The Sunday News
Farming issues Mhlupheki Dube
IN some districts of Matabeleland North Province there is an increasing number of feedlots as smallholder farmers try to get maximum value for their animals. Just for the benefit of non-agriculture trained or exposed readers, feedloting which is also called pen fattening involves putting an animal or animals in a holding pen and feeding it in situ without allowing it to go and graze on its own.
Naturally this cost money as there are feeding and watering expenses as well as other related charges which have to be taken into account when one decides to do pen fattening.
The question this article wants to address is how much business advice are these farmers getting?
Are they involving technical people such as Government extension personnel like staff from Livestock Production Department (LPD) when making such decisions?
I ask these questions because I feel they are very pertinent especially against a background of some smallholder farmers being waylaid for slaughter by ruthless loan sharks and micro-finance institutions.
Not all micro-finance institutions are uncouth but I have encountered some in my interactions with farmers in Matabeleland North that will bleed your veins dry without the slightest of conscience.
They ambush farmers with hidden fine print and suddenly spring the unpleasant surprise at the time of repayment and farmers are left poorer than what they were before being lured into a fraudulent relationship.
Therefore, while pen fattening is an important value addition practice, farmers should be counselled against going into it blind-folded and expect miracles of messianic proportions.
This is a business decision which should be based on sound business calculations not just mob induced impulses.
A farmer should look at the following factors before diving into the feedlot process.
Firstly what is the condition of the animal(s) that you want to pen fatten? This has a bearing on the time your animal will take in the feedlot and subsequently the cost of the feed.
You also need to look at how much the animal will cost you if you are buying animals for the feedlot.
Even when you are taking animals from your herd you have to put a value on it and this should be included in your variable costs.
Therefore your total variable costs should include every cost related to the feedlot, such as watering cost, medication, labour, transport (in and out), tags, levies and licences. These can be calculated per animal such that the total cost of production per animal is determined.
After determining the total cost of production per animal then a gross income for each animal is calculated using prevailing prices, expected carcass grades and estimated carcass weight.
A gross margin per animal can then be calculated once an expected gross income is determined.
The gross margin should be the one to inform a farmer whether it is viable or not to pen fatten his animal for sale. It should not be a ndondabo (I will just follow others) decision more so when farmers have to take loans to do pen fattening.
This means in your production costs you have to include loan interest and obviously that eats into your gross margin.
My advice to farmers is that it is better to pen fatten an animal from your own herd and only seek a loan for stock feed purchase.
Taking a loan to buy the animal, the stock feed, dosing remedies, dipping chemicals and other related things and expect to remain with something meaningful after the transaction is to have wild expectations.
If anything farmers’ expectations have to be managed in such a scenario especially against a background of unprecedentedly weak livestock prices this year.
Unmitigated and uninformed expectations can result in farmers hating an innocent practice such as pen fattening, after walking into a loan ambush.
Farmers are hence forth advised to always consult their extension officers before committing their valuable assets into a process or transaction which they don’t fully understand.
Pen fattening is a business venture and it should therefore observe all the requisite business tenets so as to minimise risks. The singular pivotal question to ask is “will it be profitable”? The answer to this question is the business calculation that I have tried to explain in this short article.
Disclaimer: Mhlupheki Dube writes in his personal capacity hence this article and others should not be misconstrued to represent views of his employer or partners.
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