6.5 Access to Markets and Services^[30]

6.5.1 Access to Markets

Livestock producers sell their product to different agencies. Examples of market outlets are cooperatives, processors, contractors, middlemen, wholesalers, retailers, and direct buyers such as consumers. As evidenced in the country studies, farmers operating as contract farmers or as members of cooperatives have few marketing problems, since sale and distribution of their products is the responsibility of the integrators and cooperatives. Dairy farmers in India, for example, sell a large proportion of their milk to the cooperatives regularly, with the assurance of a prompt payment. The cooperatives then sell the product to the private buyers such as wholesalers and retailers; thus, passing on the retail price and marketing risks to these buyers.

In Brazil, pigs produced are sold either to processing industries or to fresh meat markets. Market outlet for pigs depends on the weight of the animal. For instance, for lightweight pigs (<110 kg live-weight), the common market outlet is the fresh meat market shop; while for heavyweight pigs (>110 kg live-weight), the market outlet is the processing industry.

Independent farms in all four countries sell most of their livestock products to private buyers such as wholesalers (such as merchants and supermarkets), retailers (such as vendors), and end-consumers (such as hotel restaurants and fast-food chains). Private buyers such as those in Thailand buy milk at the guaranteed priced, but they usually do not provide other services like the cooperatives do. In India, a high proportion of dairy farmers sell milk to unorganized sectors such as private buyers, sub-contractors, and local vendors. Livestock producers take into consideration important factors such as regular procurement, prices received, and timely payment, in choosing a marketing agent. Price of output received by the producers could be lower or higher than the prevailing market price, depending on their bargaining power.

6.5.2 Access to Credit, Information and Veterinary Services

As with access to credit, information, and veterinary services, it is apparent that large-scale and small-scale farms have distinct and differential access to production services. Large-scale contract growers have automatic access to credit for capital and for variable inputs such as breeding stocks, DOCs, feeds, and medicines, as the contractors or integrators usually finance these inputs. Most common sources of credit are cooperatives, integrators, public banks, private banks, and relatives. Although not all integrators could supply breeding stocks to their contract growers, funds for capital investment can be financed through bank loans. Large-scale farmers can get approval for loans in public or private banks easily. On the other hand, smallholders, specifically the independents, are at a disadvantaged in terms of access to credit and other production services.

Contract growers enjoy significantly higher privileges in terms of information and other services than the independent growers. A dominant source of information regarding price and market behavior is provided by cooperatives, integrators, personal contacts, retail and wholesale markets, traders/intermediaries, and government extension services. Contract growers get first-hand information from their integrators or cooperatives, and from their peers as well. Smallholder independents, on the other hand, rely on their buyers and their contemporaries for information.

In the days of cellular phones, access to telephone services is nearly universal for the large-scale producers, especially for those farms located near the urban centers and main roads. Again, the smallholders (particularly the independents) have the least access to phone services.

Contract farmers have better access to veterinary services than independent farms (particularly smallholder independents). This high incidence of farm visits by veterinarians is expected since veterinary services are specified in the contract agreement.

In the case of India, the government subsidizes livestock services for dairy. There are veterinary hospitals/polyclinics, mobile and stationary veterinary dispensaries, and first aid veterinary centers in the country that provide animal health care and breeding facilities. These services are supplemented by cooperatives, the private sectors, and non-government organizations.