers, the independents are less feed efficient as indicated in their FCR of 2.5, compared to that of cooperatives (2.3) and contract farms (2.2). This could be explained by the rigidity of the contract farming system in terms of feed quality, technical assistance, and genetic engineering.
Input prices paid by farmers within livestock commodity across countries. In the case of dairy, medium and large-scale Thai farmers paid lower prices for inputs than did small-scale farmers, probably because of cooperative memberships and policy subsidies, although this remains to be established. Brazilian dairy smallholders were an exception to the general rule: they paid lower prices for inputs than did large-scale farms. In most country and commodity cases, smallholders paid a higher price per unit of input, particularly for feeds, than did large-scale farmers. For example, broiler farm households from the Philippines paid higher price for feed at an average of US$0.28 per kg, than in the case of Thailand (US$0.21 per kg on average) or Brazil (US$0.16 per kg), reflecting differences in import tariffs on corn (in-quota tariff for corn is 35 percent in the Philippines and 20 percent in Thailand). It can be argued that the difference in feed price across farm sizes within countries could be due to differences in quality, in addition to differences in average sizes of individual purchases, but it is difficult to establish such hypothesis since we did not directly examine the quality of feeds used by the farmers.
Although Brazilian swine farms paid relatively similar feed prices, large-scale farms turned out to have lower feed conversion ratios (they are more feed efficient) than did small-scale farms. This is likewise the result for broiler farms, unlike for layer farms where small-scale farms are more feed efficient. Similarly, for the Philippines and Thai swine farms, small-scale farms have better feed conversion ratios than large-scale farms. Overall, large-scale farms (usually under contract farming) are more feed efficient because of better access to inputs (good quality of feeds), better management, and access to intensive and modern technology, particularly in terms of improved stock.
6.3.2 Output Prices in Livestock Production
Price of milk in India. The average price received by Indian dairy farm households for buffalo milk was about 11.6 rupees per liter in both regions, while the price received for cow milk was higher in the northern region compared to the western region. Evidently, from Table 6.23, smallholders receive lower milk prices in the northern region than in the western region. The explanation for this could be the strong presence and networking of cooperatives in the western region. The cooperatives deal with small and large producers equally, and procure milk at a price based on fat and solid-non-fat (SNF) content, irrespective of the quantity of milk sold. In the northern region, the presence of organized or cooperative sector is very limited and the producers depend on unorganized sectors, such as milk vendors. Under this circumstance, smallholders have less bargaining power. One important implication that could be drawn from this observation is that, farmer-managed organizations and links between producers and processors through formal or informal contracts should be promoted in order to protect smallholders.
Price of milk in Thailand. Most of the farm households in Thailand sell their milk to their affiliated cooperatives. Data from our survey revealed that the average price of milk is 11.2 baht per kilogram (Table 6.23). Large-scale farms received a slightly higher price, while the medium-sized farms received a lower price of milk than the small-scale or large-scale farms. The price variation can be attributed to differences in sale price offered by the cooperatives. Though the output price is derived from the national guaranteed price of 12.5 baht per kg, prices may vary depending on the services that the cooperatives provide, such as free artificial insemination and veterinary services.
Table 6.23 Output price of milk in India, Thailand, and Brazil, 2002
Variable |
Farm Size |
|||||
Thailand |
Small |
Medium |
Large |
|
All |
|
Output Price (baht/kg) |
11.2 |
10.9 |
11.5 |
|
11.15 |
|
Output Price (US$/kg) |
0.26 |
0.25 |
0.27 |
|
0.26 |
|
India |
Small |
Medium |
Large |
Commercial |
|
|
North |
|
|
|
|
|
|
|
Buffalo milk (rupees/lit) |
11.3 |
11.2 |
11.9 |
13.2 |
11.6 |
|
Buffalo milk (US$/lit) |
0.23 |
0.23 |
0.24 |
0.27 |
0.24 |
|
Cow milk (rupees/lit) |
7.5 |
8.3 |
8.6 |
8.6 |
8.3 |
|
Cow milk (US$/lit) |
0.15 |
0.17 |
0.18 |
0.18 |
0.17 |
West |
|
|
|
|
|
|
|
Buffalo milk (rupees/lit) |
11.3 |
11.2 |
11.6 |
12.9 |
11.6 |
|
Buffalo milk (US$/lit) |
0.23 |
0.23 |
0.24 |
0.27 |
0.24 |
|
Cow milk (rupees/lit) |
7.4 |
7.5 |
7.5 |
7.7 |
7.5 |
|
Cow milk (US$/lit) |
0.15 |
0.15 |
0.15 |
0.16 |
0.15 |
Brazil |
<=50 animals |
>70 animals |
|
|||
Output price (real/lit) |
0.3 |
0.4 |
|
|||
Output price (US$/lit) |
0.10 |
0.14 |
|
Note: The currency conversion rates used are based on 2002 foreign exchange rates: for Thailand, US$1=42.96 baht; for India, US$1=48.61 rupees; and for Brazil, US$1=2.92 reals.
Source: Compiled from Sharma et.al., Annex III, Poapongsakorn et.al., Annex IV, and Camargo Barros et. al., Annex V.
Output price received by dairy farmers in Brazil. Price per liter of milk received by the sample farmers ranged from 0.3 real per liter to 0.4 real per liter (Table 6.23). Large-scale farmers with more than 70 cows received a higher price per liter of milk than the smallholders with less than 50 cows. Possible reasons for this price difference are better quality of milk produced by large-scale farms, and lower transport costs due to larger volumes transported.
Price of milk across countries. Across countries, Brazil farmers received the lowest price of milk per liter, ranging from US$0.10 to US$0.14 per liter. Thailand farmers received the highest price of milk at an average of US$0.26 per kg. Buffalo milk in India commanded a higher price comparable to cow's milk in Thailand. Cow's milk in India was priced lower than buffalo's milk at US$0.15 per liter. These regional differences could be due to types of market outlet, transaction costs, the degrees of policy subsidy (within Thailand for example), and quality of milk produced.
Price of live broiler in Thailand. Output price per kilogram received by growers under forward contracts is by far higher than the output price per kilogram received by those engaged in per-bird contracts (Table 6.24). This is mainly because forward contractors predetermine the output price and the input prices (such as feeds, medicines, and DOCs) to the grower. Per-bird contractors also provide all inputs (but not priced) to the grower, but collect payment per bird or per kilogram of output from the grower.
Price of live broiler in the Philippines. Average prices received for output varied among the subgroups. Smallholder independents received the highest price, at 47.6 pesos per kg, compared to 44.7 pesos per kg received by the commercial independent producers (Table 6.24). Smallholder contract producers received slightly higher prices than large commercial producers, at 6.3 pesos per kg compared to 6.1 pesos, respectively. For all types of regular buyers, the smallholder independents received the highest price per kilogram of output.
Output price received by broiler producers in Brazil. Prices per kilogram of output ranged from 0.07 real per kg to 0.08 real per kg of output (Table 6.24). The large-scale producers received higher prices than the small-scale producers possibly because of homogeneity of output and lower transport costs.
Price of live broilers across countries. The recorded price of live broiler depends mostly on the type of farming, whether contract farms or independent. Broiler growers in the Philippines enjoy a much higher price of output per kg relative to Thailand from regular buyers. In the case of Brazil, where contract farming is prevalent, the price they received is lower than what the Philippines contract farmers received, but a better comparison is relative profitability (still to come).
Output prices received by Thai swine producers. The small-scale farms tend to have higher price of fattening (or pigs) than the middle-scale and the large-scale farms (Table 6.25). In the case of piglets, large-scale farms received higher price of output than small-scale and medium-scale farms. Price-guarantee farms enjoyed higher prices of pigs and piglets than the independent farms (Poapongsakorn et.al., 2003).
Output prices received by Philippines hog producers. Prices received for weanlings or piglets (as output) by commercial producers are higher (97.5-112.4 pesos per kg) than the prices received by independent smallholders (92.5 pesos per kg) (Table 6.25). Among independent commercial producers, the large-scale operators received significantly higher prices (112.4 pesos per kg) than their medium-scale counterparts. This may reflect a significant difference in quality or genetically identifiable characteristics of piglets. Except for the price contract growers, who received relatively higher prices, all producers received, on average, similar prices for slaughter hogs (52.2-52.6 pesos per kg).
Table 6.24 Output price of live broiler across countries, 2002
Variable |
Farm Size |
|||||
Thailand |
Unit |
Small |
Medium |
Large |
Commercial |
All |
Forward Contract Price |
Baht/kg |
25.3 |
25.7 |
26.0 |
26.3 |
25.6 |
Forward Contract Price |
US$/kg |
0.6 |
0.6 |
0.6 |
0.6 |
0.6 |
Per-bird Contract Price |
Baht/kg |
3.3 |
3.7 |
4.7 |
7.0 |
3.9 |
Per-bird Contract Price |
US$/kg |
0.08 |
0.09 |
0.11 |
0.16 |
0.09 |
Philippines |
Small (<10,000 birds) |
Large (>10,000 birds) |
|
|||
Independent |
Contract |
Independent |
Contract |
|
||
From regular buyers |
Pesos/kg |
47.6 |
|
44.7 |
|
|
From regular buyers |
US$/kg |
0.9 |
|
0.9 |
|
|
Integrators |
Pesos/kg |
|
6.3 |
|
6.1 |
|
Integrators |
US$/kg |
|
0.12 |
|
0.12 |
|
Brazil |
<16,000 birds |
>60,000 birds |
|
|||
Output price |
Real/kg |
0.07 |
0.08 |
|
||
Output price |
US$/kg |
0.02 |
0.03 |
|
Note: The currency conversion rates used are based on 2002 foreign exchange rates: for Thailand, US$1=42.96 baht; for the Philippines, US$1=51.60 pesos; and for Brazil, US$1=2.92 reals.
Source: Compiled from Costales et.al., Annex I, Poapongsakorn et.al., Annex IV, and Camargo Barros et. al., Annex V.
Table 6.25 Output price of pigs and piglets across countries, 2002
Country |
Farm Size |
||||
Thailand |
Small |
Medium low |
Medium high |
Large |
|
Fattening (baht/kg) |
36 |
35.7 |
31.8 |
34.1 |
|
Fattening (US$/kg) |
0.8 |
0.8 |
0.7 |
0.8 |
|
Piglets (baht/kg) |
66.4 |
54.9 |
60.4 |
69.1 |
|
Piglets (US$/kg) |
1.6 |
1.3 |
1.4 |
1.6 |
|
Philippines |
Small |
Large |
|||
Independent |
Contract |
Medium Independent |
Large Independent |
Contract |
|
Weanlings (pesos/kg) |
92.5 |
|
97.5 |
112.4 |
|
Weanlings (US$/kg) |
1.8 |
|
1.9 |
2.2 |
|
Slaughter hogs (pesos/kg) |
52.6 |
56.6 |
52.4 |
52.2 |
52.5 |
Slaughter hogs (US$/kg) |
1.0 |
1.1 |
1.0 |
1.0 |
1.0 |
Brazil |
Small |
Large |
|||
Output price (real/kg) |
130 |
123 |
|||
Output price (US$/kg) |
44.5 |
42.1 |
Note: The currency conversion rates used are based on 2002 foreign exchange rates: for Thailand, US$1 = 42.96 baht; for the Philippines, US$1=51.60 pesos; and for Brazil, US$1=2.92 reals
Source: Compiled from Costales et.al., Annex I, Poapongsakorn et.al., Annex IV, and Camargo Barros et. al., Annex V.
Output price received by swine raisers in Brazil. Small-scale producers received an output price of 130 reals per kilogram, which is higher than what the large-scale producers (123 reals per kg) received (Table 6.25). Similarly, among the integrated farms, smallholders received a marginally higher price per kg of output than large-scale producers.
Output price received by swine raisers across countries. The output price received by swine raisers in Brazil as reported, did not distinguish whether the price is for slaughter hogs or for piglets. That is probably why they received very high price per kg on average. Hence, we can only compare price of outputs between Philippines and Thailand. In the case of price of fattening or slaughter hogs, Philippines swine producers (whether small or large) received a higher price at an average of US$1.0 per kg, compared to Thai producers who received US$0.8 per kg. Large-scale producers from the Philippines sampled farms received a higher price for piglets relative to what Thai producers (small or large) received.
[27] This section is drawn
from Costales et.al., Annex I, Mehta et.al., Annex II, Sharma
et.al., Annex III, Poapongsakorn et.al., Annex IV, and Camargo
Barros et. al., Annex V. |