78 Improving Dairy Farming
A situation analysis of the dairy farming sector in Ulaanbaatar/Mongolia and development of strategies for extension work Baast Erdenebolor
78
Improving Dairy Farming A situation analysis of the dairy farming sector in Ulaanbaatar/Mongolia and development of strategies for extension work
Baast Erdenebolor
This study was financed by the Friedrich-Ebert-Stiftung
MARGRAF PUBLISHERS
Baast Erdenebolor
Improving Dairy Farming A situation analysis of the dairy farming sector in Ulaanbaatar/Mongolia and development of strategies for extension work
Herausgegeben von Hermann Boland, Volker Hoffmann und Uwe Jens Nagel
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ISBN 978-3-8236-1510-1 ISSN 0947-0352
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Preface of the Editors Mongolia is one of those countries in Transition, struggling with the crossover from central planning into a liberalized and globalized market economy. But we do not know much about it, besides maybe of Dschingis Kahn and his descendents living as steppe nomads in yurts, and 2,5 million inhabitants is not important enough to be present in Western media. In this book we can learn more, e.g. that alone in the capital 40% of the population are living, that milk is of high preference, but mostly provided by imports, since the large state owned holdings are dissolved. Producing milk near the capital has developed into a growing business with large growth potentials. This offers best opportunities for research about the establishment of appropriate extension services in countries in transition. For the intensively discussed privatization of extension, maybe best chances exist in the so-called “commodity extension” specialized on one product chain. Baast Erdenebolor demonstrates, how to design a situation analysis for extension in a region to come to well founded and promising options of strategies for the build up of an extension organization. He emphasizes on the possibilities to establish this service as NGO or private company, independent from government subsidies or international donor contributions, following the actual privatization of extension debate. A careful analysis of the dairy sector around Ulaanbaatar, its recent history and actual state, allows to predict the future potentials and points out the actual problems and potentials for improvement of profitability. As there are nearly no data available, all necessary facts and figures are assessed in field work. Dairy farming near the city is fully market oriented, aims for profit, as well to get enough income for the family, as well to finance the further development of the business. Dairy extension therefore is first of all economic advisory work, technical advice has to consider this objective. Extension as a private service can only be sold, if its impact on farm profitability is clearly higher than its cost. Extension contents therefore have to be derived from potentials to increase farm profit and not as in many governmental extension services, to increase production or productivity at any cost. Based on a careful economic analysis of the dairy sector, the more “visionary” part of the study follows, the development of promotion strategies, which are not restricted on extension issues, because favorable frame conditions, infrastructure, input supply, credit availability, processing, marketing, breeding and veterinary services altogether determine the success potentials. Two German models have inspired the strategy for institutional development: producer associations and advisory circles. The association concentrates on the most profitable services, like feedstuff trade and cow-credits, and with the profit from these services it subsidizes its advisory work. Over time, the range of services can widened, and with increasing number and prosperity of the client farms, the non extension services can be concentrated in sub-companies or outsourced, and the extension service can concentrate on its core business, extension only. The investment calculation of this model shows, that it is not likely, to get it started, without any financial support from outside, but a rather modest contribution in the first years would be sufficient to get this undertaking started and to kick off a very dynamic economic development in this special agricultural sector. For the editors, Volker Hoffmann I
Acknowledgements While following the very purpose of helping people, I needed, and received support from many people for myself. First of all, I thank my supervisor Prof. Dr. Volker Hoffmann with all my heart for accepting me as his Ph.D. candidate, and for his advices and guidance throughout the course of my study. It is the guidance of Prof. Dr. Hoffmann that improved my ability to understand people and their problems. I am also grateful to Dr. Maria Gerster-Bentaya and Dr. Simone Helmle for their valuable advice on both the contents and the organization of my study. Furthermore, I am thankful to Mrs. Grabendörfer, Mrs. Binder, Mrs. Flick and Mrs. Mayer the former and current secretaries, as well as my colleagues in the department for helping and encouraging me with advices or just with their sense of humor. It was a privilege for me to belong to the Department of Agricultural Communication and Extension. This study would not have been possible without the scholarship of the Friedrich Ebert Foundation. In addition to my gratitude to the foundation, I want to express my personal thanks to Ms. Maria Holona, the former supervisor of foreign scholarship holders, and Mr. Thomas Minzenbach, the current supervisor, for their great support. They were always willing to listen to me and to help me in difficult times. I am very grateful to Prof. Dr. Valle-Zarate, who spent her valuable time for giving first shapes to my plan for the field study, to Dr. Schüle and Dr. Teufel for reviewing my plans and to Mr. Schuh from the University of Applied Sciences Weihenstephan for helping me in designing the questionnaires for the sample farms’ survey. I am also thankful to Mr. Pflugfelder, the head of the Department of Extension and Education at the Ministry of Nutrition and Rural Development of the state Baden-Württemberg, for providing me with useful information about dairy farming. I want to thank the farmers, who participated in the sample farms’ survey, and those farmers and experts, who were involved in the key informant interviews or helped me with the organization of the field study, or gave me valuable information. I feel greatly indepted to Prof. Dr. Chuluunbat and Prof. Dr. Nyambat from the Mongolian State University of Agriculture, Prof. Dr. Davaadorj, Prof. Dr. Orgil, Dr. Bayanmönkh and Ms. Deeshin from the Ministry of Food and Agriculture, Mr. Donzoi, the secretary of the Dairy Farmers’ Association, Mr. Dalkhjav, the retired manager of the former state-owned dairy farm in Gachuurt, and the farmers Mr. Davaasuren from Gunt, Mr. Otgonbaatar from Udleg and Mr. Jamyan from Nariinii am. I also thank Mr. Erdenee for not only driving me on those dirt roads to the farms by taking the risk of getting his car broken, but also helping me with the interviews. I appreciate the advice that Dr. Bat-Erdene and MSc. Byamba, who are both my friends and research partners, gave me on the analysis of the nutrition of dairy cattle. I wish to most sincerely thank my wife Nyamka, who did not only support me with her understanding and patience, but did also help me in gathering secondary data. Finally, I thank my mother and my son for always supporting me with all they can do.
Hohenheim, August 2007, Baast Erdenebolor II
Table of contents Preface of the Editors ............................................................................................................ I Acknowledgements ..............................................................................................................II Table of contents ….. ......................................................................................................... III List of tables .................................................................................................................... VIII List of figures ...................................................................................................................... X Abbreviations .................................................................................................................. XIII
1
Introduction........................................................................................................ 1
1.1
Background ............................................................................................................. 1
1.2
Problem and incentives for the study...................................................................... 2
1.3
Objective, goals and hypotheses ............................................................................. 3
1.4
Structure of the thesis.............................................................................................. 3
2
Theories, experiences and selected current issues of rural and agricultural extension .................................................................................... 4
2.1
Definition of extension............................................................................................ 4
2.2
Basic concepts......................................................................................................... 6
2.2.1
Framework model............................................................................................. 6
2.2.2
Influencing human behavior ............................................................................. 6
2.2.3
Problem solving and decision making.............................................................. 7
2.2.4
Diffusion of innovations ................................................................................... 9
2.3
Role and functions ................................................................................................ 12
2.4
Extension approaches............................................................................................ 15
2.5
Context of extension in agricultural and rural development................................. 16
2.6
Overview of extension providers .......................................................................... 21
2.7
Current trends in the structure of extension providers.......................................... 24
2.7.1
Driving forces for change ............................................................................... 24
2.7.2
Overview of reforms....................................................................................... 25
2.7.3
Non-market reforms of public extension services.......................................... 26
2.7.4
Rationale and limits of user financing............................................................ 27
2.7.5
Market reforms of public extension services.................................................. 30
2.7.6
Institutional pluralism..................................................................................... 31
2.7.7
Fostering private sector extension .................................................................. 33 III
3
Material and methods ...................................................................................35
3.1
Description of the study area .................................................................................35
3.2
Overview of the research procedure ......................................................................36
3.3
Collection and evaluation of secondary data .........................................................36
3.4
Key informant interviews ......................................................................................37
3.5
Conduction and evaluation of the sample farms’ survey ......................................37
3.6
Development of strategies for extension work ......................................................39
4
Development and present situation of the dairy sector in Ulaanbaatar .......................................................................................................40
4.1
Dairy farming in the past .......................................................................................40
4.2
Number and distribution of dairy farms by 2005 ..................................................43
4.3
Business environment ............................................................................................46
4.3.1
Dairy farming in the food and agricultural policy...........................................46
4.3.2
Institutional environment.................................................................................49
4.3.3
Legal environment...........................................................................................51
4.3.4
Dairy market....................................................................................................53
4.3.5
Availability of inputs.......................................................................................61
4.4
Basic data on the nutrition of dairy cattle..............................................................64
4.4.1
Nutrient requirements of dairy cattle...............................................................64
4.4.2
Nutritional qualities of conventional feedstuffs ..............................................65
4.5
Dairy farming in the view of key informants ........................................................68
4.6
Results and conclusions of the World Bank 2003 survey .....................................69
4.6.1
Description of surveyed farms ........................................................................69
4.6.2
Characterization of dairy management............................................................70
4.6.3
Production and marketing of milk...................................................................71
4.6.4
Use and need of services .................................................................................72
4.6.5
Profitability......................................................................................................72
4.6.6
Problems, priorities and plans of the farmers..................................................73
5
Results of the analysis of sample farms ..............................................75
5.1
Farming system characterization ...........................................................................75
5.2
Review of farm development.................................................................................76
5.3
Socio-economy ......................................................................................................78
IV
5.3.1
Household size and structure .......................................................................... 78
5.3.2
Off-farm employment and incomes................................................................ 79
5.3.3
Living standard ............................................................................................... 80
5.3.4
Mobility .......................................................................................................... 82
5.3.5
Availability of communication and information media ................................. 82
5.4
Entrepreneurship qualities of farmers ................................................................... 83
5.4.1
Age.................................................................................................................. 83
5.4.2
Education and experience ............................................................................... 84
5.4.3
Motivation....................................................................................................... 86
5.4.4
Capability of planning and controlling........................................................... 88
5.4.5
Membership of the Dairy Farmers’ Association ............................................ 90
5.4.6
Farmer-to-farmer connections ........................................................................ 90
5.5
Availability and costs of production inputs .......................................................... 92
5.5.1
Land ................................................................................................................ 92
5.5.2
Labor............................................................................................................... 93
5.5.3
Finances .......................................................................................................... 95
5.5.4
Water and electricity....................................................................................... 96
5.5.5
Vehicles .......................................................................................................... 96
5.5.6
Dairy housing.................................................................................................. 99
5.5.7
Dairy and hay-making equipment ................................................................ 102
5.5.8
Feed............................................................................................................... 102
5.6
Dairy management .............................................................................................. 105
5.6.1
Herd management......................................................................................... 105
5.6.2
Breeding and reproduction ........................................................................... 107
5.6.3
Grazing.......................................................................................................... 108
5.6.4
Milk extraction.............................................................................................. 110
5.6.5
Utilization and marketing of milk ................................................................ 113
5.6.6
Feeding.......................................................................................................... 115
5.6.7
Balancing of labor......................................................................................... 124
5.7
Economy of milk production .............................................................................. 126 V
5.7.1
Gross margin .................................................................................................126
5.7.2
Profitability....................................................................................................127
5.7.3
Sensitivity of the profitability to market risks...............................................128
5.7.4
Comparison of the farms ...............................................................................132
5.7.5
Conclusions ...................................................................................................135
5.8
Farm economy .....................................................................................................137
5.8.1
Profitability....................................................................................................137
5.8.2
Liquidity ........................................................................................................142
5.9
Problems, perspectives and targets of the farmers...............................................143
5.10
Requirements of the farmers on external support................................................145
6
Discussion and conclusions of the dairy sector analysis ..........147
6.1
Chance for growth ...............................................................................................147
6.2
Problems of the farms and development proposals .............................................148
6.2.1
Enhancement of dairy cattle breed ................................................................148
6.2.2
Improvement of the nutrition management ...................................................148
6.2.2.1
Optimizing feed rations with conventional feedstuffs .............................149
6.2.2.2
Ensuring the availability of adequate amounts of feed ............................150
6.2.2.3
Ensuring and improving the quality of conventional feedstuffs ..............151
6.2.2.4
Production of fodder crops .......................................................................151
6.2.2.5
Avoiding overgrazed pastures ..................................................................154
6.2.3
Optimization of barn conditions....................................................................154
6.2.4
On-farm milk processing...............................................................................159
6.2.5
Improvement of farm management ...............................................................160
6.2.6
Necessary changes for development .............................................................164
7
Strategies for dairy extension work .....................................................166
7.1
Target fields of farm consultancy ........................................................................166
7.1.1
Enhancement of the dairy cattle breed ..........................................................166
7.1.2
Improvement of the nutrition management ...................................................167
7.1.3
Optimization of barn conditions....................................................................168
7.1.4
On-farm milk processing...............................................................................168
VI
7.1.5 7.2
Improvement of farm management .............................................................. 169 Faciliation of services and linkages .................................................................... 170
7.2.1
Promotion of AI services .............................................................................. 170
7.2.2
Strengthening the input supply chain ........................................................... 171
7.2.3
Facilitation of financial services................................................................... 172
7.2.4
Linking farmers and researchers................................................................... 173
7.3
Formation of new services .................................................................................. 173
7.3.1
Establishment of financial services .............................................................. 174
7.3.2
Feed trade...................................................................................................... 175
7.3.3
Breeding........................................................................................................ 176
7.4
Organizational development ............................................................................... 176
7.4.1
Lessons from international experiences ....................................................... 176
7.4.2
Extension strategies for establishing dairy farmer organizations................. 180
7.5
Extension methods .............................................................................................. 183
7.5.1
Mass extension.............................................................................................. 184
7.5.2
Group extension............................................................................................ 184
7.5.3
Individual extension...................................................................................... 185
7.5.4
Use of printed materials................................................................................ 186
7.6
Suggestions for a pilot project ............................................................................ 187
7.6.1
Organization and structure............................................................................ 187
7.6.2
Staff............................................................................................................... 188
7.6.3
Facilities and equipment ............................................................................... 188
7.6.4
Networking ................................................................................................... 189
7.6.5
Cost-Benefit analysis .................................................................................... 190
7.7
Conclusions......................................................................................................... 193
8
Summary ......................................................................................................... 195
9
Zusammenfassung ..................................................................................... 197
10
Bilbiography .................................................................................................. 200
VII
List of tables Table 2.1: International terminology of extension..............................................................4 Table 2.2: Important recurring features affecting the diffusion of innovations ...............11 Table 2.3: Objectives and target markets of profit-oriented private extension providers ..........................................................................................................23 Table 4.1: Outputs of the dairy industry in comparison with total outputs of the country in the period between 1960 and 1990 ................................................40 Table 4.2: Approximate number and structure of dairy farms in the Ulaanbaatar area (by July 2005)..................................................................................................45 Table 4.3: Approximate number and structure of dairy farms in places surrounding the Ulaanbaatar area (by July 2005)................................................................45 Table 4.4: Objectives and selected actions of the ‘Intensified Livestock Development Programme’ that are relevant for dairy farming..............................................47 Table 4.5: Rates of personal income tax...........................................................................52 Table 4.6: Comparison of milk price, purchasing power of the consumers and the consumption of milk and dairy products (converted into raw milk amounts) in Ulaanbaatar in the period between 1992 and 2005 .....................55 Table 4.7: Raw milk processors in Ulaanbaatar ...............................................................57 Table 4.8: Monthly averages of the consumer price for fresh milk in Ulaanbaatar over the period 2001 to 2005...........................................................................59 Table 4.9: Current structure of milk suppliers in Ulaanbaatar and the expected structure for 2015 at persisting market shares.................................................61 Table 4.10: Number of purebred dairy and beef-dairy cattle introduced to Mongolia ......61 Table 4.11: Prices of a dairy cow in Ulaanbaatar, in US$..................................................63 Table 4.12: Energy and protein requirements of a dry cow................................................65 Table 4.13: Energy and protein contents of different feedstuffs ........................................65 Table 4.14: Daily energy and protein intakes of a grazing, lactating crossbred dairy cow with a live weight of 450 kg ....................................................................66 Table 4.15: Location of surveyed farms (N=83) ................................................................69 Table 4.16: Dairy herd structures of surveyed farms (N=83).............................................70 Table 4.17: Average milk yields and total productions of farms with different herd sizes (N=83).....................................................................................................72 Table 4.18: Results of the profitability analysis (N=7) ......................................................73 Table 4.19: Ranking of problem areas†, clustered according to herd sizes of the farms (N=83). ............................................................................................................74 Table 5.1: Consumption expenditures of the sample households, $ per person and month (N=30) ..................................................................................................80 VIII
Table 5.2: Comparison of the expenditures of the sampled households with averages of Ulaanbaatar, given in $ per person and month (N=30) .............................. 81 Table 5.3: Distribution of the respondents according to previous experience in dairy farming (each dot represents a farm) (N=30) ................................................. 84 Table 5.4: Type and term of trainings in dairy farming that seven respondents participated in (ranked by the year of training) .............................................. 86 Table 5.5: Capacity and structure of labor forces of the sampled farms (N=30) ............ 94 Table 5.6: Distribution of sample farms with a tractor according to availability of trucks (N=7).................................................................................................... 97 Table 5.7: Fixed costs of vehicles .................................................................................... 98 Table 5.8: Variable costs of vehicles ............................................................................... 98 Table 5.9: Fixed costs of the barns, averages of each investment class (N=30) ........... 101 Table 5.10: Fixed costs of the barns, averages of each investment class (N=30) ........... 101 Table 5.11: Annual costs of dairy and hay-making equipment ....................................... 102 Table 5.12: Amount and sources of hay provision (N=30) ............................................. 102 Table 5.13: Comparison of different hay making approaches ......................................... 103 Table 5.14: Alternative options for hay purchase (N=24) ............................................... 104 Table 5.15: Herd structures of the sampled farms (N=30) .............................................. 105 Table 5.16: Calving periods ............................................................................................. 107 Table 5.17: Comparison of milk yields of the sampled farms (N=30) ............................ 111 Table 5.18: Comparison of the mean milk yields of the sampled farms (N=30) ............ 112 Table 5.19: Average amounts of milk utilization for different purposes (N=30)............ 113 Table 5.20: Comparison of alternative options of milk marketing (N=30) ..................... 114 Table 5.21: Daily feed ration and daily nutrient requirements of a lactating cow during the grazing season, means of the sampled farms (N=30) ................. 116 Table 5.22: Comparison of the sampled farms with according to daily feed rations of lactating cows during the grazing season (N=30) .................................... 117 Table 5.23: Daily feed ration and the daily nutrient requirements of a lactating cow during the stall period, means of the sampled farms (N=30)................ 118 Table 5.24: Comparison of the sampled farms according to daily feed rations of lactating cows during the stall period (N=30) .............................................. 119 Table 5.25: Structure of the average feed intake per cow and year ................................. 120 Table 5.26: Average nutrient intakes of a cow during the grazing season and the stall period .................................................................................................... 120 Table 5.27: Structure of average energy and protein requirements per cow and year..... 121 Table 5.28: Comparison of the amounts and the structures of the dry matter supply in the dairy cattle feeding at the sampled farms (N=30) .............................. 121 IX
Table 5.29: Percentages of the sampled farms for the utilization of the feed intake potentials of dairy cattle (N=30) ...................................................................123 Table 5.30: Labor requirements per milking cow, averages of the sampled farms (N=30) ...........................................................................................................124 Table 5.31: Balancing of average labor capacities of the sampled farms (N=30)............125 Table 5.32: Balancing of labor for specialized dairy farms, classified by labor capacities (N=26)...........................................................................................125 Table 5.33: Calculation of average gross margin of sample farms, per cow with calf (N=30) ...........................................................................................................127 Table 5.34: Calculation of total costs of milk production per cow, sample means (N=30) ...........................................................................................................128 Table 5.35: Comparison of farms classified in different GM levels (N=30) ...................132 Table 5.36: Comparison of the sampled farms by farm profitability measures, $ per year (N=30) ..........................................................................................138 Table 5.37: Comparison of the sampled farms by farm liquidity measures, $ per year (N=30) ...........................................................................................................142 Table 5.38: Examples of investments affordable by mean cash surpluses of different farm classes ...................................................................................................143 Table 5.39: Comparison of self-judgments and economic measures of profitability (N=30) ...........................................................................................................144 Table 5.40: Present and desired herd sizes of the respondents (N=30) ............................144 Table 5.41: Types of external support desired by the sample farmers (N=30). Multiple responses.........................................................................................145 Table 7.1: Different stakeholder interests in Farmer Organizations...............................178 Table 7.2: Customer base for each branch of a pilot dairy extension service ................187 Table 7.3: Initial budget of facilities and equipment for a pilot project of dairy extension........................................................................................................190 Table 7.4: Annual operational costs of a pilot project of dairy extension at current values .............................................................................................................191 Table 7.5: Results of the multi-period investment appraisal of the suggested pilot project with different rates of interest for the credit financing (without extension activities yet) ..................................................................192
List of figures Figure 2.1: Framework model of organized extension .......................................................6 Figure 2.2: Model of behavior modification.......................................................................7 Figure 2.3: Stages of systematic problem solving ..............................................................8 X
Figure 2.4: Phases of the diffusion process...................................................................... 10 Figure 2.5: Scheme of the Agricultural Knowledge and Information System ................ 13 Figure 2.6: Contents of an extension approach................................................................ 15 Figure 2.7: Overview of agricultural extension providers ............................................... 22 Figure 2.8: Extension reform strategies ........................................................................... 25 Figure 2.9: Supply-side and demand-side financing of extension................................... 32 Figure 2.10: Mixed strategies for financing and delivery of extension ............................. 33 Figure 3.1: Location of Ulaanbaatar on the country map ................................................ 35 Figure 4.1: Location map of dairy farms around Ulaanbaatar......................................... 44 Figure 4.2: Population and total consumption of milk and dairy products in Ulaanbaatar in the period between 1992 and 2005........................................ 54 Figure 4.3: Per-capita and total consumption of milk and dairy products in Ulaanbaatar in the period between 1992 and 2005 in liquid milk amounts .......................................................................................................... 54 Figure 4.4: Consumer price of fresh milk in Ulaanbaatar during the period 2001 to 2005................................................................................................... 59 Figure 4.5: Distribution of the sampled farms according to their start-up years (N=83)............................................................................................................ 69 Figure 4.6: Comparison of the sampled farmers according to their responses on the relevance and the level of their incomes from dairy farming (N=83) ........... 70 Figure 4.7: Distribution of the sample farms according to the average lactation yield (N=83)............................................................................................................ 72 Figure 4.8: Development plans of surveyed farmers, multiple answers possible (N=83)............................................................................................................ 74 Figure 5.1: Structure of the sampled farms according to the farm size (N=30) ............... 76 Figure 5.2: Distribution of the sampled farms according to the year of start-up (N=30)............................................................................................................ 77 Figure 5.3: Reasons of the respondents for starting up the dairy business (N=30) .......... 77 Figure 5.4: Distribution of the sample farms by number of household members (N=30)............................................................................................................ 78 Figure 5.5: Age structure of the sampled households (N=30) .......................................... 79 Figure 5.6: Comparison of average household expenditures of different farm classes (N=30)............................................................................................................ 81 Figure 5.7: Age structure of the sampled farmers (N=30)................................................ 83 Figure 5.8: Educational level of the respondents (N=30) ................................................. 84 Figure 5.9: Distribution of the respondents of different farm classes by experience level (N=30)............................................................................................................ 85 XI
Figure 5.10: Level of contentment of the respondents with the dairy farming business (N=30).............................................................................................................86 Figure 5.11: Effect of the dairy business on the livelihoods of the respondents (N=30) ...87 Figure 5.12: Planning approaches of the respondents (N=30) ...........................................88 Figure 5.13: Distribution of the respondents according to use of controlling tools (N=30).............................................................................................................89 Figure 5.14: Responses of the settlement of daily activities (N=30)..................................89 Figure 5.15: Structure of labor forces of the sampled farms, given in mean Labor Units (N=30) ........................................................................................94 Figure 5.16: Structure of the sample farms with one or more cars according to car types 97 Figure 5.17: An open, free-stall barn in Tuul village .........................................................99 Figure 5.18: Illustration of two tie-stall barns with different levels of comfort ...............100 Figure 5.19: Breed structure of the total cow population of 30 sample farms (N=485).........................................................................................................106 Figure 5.20: Grazing schedules of the sampled farms (N=30).........................................108 Figure 5.21: Durations of the grazing season at the sampled farms (N=30) ....................109 Figure 5.22: Distribution of the sampled farms by mean lactation yields per cow (N=30)...........................................................................................................110 Figure 5.23: Integration of the lactation period in the semi-stationary farming system (N=28)...........................................................................................................111 Figure 5.24: Average lactation curve of the sampled farms in 60-day periods, presented with means and deviation spans† .................................................112 Figure 5.25: Amounts and structures of energy supply in the dairy cattle feeding of the sample farms (N=30)..........................................................................122 Figure 5.26: Amounts and structures of protein supply in the dairy cattle feeding of the sampled farms (N=30)........................................................................122 Figure 5.27: Gross margins at different productivity levels and different producer prices of milk ................................................................................................129 Figure 5.28: Net profits at different productivity levels and different producer prices of milk...........................................................................................................129 Figure 5.29: Gross margins of different productivity levels at different prices of feedstuffs.......................................................................................................131 Figure 5.30: Net profits of different productivity levels at different prices of feedstuffs.......................................................................................................131 Figure 5.31: Structures of average gross outputs of different farm classes......................137 Figure 5.32: Structures of the average total gross margins of different farm size classes ...........................................................................................................141 Figure 5.33: Farmers’ judgment of the profitability of their farms (N=30) .....................143 XII
Abbreviations $
United States Dollar
AI
Artificial Insemination
CPR
Center of Policy Research
DANIDA
Danish International Development Agency
DCS
Dairy Cooperative Society
DFA
Dairy Farmers’ Association
DM
Dry Matter
DSIRU
Department of Statistics, Information and Research of Ulaanbaatar
EU
European Union
FADU
Food and Agricultural Department of Ulaanbaatar
FAO
Food and Agricultural Organization
FO
Farmer Organization
GDP
Gross Domestic Product
GM
Gross Margin
GTZ
Gesellschaft für Technische Zusammenarbeit (Agency for Technical Cooperation of the Federal Republic of Germany)
hp
Horse Power
ILF
Intensified Livestock Farm
JALDA
Japan Agricultural Land Development Agency
LU
Labor Unit
MFA
Ministry of Food and Agriculture of Mongolia
mh
Man Hour
MI
Management Income
MJ
Mega-Joule
MNT
Mongolian Tugrik (national currency)
MSUA
Mongolian State University of Agriculture
NAEC
National Agricultural Extension Center
NEL
Net Energy Lactation XIII
nXP
Usable Crude Protein (nutzbares Rohprotein in German)
NGO
Non-Governmental Organization
NP
Net Profit
NSO
National Statistical Office
PA
Producers’ Association
RNB
Rumen Nitrogen Balance
SDC
Swiss Agency of Development Cooperation
US
United States (of America)
VAT
Value-Added Tax
XIV
1 Introduction 1.1 Background Little is known about dairy farming in Ulaanbaatar. It is known that the domestic agricultural production in Mongolia has decreased since the centrally planned economy of the country was replaced by a market economy. The former large scale dairy farms were dissolved when they could not operate without subsidies. Consequently, the industrial milk production fell from 61.5 million liters in 1990 down to 1.5 million liters in 2000 (MFA 2004,8). Contrary to the needs, the dairy farming sector was widely abandoned by the research during the 1990s. In the late 1990s, the sector started to re-gain the interest of agricultural research and policy, not least due to the fascination of Mongolians for the highly progressive and productive peasant farming systems in Western Europe. It was then discovered that some of those family farms that had obtained dairy cattle from the former large-scale farms, have already attained the form of a ‘modern’ farm as it should be: market-oriented, independent and providing income above the subsistence level. Thus, peasant dairy farming started to appear not only feasible in Mongolia, but possibly also profitable without subsidies. However, the available information on the number, the distribution, the technology and the profitability of the farms is very limited. Meanwhile, the population of Ulaanbaatar increased from 560,600 in 1990 to 965,300 in 2005 (NSO 2006,68). The expanding population boosts the capacity of the dairy market. The total consumption of milk and dairy products in Ulaanbaatar was equivalent to 64 million liters of liquid milk in 2005 (NSO 2006,263). However, the domestic industrial production was only approx. six million liters, while the amount of imported milk and dairy products was equivalent to approx. 18 million liters of liquid milk (cf. NSO 2006,209; TUNGALAG & ENKHBAYAR 2006). The milk market is supplied with a large amount of non-industrial dairy products. There is a need to strengthen the milk supply chain. On the other hand, the consumption of milk and dairy products per capita in Ulaanbaatar increased from 50.4 l (in liquid milk amount) in 2001 by 31% to 66 l in 2005 (DSIRU 2004,192; NSO 2006,263), revealing a correlation of the milk consumption with the development of the national economy. The latter has been growing constantly in the recent years, indicated by the growth of the GDP per capita from $424 in 2001 to $746 in 2005 (NSO 2005,141; NSO 2006,113). Due to the intensive development of the mining sector and high world market prices for minerals the GDP is expected to increase further, and could affect the milk consumption too. Moreover, there are opportunities for export of dairy products e.g. to China (DUGDILL 2005). The food and agricultural policy emphasizes the promotion of the dairy farming sector in peri-urban areas in the ‘Food and Agricultural Policy of the Government’ and the ‘Intensified Livestock Development Programme’. The ‘White Revolution Programme’ also has a strong emphasis on the peri-urban dairy farming. But the policy and the research have no reliable data base and concrete strategies. In order to fill the gap, a dairy sector survey was conducted by the World Bank in 2003. Its results, however, were inadequately evaluated and the survey report has a very general frame. Nevertheless, the survey set a starting point for further analysis of the sector. 1
1.2 Problem and incentives for the study While the target of ensuring the domestic supply of milk and dairy products in Ulaanbaatar is the major driving force behind the efforts of the policy to promote dairy farming around the city, a strong dairy sector could also result in additional benefits. Due to the labor-intensive character of the dairy production, the farms may contribute to a reduction of unemployment. Progressive farms may demand machines and equipment, and thus create opportunities for manufacturers and traders of agricultural machines. In contrast to the pastoral herders, the farmers possess real properties as land and buildings, thus stimulating the development of financial and property services in their areas. However, the pre-condition for the development of the dairy sector is that dairy farming is profitable. While public media and a limited number of publications including the report of the World Bank 2003 survey conclude a high profitability of the dairy farms around Ulaanbaatar, in most cases the data are inadequately evaluated and the gross margin is frequently misunderstood as the ultimate measure of profitability. Without having such information, therefore, there is no reason for researchers to assume a high profitability of the dairy business. A further concern is, even if the farms were profitable, they might have a weak liquidity. Thus, a comprehensive study, which should not only quantify the profitability in detail but also analyze the reasons for high or low profitability and elaborate solutions for improvement is needed. Yet, there arises the question if an extensive analysis of the dairy farming sector only for elaborating some policy implications is worth the effort. Experiences in transition countries reveal that private sector development depends on the synergy within the sector rather than on political interventions. The government should not directly intervene in the private sector, but should focus on creating a framework that enables a self-sustaining development of the latter. As for research, it seems more important to explore opportunities with little dependence on policy support such as the establishment of a private dairy extension organization. “In a market economy, there is only one thing that is sustainable: a commercial business based on mutual benefits” (HOFFMANN pers.com. 2006). Extension is still considered in many developing countries including Mongolia as a government task. Public extension, however, has been increasingly criticized due to the inefficiency of many government extension organizations in the world. While user financing of extension is not feasible in most developing countries yet, researchers tend to agree that private delivery of agricultural extension is to be generally preferred to public delivery, and many variants can be developed for user participation in the financing. Thus, the results and recommendations of recent extension research and the market potential for the dairy farming sector around Ulaanbaatar as well as the lack of extension or comparable services for dairy farmers encouraged the author to pre-assume that dairy extension in the study area can be organized on a self-sustaining base. Research is needed for defining the role, contents and methods of dairy extension, as well as for elaborating strategies for organization and management of the extension service. Against the outdated understanding of extension as a political instrument to disseminate pre-defined know-how and technology packages, modern extension services do not refrain from intervening fields beyond the technology advising such as management consultancy, service facilitation and organizational development. 2
1.3 Objective, goals and hypotheses The objective of this study is to elaborate strategies for dairy extension work on the basis of a situation analysis of the dairy farming sector around Ulaanbaatar, the capital city of Mongolia. The sector analysis reviews the recent development of dairy farming, gives an overview of the farms in the study area, reveals the weaknesses and strengths in the business environment of the farms and includes an analysis of sample farms. While the first part of the sector analysis is aimed at ordering and systematizing of already existing information about the sector, the sample analysis is aimed to create detailed information about the dairy farming business. It has a holistic consideration of a farm as a system consisting of the interaction of many subsystems, and reveals the variability in these different subsystems, which is assumed to result in variability in the economic success of the farms. The sector analysis is based on the following hypotheses: 1. There are enabling political support and a synergic business environment for the development of the dairy farming sector in the study area. 2. The majority of the farms in the study area have attained profitability and liquidity to levels that enable a self-sustaining development. The results of the sector analysis were used for elaborating strategies for dairy extension work. Although numerous tasks could be performed by dairy extension, priority is given to those functions promising both significant impacts on the farm profitability and high returns to the extension service itself. Thus, the study looks at the profitability of the farms on the one hand, and that of the extension service on the other. It was assumed that, even if user fees cannot fully cover the costs of extension work, there are alternatives for ensuring a financially self-sustaining private dairy extension service. The study also aims at identifying and exploring the feasibility and the profitability of these alternatives.
1.4 Structure of the thesis The chapter 2 consists of a literature review that deals with the theoretical fundamentals of extension work, defines the roles and functions of extension in the context of the new paradigm towards liberal and global markets, which have substantial impacts on the agricultural development in the developing countries, reveals the importance and the mechanisms of institutional linkages for extension, and discusses the institutional settings and extension reforms that have been taking place with different levels of success in many countries. The chapter 3 describes the material and methods used in the study. The results of the dairy sector analysis are given in the chapters 4 and 5. While the chapter 4 consists of an overall analysis of the sector, including the re-evaluation of the empirical data gained by the World Bank survey in 2003, the chapter 5 contains the results and the discussion of the sample farms’ analysis. The chapter 6 consists of a discussion of the results of the sector analysis and conclusions. Appropriate contents and methods of dairy extension are elaborated in the chapter 7. In addition, alternative approaches for ensuring the financial sustainability of the service are suggested. A pilot project is proposed and its profitability is analyzed. The chapter is followed by the summary in English and German. 3
2 Theories, experiences and selected current issues of rural and agricultural extension 2.1 Definition of extension “…there is a great diversity of the understanding of extension and its underlying philosophy.”…“Only by listening carefully and being specific about extension activities, it is possible to … understand what is meant when talking about extension” EHRET (1997,13). For understanding what extension is, it is helpful to look at the terms of extension in different languages and explore their meanings since “The term that is given to extension explains to a certain extent the philosophy and the function of extension” (HOFFMANN 1990,191). Some examples are shown in the Tab. 2.1. Table 2.1: International terminology of extension Language British and American
Term denoting giving advice
Content of term
Term denoting the person giving advice
Advisory work
to give advice, assistance for problem solving
Advisor
Counselling
to advice psychologically
Counsellor
Consultation
to consult
Consultant
Extension
to disseminate, to spread out
Extension agent
German
Beratung
to give advice, assistance for problem solving
Berater Ratgeber
French
Vulgarisation
to make popular, to spread out
Vulgarisateur
Encadrement
to frame, to incorporate, to check in, to file in
Encadreur
Spanish
Extension
to disseminate, to spread out
Extensionista
Dutch
Voorlichting
to light ahead, to illuminate, to enlighten
Voorlichter
Danish
Oplysning
to light ahead, to illuminate, to enlighten
Consulent
Russian
Консультация
to consult
Консультант
Source: adapted from HOFFMANN 1990,192.
The examples reveal three major concepts. The English word extension and the Spanish extension have the meaning of spreading something from a certain point to the areas around. These terms reflect the dissemination of knowledge and innovations from research and education centers to a wider circle of users. Similarly, the French vulgarisation means making messages popular by simplifying them. 4
The Dutch voorlichting and the Danish oplysning are close to the English term enlightening and create a picture of a guide lighting the pathway ahead to help people find their way. Although this is different from what extension means, there is a common differentiation between the better educated, more knowledgeable providers and the less educated receivers in both of these variants. They also imply a one-way communication within a ‘top-down’ approach i.e. from the better situated providers to the weaker receivers. In contrast to these elitist understandings, the German terms Beratung, Berater, beraten, the English counseling, counselor, the French conseil, conseiller, but also the English consulting, consultant, and consultation as well as the Russian консультация and консультант have the meaning that people discourse on a problem, or to come to joint decisions or problem solutions. A ranking between the consultant and his/her client is not given and the communication is two-way i.e. both client-to-consultant and consultant-toclient communications are possible. When organized agricultural extension was introduced to the developing countries in the second half of the 20th century, many of them adapted the terms from European languages. “Terminology introduced by former colonial administrators often is used in some less industrialized countries, despite the fact that different types of extension might be needed in both countries. For example, Indonesia follows the Dutch example and speaks of lighting the way ahead with a torch (penyuluhan), whereas in Malaysia, where a very similar language is spoken, the English word for extension translates as perkembangan” (VAN DEN BAN & HAWKINS 1996). In Mongolia, the National Agricultural Extension Centre (NAEC) was established in 1996. There is no commonly agreed term for extension yet. The official name of the extension centre in Mongolian can be literally translated as ‘Centre of Transferring Scientific Findings into Agricultural Production’. The word extension is translated in many variants including ‘transferring service’, ‘advisory service’, ‘training and transfer service’ or preferably ‘training and advisory service’. Often the original English term extension is used, whereas with different spellings in the Cyrillic-Mongolian alphabet. Extension means different things to different people (RÖLING 1982,87). The explanation of the above terminology should make clear that the term extension can be used both for dissemination of knowledge and innovations, and for consultancy. This study is based on the definition of ALBRECHT et al. (1989,33-34): “Extension is the process whereby the advisor tries to motivate his extension partner (or client) and to give him the capability with the help of encouragement and ideas to act to solve his acute problems. The people concerned acquire better insight into the network of problems and recognize the alternative solutions available. They gain from this both the incentive to embark on problem solution and the direction to take. Through the agency of extension, otherwise untapped human resources are set free and utilized. The relationship between the advisor and the extension partner that is necessary to achieve this should be reciprocal, the extension worker being committed to the welfare of his opposite number. In this relationship, the freedom of decision making and the personal responsibility of the partner must be preserved in full, because he alone must ultimately bear the responsibility for the consequence of his actions”. 5
2.2 Basic concepts 2.2.1 Framework model Extension is based on the conscious communication between the advisor(s) and his/her client(s). In a wider sense, it is an interaction between a promotion system and a target system. The framework model of extension emphasizes on the differences between these two systems. As the model shows, the behavior of the individuals in each system is embedded in a wider social context (Fig. 2.1) Figure 2.1: Framework model of organized extension
P
em yst S n o ti o m o r
Ta r get
Sys tem
Communication
Interaction
Structure of organisation
Social structure Social and cultural milieu People in their fields of relationships
Area of operations of extension
Source: HOFFMANN & GERSTER 2006,24, adapted from ALBRECHT et al. 1989,70
Successful extension requires that the two systems overlap as much as possible. This is illustrated by an example from Taiwan: “Being very much like farmers in farm background, personal characteristics, and commitment to farming and different mostly in knowledge that they possessed, they (advisors) understood the farmers’ situation and could easily communicate with them” (LIONBERGER & CHANG 1981,178).
2.2.2 Influencing human behavior Extension is needed for problem solving. But the clients often refrain from taking the necessary actions because their behavior blocks the insight into the problem situation or the motivation to make changes. Understanding the nature of human behavior and the mechanism of influencing the behavior is therefore important for extension work. LEWIN’s (LEWIN & CARTWRIGHT 1951) field theory distinguishes between the physical and the psychological environment. The latter is subjectively perceived and very individual. Perception is influenced by both our sense organs and functional factors including experiences, values, expectations, needs, attitudes and internalized socio-cultural norms. We prefer to perceive contents that meet our needs, increase our security, seem appropriate for achieving targets, fulfill our expectations and confirm our experience (ALBRECHT et al. 1989,66-67). 6
According to the field theory, behavior is a function of the interaction of an individual and his psychological environment. ALBRECHT et al. (1989,63) describe behavior as follows: “A person in his perceived environment feels something is worth striving for, and he mobilizes his personal powers to reach the goal. When something negative occurs, he activates his personal powers to avoid the negative situation. Ways of reaching targets and avoiding negative situations can be blocked or impeded by barriers. Forces conducive to positive targets are described as driving forces and those conducive to negative situations are termed inhibiting forces”. The inhibiting and the driving forces are present in a state of equilibrium or disequilibrium in the psychological field. Behavior is modified if the present balance of the forces is shifted and a new level of equilibrium is stabilized. This takes place either through an increase of the driving forces, or a decrease of inhibiting forces, or a combination of the both processes. The latter variant is most sustainable since the inner tension resulting from the change is kept at a lower level and the danger of relapsing to the old level is minimal (Fig. 2.2). Figure 2.2: Model of behavior modification Phase 1
Phase 2
Phase 3 Behaviour at different times
Inhibiting forces
Driving forces Disturbance of former equilibrum
Shift to new equilibrum
Stabilisation of modified behaviour
Perception of problem
Stages of implementation
Solution to problem or relapse
time
Source: ALBRECHT et al. 1989,64; adapted from LEWIN 1962,237
2.2.3 Problem solving and decision making Problems arise either through a perceived deterioration of the situation or the awareness of realizable possibilities of improvement (ALBRECHT et al. 1989,70). According to the model of systematic problem solving, which is elaborated by the ‘Hohenheim School of Extension’, the procedure of problem solving begins with a situation analysis and ends with the evaluation of results (Fig. 2.3). 7
Figure 2.3: Stages of systematic problem solving re-examination of perceptions
search for goal
description of initial situation
Function of advisory work perception of a problem
support through “mental help” in structuring and restructuring by informing, motivating and enabling
analysis of causes and problem definitions
search for solutions
choice between alternatives
evaluation of results identification of results
implementation of solution
forwards if possible; if problematic, then back to previous stages If evaluation of results is negative, begin again
Source: HOFFMANN & GERSTER 2006,11
While the situation analysis requires active involvement of the advisor, the determination of the goal and the definition of the problem are subjectively acts conditioned by the needs and the values of the client. The advisor has to be aware of his supportive role. The problem definition is the cardinal point since “half the solution is contained in the definition of the problem” (ALBRECHT 1989,71). According to VAN DEN BAN & HAWKINS (1996,91), it enables the farmers to continue the decision process without further help since the problem definition focuses on “what they can do to solve the problem rather than on what others should do”. If the search for solutions is not successful, the goal or the problem has to be re-defined. When possible solutions are found, they must be compared. The best solution has not only a high probability of success, but also low risks in case of failure. “The advisor has an important role to play in this choice of alternatives. His specialist knowledge and expertise are called for when it is a question of assessing how far the alternatives are likely to contribute to target attainment, the probable financial input and the associated risks and possible undesirable consequences” (ALBRECHT 1989,72). The evaluation of the results will reveal whether the problem has been solved. If not, it has to be thought out again and a new action must be taken. The evaluation is easier if the goal has been quantified. “Only if the effects and results can be accurately ascertained is it possible to make a final evaluation. If it is seen to be positive, the danger of relapse is finally eliminated” (ALBRECHT et al. 1989,72).
8
The major functions of the advisor in the problem-solving process are to motivate his client and to enable him to solve his problems. The advisor will bring in his knowledge where it is useful. Relevant information acts to reduce the uncertainty which is attached to the outcome of a future action, although complete certainty is unlikely to be achieved (JONES 1994,174). However, the advisor has to be careful about the extent of the information he is giving to the client. The latter can be confused if given too many alternatives from which to choose, and if all the consequences of choosing these alternatives are explained. On the other hand, giving too little information may withhold valuable ideas. “The right amount to give will depend on the farmer’s capability and on the importance of the problem” (VAN DEN BAN & HAWKINS 1996,92). The advisor does not bear responsibility for the consequences of the decision made by the client, but does for the quality of his work, which results from the quality of the technical content of the extension work and the methodology employed to apply it, whereby the following are important (ALBRECHT et al. 1989,35): ¾ The ability to relate to the situation of the partner, his experience and level of comprehension; ¾ The technical reliability of the solutions developed; and ¾ The clear exposition of the risks involved in alternative solutions. It is important that the advisor supports the client in the process of structuring and restructuring his own ideas because when the client is severely affected by problems, his psychological tension narrows his view and restricts his perception. “If you are deeply enmeshed in a problem, you can rarely cut yourself free; if you are stuck in a bog, you cannot pull yourself out by your own forelock like Baron Münchhausen” (ALBRECHT et al. 1989,73).
2.2.4 Diffusion of innovations Innovations are often needed for solving problems. An innovation is an idea, a method or an object which is regarded as new by an individual (VAN DEN BAN & HAWKINS 1996,96). It is not necessarily something absolutely new, nor has it to be an improvement on current ideas and practices. ROGERS (2003,169) defines the following stages in the innovation-decision process: 1. 2. 3. 4. 5.
Knowledge Persuasion Decision Implementation Confirmation.
The stage ‘knowledge’ is evidently the first stage since a decision to adopt or reject an innovation can only be made if the decision-maker is informed about it. The confirmation on the other hand, seems to be the last stage since it can only happen if the implementation of the decision has brought results which can reduce the uncertainty about the innovation and confirm its comparative advantage. The remaining stages ‘persuasion’, ‘decision’ and ‘implementation, on the other hand, are not necessarily in the sequence as 9
shown in the list. The persuasion for instance, might occur after the decision is made and being implemented. The implementation might start before the final decision is taken. The adoption of an innovation is a dynamic process. It is not finished with a single cycle of the stages above. Once the decision to adopt the innovation is made, further decisions need to be made on how to implement the former decision effectively and efficiently. Information is needed continually and the level of persuasion and confirmation may vary for many reasons. A farmer may feel confirmed in his decision to adopt an innovation until his neighbor reveals him risks he has not considered yet. The diffusion of innovations usually goes through four phases shown in the Fig. 2.4. In the initial phase, the innovator is perceived critically by his contemporaries since the benefits of his changes are not proven yet. Thus innovators are usually those who are able to take risks. They take the function of local experimenters. Not only economic, but social risks are possible since the critical behavior of the people can sharpen to a rejection emerging from the attitude “what we have been doing is right”. Figure 2.4: Phases of the diffusion process Number of adopters per unit of time
1
2
3
4
time
1 The innovator as “trouble maker” 2 The critical phase (end or turning point) 3 Transition to the self-sustaining process 4 Final phase of the wave
Source: ALBRECHT et al. 1989,92
It is crucial for a successful diffusion that as many people can relate to the innovator as possible. They will adopt the innovation when signs for the advantageousness of the innovation are seen. Involvement of locally acknowledged people in the early phase of diffusion promotes the interest of the mass in the innovation. The innovation becomes attractive and seems less risky than before (cf. VAN DEN BAN & HAWKINS 1996,106). It is assumed that a diffusion rate of 20% should be achieved in the critical phase in order to enable a self-sustaining diffusion process (ALBRECHT et al. 1989,94). Once the self10
sustaining phase has started, there is no need for external driving forces; the innovation becomes a norm. According to the normal distribution like shape of the diffusion, the adoption rate sinks slowly and gradually after reaching its peak. Since no more driving forces derive from the process after the peak is achieved, the last adoptions can only result from a decrease of inhibiting forces through fortuitous changes in the circumstances of the last adopters. Although the diffusion of innovations is always situation-specific, there are some recurring features that affect the course and the speed of the diffusion (Tab. 2.2). Table 2.2: Important recurring features affecting the diffusion of innovations Comprehensibility
Do clients understand why the suggested innovation is a solution? Do they know about the effects? How much information and knowledge would be necessary to adapt better to their situation? What can be varied and to what extent without endangering success?
Complexity
How many stages does the innovation involve? How severe are these changes with respect to the known situation; what clarity of the consequences.
Divisibility
Can it be tried out on a small scale, extended in stages, partially adopted?
Risk
How is for example certainty of yield? Can inputs be calculated? What are consequences of failure?
Observability
Is it possible to observe any result during implementation? e.g. of all / some or none of the stages, and results of colleagues, on model farms or demonstration plots.
Comparability of motivation
Has the potential adopter the same motives as the innovator, do the objective advantages of the innovation meet subjective needs? (is the innovation really a solution or does it cause additional problems?)
Compatibility with norms
Can the adoption of the innovation be reconciled with existing rules, with social norms? Does the innovation match with existing cultural practices and norms?
Labor input
What implication does the innovation have on labor input? To what extent are there physical implications, e.g. difficulty of work or lack of practice, or also psychological implications, e.g. when rigid habits are changed.
Costs
What costs are involved, direct or indirect, short or longer term, with the problems of allocation or the demands on liquidity.
Return
What is the benefit of the innovation, e.g. in money terms or other benefits, how to quantify these non-monetary benefits?
Observability of success
How can first successes been observed and when? How long does it take between the stage of inputs and possible experience of success?
Observability of failure
How and when? What reasons are given for the successes and failures and how are they linked up with the innovation?
Source: HOFFMANN & GERSTER 2006,34, adapted from ALBRECHT et al. 1989,97
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2.3 Role and functions Mutual trust and help belong to the nature of human beings. Mental support for problem solving has therefore always been, and will probably remain a global phenomenon. Extension work will not lose its significance as long as people have to take decisions. Although organized extension work has been carried on in various sectors of society including industry, education and health (RIVERA 2001,7), agriculture extension has attained a special focus of policy and research. This is somehow paradoxical since farming is one of the oldest occupations in the world and extensive indigenous knowledge on farming is available in almost each nation. However, traditional farming systems, in which increases are usually obtained by bringing new land into production are no longer viable since low-cost land conversion possibilities are continually exhausted and contradicting the maintenance of ecosystems (PRETTY, MORISON & HINE 2003,218). Almost all increases in world agricultural production will have to come from higher output per hectare (UMALI & SCHWARTZ 1994,1). This shifting from a resource-based to a technologybased system of agriculture requires the farmers to increase their competetiveness by adopting technological innovations and improving their entrepreneurial skills. Many other changes including increasing environmental awareness and consumer protection, changes in the social and political systems (as is the case of post-socialist countries in Eastern Europe and Central Asia), globalization of markets, global warming, population increase, shortages of raw material and energy etc. influence the agricultural production worldwide. “Change today is global and rapid. A new paradigm has emerged towards a market-driven agribusiness orientation, stressing comparative advantage in a highly competitive global market. This globalization and market orientation is placing new pressures on governments and their people to produce more, for both domestic consumption and trade” (RIVERA 2001,4). In the developing countries the situation is more dramatic than in the industrialized countries. The farmers are those who supply food for the entire population on the one hand, but themselves are the poorest and most vulnerable group on the other. While the industrialized countries protect their domestic markets and balance rural-urban disparities by allocating subsidies to their farmers, the developing countries, in which farmers have a share of up to 80% in the population (CARY 1993,336), cannot afford and are often not allowed by the multinational donors as the IMF and the World Bank to subsidize their agricultural production. The farmers in the developing countries with already critical situations are faced with a new world order now, which makes them compete with farmers in the industrialized countries who have both more effective technologies and more financial power, being massively subsidized by their governments. In this world of changes, the importance of knowledge and the rapidity of its transfer and exchange are increasingly recognized as central to trade and development, in high-income as well as in low-income countries (DRUCKER 1998). The need for agricultural and rural information and advisory services is likely to intensify in the foreseeable future (JONES & GARFORTH 1997,9). Agricultural extension is considered as an accelerator for agricultural development (MOSHER 1966). It fulfils four main functions (ALBRECHT et al. 1989,36): 12
¾ “To act as an intermediary between agricultural development institutions and target groups. In this way the latest results of research are made available to the farmers in such a way that they can be understood and applied and, conversely, the need for solutions to particular agricultural problems is reported back to the research institutions. ¾ The transfer and adaptation of the achievements of existing institutions to the abilities and potential of the target population. In the medium term this can result in what is being offered by these institutions being modified to meet the needs of the target group. ¾ The formal creation of development and other services by helping to structure institutions. New institutions, whether state organized or self-help, influence the whole agricultural production system. ¾ Mobilization, in the form of motivating and qualifying disadvantaged groups that results from specific attention to problems and concrete help, so that they attain independent action and self-help. Thus counseling taps an otherwise unused source of development-promoting strengths. This kind of mobilization also creates the precondition for the dissemination of innovations in the rural environment”. The concept distinguishes extension from other types of non-material influences as training, which supplies a stock of knowledge, and communication media as books, newspapers, radio, which are not based on personal contact and do not deal with individual problems. However, ALBRECHT et al. (1989,34) admit that “In many extension situations, however, training and extension are closely connected.” and “As well as being connected with training, successful extension is also often combined with phases of dissemination of information through these impersonal media.” Extension is seen as one of the components in the Agricultural Knowledge and Information System (AKIS), of which major objectives are poverty reduction, agricultural productivity gains, food security and environmental sustainability (FAO & WORLD BANK 2000; RIVERA, QAMAR & MWANDEMERE 2005,3; Fig. 2.5). Figure 2.5: Scheme of the Agricultural Knowledge and Information System education
farmers
extension
research
Source: RIVERA et al. 2001,8
13
Given the use of extension as a means to help alleviate rural poverty and improve food security in many countries (RIVERA 2001; FARRINGTON et al. 2002) and the increasing recognition of its role in the human resource development (CLARK 1987; NAGEL 1997; QAMAR 2000; LEEUWIS et al. 2004; HIREVENKANAGOUDAR et al. 2005; DAVIDSON 2007), the concept of ‘agricultural extension’ is controversial. Also, the relevance of off-farm incomes for the livelihood of rural people must not be underestimated. It may well be that the best prospects for significant livelihood improvement of rural people lie outside the natural resources sector in the generation of off-farm incomes (CARNEY 1998; LANJOUW & LANJOUW 2001). Hence, the exploitation of opportunities for non-agricultural employment and micro-enterprise development should be one of the areas extension services should focus on. Some researchers therefore prefer other terms as ‘extension plus’ (SULAIMAN & HALL 2004) or ‘rural extension’ (ALBRECHT et al. 1989; ALEX, ZIJP & BYERLEE 2001; ANDERSON & FEDER 2003). ALBRECHT et al. (1989,37) explain that the aim of rural extension is “to counter a further impoverishment of the people engaged in agriculture and to improve their living conditions”. In this sense, rural extension embraces the following areas of activity: ¾ “Techniques of production: the introduction of new production techniques and the communication of essential knowledge and skills to improve the subsistence basis, to produce marketable surpluses and to achieve a higher income. In the long term, the sources of income and, above all, soil fertility have to be maintained. ¾ Management: the improvement of farm organization by the efficient use of existing factors of production. ¾ Socio-economic questions: the improvement of nutrition and the running of the household, discussion of opportunities for non-agricultural employment for members of the family etc. ¾ Institutional questions: the promotion of organized cooperation and other means of raising the capability of self-help.” However, the concept of ‘rural extension’ is not undisputed since urban agriculture has been increasingly gaining recognition. About 200 million urban dwellers participate in urban farming, providing 15 to 20 percent of the world’s food (ARMAR-KLEMESU 2000,100). RIVERA (2001,9) compromises by terming ‘rural and agricultural extension’, but suggests a broader concept of ‘food and agriculture, rural and urban extension’. He reminds that “extension in high-income countries is already providing information and education services in urban areas, extending beyond technical agriculture and rural development alone” (RIVERA 2001,10). RUSSELL & ISON (2000,19) suggest to abandon the term ‘extension’ altogether. Along the changes taking place in the business environment of farmers, extension will certainly have to adapt to the new conditions and help farmers create and make use of new opportunities, thus with new concepts. “Theories come and go” (HOFFMANN & GERSTER 2006,3). Eventually, there will probably be neither agricultural or rural extension services, nor stereotypical extension workers. Instead, extension will diversify, with various private and public providers delivering different services as management consultancy, marketing extension, micro-enterprise consultancy, information service, participatory research etc. The only common concept for all these services will be the basic understanding of extension as ‘mental support for problem solving’. 14
2.4 Extension approaches All relevant elements of an extension system are systematically integrated in an extension approach (Fig. 2.6). “Starting with target groups and their problems, the contents of extension, the organizational set-up and staff, the methods and extension aids to be used and the objectives and the working program related to them should be defined in reasonable combinations” (HOFFMANN 1992,271). Figure 2.6: Contents of an extension approach Natural environment and social, economic and political system
Philosophy, objectives and working program
Methods and extension aids
Target groups and their problems
Contents (recommendations, alternatives of solutions)
Organisational set-up and staff
Source: Translated and adapted from HOFFMANN 1992,271
Many extension approaches have been developed and applied in international extension work. Some of them have been applied only locally while others have been introduced globally. Popular examples are the Training and Visit System, the Farmers Field School, Farmer-to-farmer-extension and the Participatory Extension Approach. It seems impossible to compare the approaches or recommend a certain approach for a certain condition. HOFFMANN (1992,272) asks “What could be the criteria of analysis and evaluation? Evaluation could try to assess the impact and look if the implementation of a certain approach proved to be successful. But the evaluation of such a complex process in general is difficult. How to measure success and how to determine the real cause effect relations? Success finally relates to objectives, which are very different in the different approaches. What then could be the use of comparison?” and claims: “There is no better or even best approach as such!” Since each situation requires specific solutions, extension approaches have to be developed. The analyses of the situation of the target group must be the foundation and center of the approach, and all other elements should be oriented to it (BAUER 1995,82). 15
2.5 Context of extension in agricultural and rural development Although the basic definition of extension only refers to a communication process between the advisor and his clients, agricultural extension is a promotion system within the wider context of agricultural and rural development. External forces and institutional linkages are often decisive for the impacts of extension (cf. HAUG 1999). PETERSON (1997,21) distinguishes between a macro environment, and institutional linkages of extension services with other institutions. Using his scheme with a slight modification, this section completes the view of extension given in the previous sections. A. Macro environment ¾ Population density A small population distributed in a large territory, as in Mongolia for instance, is generally not favorable for extension. Farmers in the borderland often prefer subsistence farming due to the distance from the markets. If an extension organization serves all farmers in the country, the costs are likely to go beyond the impacts. A positive benefit/cost ratio can only be achieved when low-cost approaches are used. But this is not feasible since the advisors have to spend much time, money and effort in order to reach their clients. ¾ Agro-ecology Agricultural production is strongly influenced by the natural environment. In areas with favorable agro-ecological conditions the impacts of extension can be better than in marginal areas that are frequently affected by climate risks such as drought, or threatened by soil erosion. Also, in some countries, especially in those with larger territories, both researchers and advisors are challenged by different technology and information needs of farmers, resulting from the diversity of agro-ecological zones (PETERSON 1997,23). ¾ Infrastructure Infrastructure, especially the conditions of transport, communication, and market facilities affect the performance of both farming and extension (PETERSON 1997,24). Bad road conditions or lack of trucks restrain the transport of inputs and farm produce. If combined with a large territory, underdeveloped infrastructure makes the interaction with advisors impossible for many farmers. The communication infrastructure also affects the effectiveness of extension crucially. Messages such as technical advices or invitations to field operations cannot be transmitted if either advisors or farmers do not have access to communication media as telephone, radio, television or newspapers. ¾ Political system The absence of political unrest and war is the pre-condition for successful farming and effective extension work (cf. GUSTAFSON 1994). Democratic policies tend to promote private farming businesses to a greater extent than other forms of policies. Democracy also often involves a decline of administrative hierarchy and bureaucracy. Corruption, nepotism and other undemocratic phenomena weaken the national economy, increase the poverty and reduce the public investments (for extension). 16
Another impact of politics on public extension organizations is that political shifts at the national level often result in changes in extension personnel, management and programmes (PETERSON 1997,23). The replacement of experienced managers and workers with inexperienced ones reduces the efficiency of extension organizations. ¾ National economy One of the most significant factors affecting extension’s performance is a country’s stage of economic development (PETERSON 1997,23). High-income countries are able to protect their domestic markets, to subsidize their farming sectors and to allocate large-scale public investments or subsidies to extension providers while low-income countries are often highly dependent on the agricultural development on the one hand, but are not able to support their farmers on the other (cf. 2.3). ¾ Rural policy The development of agricultural extension depends on the development of the agricultural sector as a whole (PURCELL & ANDERSON 1997). It is the task of the government to create a favorable legal environment and carry out policy measures in behalf of both farmers and extension services. Even a total privatization of extension does not release the government from financing extension activities targeted on public goods (cf. 2.7.5). Another issue facing the rural policy is the liberalization. Despite the increasing liberalization trend along the globalization, the regulation of domestic markets remains a task of the governments, especially in countries with a majority of small farmers. Without market regulations, millions of small farmers would be exposed to a trade war across the borders against larger producers, which profit from economies of scale. ¾ Culture All cultural systems develop particular modes of perceiving and thinking, ideas of cause and effect relations, values and rules for dealing with people, creatures and things (ALBRECHT et al. 1989,77). These factors affect the interaction of extension workers and farmers as well as the way messages are perceived by the farmers. Thus, cultural differences need to be taken into account when extension approaches are to be developed and implemented (PETERSON 1997,23). B. Institutional linkages ¾ Research Agricultural research organizations are extension’s closest institutional partners in technology generation and transfer (PETERSON 1997,24; BETRU & HAMDAR 1997; AGBAMU 1998; DOAMEKPOR 2005;106). However, research organizations in developing countries are confronted by many problems including chronic underfinancing, lack of well-trained scientists, lack of access to external sources of knowledge, low staff morale and incentives etc. (cf. IDACHABA 1987; HALL et al. 2000; ALSTON & PARDEY 2006,16). Poor research capacities do not enable successful extension work since without technologies to extend, there is little scope for extension to have an impact on production (LAMERS et al. 1999,1).
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In many developing countries the extension-research linkage is considered weak or ineffective (KAIMOWITZ, SNYDER & ENGEL 1990; EPONOU 1993; VAN DEN BAN & HAWKINS 1996,27; PURCELL & ANDERSON 1997; MOVAHEDI 2005,97). Although several attempts have been made to bring researchers and extension workers together as the designing of the Farming System Research approach and the Rapid Rural Appraisal, a generic problem has not been solved: the extension agencies in most developing countries are integrated into the Ministries of Agriculture (STAATZ & EICHER 1990). The researchers in turn, often have a critical attitude to the extension agencies since they compete for power and resources (SWANSON 1997,171; FEDER, WILLETT & ZIJP 1999,11). Moreover, the researchers tend to look down on extension workers, who usually have a lower level of education, instead of working as a team (VAN DEN BAN & HAWKINS 1996,28). Extension organizations may wait until the extension-research linkage is improved, or try to mobilize existing resources. Contracting researchers with farmers might be a first step towards a better partnership with the researchers even this is only possible with medium and large farms. The long-term effect of such measures is to make different actors in the policy and research aware of the possibility to market the research. This is particularly important in post-socialist countries where public-private partnerships are still lacking. ¾ Education Extension organizations are users, partners and, to some extent, intermediaries for educational institutions (BETRU & HAMDAR 1997; WOLF et al. 2001). The latter provide the extension organizations with qualified staff and offer in-service trainings “to strengthen the competencies of extension workers while they are on the job” (MALONE 1984,209). As intermediaries, the extension organizations may contract agricultural universities, colleges and vocational schools for farmers’ trainings. Despite the attempts of agricultural universities to ensure and strengthen the human resources in agricultural extension including the integration of extension methodology into their curricula and offering bachelor or master degrees in extension and rural sociology, the lack of well-trained advisors remains a problem in many countries. About 39 percent of the extension personnel worldwide had a secondary-level and 33 percent an intermediate-level education by 1992 (BAHAL, SWANSON & FARNER 1992, cited by HALIM & ALI 1997,136). A frequently documented reason for this problem is that the salaries offered by extension organizations are not attractive for university graduates (NAGEL 1997,19; FEDER, WILLETT & ZIJP 1999,5). ¾ Input supply Under- or oversupply of inputs put farmers in difficulties. In both cases, extension can help farmers use their financial resources efficiently. Poor access to inputs inhibits the farmers’ efforts to intensify and increase their production. Advisors can support farmers to find the necessary inputs at low prices. A big variety of inputs on the other hand, requires competence for making the right choices. Input manufacturers and traders usually advertise for their products, but often with half-true messages. Thus, advisors should provide farmers with right information on the inputs. Some larger manufacturers of inputs have their own advisory services, enabling the farmers to obtain ongoing consultancy. But that does not automatically imply a ‘win-win’ situation. 18
The input suppliers may need the support of extension organizations too. The knowledge of the advisors about the needs and preferences of farmers is useful for the suppliers to elaborate marketing strategies. The existing extension network is helpful to reach a large number of farms. As far as the inputs meet the requirements of the farmers the extensionsupplier linkage is compatible with the goals of extension. Therefore, extension organizations should interact with suppliers to ensure that inputs are available in time and in sufficient quantity. They might also encourage the suppliers to make new inputs available (KATZ 2003,25). If new inputs are available, extension services could organize tests or demonstrations before an area-wide use of these inputs is made (ALBRECHT et al. 1989,188). By linking themselves with input suppliers appropriately, extension organizations strengthen their position among the agricultural development institutions while helping farmers at the same time. ¾ Credit supply Understanding the credit context – government and bank policies, availability of credit, and the institutional relationships involved in its delivery – is important for extension. The knowledge is useful for extension managers in targeting farmers and in coordinating extension objectives with credit institutions (PETERSON 1997,25). Small farmers are often not able to obtain credits. The reasons may be the lack of collateral, but also lack of information about the credit institutions and their conditions, or lack of ability to make a business plan. Since credits, however, are essential for farmers to increase their production and incomes, it is the task of extension to find out ways that work. On the other hand, however, advisors must be aware of the risk that some farmers might be not able to pay off their credits. It is therefore recommendable to i) know the credit conditions exactly, ii) to consult with the farmers about their liquidity and iii) help the farmers make realistic plans and rational decisions. Most credit institutions or their administrations are located in urban areas. They often do lack information on the situation of farms, and might be not motivated to serve farmers generally. Despite the urban biases extension organizations should try to motivate them to elaborate loan conditions that are realistic for farms, whereas attention should be paid to the seasonal fluctuation of farm incomes. ¾ Marketing Extension should facilitate farmers’ access to market information and help them with a profitable marketing at a minimal price risk (cf. KATZ 2003,28; ALBRECHT et al. 1989,190). Advisors may need to support farmers in developing appropriate marketing strategies. Extension may also facilitate the development of labeling in connection with particular production practices or quality control (KATZ 2003,29). Information on market dynamics and particularly on emerging markets is important since farmers in some regions may obtain more profits in the long run if they change their production. In order to carry out its tasks with respect to marketing, an extension organization needs linkages with other stakeholders in the product-market chain such as transporters, intermediaries, dealers, processors, exporters etc. Also, it is often necessary for extension to follow up new relations between these actors and the farmers for some time since business relations need time to develop (KATZ 2003,29). 19
However, it depends on the extension approach to what extent extension is engaged in marketing. While approaches focused on the improvement of farm technology such as Training & Visit (T&V) or Transfer of Technology (TOT) tend to neglect the role of extension in marketing, in commodity specialized approaches, the market extension, as it is termed by CROWDER (1997) and SHEPHERD (1997), plays an important role. ¾ Farmer organizations Farmer organizations (FOs) are an important driving force for sustainable agricultural and rural development. Common fields of their activities include education, extension, facilitation, organization of credit and input supply, provision of services as artificial insemination or accounting etc., management of common property, and defending collective interests of members e.g. lobby (KIDD, LAMERS & HOFFMANN 1998,10; VAN DEN BAN & HAWKINS 1996,226; NEUCHÂTEL GROUP 1999,10). They can take on a variety of forms and include both long-term associations of farmers such as producer organizations (POs) and those groups which are strategic and time-bound, with farmers coming together only to solve a specific problem (KIDD, LAMERS & HOFFMANN 1998,10). Farmers in developing countries often lack the competence for establishing and managing organizations. Thus, facilitation of organizational development becomes an extension task. First steps towards the establishment of FOs would be to discuss mutual interests and to define common goals. Existing FOs offer an effective channel for extension contact with large number of farmers, as well as opportunities for participatory interaction with extension organizations. Feedback on needs, problems of the farmers, and the results of technology adoption from such groups will be increasingly important (PETERSON 1997,26). “Some argue that extension can most effectively carry out its mandate, not by working directly with individual farmers, but by working with and through farmers’ groups or organizations” (BYRNES 2001, cited by RIVERA 2001,10). Eventually, farmers’ associations, often along commodity lines, provide own extension services to their members (cf. 2.6.2). ¾ Non-governmental organizations Non-governmental organizations (NGOs) represent a highly prevalent partner for agricultural extension in developing countries, frequently focusing on areas inadequately served by the government. Many NGOs strive to be participatory, democratic, responsive, costeffective, community-based, and focused on the needs of hard-to-reach target groups (FEDER, WILLETT & ZIJP 1999,22). However, the NGOs have weaknesses too. Most NGOs in developing countries are small, operating in limited areas; preferably in areas where several NGOs with similar functions already co-exist. Their independence often leads to problems with accountability. Some NGOs provide more ideological than scientific solutions to farmers’ problems (VAN DEN BAN & HAWKINS 1996,230). In addition, “some NGOs are more accountable to external funding agencies than to the clientele they claim to serve” (FARRINGTON 1997,215). Hence, “care must be exercised to ensure that partnership arrangements with NGOs capitalize on their strengths and avoid their weaknesses” (FEDER, WILLETT & ZIJP 1999,22). Nevertheless, the group-organizing and human resource development skills that 20
can be generally ascribed to NGOs are competences that many technology oriented extension services need (cf. FARRINGTON 1997,218; NAGEL 1997,18). Other opportunities for mutual partnership between extension and NGOs must be explored case-specifically. Some NGOs also provide extension services either directly to farmers or to other NGOs, FOs or key individuals. ¾ Policy Extension should be actively involved in policy and influence the formulation of relevant rules and regulations instead of always adapting itself to the policies made by others. It may take the following two distinct roles in the policy dialogue. In the both cases advisors are required to have relevant knowledge and experience as well as facilitation skills, and to make effective use of them (KATZ 2003,39 to 43): 1. Advocacy and lobbying The situations differ according to the specific interests of the target groups. Advisors of FOs will lobby for the interests of their employers while public extension services may advocate on behalf of rural poor or lobby for policies with positive impacts on nature conservation or ecologically sound production practices. Eventually, every extension organizations will advocate for policies, of which it expects that they will be favorable to the success of extension work (KATZ 2003,42). 2. Mediation and process facilitation between the interests of different stakeholders Interests of different stakeholders often conflict. While farmers want to sell their produce at highest possible prices, consumers demand low prices. Agricultural utilization of virgin land is against the public interest in conservation of natural resources. Extension organizations can facilitate the process of discussion and policy formulation or mediate between the stakeholders in a way that a maximum of consensus is reached.
2.6 Overview of extension providers By the end of 1990s, agricultural extension employed at least 800,000 extension workers and hundreds of thousands more farmer technicians or leader farmers, reaching about 1,200 million people (FEDER, WILLETT & ZIJP 1999,3). More than 90% of the world’s extension personnel are located in developing countries where the majority of the world’s farmers is located (FEDER, WILLETT & ZIJP 1999,5). There is a wide range of extension providers. They are broadly classified into public sector providers and private sector providers. The private sector providers can be divided further into three categories according to their objectives as shown in Fig. 2.7 although the demarcation lines between these categories, particularly between profit-oriented and nonprofit private providers are often unclear e.g. many NGOs carry out commercial activities. In the following, major extension providers in both the public and the private sector are briefly described.
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A. Public sector providers About 80% of the world’s extension services are publicly funded and delivered by civil servants (WORLD BANK 1997,72). The public extension organizations employ about 95% of all extension staff (UMALI & SCHWARTZ 1994,5). Most of their services are free of charge, not least following the traditional view of many aspects of agricultural knowledge diffusion as ‘public good’ (UMALI-DEININGER 1997,204). Figure 2.7: Overview of agricultural extension providers PUBLIC SECTOR ¾ ¾ ¾ ¾ ¾ ¾
Ministry-based extension organizations Local extension units Public academic institutions Commodity boards Agricultural development foundations International development organizations
PRIVATE SECTOR a. Profit-oriented providers ¾ Agro-processing/ Agro-marketing firms ¾ Input suppliers ¾ Consulting firms ¾ Publishing firms ¾ Traders ¾ Private academic institutions b. Non-profit providers ¾ NGOs ¾ Religious organizations c. Producer organizations ¾ Farmer associations and unions ¾ Commodity grower associations ¾ Community village organizations
Source: adapted from KATZ 2002,17; UMALI & SCHWARTZ 1994
The most common form of public extension is the ministry-based extension. In most developing countries and many industrialized countries, the National Extension Agencies of the Ministries of Agriculture are the main extension providers. One of the reasons for integrating extension services into the ministries is the ministerial hierarchy following the country’s territorial subdivision, which allows a country-wide expansion of the system. The ministry-based extension services target all persons engaged in agriculture, but also employ specialists to cater to specific needs in terms of technology or in terms of target groups (NAGEL 1997,14). Although academic institutions play a number of roles related to extension in every country, the Cooperative Extension Service of the United States is the only system in which the main extension function remains within the university. “The extension goals of landgrant colleges have shifted from practical education to technology transfer and, more recently, to a much broader concept of human resource development” (NAGEL 1997,16). Some developing countries have been successfully attempting to increase the role of agricultural universities in their extension systems (NAGEL 1980; AXINN 1988, 102-103). Most commodity boards are government parastatals. They often undertake both production and marketing extension and have mostly been established for cash crops, traditional plantation or export commodities. They are financed from a mix of levies on the marketed 22
products, farmer membership fees and public budget (UMALI & SCHWARTZ 1994,48). A common characteristic of parastatals is the vertical linkage of all services concerned with a particular crop, which include adaptive technical research, credit, supply of planting materials and inputs, and single channel marketing (MORIS 1991). Agricultural foundations are independent institutions established primarily for the purpose of coordinating and funding research and extension in specific commodities or agriculture in general. Some foundations may also conduct research and extension activities (UMALI & SCHWARTZ 1994,13). A serious problem concerning most foundations is the dependence on donor funding (COUTU & O’DONNELL 1991). B. Private sector providers Input suppliers provide information pertaining to the use of their respective products as a component of their marketing strategy. Agro-processing and agro-marketing firms provide agricultural extension services to their suppliers as a means of reducing input supply risks. Consulting firms primarily serve medium- and large-scale farms and commercial firms that require sophisticated and technically specialized agricultural information and technologies. They may generate their own research outputs, as do the private education and research institutions, and carry out publishing activities focused on the demands of their clientele. Consulting firms and academic institutions cover the costs of extension directly from service fees (UMALI & SCHWARTZ 1994; Tab. 2.3). NGOs are becoming increasingly involved in agricultural extension. Their extension activities often target small- and medium-scale farmers and areas that are not reached by the public sector extension. Some NGOs perform research and extension functions together (UMALI & SCHWARTZ 1994,13). FOs can be both consumers and suppliers of extension services (UMALI-DEININGER 1997,213; KIDD, LAMERS & HOFFMANN 1998,10; HOFFMANN, LAMERS & KIDD 2000). Marketing and processing associations may deliver extension to minimize supply risks while credit associations may deliver extension to enhance the liquidity of their members. Table 2.3: Objectives and target markets of profit-oriented private extension providers Extension provider
Firm objective
Target market
Agro-Marketing and Agro-Processing firms
Backward integration to reduce input supply risks (i.e. product quality, volume and timing)
Contract farmers
Input Suppliers
Product promotion Ensure proper use Preserve market share
All farmers
Consulting firms and Academic institutions
Fee for service
Mostly large and medium-scale farmers
Publishing firms
Returns from product sales
All farmers but mostly large and medium-scale
Source: adapted from UMALI & SCHWARTZ 1994,27
Producer associations provide extension in order to help their members increase their production and incomes (UMALI & SCHWARTZ 1994,28). 23
2.7 Current trends in the structure of extension providers 2.7.1 Driving forces for change Being the main form of organized agricultural extension worldwide, the public sector extension has been criticized increasingly. In 1990, RIVERA pointed out that public sector extension is criticized for “insufficient impact, ineffectiveness, inefficiency, and sometimes, for not pursuing programs that foster equity”. Eleven years later, RIVERA (2001,15) still reminds that “Extension is currently failing or moribund in many African nations. In other low-income developing countries, extension is in disarray or barely functioning at all”. While there is a variety of criticisms and opinions, the most commonly reported difficulties of public extension services are underfinancing and institutional inefficiency (cf. BIRKHÄUSER, EVENSON & FEDER 1991; AMANOR & FARRINGTON 1991; UMALIDEININGER 1997,204; KIDD et al. 2000,96; KATZ 2002,7). Failure of public extension is often indicated by inappropriate extension contents and methods, incoherent institutional links with research and agricultural higher education, and inadequate interaction with farmers (RIVERA & GUSTAFSON 1991; RIVERA 1996,1997; CARNEY 1998). Along the global liberalization, public spending is reducing in both industrialized and developing countries, aggravating the already critical situation of the public sector extension (RIVERA & CARY 1997; KIDD, LAMERS & HOFFMANN 1998,7; VAN DEN BAN 2000,11). Under present framework conditions most public extension systems are financially unsustainable (KIDD et al. 2000,96). Against the 1970s and 1980s where a number of attempts were made to strengthen the public sector extension, it is widely agreed now that such attempts are unlikely to solve the long-term problems of extension systems (KIDD et al. 2000,96). The trend since the mid 1980s in some countries and since the 1990s in most countries has been to increase the private sector extension (FEDER, WILLETT & ZIJP 1999,4-5). The private sector is assumed to be free of administrative and political constraints associated with public bureaucracies and is able to allocate resources more efficiently (HOFFMANN, LAMERS & KIDD 2000). The governments on the other hand, should focus on ensuring a favorable policy environment for the private sector development, and on regulatory functions e.g. putting corrective mechanisms and programmes in place to off-set the socially and environmentally damaging effects of a market economy (UMALI & SCHWARTZ 1994; KATZ 2002,7, BEYNON 1996; KIDD, LAMERS & HOFFMANN 1998; HOFFMANN 2004,88). Meanwhile, many extension providers have emerged in the private sector, including NGOs, private enterprises, FOs and commercial associations of extension specialists. Not only are public extension services out-contracted to private sector providers, but also public sector extension workers are contracted-in by the private sector (RIVERA 2001,15). An important driving force for the private sector involvement is the emerging paradigm of financial participation. In many places farmers have begun to pay for extension services. This is well in the interests of the governments and the donors, and advocated by development practitioners that had been wondering if the provision of free services does not obstruct the building of self-reliant rural communities (KATZ 2002).
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2.7.2 Overview of reforms RIVERA’s classification in accordance with SMITH (1997), which distinguishes between market reforms and non-market reforms, provides an overview of the major reform strategies that are taking place worldwide (Fig. 2.8). Figure 2.8: Extension reform strategies† a. Market Reforms FUNDING
DELIVERY
Public
Public
Private
Revision of public sector extension via downsizing & partial cost recovery
Cost recovery (fee-based) systems
(Canada, Israel, USA)
(OECD countries, previously in Mexico)
Institutional pluralism
Privatization and Commercialization
(Chile, Estonia, Hungary, Venezuela, South Korea, Taiwan)
(The Netherlands, New Zealand, England and Wales)
Private
b. Non-Market Reforms
Political Fiscal Administrative Issues
Decentralization to lower tiers of government
Transfer (delegation) of responsibility to other entities
(Colombia, Indonesia, Mexico, The Philippines, Uganda & others)
(Bolivia, to farmers organizations; Ecuador, mixed with farmer-led NGO programmes; Peru, extension devolved to NGOs)
†
Source: RIVERA 2001,24. The country references should not be interpreted exclusively since different strategies may be pursued in one country e.g. Germany has three distinct extension systems (HOFFMANN, LAMERS & KIDD 2000).
With respect to his classification, RIVERA warns not to associate the term ‘reform’ with something entirely new. Decentralization is widely agreed as a reform strategy, while in some countries extension is historically decentralized. Partial privatization has existed in France since the 1960s. Pluralistic systems have a long history in Finland. “What is new however, is the extent of globalization and the major economic restructuring in both the developed and the developing countries which has greatly tipped the balance between the public and private sectors” (RIVERA 2001,23). A careful look at the Fig. 2.8 reveals that both the non-market reforms and three of the four market reforms are immediately targeted at changing public extensions services while the remaining one refers to fostering the private sector extension with public funds. Furthermore, the market reform strategies might shift between the quadrates i.e. public 25
extension provider might begin with revising, gradually introducing cost-recovery, thus increasing its commercialization. At a point when the public extension is considered to be feasible and fiscally sustainable in private ownership, it will be privatized. After the privatization, the private extension provider might still cooperate with the government, and possibly get subsidized or contracted for serving the public interest. The reform strategies are briefly described in the following sections. But the scheme in Fig. 2.8 is slightly modified and the order is changed. The fostering of the private sector extension is described separately due to the difference that public extension providers are under immediate authority of the government while private extension providers have the right to decide whether they cooperate with the government or not. Thus, reforming public extension services is different from promoting the private sector extension, though many reform measures in practice are focused on both of these targets at the same time.
2.7.3 Non-market reforms of public extension services Decentralization Decentralization means shifting the responsibility for extension from the central government to local units. While a full-scale decentralization i.e. the fiscal and political decentralization of extension is possible in a policy environment that fosters devolution of power, operational planning and administrative decision-making can be decentralized in a less favorable policy environment too. Countries with centralized extension structures may begin with dismantling of these structures and build the decentralized extension structures. Alternatively, both processes may take place simultaneously. Usually, decentralization of extension takes place within the frame of a wider decentralization (RIVERA 2001,28-29; KATZ 2002,85-88; FEDER, WILLETT & ZIJP 1999,17-18). Several positive changes in the extension system are associated with decentralization e.g. transformation of the top-down structure and operation of the public service bureaucracy, decoupling of extension from other agency functions, and increasing the user-orientation. Delegation of responsibility to non-governmental entities Some governments have shifted the institutional and technical responsibility for extension to NGOs, farmers’ cooperatives and chambers of agriculture, or to community organizations as is done in several European and Latin American countries (RIVERA 2001,29). Reducing the governments’ role in decision making is thought to make services more responsible to local conditions, more accountable, more effective and more sustainable. This is often associated with the development of a pluralistic extension system (see 2.6.6). Decentralization is often a prerequisite for effective local participation (HOWELL 1986). Where farmers are well-educated, organized and politically astute, it is easier to entrust them control over extension (cf. HOFFMANN; LAMERS & KIDD 2000,6). Some countries have established dual authority structures with power shared either between the government and farmers’ associations, as in Norway and Sweden, or between the government and a subnational governmental entity as in Japan, South Korea and Taiwan (RIVERA 2001; AMEUR 1994; UMALI-DEININGER 1997; HAUG 1991; NAGEL 1997).
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2.7.4 Rationale and limits of user financing One of the major goals of market reforms, whether targeted at the public sector or the private sector extension, is the introduction or promotion of user financing of extension, whereas in the extension literature the terms ‘user participation’ and ‘financial participation’ are used instead of ‘user financing’ since a fully user financed extension service is supposed to be unfeasible in most countries. Given the tradition of agricultural extension as a public service, user financing indeed is a complicated issue, requiring both justification and feasibility. Thus, before describing the market reform strategies, it seems appropriate to explore the rationale and the limits of user financing. Motives KATZ (2002,32-33) identifies the following motives for user financing: ¾ “Reducing public expenditures for extension, ¾ ensuring effective, demand-oriented, high quality services, better adoption rates of new practices, and accountability of service providers to clients, ¾ fostering empowerment and farmers’ ownership of services, and ¾ improving the chance of financial sustainability of services.” Favorable conditions Besides favorable legal and political framework conditions, user financing requires an open attitude of the farmers to paid services. In a society where farmers have been served by free services offered by the government or development projects for many years, it is difficult to charge farmers for extension. The level of economic development of a country determines the demand for new technologies and improved information. Well developed economies and a high market competition often have strong pressures on producers to gather high-quality information and to apply innovative technologies, and enable them to transform information into improved economic outputs. The market forces in high-income countries reward those farmers with a knowledge-based production system to a greater degree than in low-income countries. Farmers often tend to perceive paid services offered by profit-oriented private providers acceptable while they might be not motivated to pay for services provided by public institutions, development projects and NGOs. Therefore, introducing user financing is easier if the service providers are private enterprises (KATZ 2002,41). However, they will only enter the market if a fair competition is ensured. Competence of advisors becomes more important in association with the user financing since paying users require more proficiency than non-paying users. The advisors have to prove not only their technical expertise but communication and facilitation skills too. In cases where farmers require a service comprising advices both on technology and management, the advisors, who are usually educated in technical matters, should improve their knowledge in business management. In addition, they need adequate organizational skills to help farmer groups, but also to manage themselves (cf. RIVERA 2001,27).
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The farmers are also required to be competent enough to choose right extension providers and to assess the impacts of extension. Both competent advisors and competent farmers are usually available in a society where capacity building is systematically promoted by the state. Eventually, extension contents with obvious impacts on the profitability of the farmers must be available. In places where agricultural research is underdeveloped or the linkage between extension and research is very weak, thus the extension workers having not much to offer their clients, their service is unlikely to meet the requirements of their users. Forms of user financing in the practice Common ways of putting user financing into practice include (KATZ 2002,31): ¾ “Publicly financed extension organizations may ask for a user fee from individual users or groups for specific services of mainly private interest. ¾ Extension systems with public funding and private delivery may include a financial contribution by the clients. ¾ Extension set-ups in FOs or commodity organizations may be partially or fully financed by farmers’ contributions, indirectly through membership fees, levies, earmarked taxes or directly through user fees for services. ¾ Farmers and advisors conclude an agreement according to which the advisor gets a share of the incremental profit resulting from the service or bears a part of the loss. The advisor’s share in the profit would usually supplement his basic salary. The advisor in such a system may be from the public as well as the private sector.” Feasibility and limits Farmers usually pay for extension if (i) they are able to afford the service, (ii) they believe that the benefits of the service are more than the costs, and (iii) the service has a ‘private good’ character. Inability to pay for extension is a typical issue for developing countries where many subsistence farmers do not have cash beyond their essential needs. Even if the service promises high impacts on their profitability, their low level of liquidity makes it unaffordable. It therefore becomes necessary for the government to finance the extension services for subsistence farmers. In addition to allocating financial resources directly to extension providers, some innovations for involving subsistence farmers in paid extension services have been developed, including those approaches with a non-cash participation of the farmers. They will be described in the later sections. Besides having a better liquidity, larger farms i.e. farms with larger marketable outputs are able to benefit from extension to a larger extent than smaller farms since they can spread the total cost of extension into low per-unit costs. Therefore, large farms usually have more incentives to pay than small farms, provided the quality of the service meets their requirements. Moreover, most large and medium farms are located in areas with favorable agro-ecology and good infrastructure. These conditions enable high impacts of extension, thus encouraging the farmers to pay (UMALI & SCHWARTZ 1994,25). 28
The involvement of small and smaller medium-scale farms in the paid extension service is made possible by approaches that enable the extension services to receive adequate charges, but keep the charge per farmer low at the same time. FOs employing or contracting advisors for instance, take advantage of economies of scale. Another possibility is to stratify the client market and to target public resources at small farmers while gradually charging medium and large farmers (UMALI & SCHWARTZ 1994,25). The expected impact of extension, and thus the motivation of the farmers to pay for it regardless of the farm size - depend on the target commodity. For cash crops farmers might need extension to a higher degree than for low-value crops. For growing new crops a farmer would need professional assistance while he might not need help for crops he has been growing for years. Farmers are generally motivated to pay for services with a ‘private good’ character while not for ‘public good’ services (UMALI & SCHWARTZ 1994; KATZ 2002). Therefore, there is no motivation for the private sector to provide ‘public good’ services. Although it is difficult to define if a service offered or information delivered by an extension provider is a public good, researchers often agree that general agricultural information is a public good. “General information and advice on commonly produced crops and animals constitute extension services that can be classified as largely public goods. If one farmer applies a new practice that does not require too complex changes in the cropping system, other farmers can easily copy it. Farmers are usually not willing to pay for such services, at least not the full costs” (KATZ 2002,25). Therefore, the delivery of general agricultural information will have to remain a public responsibility (UMALI & SCHWARTZ 1994,23). HOFFMANN, LAMERS & KIDD (2000) give further examples for extension functions that will not be absorbed by commercial extension, thus remaining in the public responsibility: education and training for basic qualifications, strategic experiments and pilot programmes, assignments in remote areas, unattractive subjects, issues concerning integrated rural development, and the conservation and stabilization of the natural resources. In short, it is appropriate to spend public money for financing extension services if the services create benefits for the broader society but are not paid by the users. “There is a public interest in seeing certain services being offered and used, and if the market forces do not provide them, public funds need to do it” (KATZ 2002,27). The ‘public interest’ generally comprises poverty reduction and ecological sustainability (UMALI & SCHWARTZ 1994,26; KATZ 2002,27-29). However, extension services are often targeted at both the private and the public interest. Supporting a farmer to increase his incomes is in the interest of the individual in the short term, but might be in the public interest if considered in the long run. If the farmer has more income, he will pay more taxes, improve the food supply, create jobs, and thus contribute to poverty reduction. A final analysis of user financing in connection with the public and private interests therefore suggests that “most services should be financed by a mix of public and private funds, with the cost shared in much the same ratio as the attached interests” (KATZ 2002,28). It is recommendable to negotiate the user fee and the payment conditions situation-specific, on the basis of the actual cost of the service, the degree of public interest in the service, and the value that users attach to it (KATZ 2002,45; KIDD, LAMERS & HOFFMANN 1998,9).
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2.7.5 Market reforms of public extension services Revision of public sector extension The least radical way of reforming the public sector extension is to revise it by downsizing and introducing minimum cost recovery. The USA for instance, shifted away from a discipline-oriented, management-by-objectives approach to an issue-oriented management approach of extension in the late 1980s. Several other countries e.g. Australia, Canada, Portugal and Spain maintain extension units in their ministries of agriculture and continue to provide public sector funding and delivery of extension (RIVERA 2001,25). Cost-recovery Cost-recovery through user charging is being introduced in a number of public extension services. The public extension services in over a half of the OECD member countries receive at least 20% while those in Finland, Norway and Denmark even 50 to 100% of their finances from their users (cf. RIVERA 2001,26). Besides easing the burden on the public purse, the cost-recovery strategy serves as a stimulus for the development of private sector participation in service provision and aims at making the service accountable to farmers (KIDD et al. 2000,97; FEDER, WILLETT & ZIJP 1999,19). However, the majority of small farmers and a considerable share of medium farms producing low-value crops in developing countries cannot pay for extension. In areas that are unfavorable for farming, paying for extension might be unprofitable for the farmers due to the limited potentials of yield increases (KIDD et al. 2000,97; CROWDER 2000; RIVERA & CARY 1997; UMALI-DEININGER 1996; cf. 2.7.4). Researchers tend to agree that market stratification is an appropriate strategy to reduce both fiscal and liability problems (RIVERA 2001,26; FEDER, WILLETT & ZIJP 1999,20; UMALI-DEININGER 1996; WILSON 1991). In the Meru district of Kenya for instance, users of animal health services in each Division were involved in a consultation aimed at determining different subsidy levels to be applied (KIDD et al. 2000,97). Privatization and Commercialization Privatization implies the full transfer of ownership, funding and delivery of extension services to the private sector (RIVERA & CARY 1997; RIVERA 2001,27). While examples of full privatization are rarely available, the case in The Netherlands is frequently referred to in the literature. In that case, the government privatized its extension services by first transferring them with initial financial support to work with farmer associations, and more recently assigning responsibility for these services to a private company, the DLV (RIVERA 2001,27; FEDER, WILLETT & ZIJP 1999,25; SADIGHI 2004,937). Privatization relieves the government of a fiscal burden, often improving the delivery of services once the private sector has taken over the function (RIVERA 2001,27). “All privatization efforts report improvements in accountability, usually expressed in terms of client orientation and satisfaction.…All privatized efforts claim improved efficiency, costeffectiveness, and reduced public sector costs by servicing the needs of farmer clients who can afford to pay for the information.” (FEDER, WILLETT & ZIJP 1999,24).
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However, the private sector tends to serve ‘better-off’ commercial farmers and neglect less commercial farmers (WORLD BANK 1997; FEDER, WILLETT & ZIJP 1999,24). Thus, fully privatized extension is economically not feasible in areas with a large base of small or subsistence farmers (UMALI-DEININGER 1996). In the case of commercialization, authority is given to a government-commercialized public agency (RIVERA & CARY 1997,204; RIVERA 2001,27). Prominent examples of commercialized public extension organizations are the ‘Agriculture New Zealand’ Ltd. and the ‘Agricultural Development Advisory Service’ (ADAS) Consulting Ltd. in England (FEDER, WILLETT & ZIJP 1999; OECD 1999). In the case of the ‘Agriculture New Zealand’, FEDER, WILLETT & ZIJP (1999;19-20) report improved performance and job satisfaction of consultants, grown number of farm consultants throughout the country, reduced public burden, improved accountability and ability to trace cause and effect by involving advisors in the entire production-processing transporting-marketing chain, a stronger client-orientation and a concern to produce results rather than to simply engage in activities. While the immediate risk of privatization or commercialization of extension services is to neglect smaller farmers, there is another risk of less openness in the agricultural information exchange due to the competition. With respect to a privatization attempt in Albania, SCHULTZ et al. (1996; cited by FEDER, WILLETT & ZIJP 1999,26) record that it created “competition rather than cooperation within the knowledge system, hampering communication with research, education, farmer organizations, private consultants and suppliers”. This might be less damaging for farmers in the industrialized countries where a great deal of information is available from multiple sources, but many farmers in the developing countries require more open access to services that would otherwise not reach them (HOFFMANN, LAMERS & KIDD 2000,6).
2.7.6 Institutional pluralism Since a full privatization of extension services is not feasible in many countries, a new trend has come to the extension research and policy: the institutional pluralism. Although it is the generic term for the involvement of a variety of stakeholders in the agricultural extension, its key issue is the combination of the private sector delivery with public funding (KIDD, LAMERS & HOFFMANN 1998; RIVERA 2001; FEDER, WILLETT & ZIJP 1999,2122). Public funds can be channeled to an extension organization directly as supply-side finance or via the users as demand-side finance (Fig. 2.9). A. Supply-side financing Although supply-side financing is the common form of financing in most agricultural extension systems, an unconventional form of supply-side financing has been developed along the institutional pluralism: contracting-out (also termed as ‘outsourcing’ and ‘service mandates’). This is often done in order to integrate the private sector; usually profitoriented extension providers, NGOs, producers’ associations or community organizations, into extension systems. The clientele is often specified (KATZ 2002,50). The services to be contracted out have different extents depending on the need and the possibilities e.g. the availability of extension providers. In Morocco, for example, only staff training and video production are contracted while more comprehensive contracting 31
has been attempted in countries as Estonia, Turkey, Madagascar, Costa Rica and Mexico (FEDER, WILLETT & ZIJP 1999,22). In Mozambique, the delivery of extension services in pilot provinces is contracted to NGOs (RIVERA 2001,26). Figure 2.9: Supply-side and demand-side financing of extension Users/clients
Users/clients
$ SERVICES
SERVICES ACCOUNTABILITY
Extension organization
$
Extension organization
ACCOUNTABILITY
$
Sources of finance
a. Supply-side financing
Sources of finance
b) Demand-side financing
Source: KATZ 2002,49
Major motives for the contracting-out of extension services include the reduction of public expenditures, the enhancement of the service quality, the development of service markets and the overcoming of weak government institutions (KATZ 2002,53). However, experiences suggest that the expectations are not always fulfilled. Success depends on many factors including the formulation of contracts, management capacity and technical competence of the service providers, but also on the fairness of tenders, financial participation etc. While the government is freed of the extension delivery, it retains the task of controlling and evaluating the work of extension providers. It should also ensure that advisors are provided with adequate training so that there is a real chance for better services. Although contracting-out is supposed to increase the accountability of extension, contracted providers tend to be more accountable to the government than to the farmers. Some providers may manipulate evaluations in order to get another funding. “Written reports can easily be made to say the right thing, and successful extension can always be simulated in time for an evaluation visit” (HOFFMANN & GERSTER 2006,4). Also, due to the short-term contracts the providers tend to focus on quick and tangible activities. B. Demand-side financing In this case the funds are channeled to the farmers, who then buy services from an accredited extension provider. This scheme suits to services with a high degree of private interest and requires financial participation of clients. Contracts are usually made between the clients and the funding source, and often between the clients and the service provider too. Common forms of demand-side financing are vouchers and refunding, whereas voucher systems are more frequently referred to as a promising approach (KATZ 2002,56). 32
One of the immediate goals of the demand-side financing is to make extension accountable to the clients. In order to ensure and increase their incomes the service providers are motivated to respond to the clients’ demands. Provided that an adequate selection mechanism is set up, the public funds are directed to the most promising initiatives and services. Many farmers who otherwise could not afford or who would not be reached by the private extension providers are served due to their increased purchasing power. However, these expectations can be only fulfilled if a number of preconditions are met. Both the quantity and the quality of service providers are crucial for the service market development. Also, the clients must be able to identify and articulate their demand, negotiate with the service providers, and to control the service quality. Thus, demand-side financing programmes often need to be complemented by capacity building on both the client and the service provider sides as well as participatory investigation and exploration of new opportunities. Public funding in the demand-side financing programmes is often considered as temporary. The clients are supposed to take over the full financial responsibility after the service markets have developed. However, the effectiveness of kick-off subsidies as a tool to foster the development of service markets is questionable if the purpose of a demand-side financing intervention is related to a persisting public interest. Thus “…the duration of demand-side financing interventions does not necessarily need to be only temporary, but should be in accordance with the duration of the public interest in the concerned services” (KATZ 2002,60). Effective controlling mechanisms including accreditation of extension providers, regular monitoring of their activities, and unbiased evaluation of results and impacts are essential for the success of demand-side financing. Due to the complexity of the service markets, the administration may require both more competence and more investment, which is justified with regard to the public interest.
2.7.7 Fostering private sector extension Fostering the private sector extension is a long-term process. New institutions and institutional arrangements such as public-private partnerships are involved (FEDER, WILLETT & ZIJP 1999,21). Although both the delivery and the funding of the extension services by the private sector are generally preferred, in areas with a high degree of public interest in extension services but a weak private sector a mix of strategies shown in the Fig. 2.10 appears to be more appropriate than a total privatization. Figure 2.10: Mixed strategies for financing and delivery of extension FUNDING
DELIVERY
Public Public Private
Private
Free public extension service
Cost-recovery by government agents
Subsidies to private extension, extension contracts, voucher schemes
Private enterprise
Source: KIDD, LAMERS & HOFFMANN 1998,8
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Governments need to move away from service delivery toward ensuring an enabling pol1icy environment, coordinating and facilitating the work of other players, assisting farmers in negotiating terms of contracts, monitoring the quality of extension work, and exercising financial control (FEDER, WILLETT & ZIJP 1999,22). “In the short-term, steps must be taken to improve in priority-setting, financial management and user-orientation in the public sector and to decentralize wherever possible” (KIDD, LAMERS & HOFFMANN 1998,10). Where political, economic, legal and infrastructural conditions for the development of the agricultural sector, particularly those for private sector development in the agricultural sector are lacking, the scope of extension-type programmes is limited and wider reforms will be necessary (KIDD et al. 2000,101). The development of private sector extension requires capacity building for service providers. The government should provide framework conditions that enable regular training of advisors in technical know-how, extension methods and organizational management. Where market entrances involve high economic risks, the government may share the risk of new extension providers by subsidizing. In most cases this investment will have adequate returns since the private sector will take on the many tasks of the government at a later stage of its development. Subsidies may also be allocated to education institutions that train and coach advisors. In the case of institutional pluralism, demand-side financing must not be automatically preferred to supply-side financing despite its advantages (cf. 2.7.6). It must always be the rule that demand-side financing is only feasible if there is a real competition between service providers and if the farmers really have the capacity to articulate their needs. Particular attention must be given to the risk that farmers often seek short-term solutions instead of investing into measures with long-term effects. The strengthening of farmers’ groups, federations and other community-based organizations and enabling them to more actively participate in extension is required for the successful implementation of institutional pluralism (AXINN 1988; ANTHOLT 1994; KIDD, LAMERS & HOFFMANN 1998,10; cf. FEDER, WILLETT & ZIJP 1999,22). Within the general frame of its human resource development task, the government should support such organizations both financially and logistically. Without organizational development, other mechanisms allowing farmers a greater role in decision-making and resource allocation will be largely ineffective and open to manipulation by extension providers and more powerful farmers (KIDD, LAMERS & HOFFMANN 1998,10). Eventually, developing private sector extension requires situation-specific strategies (KIDD, LAMERS & HOFFMANN 1998,10). No single reform measure can be considered a panacea, but all are ‘work in progress’ (RIVERA 2001,13). “Several areas of reform might be combined to formulate a country’s policy, depending upon that country’s situation and the way the government views its needs” (RIVERA 2001,30). Despite positive opinions on the reforms in some countries (AMEUR 1994; UMALI & SCHWARTZ 1994), KIDD et al. (2000,100) warn not to consider these efforts as models, “despite much promotional rhetoric”. They proceed: “Poorly considered transfer of programmes from one situation to another based on promotion of the new ‘symbolic capital’ of pluralism is likely to run into problems.”
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3 Material and methods 3.1 Study area Ulaanbaatar, the capital city of Mongolia, is located in the northern part of Mongolia in the latitude 48°N and the longitude 107°E. The city stands 1,350 meters above sea level and covers an area of 4,704 km², which is 0.3% of the country’s territory. The urbanized area of the city is 224.6 km², which is 4.8% of the total area. Agricultural land is 280 thousand ha and includes 269 thousand ha of grassland (NSO 2006; Fig. 3.1). Figure 3.1: Location of Ulaanbaatar on the country map
Ulaanbaatar is the coldest capital city in the world. The annual average temperature is 0.3°C, and fluctuates between -21.8°C in January and 16.9°C in July. The amount of precipitation varies from 180 to 260 mm per year (NSO 2006). The city had a total population of 965,300 by the end of 2005, which was approx. 38% of the country’s population. The annual growth rate of the population between 1990 and 2005 was 3.5%. The population growth is affected by the increasing immigration from rural areas. While the number of immigrants was 5,157 in 1990, it was 40,760 in 2003 and 68,808 in 2004 respectively. The population density per km² is 195 (DSIRU 2005). The population of Ulaanbaatar consists of a large share of young people. An approximately share of 33.5% of the city population comprises children under 16 years, 59.1% is of labor age (16-59 years old), and 7.4% is of pension age (60 years and more). In 2004, the city had 205,498 households, of which 83,658 were living in apartments and the remaining were living in small houses or yurts (DSIRU 2005). About 48% of the households are connected to water pipes (NSO 2006). The city has six urban and three peri-urban districts, which are divided into 121 community units called khoroo. Peri-urban settlements e.g. the khoroo-centers are unofficially called villages, although the term also includes the immediate surrounding areas.
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The GDP of the city was $1 million in 2005, which was 54% of the country’s GDP. The GDP per capita was $1,271 in Ulaanbaatar while the national average was $746. Agriculture contributes for 0.8%, industry and construction for 29.2% and services contribute for 70% of the city’s GDP respectively. About 25% of the city population is living below the poverty level (NSO 2006). By the end of 2004, Ulaanbaatar had 6,881 households with livestock and a total stock of 226,358 animals: 40 camels, 17,588 horses, 45,370 cattle, 82,529 sheep and 78,101 goats. Most of the animals were registered in the districts Songino-Khairkhan, Baganuur, Bayanzurkh and Nalaikh (DSIRU 2005).
3.2 Overview of the research procedure The study started with a review of extension literature and publications on dairy farming in Mongolia in February 2004. A first overview of the dairy farming sector in the study area was gained by the evaluation of the empirical data that were obtained by the World Bank survey in 2003. On the basis of this evaluation, plans and questionnaires for the field survey were elaborated. The field survey was carried out between March and July 2005. Secondary material was collected from various sources, the number and distribution of dairy farms were estimated through numerous trips to possible farming places, different stakeholders were interviewed and a sample farms’ survey was conducted. Between August 2005 and February 2006, the data from the field survey were evaluated. An adequate evaluation, however, was not possible due to gaps in the sample farms’ survey that were revealed later. Thus, a second field survey was conducted between March and June 2006. This survey filled the gaps, and enabled a more comprehensive knowledge of the situation for developing extension strategies. The final evaluation of the study results was made between July and November 2006. The strategies for dairy extension work were elaborated between December 2006 and February 2007. The final version of the thesis was prepared between January and August 2007.
3.3 Collection and evaluation of secondary data The report of the World Bank survey on dairy farming in Mongolia was downloaded from the website of the World Bank (www.worldbank.org). While the sample consisted of 100 farms in different areas, the data of only those 83 farms located around Ulaanbaatar were evaluated. Descriptive statistics were used to analyze the data on the production and management of the farms. The opinions of the authors of the original survey report were not included in the evaluation since the immediate aim of the latter was to analyze the empirical data. Due to limited availability of online resources on the subject of the study most of the secondary material was gathered in Mongolia. Both written and oral information were used for the analysis of the recent history of dairy farming in the study area and the characterization of its business environment. In cases where oral information did not fit to written information on the same topic, the latter was preferred. 36
The evaluation involved structuring and re-structuring of the gathered information as well as descriptive statistics e.g. for the market analysis. The currency used in the data evaluation is the US Dollar ($). It was preferred to the national currency Tugrik due to its relatively stable exchange rate.
3.4 Key informant interviews A total of 26 persons were interviewed. Eighteen interviewees including the key farmers were chosen by the recommendation of the Dairy Farmers’ Association. The remaining interviewees were chosen on the base of their competence. The interviewees consisted of the following groups: ¾ Farmers (eight farmers in six villages) ¾ Former employees of the state-run dairy farms (five) ¾ Researchers of the Mongolian State University of Agriculture (five) ¾ Policy makers (four high ranking officials of the Ministry of Food and Agriculture and one official of the Food and Agricultural Department of the Ulaanbaatar city) ¾ Local governors (two) ¾ Other (an expert of the US-American NGO “Mercy Corps”, and the secretary of the Dairy Farmers’ Association) While the expert interviews involved standardized questionnaires, and thus were clearly structured, the farmer interviews had a minimum level of structure. Interview guidelines were used instead of questionnaires. Since the farmers’ responses to the pre-defined questions often switched to other topics, the guidelines could not always be followed, yet helped to come back to the issues and make the interviews complete. The questions of the expert interviews referred to the recent history and the present situation of the dairy farming sector, and to their opinions on the political and economic importance of the sector as well as its major obstacles and development perspectives. Farmers were asked about their economic situation, major problems and whether they are involved in institutional networks. They were also asked about the number and structure of dairy farms in their areas. Since the expert interviews provided relatively similar responses, only a summary of the responses was included in the written results of the sector analysis. The key farmer interviews were mainly used for the preparation of the sample farms’ survey.
3.5 Conduction and evaluation of the sample farms’ survey Before planning the sample farms’ survey, visits to all possible places with dairy farms were arranged and the total number of dairy farms in the study area was estimated. In addition, the key farmers’ interviews contributed to the final estimation of 375 farms.
37
Since both the evaluation of the World Bank survey and the key farmer interviews did reveal a quite homogenous system of dairy farming, a sample size of 30 was considered as sufficient for a detailed analysis. The sample represents eight percent of the farms in the study area. A pre-defined sample design was used for choosing farms for the sample. Small (up to 15 cows) and medium farms (15 to 30 cows) build the majority of the sample. The latter consisted of 14 small farms, 15 medium farms, and one large farm with 73 cows. While the large farm was chosen selectively, the remaining farms were chosen randomly, whereas attention was given to involving farmers from various places. The random selection was usually done by visiting a pre-defined place, meeting a random farmer and asking him about possible candidates for the sample analysis. When a farmer refused the interview, he was required to find a substitute for him. Each interview was done in two phases. Two questionnaires were prepared: one for gathering detailed quantitative variables of farm and household as well as information on the production technology and marketing, and another one for qualitative information on farm management, perception of problems and outlooks for farm development. The author made the experience with first five to six farmers that they were willing to fill out the questionnaires by themselves; but in this case the quality of the data was inadequate. Therefore, all questionnaires were filled out by the author himself through structured interviews. The interviews were frequently interrupted by several occasions including the necessity of the farmer to transport milk to the city. In this case, the missing data were obtained with an additional interview at a later time. In summary, a half of the farmers were interviewed twice, and the remaining farmers were interviewed three times. A preliminary evaluation of the questionnaires was inhibited by several reasons. A recurrent reason was that the details of the data given by the farmers did not fit to each other e.g. the assumed feed rations were often obviously too high for the milk production level and vice versa. Thus, the sample farms were visited again and the data of each individual farm were adjusted. A mix of methods was used for the evaluation of the sample farms’ survey. The most frequently applied method was descriptive statistics, whereas a comparison of the farms was made in most cases not individually, but between the mean values of farm size classes. Some qualitative data were described without the use of statistics. The first step of the evaluation was the characterization of the farms and their production systems using quantitative criteria available from literature. The data were then organized into the categories ‘socio-economy’, ‘entrepreneurship qualities of the farmers’, ‘dairy management’, ‘economy of milk production’ and ‘farm economy’. The latter two categories consist of the economic evaluation of the data that resulted from the evaluations in the previous categories. The socio-economic assessment of the farms was done by means of descriptions and descriptive statistics. The farms were compared with each other, and with the average statistics of the region e.g. for characterizing their living standards. The entrepreneurship qualities of the farmers were described and compared by means of descriptions and descriptive statistics too. A qualitative assessment of the relationships 38
between the farmers was conducted on the basis of standardized interviews and personal responses. In the part ‘dairy management’, the conditions and operations of production processes are described and compared. Among the sections of dairy management, the nutrition management particularly demanded a detailed analysis, not least due to the lack of secondary data on the nutritive values of the different feedstuffs. Numerous estimations were made as described in the section 4.4 in detail. The economic analysis was performed in two stages. In the first stage, the profitability of the production was analyzed on the level of a single lactating cow, using gross margin and net profit per cow and year as the main measures. The gross margin was used for a comparison of the farms and for conclusions. A sensitivity analysis was performed in order to reveal the effects of potential market risks. Two risk factors: changes of the milk price, and changes of the feed price, were chosen and the reactions of both the gross margin and the net profit to the risks of these factors were quantified. In a conclusive analysis, the profitability levels of the farms were explained in connection with major variables of production technology. The farm economy was characterized by the total gross margin, the farm income, and the management income as the measures of profitability, and the cash surplus as a measure of liquidity. For the calculation of liquidity, an intermediate measure was created and named ‘consumable income’. A linear regression using the management income as the dependent variable was performed. Finally, the opinions of the farmers about their problems, development perspectives and their requirements on external support i.e. dairy extension service were summarized.
3.6 Development of strategies for extension work Based on the theoretical concepts and international experiences gathered from extension literature, and using the sector analysis as the empirical data base, extension contents and methods, and strategies for the establishment and the management of an extension organization were suggested. A pilot project of a commercial dairy extension organization was proposed and its profitability was pre-evaluated by means of a multi-period investment appraisal.
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4 Development and present situation of the dairy sector in Ulaanbaatar 4.1 Dairy farming in the past Mongolia has a tradition of pastoral animal husbandry. The development of stationary dairy farming is related to the urbanization process in the 20th century. The population in Ulaanbaatar city grew from 60,000 in 1910 to 224,000 in 1963. Some 200,000 people were living in province towns in the mid 1960s (DSIRU 2004,24). The demand of the urban population for milk and dairy products was no longer met by the supply from herders. By 1960, Mongolia had 1.9 million cattle and the total milk production was 227.7 million liters (STATE STATISTICAL OFFICE OF THE PEOPLE’S REPUBLIC OF MONGOLIA 1991,18). The underdeveloped infrastructure did not allow transportation of milk from remote areas in the 1.6 million km² territory to urban centers. Thus, the government decided to set up large-scale dairy farms in peri-urban areas. Purebred dairy cattle, farm equipment and farming know-how should be introduced from the Soviet Union and the Eastern European countries (JADAMBA & MINJIGDORJ 2003,17). In 1968, the first dairy farm was set up near Darkhan city in Selenge province. The farm had 200 cows. By 1979, 23 dairy farms had been established and produced 18 million liters of milk annually. In 1990, there were 36 large-scale, mechanized dairy farms with 200 to 1,200 dairy cows in 32 places, with a total of 19.6 thousand cows. The average annual milk yield of a farm cow was 2,558 l, which is eight times the yield of a Mongolian native cow (JADAMBA & MINJIGDORJ 2003,57 and 158). The dairy farms had approx. 1.7% of all cows in the country, but contributed for 19.5% of the total milk production. Industrial dairy production took a share of 25% in the total production (Tab. 4.1). Table 4.1: Outputs of the dairy industry in comparison with total outputs of the country in the period between 1960 and 1990† Outputs
1970
1980
1990
Total, million l Industrial, million l
227.7 7.7
220.6 10.8
225.7 24.8
315.7 61.5
Total production per capita, l Industrial production per capita, l
239.1 8.1
176.9 8.7
140.2 15.4
152.1 29.6
unknown
140
102
118
Milk consumption per capita, l †
1960
Data converted to fluid milk amount. Source: STATE STATISTICAL OFFICE OF THE PEOPLE’S REPUBLIC OF MONGOLIA 1991,19
There were five dairy farms in the Ulaanbaatar area: two 400-cow farms in Gunt and Khuandain am (Gachuurt), and three 800-cow farms in Shar khad, Jargalant and Gachuurt villages. The farms had a total of 5,312 dairy cattle, including 2,849 cows. They produced 7.2 million liters per year at an average milk yield of 2,478 liters per cow. In Tuv province, which surrounds Ulaanbaatar, 16 dairy farms with eight thousand cows were supplying 17 million liters per year during the 1980s (JALDA 1995,161).
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The milk processing plant in Ulaanbaatar was the largest in the country, and had a processing capacity of 60 million liters per year. It was set up in 1985 and was supplied by the farms located in Ulaanbaatar, and in the Tuv, Selenge and Khentii provinces. However, the capacity of the plant was never exploited. In 1990, the plant processed 38 million liters (JALDA 1995,163). Despite the high level of mechanization and productivity, the dairy farms were not profitable and thus, were massively subsidized by the government. The rapid transformation from a centrally planned economy to a market economy in the early 1990s was accompanied by much confusion as well as a deterioration of the country’s economy. The dairy farming sector almost lost its viability. The privatization began in 1991. The dairy farms became stock companies and the workers became shareholders through their vouchers that were delivered by the state1. But in fact, the privatization was only formal. It was and is still unclear how much asset each shareholder owned. They could not profit from their shares, and even not receive their salaries since the farms had a permanent shortage of funds after the subsidies were stopped. Many of the farms suffered a decline in their milk production, and were not able to ensure sufficient feed for the cattle. Spontaneous sells and disappearance of cows and farm equipment became frequent. Some farms raised bank loans, but could not pay-off. The banks in turn, took the farm assets. Farm facilities were sold as scrap metal and cows were slaughtered. Between 1990 and 1992, some of the farm employees started their own farming business. They purchased farm cows in addition to the up to five cows they had before and attained a herd size of about five to ten cows. They soon quitted their jobs in order to work fulltime at their farms. Between 1993 and 1995, the large farms were finally dissolved. Although no documentations on the privatization process are available, the distribution of the farm capital was obviously unfair in most cases. Farmers in the study area who used to work at the state farms commented very critically during the survey: high-ranking farm employees had received most cows and facilities while others received only one or two cows or even nothing. The vouchers had been forgotten. Those who wanted to own more were required to pay for or raise bank loans, which however, was not possible for them due to the lack of collateral, and their fear of being not able to pay-off and being sent to prison. Raising a loan was indeed unusual for most Mongolians in the early 1990s. In the case of the 400-cow farm in Khuandain am for instance, the zoo technician owned 260 cows while many farm workers received nothing. But on the other hand, those who received such a great amount of farm capital had the possibility and the courage to raise bank loans. In the case of Jargalant farm, the situation was even worse. The former zoo technician, now a farmer stated to have received no cattle or assets from the farm. Most of the 800 farm cows had already died or disappeared before 1994.
1
According to its privatization programme, the Mongolian Government distributed three red and one blue vouchers to every citizen of Mongolia for free in 1991. The red vouchers, with face value of 1000 Tugrik were for the privatization of small businesses including the dairy farms. The blue vouchers with face value of 7000 Tugrik were for the privatization of large enterprises. The red vouchers, however, were freely tradable and thus, their market value diverged.
41
Having seen the failure of the privatization at most dairy farms, the government resorted to the international development assistance in order to regulate the privatization of some farms in 1994. Consequently, the DANIDA-project ‘Restructuring of mechanized dairy farms’ was implemented at seven farms including three in Tuv province, each one in Uws, Bayan-Ulgii, Selenge provinces and Ulaanbaatar between 1994 and 1999. In 1994 and 1995, each of the 99 target households, of which members were employed at these farms, received eight to ten cows, one million Tugrik ($2,237 at the exchange rate of 1995) for cattle housing and fencing, horse scythes and rakes to the value of $600 to 800, and horse driven carts and milk containers. The project supported the farmers with intensive training and provided soft loans. Support was also given for the establishment of ten dairies. In addition to the direct enterprise support, two representative organizations were set up; the Dairy Farmers’ Association and the Dairy Processors’ Association (DANIDA 2000). This project is considered as one of the milestones in the recent history of dairy farming. Out of the 99 farms established by the project, 60 were reported to be still operating in 2003 (SCANAGRI SWEDEN & CPR MONGOLIA 2003,25). In Nariinii am for instance, 19 farms were set up in 1994. By 2005, seven of them were operating. Meanwhile, Nariinii am became the place with most dairy farms. Apart from this project, no relevant measures were taken to prevent the break-down of the sector. Most of the farms emerged from the former dairy farms did not succeed. Since feed was not available, the farmers tried to keep the dairy cattle on a year-round pastoral basis, which is inappropriate for special dairy breeds. Most farmers did not even know how to build a cow barn. The farmers also lacked entrepreneurial skills. In addition, the state-run breeding programmes were stopped. The extensive form of dairy farming resulted in high mortality and low productivity of the cattle. The dairy processing industry broke down. The industrial milk production fell from 61.2 million liters in 1990 down to 1.8 million liters and 1995 and 1.5 million liters in 2000 (MFA 2004,8). Nevertheless, the situation slightly started to turn in the late 1990s, along the relaxation of the national economy. By 2000, the GDP had started to grow. The real GDP growth rate was -9.2% in 1991, 6.3% in 1995 and 3.2% in 1999 respectively (MONGOL BANK 2006). Both rural and urban people had attained a better insight into the market economy and started to run own small and medium-scale businesses. Although most dairy farms had given up, few successful farms including some of those supported by the DANIDA project started to attract attention in their areas. After the herders lost 11 million animals during three consecutive harsh winters between 2000 and 2002, it became doubtless that semi-stationary livestock production is less vulnerable, thus more sustainable than the pastoral animal husbandry. Since 2000, many dairy farms have emerged around Ulaanbaatar. Some neighbors, relatives and friends of established farmers eventually started up their own farms. Those who had kept a few cows for subsistence expanded their herds. According to the statement of a farmer in Nariinii am in the newspaper ‘Rural business news’, issue 03/2002: “A semiintensive dairy farm with 15 cows in Nariinii am makes more profit than a herdsman with 1000 cattle in Western Mongolia”, most dairy farmers were content with the profitability of their farms. 42
In 2002, the US-American farmer Bill Yodor set up a dairy farm in Udleg village (in the Tuv province, but on the boundary of Ulaanbaatar), being funded by the ‘Joint Christian Service’. His farm, but his barn in particular, set a suitable model to both start-up and expanding farms. The 20-cow barn was designed by the extension service of the University of Pennsylvania and was built with an investment of $4,000 (SAMDANDOVJ et al. 2003,27). The dairy management on Yodor’s farm was documented and praised by many researchers as well as the mainstream press. A booklet describing all details of his farm was issued in 2003. This farm is considered as another milestone in the development of dairy farming in Mongolia. Since 2004, the farm is owned by a Mongolian farmer. People from all over the country have visited this farm. Not least due to the Yodor’s farm including a two-floor house, the peasant dairy farming in peri-urban areas has gained the image of a modern business enabling both good profits and a comfortable living in contrast to the pastoral animal husbandry. Not only rural migrants, and peri-urban locals, but also many urban dwellers started up their family farms. In addition, investors from non-agricultural businesses are starting to invest in dairy farming. By July 2006, a 100-cow farm had been set up in Gunt village in Ulaanbaatar. Another 200-cow farm was planned on the ruins of the former 800-cow farm in Jargalant village and the repair had begun. The dairy processing industry appears to recover. The industrial milk production increased from 1.5 million liters in 2000 to 7.1 million liters in 2005 (TUNGALAG & ENKHBAYAR 2006).
4.2 Number and distribution of dairy farms by 2005 There are no reliable statistics on the number of dairy farms in the Ulaanbaatar area. Different sources report different data. The number of cows appears to be the main criteria for defining a dairy farm. But there is no commonly agreed threshold. Different estimations are made by using different criteria. Some reporters consider households with more than eight cows as dairy farms while others count households with more than ten cows. Official statistics report 74 dairy farms in the Ulaanbaatar area. The total number of dairy cows is reported to be 1,235, resulting in an average of 17 cows per farm (NSO 2006,48). The Food and Agricultural Department of the Ulaanbaatar city has a registration of 77 dairy farms. Although the farms have four to 51 cows, farms with 11 to 20 cows dominate. Only 21% of the farms have more than 20 cows. The average lactation yield is 2,000 l (FADU 2005). The author, however, could estimate more farms than reported by the sources above during his trips. Most farms are located in 12 places in the Ulaanbaatar area and in the Tuv province. While Gachuurt, Khuandain am, Tuul, Gunt, Khandgait, Jargalant, Nariinii am and Shar khad villages are within the boundaries of the Ulaanbaatar area, Udleg and Mandal belong to the Batsumber sum (district) and Bayanchandmani and Bornuur are centers of the sums with the same names in the Tuv province (Fig. 4.1). In these places, except for Tuul, Khandgait and Bayanchandmani, state owned dairy farms had existed before 1992. Nariinii am, Bornuur and Mandal belonged to the target areas of the DANIDAproject ‘Restructuring of mechanized dairy farms’ (cf. 4.1). 43
A distinguishing of the places in and around the Ulaanbaatar area is not necessary in this case since there are no substantial differences between the market and infrastructure conditions in these places. Shar khad for instance, belongs to the Ulaanbaatar area although it is more distanced from the city than Bayanchandmani and Udleg. The farmers in Bornuur, Bayanchandmani and Batsumber (Udleg and Mandal) sell their milk in the Ulaanbaatar city as do the farmers within the Ulaanbaatar area. Figure 4.1: Location map of dairy farms around Ulaanbaatar
Source: Illustration made by the author by means of the programs Google Earth 4 BETA, Adobe Photoshop 7.0 and Microsoft Power Point 2002.
The above figure also illustrates the traffic conditions in each place. Regular busses and taxis to the city are available in Tuul, Gachuurt, Khandgait and Jargalant. Gunt is about 10 km from the nearest bus stop. Jargalant, Udleg and Mandal are reachable by both train and car from the city. Shar khad and Nariin are reached by car via Jargalant. Bayanchandmani and Bornuur are located along the vertical paved road line in Mongolia. The dirt roads to Khuandain am and Khandgait are relatively less vulnerable to damages caused by rainfalls, differently from the dirt roads to Gunt, Nariinii am, Shar khad and 44
Udleg, which are strongly damaged due to the loamy ground and through the intensive traffic of trucks. Smaller cars cannot drive on these roads after heavy rainfalls. At average speeds of 60 to 80 km/h on the paved road and 30 to 40 km/h on the dirt roads, a journey from the city to Khuandain am, Gunt, Jargalant or Bayanchandmani takes about an hour, to Nariinii am an hour and 15 minutes, to Udleg, Shar khad and Bornuur about 1.5 hours, and to Mandal about two hours. All other places are reached within less than an hour. Two criteria were set to define a dairy farm: i) the availability of purebred or crossbred dairy cattle, and ii) commercial milk production. Accordingly, 375 farms were estimated in the main places of dairy farming in the Ulaanbaatar area. Most of the farms in the Ulaanbaatar area are located in the Songino khairkhan district. While Gachuurt (including Khuandain am) and Tuul are the only places with dairy farms in the districts Bayanzurkh and Khan-Uul respectively, there are some other places with dairy farms as Sanzai and Sharga morit in addition to Khandgait in the Sukhbaatar district. About 50 farms can be estimated in these places in Sukhbaatar district and in the three of the remaining four districts: Baganuur, Bagakhangai and Nalaikh. No dairy farm was found in the Bayangol district (Tab. 4.2). Table 4.2: Approximate number and structure of dairy farms in the Ulaanbaatar area (by July 2005) Place
Nariinii am
Gachuurt†
Jargalant
50 40 20 10
30 20 10 3
40 15 5 2
20 20 0 0
30 10 0 0
20 10 0 0
10 10 0 0
190 123 40 15
120
63
62
40
40
30
20
375
Farms with: ≤10 cows 11-20 cows 21-30 cows >30 cows Total †
Tuul
Shar khad
Gunt
Khandgait
Total
Including Khuandain am
About 175 farms were estimated in the Tuv province, relatively equally distributed in the four places (Tab. 4.3). Another 30 to 40 farms were assumed in other sums of the province, particularly in Sergelen and Sumber. Table 4.3: Approximate number and structure of dairy farms in places surrounding the Ulaanbaatar area (by July 2005) Place
Bornuur
Bayanchandmani
Udleg
Mandal
Total
Sum
Bornuur
Bayanchandmani
Batsumber
Batsumber
Farms with: ≤10 cows 11-20 cows 21-30 cows >30 cows
20 20 10 3
20 10 3 1
20 15 5 1
20 20 5 2
90 55 23 7
Total
53
34
41
47
175
45
4.3 Business environment 4.3.1 Dairy farming in the food and agricultural policy The ‘Food and Agriculture Policy of the Government’, which was approved in June 2003, is aimed at ensuring a sustainable development of the agricultural and food processing sectors by boosting production, increasing efficiency, improving the quality and the safety of food, achieving self-sufficiency in milk, flour, potato and vegetable production as well as creating favorable living conditions in rural areas. The government will reform the legal frames for crop farming and livestock production, improve the agricultural insurance system, promote the rural financial services and support the food processing industries with favorable credit and taxation policies. Attention is given to the promotion of stationary livestock farming: “By 2015, at least 20% of herders (i.e. about 60,000 households) will be living in settled and semi-settled modes and using the pastures rationally while intensified livestock farms with cattle, pork and poultry will grow up around cities and settlements” (PARLIAMENT OF MONGOLIA 2003). The government approved the ‘Intensified Livestock Development Programme’ in 2003. The term ‘intensified livestock farm’ (ILF) concerns a stationary or semi-stationary commercial livestock farm. The target groups of the programme are beef, dairy, sheep, pig and poultry farms in peri-urban areas. The programme has three objectives and includes many actions that are relevant for dairy farms (Tab. 4.4). It can be summarized that the government recognizes the importance of intensified dairy production in peri-urban areas. But the regular budget of the government would not allow the implementation of the planned actions. Therefore, the government approved the ‘White Revolution’ programme in June 1999. It is aimed at increasing the domestic supply of dairy products, and supporting peri-urban dairy farms and the dairy processing industry. However, the last monitoring of the programme in May 2003 assessed the goals of the programme as not achievable within the deadline December 31, 2004 due to underfinancing (MFA 2003,26). Both the ‘Food and Agricultural Policy’ and the ‘Intensified Livestock Development Programme’ shall be carried out until 2015. In 2005, the government approved a second phase of the ‘White Revolution’ programme for the period from 2006 to 2014. The objectives of the programme were re-defined as achieving self-sufficiency and export of dairy products through the creation of favorable conditions for dairy production, and a better co-operation of the stakeholders in the dairy food chain. These objectives are to be achieved through improving of the legal framework and the market environment, supporting farmers and milk processors, and promoting domestic dairy products. The budget of the programme is estimated at approx. $10 million. The following activities were planned to support peri-urban dairy farms (MFA 2005): 1. Allocation of pastureland, hayfields and crop land to peri-urban dairy farms 2. Establishment of demonstration farms and improvement of dairy breeds 3. Re-vitalization of the fodder production 4. Providing low-interest loans for established dairy farms 46
5. Promotion of dairy producer organizations 6. Establishment of milk collection centers Table 4.4: Objectives and selected actions of the ‘Intensified Livestock Development Programme’ that are relevant for dairy farming Objectives
Actions
1. Improvement of the economic and the legal environment.
- Amendment of the Law on Land in order to lease pasturelands and hayfields to ILFs. - Reduction of pasture rents leased to ILFs. - Clarification of the legal status of ILFs. - Study of the feasibility of exempting new ILFs from the income tax for the first 3 years. - Identification of new areas appropriate for intensified livestock production.
2. Integration of intensified livestock production into the concept of regional development and establishment of model farms.
- Promotion of dairy farming in peri-urban areas - Establishment of model dairy farms: four in the Western Region, two in each of the Khangai and the Eastern Region, six in the Central Region and four in Ulaanbaatar. - The model dairy farms should not only produce milk, but also provide other farms in their regions with purebred dairy cattle.
3. Capacity building
- Technology and management training for intensified livestock farmers - Import of breeding cattle and semen, and enlargement of the livestock gene bank - Cattle auctions - Promotion of local AI services, establishment of mobile AI services - Establishment of cattle breeding farms - Public promotion of intensified livestock production - Research and experiments on feed production - Allocation of privileged rights in the tenure of pastures and hayfields to ILFs - Reviving the industrial feed production and introduction of modern techniques - Introduction of mechanized technology of haymaking, promotion of the production of round bale silage, grain mix and mineral feed. - Support for fencing and protection of crop lands, hayfields and pastures - Promotion of integrated crop and livestock farms - Support of co-operation of ILFs with milk processors - Support of co-operative pasture tending, feed preparation, irrigated fodder cropipng and expansion of sales - Support of co-operation of ILFs with NGOs and researchers
Source: GOVERNMENT OF MONGOLIA 2003
47
The MFA initiated the project ‘Increasing the supply of dairy products to urban centers by reducing post-harvest losses and re-stocking’ with supports from the Food and Agricultural Organization (FAO) and the government of Japan as a part of the ‘White Revolution’. The project with a budget of $1.92 million started in July 2004 and will end in June 2007. It is being implemented in three areas: Tuv province - Ulaanbaatar, Selenge province – Darkhan, and Orkhon province – Erdenet. The project implementation is organized into three thematic programmes: the Milk production enhancement programme, the Milk marketing enhancement programme and the Dairy training programme. After inception and preparation periods, the project implementation itself started in June 2005 and will end in March 2007. By December 2005, the following outcomes were reported by the project team (www.mongolia-dairy.mn October 02, 2006): 1. A dairy cow breed improvement scheme with a full cost recovery structure is developed. 230 cows were inseminated artificially with Simmental semen. 2. Two model dairy service centers are set up in Nomgon and Zuunkharaa towns in Selenge province. Milk from Nomgon is delivered to Darkhan city and from Zuunkharaa to Ulaanbaatar city. Another dairy service centre is planned in Mongonmorit, a region in the Tuv province delivering milk to Ulaanbaatar. The dairy service centers are run by local veterinarians and delivering services to herders and smallholders for promoting efficient re-stocking and profitable milk production. 3. 119 milk collection points are organized to buy milk from 1,122 milk producers in six locations in the Selenge and the Tuv provinces and in Ulaanbaatar (Jargalant). 4. Two model milk producer organizations are established in the Selenge province with 20 and 17 members respectively. A further one is planned in Mongonmorit. The activities of these organizations comprise milk collection and delivery, dairy services including artificial insemination and cheese making. Two milk cooling centers are established in Zuunkharaa (milk capacity 20,000 l), Jargalant (10,000 l) and Mongonmorit (2000 l). Start-ups are scheduled for 2006. 5. Three model milk processing units are set up in Darkhan (capacity: 1-2 t milk per day, products: pasteurized fresh and flavored milk and drinking yoghurt), Mongonmorit (capacity: 1-2 t milk/day, products: pasteurized fresh and flavored milk and drinking yoghurt) and Ulaanbaatar (capacity: 50 kg cheese + fresh cheese from the milk producer organizations in Selenge province, products: fresh and processed cheese). Start-ups are scheduled for April-May 2006. 6. A national dairy training centre is established at the Food Technology College. Twenty-one trainings were carried out with 590 participants. 7. A national milk promotion campaign for milk quality improvement, import substitution and consumer education is planned to be implemented in August - September 2006. 8. A dairy development/investment plan to expand the improved dairying models to other areas under the “White Revolution” programme is intended to be prepared in late 2006/early 2007. A Dairy Development Fund will be set up to support the implementation of the investment plan. 48
Outcomes with immediate benefits for the dairy farmers in Ulaanbaatar are the breed improvement scheme, the milk cooling centre and the milk collection points in Jargalant, and the national training centre. The dairy service centers and milk producer organizations read interesting, but the functions of these organizations are not clearly defined. For example, it is not sure if a veterinarian shall serve farmers in issues concerning technology and management of dairy production. In the consideration of the author, the project team has been trying to achieve too many quantitative outcomes in a very short implementation period of only 19 months. In addition, the project lacks transparency in contrast to its relevance for the dairy sector. During his visits to about 50 dairy farms around Ulaanbaatar, the author could find only one farmer who was aware of this project. Except for few reports and presentations released on the website of the project, no documentation of the project activities is available. Nevertheless, the project has put the stagnating ‘White Revolution’ in motion and made significant contributions to strengthening of the dairy food chain. The Dairy Development Fund could become an effective tool of political support, provided that its financing is ensured, it is provided with appropriate management, and it reaches the target groups.
4.3.2 Institutional environment Government institutions The Ministry of Food and Agriculture (MFA) is the main body of agricultural policy. The Animal Husbandry Division of the MFA deals with farmers’ requests and is involved in development projects supporting farmers and herders. It has been coordinating an AI project in cooperation with the ‘Food Aid Programme’ of the Government of France since 2004. In 2005, a total of 1,377 cows at 246 dairy farms countrywide, including 429 cows at 114 dairy farms in Ulaanbaatar were inseminated artificially. The fertilization rate of 83% indicates an adequate performance of the service (MFA 2006). This project is well known among the farmers. The division also imports 25 hp tractors from China and sells to farmers in need at 50% of the original price. By 2005, about 50 dairy farms in Ulaanbaatar had purchased tractors from the Animal Husbandry Division. The Veterinary Department is another ministerial organ that cooperates with dairy farmers. A particularly relevant activity is the coordination of the obligatory livestock vaccination through contracts with local veterinarians. The veterinarians visit each farm twice a year and vaccinate the cattle against common diseases. The National Agricultural Extension Center (NAEC) of the MFA was established in 1996. While the center has been struggling to establish a country-wide extension network for promoting crop farmers and herders, there is no evidence of activities targeted at dairy farmers. BUYANDELGER (2004), an officer of the NAEC, also admits that the Ulaanbaatar area has been left out from the target areas of the NAEC. An average dairy farmer in Ulaanbaatar is not aware of the existence of the NAEC. The Ulaanbaatar city has a ‘Food and Agricultural Department’. The department was dissolved in 1996 and re-founded in 2005. The functions of this department are still unclear. It is organized into the divisions ‘Food’, ‘Crop production’ and ‘Intensified livestock production’. Action plans of the latter division include agricultural extension, AI and lobby 49
for the farmers. However, it is doubtful whether the department could get sufficient authority and budget for independent activities under the current structure, in which the MFA is the ultimate decision maker in the agricultural sector. Research and educational institutions The Mongolian State University of Agriculture (MSUA) is the main institution of agricultural research and education. Out of the seven schools of the MSUA, the following five schools are immediately associated with the dairy farming sector: ¾ School of Natural Resource Management (former Faculty of Animal Sciences) ¾ School of Veterinary and Biotechnology (former Faculty of Veterinary Science) ¾ School of Engineering ¾ School of Ecology and Technology Development ¾ School of Economy and Business While the schools concentrate on education activities, the Research Institutes of Animal Husbandry, and the Research Institute of Veterinary Medicine, which also belong to the MSUA, are responsible for livestock research. Although there is no organized cooperation of the university and dairy farmers, individual schools occasionally offer farmer trainings with durations between one day and several weeks. However, none of the farmers the author met had attended training at MSUA. There is discussion about the establishment of an extension center at the MSUA, which should be initially funded by the Government of Canada and jointly carried out by the MSUA and the University of Saskatchewan. This might be a first step towards a more active role of the MSUA in the agricultural knowledge and information system. But the MSUA will still have to retain its scientific profile and the so much desired praxis orientation is also inhibited by the lack of material base such as demonstration farms and the fact that many researchers and lecturers have limited knowledge of the praxis. In contrast to the MSUA, the Mongol Farmer College, the only private agricultural college in Mongolia, is more actively involved in praxis oriented agricultural higher education though it has limited capacities for research. The college was founded in 1998 and the first 66 BSc. students graduated in 2002. Its curriculum comprises the following subjects: farm management, crop farming, livestock farming, animal breeding, irrigated crop farming, agricultural engineering, and management of agricultural cooperatives. The college offers 45-day training courses for farmers annually and involves dairy farmers in the annual conference ‘Intensive farming in Mongolia’. The students of the college occasionally make internships on dairy farms. An increasing number of dairy farmers prefer to enroll their children in the Mongol Farmer College and not in the MSUA. The Dairy Farmers’ Association The Dairy Farmers’ Association (DFA) is the only non-governmental organization of dairy farmers. The DFA was founded by the DANIDA-project ‘Restructuring of mechanized dairy farms’ in 1997 (see 4.1). By 2005, the DFA had 800 members from Ulaanbaatar and twelve provinces. The membership fee is approx. $10 a year. Main activities of 50
the association had been training and fairs. Between 1998 and 2004, a total of 6,548 participants were involved in DFA-trainings focused on livestock production, veterinary medicine and farm management (DONZOI 2005). The DFA organized public fairs such as ‘Mongolian Tea’, ‘Mongolian Yoghurt’, ‘Camel milk’ and ‘Horse milk’ in Ulaanbaatar city, and the annual field demonstration ‘Dairy farming’ in Nariinii am. The demonstrations also involve experts of the MFA, MSUA, the Research Institute of Animal Husbandry and Mongol Farmer College. In 2003 and 2004, the DFA organized the ‘Festival of dairy cows’ for awarding best performing cows. In 2004, three farmers with the highest milk production per cow were awarded ‘Golden farmer’, ‘Silver farmer’ and ‘Bronze farmer’. The activities of the DFA were assessed by both farmers and experts that were interviewed as useful and motivating. However, the involvement of the farmers in the activities of the DFA depends on their locations. While most members of the DFA are located in Jargalant, Nariinii am, Shar khad and Udleg, farmers in Tuul village are not aware of the association. Besides, farmers who had started up their farms nearly at the time when the DFA was founded are more actively involved than new farmers. The key informants agreed that the activity of the DFA has weakened after the completion of the DANIDA project in 2000. While development projects usually abandon the Ulaanbaatar area, the Global Civic Sharing, a Korean NGO, has been active in Jargalant since 2000. It follows the vision of turning the ‘Jargalant’ village into a ‘livable livestock farming village of high income’. Besides occasional emergency assistance, and trainings in English and basic computer skills, it operates a hay fund with a capacity of 100 tons in Nariinii am and a bran fund with a capacity of 15 t in Shar khad. In addition, the GCS runs a micro credit project named ‘Livestock Bank’. The Village Operation Committee of the Livestock Bank project enables farmers with two to four cows and at least two years of experience to buy a dairy cow on a credit with the maximal volume of $500 (see 4.3.5).
4.3.3 Legal environment There are two possible legal forms for a dairy farm: civil law association and limited liability company (Co. ltd.). To set up a Co. ltd., minimum capital of one million Tugrik (equal to $833) is required. But most dairy farms have not taken any of the statuses above. Farming without an enterprise status is favorable due to less financial and legal obligations. A business entity or a civil law association has to pay income tax, value-added tax (VAT) and property tax. The income tax is progressive. For an annual income of up to 100 million Tugrik ($83,333 at the exchange rate of 2005) the rate is 15%, and if the income is more than 100 million Tugrik, the first 100 millions are taxed at 15% and the rest at 30%. The VAT with a 15% (10% since January 01, 2007) rate is only paid by entities with annual revenues of more than 10 million Tugrik ($8,333). The property tax has a rate of 0.6% and is not paid for land since land cannot be owned by business entities. Farmers have to pay personal income tax, livestock tax and property tax. Income tax rates are given in the Tab. 4.5. Livestock tax is based on an annual rate of 100 Tugrik ($0.08) 51
per sheep unit2. Households with up to 20 sheep units per person are considered poor and exempt from taxation. A four-person household pays livestock tax only if it has more than 16 cattle. But even if this household had 20 cattle, it would pay only $1.6 per year which is about the price for five liters of cow milk. Table 4.5: Rates of personal income tax Income in US$ (exchange rate by 2005)
Income tax rate
0 – 2,000
10%
2,001 to 4,000
$200 plus 20% of the amount over $2,000
From 4,001 up
$600 plus 30% of the amount over $4,000
Source: PARLIAMENT OF MONGOLIA 1992
Farmers do not pay VAT since they declare their annual income to be less than 10 million Tugrik. This has consequences for the processors and the consumers: raw milk processing is at an economic disadvantage compared with the use of imported milk powder, and as a result, dairy products made of raw milk are expensive. Also, many customers prefer to purchase cheap, unprocessed milk in the streets, kiosks or open food markets. Herders are exempt from the fee for the use of pastures. Since farmers have been considered as herders, they do not pay for the pasture use either. This might change if the farmers will be given a different legal status e.g. if a Farmer’s Law is passed. A farmer, however, has to pay fee for the use of his residential lot, which is allowed to have a maximal size of 0.07 ha, if he does not own it yet. But he is exempted from 90% of the fee. It is not common for the farmers to pay land fee since most of them own their residential lots. According to the Law on Land and the Law on Allocation of Land to Mongolian Citizens for ownership, citizens of Mongolia are allowed to own land for household needs or for agricultural purposes. Each household has the right to own land with a given size for residential purpose in urban and peri-urban areas once free of charge. The size of free land is 0.07 ha in Ulaanbaatar, 0.35 in aimag (province) centers and up to 0.5 ha in sum (district) centers respectively. In addition, land not exceeding 0.1 ha may be possessed for the cultivation of vegetables, fruits, berries and/or fodder plants free of charge, but not owned unless it is purchased. Crop land or abandoned land for cropping purposes, on the other hand, can be purchased from the state. The usual procedure of owning crop land is bidding. Farmers who have been cropping for a long time, may be given a privileged right for owning their crop land not exceeding 100 ha for cereals and five ha for potato and vegetables i.e. without bidding. Once a farmer owns land, he must pay property tax. But there are tax reductions between 95% and 98% for residential land depending on the location, and 95% for crop land. Both citizens and business entities of Mongolia are allowed to possess state-owned land for duration of 15 to 60 years with one possible extension for 40 years. The size of land to be owned or possessed, and reserve prices and rents are determined by local authorities.
2
The term ‘sheep unit’ is used for the taxation of livestock. One sheep is a sheep unit and other animals are converted as follows: cattle, horse and camel are equal to five and goat to 1.5 sheep units.
52
Pasture is not allowed to be owned or possessed. But according to the article 52.5 of the Law on Land, “fenced pastureland can be used to citizens, economic entities or organizations for purposes of undertaking intensified settled livestock husbandry … regardless of the season”. Dairy farms may obtain a contract for private use of fenced pastureland in areas with sufficient pasture capacities from the local authorities. In densely populated areas such as Ulaanbaatar, however, private use of pasture appears rather impossible. District authorities shall organize the use of hayfields. Normally, possible hayfields are identified each year and contracted to farmers and herders. The latter can also suggest the use of particular pastureland areas as hayfields and contract with the district authorities. Eventually, a farmer may possess a hayfield if he enhanced it by investing in irrigation, fencing, fertilizing, planting trees etc., by the decision of the district authority. However, the author did not meet a farmer who possessed a hayfield. Instead, some farmers contracted hayfields on a yearly basis. Many farmers and experts are of the opinion that farms, but stationary livestock farms in particular, should obtain a legal status. In October 2003, a Farmers’ Law was drafted by the MFA, but had not been passed by the parliament in July 2007 yet. This law would give farms fulfilling several eligibility criteria a special legal status as a ‘farmer’s husbandry’ and set the framework for their rights, responsibilities, financial relations and internal organization (BINYE 2003,47). The probably most important output of the law is the privilege in ownership and possession of pastures, hayfields and crop land that farmers would be given. However, before passing the Farmer’s Law, the Law on Land, the General Taxation Law and the Law of Taxation on Citizens’ Income need to be amended. It is still unclear how long it will take until the Farmers’ Law is passed.
4.3.4 Dairy market Introduction Milk has been an essential component in the nutrition of Mongolians. Traditionally, milk is consumed fresh or boiled, and used for making tea and numerous dishes and products such as butter, sour milk, cream, skimming, yoghurt, cheese, curd, dried curd, and arkhi, the national alcoholic beverage. The dairy processing industry introduced ice cream and flavored yoghurt. Since the 1990s, pasteurized milk in Tetra Pak® and different sorts of yoghurt and cheese from Europe have entered the urban markets. However, there is a considerable difference in the milk consumption of rural and urban people. In 2005, an average rural inhabitant consumed 245 l milk, both fresh and processed, while an urban dweller in Ulaanbaatar consumed only 66 l (NSO 2006,263). The structure and the dynamics of the dairy market have been very complex and rapidly changing in the recent years. This section gives no final conclusions but a few assumptions and outlooks for the market development. Demand The volume of the dairy market in Ulaanbaatar has enlarged since the privatization of the former large-scale dairy farms along the population increase from 589,000 in 1992 to 965,300 in 2005. The total consumption converted into liquid milk amount was only 20 million liters in 1992 while it reached 64 million liters in 2005 (Fig. 4.2). 53
Figure 4.2: Population and total consumption of milk and dairy products in Ulaanbaatar in the period between 1992 and 2005 1,200,000
80 70
1,000,000 800,000
50
600,000
40 30
400,000
million liter
60
20 200,000
10
0
0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Population
Total consumption converted to liquid milk amount
Source: DSIRU 2004; DSIRU 2005; DSIRU 2006; NSO 2005; NSO 2006
However, the total consumption seems to depend on the per-capita consumption rather than on the population growth. The per-capita consumption was equivalent to 34 l of liquid milk in 1992, peaked at 102 l in 1998 and became 66 l in 2005 (Fig. 4.3). Figure 4.3: Per-capita and total consumption of milk and dairy products in Ulaanbaatar in the period between 1992 and 2005 in liquid milk amounts 80
120
70
100
liter
50 40
60
30
40
million liter
60 80
20 20
10
0
0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Consumption per capita
Total consumption
Source: DSIRU 2004; DSIRU 2005; DSIRU 2006; NSO 2005; NSO 2006
No research has been done on the dairy market in Ulaanbaatar. Some publications tend to explain the decrease of the consumption in the early 1990s with the break-down of the dairy processing industry alone (NYAMBAT et al. 2003; TSETSGEE 2003). But this is not 54
true since private sellers have been the major suppliers of milk and dairy products after the collapse of the centrally planned economy. Mongolians preferred to buy milk from private sellers even before 1990 due to their natural taste and aroma compared to the industrial products. In addition, there often were queues in the groceries for milk, especially in winter and spring. Unfortunately, street sales of food were forbidden. Thus, in the early 1990s, the city population enjoyed the freedom of purchasing fresh milk and dairy products in the streets and at open food markets. Most of them would have bought milk from private sellers even if the dairies had performed well. A possible explanation for the low level of consumption in the early 1990s is the low purchasing power of the population. This is clearly revealed by the decline in 1993, where the annual monetary income of an average household Ulaanbaatar was sufficient for the purchase of 1,419 l raw milk, indicating a 47% decrease of the purchasing power compared to the level of 1992. The milk sellers in turn, reacted by reducing the milk price by 31% to $0.27 per liter in 1993. After 1993, the purchasing power expressed in affordable raw milk amounts per year has never been less than 2,000 l. Also, the milk price has not been less than $0.34 on year’s average. Meanwhile, the milk purchasing power of an average household has reached 4,082 l and the milk price has stabilized in the range of $0.40 (Tab. 4.6). Table 4.6: Comparison of milk price, purchasing power of the consumers and the consumption of milk and dairy products (converted into raw milk amounts) in Ulaanbaatar in the period between 1992 and 2005 Years
Consumer price of fresh milk, $/l
Milk purchasing power of an average household, l/year
Consumption per capita, l/year
Total consumption, mill. l/year
1992
0.39
2,669
34.2
20
1993
0.27
1,419
23.8
14
1994
0.34
2,011
28.1
17
1995
0.41
2,500
50.0
31
1996
0.45
2,501
90.3
57
1997
0.46
2,061
84.2
55
1998
0.46
2,273
102.2
68
1999
0.43
2,060
56.4
43
2000
0.43
2,409
49.2
39
2001
0.48
2,981
50.4
41
2002
0.42
3,705
57.6
49
2003
0.42
4,235
45.6
41
2004
0.39
4,094
57.6
53
2005
0.40
4,082
66.0
64
Source: DSIRU 2004; DSIRU 2005; DSIRU 2006; NSO 2005; NSO 2006
However, the purchasing power cannot explain the increase of milk consumption between 1996 and 1998. It was lower than in 1995 for instance, but both the consumption per capita and the total consumption of the city population were twice as much as in 1995. Perhaps the market supply could explain the three year-peak of milk consumption. Indeed, 55
the total milk production of the country peaked during that time, reaching over 369 million l in 1996, 406 million l in 1997 and 418 million l in 1998, in contrast to the 308 million l in 1992, but also to the 2005 level of 335.1 million l. Unfortunately, no supply data are available for the dairy market in Ulaanbaatar. Nevertheless, a correlation between the country’s supply and the city’s supply can be assumed. Thus, increased availability of milk and dairy products might have led to an increased consumption. But there is still confusion about the consumption peak in 1998 in particular since i) the milk price was highest in that year, and ii) the trend could not be preserved when the country’s milk production further increased to 467 million l and the milk price decreased by $0.03 per liter in 1999. If the decline of the consumption in 1999 would be explained by the decrease of the milk purchasing power from 2,273 l/year to 2,060 l/year, why did the increase of the purchasing power in the following years did not lead to a re-increase of the consumption? In addition, import of dairy products increased from 3,572 thousand tons in 1995 to 6,753 tons in 2001. Between 1999 and 2002, there were three consecutive harsh winters, resulting in a loss of one million cattle in the country, which was the third of the total cattle stock. The total milk production of the country fell from 467 million l in 1999 down to 375.6 million l in 2000, 290.3 million l in 2001 and 276.6 million liter in 2002. The reduction of the milk production might have affected the milk consumption in Ulaanbaatar. But the milk price increased only in 2001 and fell back in 2002, thus not indicating a chronic shortage of supply, which would have kept the price high. The purchasing power of the consumers increased further. However, the consumption became only 57.6 l in 2002 and fell down to 45.6 l in 2003 for unexplainable reasons. In 2003, the country’s milk production had started to increase and the milk price was lower than in the period between 1996 and 2001. Even if the milk price has not exceed the level of the late 1990s yet and milk and dairy products are available everywhere in the city at any time now, the milk consumption has not reached the level of the late 1990s again. A possible reason for the decline of the milk consumption since the late 1990s seems to be a change in the consumption behavior of the city population. While the need for adequate milk consumption was felt by the consumers strongly, but restrained by their limited financial resources and the high inflation in the early and mid 1990s, the stabilization of the inflation under 10% and the start of the economic growth of the country in the late 1990s allowed them to satisfy their needs to a quite high degree. Even high prices e.g. $0.46 per liter of fresh milk could not stop the motivation of the consumers to buy more milk and dairy products. But after the peak in 1998, perhaps the motivation declined, and consumption priorities were placed on other goods. The non-food expenses of an average household increased from $468 in 1998 by 141% to $1,128 in 2003 at a mean inflation rate of 7.4% during this period. In addition, the intervention of the Western culture in Ulaanbaatar makes the traditional eating habits less attractive anyway. Supply The total milk production of 335 million liters in Mongolia was sufficient for a consumption of 131 liters per capita in 2005 if an equal distribution over the country was possible. But the weak infrastructure and the lack of milk conserving facilities make milk transport from remote areas unaffordable. Thus, dairies and food markets in Ulaanbaatar were sup56
plied only by farmers and herders around the city. The industrial dairy production in Ulaanbaatar was equivalent to 6.8 million liters of liquid milk, and had a 96% share in the country’s total industrial production. The production range consisted of four million liters of pasteurized milk, 58 tons of cream, 2.5 million liters of yoghurt, 33 tons of butter, and 18 tons of cheese and curd, and 483,000 liters of ice cream (NSO 2006). The total import of dairy products was equivalent to 20.9 million liters of liquid milk. Since specific data on the share of the imports in Ulaanbaatar are unavailable, it was estimated by the assumptions that the imported products were sold in the three large cities of the country: Ulaanbaatar (965,300 inhabitants), Darkhan (72,265) and Erdenet (72,520), and that the distribution of the sales were proportional to the distribution of the population in these places. Accordingly, 87% of the imported products were assumed to be sold in Ulaanbaatar. This is about the equivalent of 18.2 million liter liquid milk. According to this estimation, the range of the imported products consisted of five million liters of pasteurized milk, 873 tons of milk powder, 348,000 liters of yoghurt, seven tons of butter and 130 tons of cheese (cf. TUNGALAG & ENKHBAYAR 2006; NSO 2006). Assuming that the industrial products were sold out, 39% of the total consumption was covered by industrial products and the remaining 61% by non-industrial products. The domestic supply including both industrial and non-industrial products was equivalent to 46 million liters of liquid milk and had a market share of 72%. Out of the 30 dairies in Ulaanbaatar, only eight process raw milk. Other dairies use milk powder from Russia and New Zealand. Among the raw milk processing dairies, the ‘Suu’ company, the largest dairy in the country, has a processing capacity of 200 t of raw milk per day (Tab. 4.7). Table 4.7: Raw milk processors in Ulaanbaatar Enterprise name
‘Suu’ Co. ltd.
Range of products
Raw milk processing capacity per day
Pasteurized and flavored milk, curd, dried curd, yoghurt and dry colostrum
200 t
‘Suu Vit’ Co. ltd.
Pasteurized milk, yoghurt
5t
‘Ulaanbaatar suu’ Co. ltd.
Pasteurized milk, yoghurt
4t
Pasteurized milk, Yoghurt, curd, dried curd
3t
Pasteurized milk, yoghurt, cream, curd, ice cream, butter
2-3 t
Pasteurized milk, cream, yoghurt
500-600 l
Pasteurized milk, yoghurt, cream, curd, dried curd, butter
200-400 l
Yoghurt
200 l
‘GUM’ Co. ltd. ‘Mon Suu’ Co. ltd. ‘ZECH’ Co. ltd. ‘Jonon Suu’ Co. ltd. ‘Jaal tolgoi’ civil law assoc.
Source: SCANAGRI SWEDEN & CPR MONGOLIA 2003,20
These eight dairies are able to process approx. 440 million liters of raw milk per year. The capacity is theoretically sufficient, even too much for the current market volume of 64 million liters. It seems, therefore, that there is no need for more dairies in Ulaanbaatar and priority should be placed on exploiting the existing capacities in the dairy sector.
57
It is often assumed that an increase of the milk supply would boost the industrial production (MFA 2006, NYAMBAT et al. 2003; TSETSGEE 2003,50). But it is not sure if and to what extent the dairies have a real chance to increase their production. Two facts should be considered closer: i) the dairies already have the technical capacities to cover the demand and ii) non-industrial dairy products have a market share of 61%. There was a theoretical possibility to channel the 39 million liters of raw milk processed in the nonindustrial sector to the dairies. But most consumers still demand unprocessed milk and traditional dairy products. This might be caused by the behavior of the consumers: unpackaged products appear naturally and domestic, the consumers are aware of the dairies using milk powder etc., but also by the prices. The VAT-asymmetry causes price differences between industrial and non-industrial products: raw milk becomes 10% more expensive as soon as it belongs to a dairy (cf. 4.4.1). A final analysis suggests that the actual competitiveness of the industrial production is below that of the non-industrial production. SCANAGRI SWEDEN & CPR MONGOLIA (2003,20) report that the ‘Suu’ Co. ltd. has overdue loans of about one million US$, and the other dairies are financially weak too and using outdated equipment. Only ‘Suu’, ‘GUM’ and ‘Jonon Suu’ possess a plant building. The remaining five dairies operate in rented rooms. Thus, there is no guarantee that an increase of the raw milk supply would lead to an increase of the industrial production. Also, there is no guarantee that an increase of the industrial dairy production will be absorbed by the market. The use of milk powder is also inhibiting a synergy within the dairy supply chain. The import of milk powder was 319 t in 1995, 345 in 2000 and 1,004 t in 2005 respectively. About 90% of these amounts may have been used by the dairies in Ulaanbaatar. There is a tension in the relationship between the farmers and the dairies: the dairies could shift from raw milk processing to milk powder processing any time, as most small dairies already do. The farmers in turn, are not content with the dairies and seek marketing alternatives. Price As shown in the Tab. 4.6, the average consumer price of fresh milk has ranged between $0.27 and $0.48 per liter since 1992. After 2001, it has stabilized at about $0.40. But since the consumer price index of foodstuffs, related to a basic index of 100 in December 2000, was 107 in December 2002, 115.2 in December 2003, 132.7 in December 2004 and 153.3 in December 2005 respectively (NSO 2005; NSO 2006), one might wonder if one liter milk should cost $0.64 or so instead of $0.40 in 2005. The consumer price of beef for instance, almost doubled from $1.02 per kg in 2000 to $1.95 in 2005. Milk price, however, has been kept at a low level because the price of milk powder has not increased. The latter was $3.29 per kg in 1996, $2.61 in 2000, $3.03 in 2002 and $2.99 in 2005. A serious problem facing the farmers, the dairies and the consumers is the strong seasonal fluctuation of the milk price. This is caused by two reasons. First, most dairy cows deliver in spring. Therefore, less milk is available in winter and early spring, forcing up the price to a level that is more than twice the summer price. Second, the cattle are kept in barns and fed commercial feedstuffs between October and April while they are grazed for free and fed no or only a little ration of bran between May and November. Accordingly, the production costs are much higher during the stall period (Fig. 4.4; Tab. 4.8).
58
Figure 4.4: Consumer price of fresh milk in Ulaanbaatar during the period 2001 to 2005 70
US Cent / l
60 50 40 30 20 Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct 2001
2002
2003
2004
2005
Table 4.8: Monthly averages of the consumer price for fresh milk in Ulaanbaatar over the period 2001 to 2005 Month Price, $/l
Jan
Feb
Mar
Apr
May
June
July
Aug
Sep
Oct
Nov
Dec
0.52
0.55
0.54
0.51
0.44
0.31
0.28
0.28
0.32
0.40
0.45
0.49
Source (for Fig. 4.4. and Tab. 4.8): NSO 2005; NSO 2006
Competition There are three major suppliers of raw milk: dairy farms, importers of milk powder, and herders. Unfortunately, a quantitative analysis of the competition is not possible due to the lack of specific data. While the 6.8 million liter that were processed in the dairies must have come from the dairy farms it is unknown what share of the 39 million liters of raw milk that were sold as fresh milk or processed on-farm, was produced by the dairy farms. If estimated roughly from the estimations of 7,500 dairy cows around Ulaanbaatar including those in Tuv province (see 4.2), a lactation rate of 80%, and an average marketable lactation yield of 2,000 l per cow (cf. SCANAGRI SWEDEN & CPR MONGOLIA 2003,62; KHANDSUREN 2003,58; NYAMBAT et al. 2003,38; FADU 2005), the dairy farms supplied 12 million liters of raw milk in 2005. Thus, approx. 34 million liters of raw milk were supplied by herders including those who also have some dairy cows among their animals but do not specialize in dairy production and sell milk only in the summer. The disadvantage of the dairy farming compared with the milk powder import will persist as long as the government is not able to overcome the resistance of the dairies and to raise the customs tariff for milk powder. This is not expectable in the near future since the dairies have a much stronger power for political lobby than the farmers.
59
On the other hand, a competition of the farmers with the herders is possible. Such a competition has been absent so far; the market capacity has been enabling both the farmers and the herders to sell their produce. If the milk production of the farms would increase, the additional production may be absorbed by the dairies. The latter would basically prefer to buy milk from farmers since the herders are distributed all over the area, making the milk collection expensive. In addition, the herders have little amounts to deliver and do usually not plan their milk production. But if the dairies would be not able to expand their production, there will be a real competition between the farmers and the herders for the unofficial market i.e. for the market share of the herders. Herders have the comparative advantage of low-cost production. Milk production on a dairy farm, on the other hand, is expensive due to the fixed costs of barn and equipment as well as the variable costs for supplementary feed and breeding etc. But a major disadvantage of the herders is that they are only able to sell milk in the summer and fall. On the contrary, farmers can increase their winter production by inseminating their cows in early spring. Although the herders can also take this measure, intensive winter feeding would not be profitable for Mongolian native cows, which have a lactation yield of 300 to 400 l. Perhaps the best possible scenario for the development of the raw milk market in Ulaanbaatar is that the herders deliver between June and August while the farmers deliver during the remaining nine months of a year. The policy is concerned about the poor hygiene of dairy products sold in the streets, kiosks and at food markets. A more rigid control of non-industrial dairy products has been frequently suggested. However, it has been more important for the policy to have a supply at all than the hygiene issues during the last 15 years. If the government would actually force the implementation of the already existing rules on milk hygiene, many dairy farmers and most herders would be immediately banned from the market. After a while, the farmers might get used to a more hygienic production and sale more likely than the herders, who would not mind giving up the milk sales at all. Outlook for 2015 The increase of the consumption from 45.6 l liquid milk per capita in 2003 to 66 l in 2005 gives hope of further increase. It is not possible to foresee how far the increase will proceed. Perhaps the consumers will re-think their priorities and spend more money for milk and milk products again. Or perhaps the migration flow from the rural areas might lead to an increase of the consumption because the migrants would consume large amounts of milk products as rural people usually do. It seems at least possible to assume that the current consumption level of 66 l per capita will be retained. The growth of the city population will result in a further expansion of the dairy market then. The growth between 1990 and 2005 results in the linear regression y = 27,419x – 54,050,825, whereas y is the number of inhabitants and x is the year. The regression is significant at the 0.01 level. Accordingly, the city is expected to have 1,199,290 inhabitants and a total effective demand of milk and dairy products equivalent to 79 million liters of liquid milk in 2015. If the current structure of suppliers will be preserved, there is an additional capacity of three million liters that shall be exploited by the dairy farms (Tab. 4.9). According to the above scenario, the milk supply of dairy farms will increase by three million liters until 2015. This can be achieved either by an increase of the productivity 60
and/or by an increase in the number of farms. In the latter case, 100 new farms with an average size of 15 cows are required to produce this amount. Table 4.9: Current structure of milk suppliers in Ulaanbaatar and the expected structure for 2015 at persisting market shares 2005 Suppliers
Market share
2015
Supply, million liters of raw milk
Market share
Supply, million liters of raw milk
Farmers
19%
12
19%
15
Herders
53%
34
53%
42
Imports
28%
18 (equivalent)
28%
22 (equivalent)
100%
64
100%
79
Total
However, other scenarios are possible too. The farmers may take over a part of the herders’ market share. Indeed, this should be the target of the farms and dairy extension. By taking over a half of the herders’ share, the farmers could be supplying 36 million liters per year by 2015. The difference between this amount and the current production volume is 24 million liters, and could be produced by 1,200 new farms with 15 cows. The target could be achieved by more efficient production and better productivity, whereas the reliability of the dairies should not be overestimated. Substituting the imports is a different issue. In a final analysis, this is a target for the dairies and not for the farmers since raw milk is not imported. Milk powder is only a problem because it is imported. Domestic production of milk powder is possible too. The import of end products is justified by the demand and the inability of the dairies to substitute them. The immediate focus of the farmers should be placed on the raw milk market.
4.3.5 Availability of inputs Dairy cattle Between 1953 and 1988, 16,623 purebred cattle of dairy and beef-dairy breeds were introduced to Mongolia. ‘Black-and-White’ was the most dominant dairy breed (Tab. 4.10). Table 4.10: Number of purebred dairy and beef-dairy cattle introduced to Mongolia Breed
Period of introduction
Number of bulls
Number of cows
Russian Black-and-White
1953-1988
105
4405
German Black-and-White
1976-1978
21
2458
Simmental
1953-1974
197
4138
Alatau
1955-1974
468
2161
Steppe Red
1962-1985
601
1394
2067
14556
Total Source: GONCHIG 1986,187-210 ; JADAMBA & MINJIGDORJ 2003,28
61
Below is a description of the breeds according to GONCHIG (1986,187-210) and JADAMBA & MINJIGDORJ (2003,164-166). ‘Russian Black-and-White’: The Siberian Black-and-White breed was developed from crossing of Dutch cattle with native breeds. A purebred cow has a height of 126 cm at withers and a diagonal length of 146 cm. At former state farms in Mongolia, a purebred cow gave 2,500 to 3,300 kg milk with 3.4 to 3.8% fat during a lactation period while a crossbreed’s lactation yield was 1,800 to 2,000 kg with 3.6 to 3.9% fat. ‘German Black-and-White’: The German Black-and-White dairy cattle were introduced from the states Saxony, Saxony-Anhalt and Brandenburg of the former Democratic Republic of Germany to Mongolia. The population consisted of German ‘Black-and-White’ at 26%, crossbreeds of German ‘Black-and-White’ × ‘Jersey’ at 40%, German ‘Blackand-White’ × ‘Holstein Friesian’ at 9% and crosses of all three genotypes above at 25%. An average German ‘Black-and-White’ cow in Mongolia weighs between 530 and 620 kg, and had a lactation yield of 3,800 to 4,600 kg with a fat content of 3.6 to 3.9% at the former state farms. The German ‘Black-and-White’ has been considered as the most productive dairy breed in Mongolia. ‘Simmental’: This beef-dairy breed was introduced from the Smolensk province of the former Soviet Union to Mongolia and was crossed with native cattle. A purebred cow weighs 502 kg and had a lactation yield of 2,400 kg at the former state farms. A crossbreed had an average lactation yield of 1,800 kg milk at a live weight of 459 kg. ‘Alatau’: This beef-dairy breed was developed from crossing ‘Brown Swiss’ onto the indigenous breed of Kyrgyzstan, followed by selective breeding among the crossbred progeny in 1950s. Live weight of a purebred cow is 430 kg. The average lactation yield at the former state-owned dairy farms in Mongolia was 2,800 to 4,500 kg with a fat content of 3.8 to 4%. ‘Alatau’ was crossed with the Mongolian native breed. A crossbred cow weighs 450 kg and has a lactation yield of 1,800 to 2,100 kg with 3.8% fat. ‘Steppe Red’ (Krasnaya Stepnaya in Russian): This dairy breed was developed from ‘Red East Friesian’ and ‘Angeln’ crossed with ‘Ukrainian Grey’ and later some ‘Brown Swiss’ and ‘East Friesian’ in the early 19th century. The ‘Red Steppe’ was the most spread breed in the former Soviet Union. Females often reach 550 kg and stand 132 cm, while a bull can weigh up to 1,000 kg and stand 142 cm. At dairy farms in Mongolia, a purebred cow had a lactation yield of 2,800 to 5,000 kg with 3.6 to 3.7% at a live weight of 498 kg. The author estimated some 5,300 dairy cows in the very area of Ulaanbaatar and 2,200 dairy cows in the surrounding areas of the Tuv province, though it is not possible to distinguish between pure- and crossbreeds. ‘Black-and-White’ cows contributed for about 40%, ‘Alatau’ cows for 40%, ‘Simmental’ cows for 18 to 19% and ‘Steppe Red’ for 2% of the total stock. Cows are traded between farmers. Farmers in Ulaanbaatar buy cows in Jargalant, Nariinii am, Gachuurt and Udleg, but also in Mandal and Bornuur. The prices have intensively risen in recent years. The sellers usually define if a cow is pure- and crossbred, and the usually less experienced buyers accept it. The cow price also depends on the popularity of the seller i.e. most buyers prefer buying expensive cows from acknowledged farmers than cheap cows from unknown ones (Tab. 4.11). 62
Table 4.11: Prices of a dairy cow in Ulaanbaatar, in US$ Year
2001
2002
2003
2004
2005
Purebred cow
150-200
150-200
200-250
250-350
400-450
Crossbred cow
100-150
100-150
100-150
200-250
300-350
Feed Hay is the only available forage. Dairy farmers either prepare hay by themselves or purchase it. It is sold by (seasonally) traveling hay traders, by farmers in northern regions with well vegetated hayfields and on raw material markets in Ulaanbaatar. The price was between $0.50 and $1 per bale that is supposed to weigh 25 kg but weighed in fact only 20 kg in 2005. Hay is available all year round at the raw material markets in Ulaanbaatar. However, the price gets up to $1.5 per bale in spring. Wheat bran from flour mills in Ulaanbaatar is used for supplementing the hay feeding in winter and grazing in summer. About 15,000 tons of bran are produced each year (SCANAGRI SWEDEN & CPR MONGOLIA 2003,11). It is available on the raw material markets in the city. The price increases by 50% from 50 $/t in autumn to 75 $/t in spring. Few farmers use wheat grain in the nutrition of dairy cows in winter. Wheat grain costs $100 per t. Some farms feed salt in winter. But there is no evidence for the use of mineral feed, nor is any mineral feed available on the market. Fodder plants as oat, alfalfa and rape were grown on 5.2 thousand hectares in Mongolia, but on only 136 hectares in Ulaanbaatar and 199 hectares in the Tuv province in 2005 (DSIRU 2005,39; NSO 2006,195). The crop farms growing these plants use the yields for the feeding of their own livestock. For dairy farmers the fodder crops are not available. But there is evidence of a few dairy farms growing oat. Electricity and water The state electricity network reaches every settlement in the Ulaanbaatar area and in the Tuv province. It charges US Cent 4.9 per kilowatt during the day (6 a.m. to 9 p.m.) and US Cent 1.1 per kilowatt at night (9 p.m. - to 6 a.m.) for private use. Water pipes are not available outside the city. The farms obtain water either from own wells in their yards or buy it from community wells at $0.50 per t. During the summer, the cattle are usually watered at rivers. Loan Farmers could raise loans from a bank or a credit cooperative. Business loans had average interest rates between 24% and 36% p.a. depending on the repayment term, which is usually between 12 and 36 months, in 2005. But most farmers fail a business loan assessment due to the lack of fixed assets. Most farm buildings do not meet the bank requirements. Vehicles of good conditions, on the other hand, can be accepted as collateral. Only two banks offer special loans for herders and livestock farmers accepting animals instead of fixed assets or vehicles as collateral.
63
The Agricultural Bank offers a ‘herders’ loan’: up to five million Tugrik or about $4,000 (exchange rate 2005) with an interest rate between 36% and 48% p.a. can be raised by herders or farmers for up to 12 months. A dairy cow is assessed at about $400. The maximum amount of the loan is equal to 20% to 30% of the total assessment value of the livestock. A farmer with 20 cows for instance, can borrow up to $2,500. The ‘herders’ loan’ of the Khas Bank has a maximal volume of only one million Tugrik ($830), interest rates between 36% and 45.6% p.a. and a term between one and twelve months. The assessment of dairy cattle is similar to that of the Agricultural Bank. Credit co-operatives offer loans with less rigid requirements than the banks3, but the interest is 48% p.a. or more. In addition, beginning late 2005 and proceeding throughout 2006, one credit cooperative was dissolved after another due to insolvency. By September 2006, 22 out of the 545 credit cooperatives in Ulaanbaatar were bankrupt and 9,138 cooperative members had lost their savings to a sum of $48 million (www.olloo.mn, September 20, 2006). The ‘Livestock Bank’ micro credit project of the Korean NGO ‘Global Civic Sharing’ has been enabling farmers in Jargalant with two to four cows and at least two years of farming experience to buy a dairy cow on credit since 2003. The farmers should refund the loan of maximally $500 by an 18 month partition. The interest has positive rates of 1.2% in the first six months, 1.4% in the next six months and 1.6% in the last six months respectively. When the principal sum is refunded, the Livestock Bank is able to lend the funds to other farmers in need. It is not clear for how long this project will be carried out.
4.4 Basic data on the nutrition of dairy cattle Since data for the nutritional values of the feedstuffs and the nutrition of dairy cattle are lacking, the author derived estimations from various secondary sources. The author wishes to stress that the estimations need to be examined through detailed investigations.
4.4.1 Nutrient requirements of dairy cattle The average live weight of crossbred ‘Black-and-White’ and ‘Alatau’ cows in Mongolia is 450 kg (JADAMBA & MINJIGDORJ 2003,164-165). A dairy cow with this weight requires about 29 MJ Net Energy Lactation (NEL) and 360 g utilizable crude protein at the duodenum (nXP) per day for body maintenance (KIRCHGESSNER 2004,313 and 317). During the grazing season, the energy requirement for body maintenance increases by 15% (cf. STEINWIDDER 2002,179). On the assumption that no milk is produced during the dry period, the nutrient requirements of a dry cow should be equal to the requirements for body maintenance. However, during the end phase of pregnancy (about the last six weeks), 10 MJ NEL and 410 g nXP per day are additionally required due to the growth of the fetus (cf. KIRCHGESSNER 2004,372). Table 4.12 summarizes the energy and protein requirements of a dry cow in different variants and the means of the sampled farms. 3
The credit cooperatives usually assess vehicles and real estates with higher values than the banks.
64
Table 4.12: Energy and protein requirements of a dry cow Energy (MJ NEL)
Protein (g nXP)
Daily
Daily
Maintenance (60 days)
Gravidity (42 days)
Grazing season
33
10
Stall season
29
10
Total
Total
Maintenance (60 days)
Gravidity (42 days)
2,400
360
410
38,820
2,160
360
410
38,820
The production of one liter milk with the regionally average fat and protein contents of 3.8% and 3.3% requires approx. 3.1 MJ NEL and 84 g nXP (cf. KIRCHGESSNER 2004,314 and 317). Accordingly, a lactating cow with the average productivity of eight liter per day requires 25 MJ NEL and 672 g nXP per day in addition to the requirements for body maintenance. A cow with 450 kg live weight is able to take in approx. 13.5 kg dry matter (DM), of which 8 to 11 kg can be provided by forage, per day (cf. WIEDENMANN et al. 1999,256).
4.4.2 Nutritional qualities of conventional feedstuffs The nutrient contents of common feedstuffs are estimated in the Tab. 4.13. There is a serious problem with the rumen nitrogen balance (RNB) of hay and pasture grass. A negative RNB indicates an overestimation of the nXP i.e. the amount of nitrogen available for the rumen bacteria is insufficient for a full utilization of the concerning feedstuff for milk production (cf. WIEDENMANN et al. 1999,252). Table 4.13: Energy and protein contents of different feedstuffs Nutrients per 1 kg fresh mass
DM, g
NEL, MJ
nXP, g
Nutrients per 1 kg DM NEL, MJ
nXP, g
RNB per 1 kg FM
April
824
2.6
62
3.1
75
-1.0
May-August
400
2.2
47
5.4
119
1.1
Sep.-mid Oct.
544
2.7
57
4.9
105
-1.0
Mid Oct. to Dec.
811
4.0
83
5.0
102
-6.2
Hay
906
3.9
87
4.3
96
-3.2
Bran
891
5.0
115
5.6
129
1.0
Wheat grain
871
5.8
124
6.6
142
1.4
Oat grain
880
6.2
121
7.0
137
-1.8
Pasture
Sources: Data from GONCHIG 1986,352; SAMDANDOVJ et al. 2003,37; GENDARAM 2004,18; and calculation according to the methodology in KIRCHGESSNER 2004,134-135 and 318.
Pasture Pasture plants are most nutritious and digestible between May and August. From mid August, the fiber accumulation starts to increase and the amount of digestible protein starts to fall, resulting in a reduction of the digestibility. The most critical time of grazing is No65
vember, where the average RNB of pasture grass becomes -6.2, which indicates low efficiency of grazing. It is quite problematic to determine the nutrient intakes of grazing dairy cattle due to the lack of reliable data. Most investigations on animal nutrition refer to animals of native breeds, which are different from dairy breeds. A native Mongolian cow for instance, weighs only 300 kg, which is 150 kg less than a crossbred dairy cow. Accordingly, a Mongolian cow has smaller rumen and less feed intake capacity than a dairy cow. Another problem is the vulnerability of pastures. There is no organized pasture management. Pasture improvement measures as weed control, irrigation etc. are rarely carried out. The vegetation of the pastures varies strongly. In addition, the nutritive values of the pastures depend on the density and the diversity of animals grazing, which are not exactly determinable due to the open access of the pastures. Therefore, the averages shown in the Tab. 4.13 deviate in different places and from year to year. The author used the following comparisons for an estimation of the nutrient intakes of grazing dairy cows (Tab. 4.14): 1. Comparison of intakes of a grazing native cow (GONCHIG 1986,346; BOLIKHORLOO et al. 1978,98; GENDARAM 2004) with the potential forage intake of a dairy cow derived from the live weight of 450 kg (WIEDENMANN et al. 1999,256). 2. Comparison of the average nutrient contents of pasture grass given in Tab. 4.13 with the estimated grass intakes from the comparison 1 and average milk yields of dairy cows during the grazing season. Table 4.14: Daily energy and protein intakes of a grazing, lactating crossbred dairy cow with a live weight of 450 kg April
May
June-August
Sep.- Oct.
November
Supply Fresh mass, kg
12
20
28
20
14
DM, kg
10
8
11
11
11
NEL, MJ
31
43
61
53
56
nXP, g
738
949
1,329
1,147
1,158
RNB
-13
23
32
-20
-87
NEL, MJ
33
33
33
33
33
nXP, g
360
360
360
360
360
NEL, MJ
-2
10
28
20
23
nXP, g
378
589
969
787
798
RNB
-13
23
32
-20
-87
0
3
9
7
8
- Requirements for body maintenance
= Balances
Expected milk production, l
66
The Tab. 4.14 reveals that grazing in April does not provide sufficient energy for the body maintenance. Also, the protein supply is critical due to the negative RNB. In May, the situation is much better: approximately three liters of milk per day can be produced without supplementary feeding. The nutritive quality of pastures increases further and peaks in June and July, allowing the production of nine to ten liter milk without supplementary feeding, and starts to fall in August. In September, the RNB becomes negative, making the milk production potentials given in the table unsure. Even though a detailed quantitative analysis is not possible it seems that the expected production levels in fall and winter, as well as in April, can be only achieved if grazing is supplemented by rations of feedstuffs with adequate protein contents i.e. with positive RNBs. After the middle of October, it is essential to balance the RNB for ensuring the protein supply for body maintenance at least. Hay When hay is fed during the stall period, the energy requirement of a cow for body maintenance is 29 MJ NEL per day. A daily ration of 7.3 kg hay with 6.7 kg DM would cover this requirement and result in a surplus of 273 g nXP. Each kg of hay above the threshold of 7.3 kg would enable the production of 1.2 l milk. However, due to the negative RNB, this productivity is only achievable if the total RNB of the ration is balanced by other feedstuffs with positive RNBs. By doing so, a ration of 10 kg hay would result in the production of 3.3 l milk. Given different biological and other factors including uncomfortable conditions in the barn, wrong milking approach etc. that limit the milk production, a realistic benchmark is ’10 kg hay for 3 l milk’. A simple comparison of summer grazing with hay feeding reveals the advantage of the free grazing: if 10 l milk can be produced either with 15 kg hay, which are purchased at the average price of $50 per t, or by grazing for one day in the summer, the farmers benefit from each grazing day in the summer to the value of 15 kg hay i.e. $0.75 per cow. Concentrates The protein amount required for the body maintenance of a lactating cow during the stall period is provided by only 3.1 kg of bran while the required energy is provided by no less than 5.7 kg. Each more kg results in the production of 1.6 l milk. A wheat grain ration of 5 kg/day would cover the energy requirements for body maintenance of a lactating cow during the stall period and result in a surplus of 257 g nXP. Each more kg has a milk production value of 1.8 l. Oat grain is the feedstuff with most energy contents. The energy and protein requirements for the body maintenance of a cow during the stall period can be fully covered with a ration of 4.6 kg. Each more kg provides NEL for the production of two liter milk. Due to the negative RNB of oat grain, a ration with oat grain must also include feedstuffs with positive RNBs in order to maintain a positive overall RNB. If a basic ration of 10 kg hay is fed, the production of 10 l milk will require a supplementary ration of either 4.4 kg bran, or 3.9 kg wheat grain, or 3.5 kg oat grain.
67
4.5 Dairy farming in the view of key informants Basic questions and the responses of 26 interviewees (cf. 3.4) are summarized below: 1. What do you think about the role of dairy farming in the rural policy and the national economy? ¾ Mongolia should be self-sufficient for essential foodstuffs including meat, milk and flour in order to maintain the economic dependency on China and Russia at an acceptable level. ¾ The intensification of the agricultural production, which is one of the strategic goals of the agricultural policy, is already being realized by the dairy farms with little political support. ¾ The rural-to-urban migration can be regulated efficiently and its negative effects can be avoided if the migrants have a chance to get settled in peri-urban areas instead in the city and earn their living with a business that they are relatively familiar with. The dairy farming offers that possibility, even if to a limited extent yet. ¾ Mongolia could export milk and dairy products. It is quite possible that consumers in China, Korea and Japan would buy dairy products from Mongolia, which is well known for its virgin nature and ecological farming systems. 2. What are the most important advantages of dairy farming if compared with the pastoral animal husbandry? ¾ Less exposure to harsh climatic conditions. This is true for not only the cattle, but also the people: in contrast to the herders, the farmers are spared the risk of freezing to death on the pasture during snow storms. ¾ Having properties as barn, fenced yard, house etc., the farmers are financially safer than herders. ¾ Located in peri-urban settlements, the farmers have a better access to infrastructure, and enjoy a larger communication network and more information supply than the herders. They also have a better access to public services such as school, kindergarten, hospitals, post and public transport. These advantages result in a better living condition not only for the dairy farmers but for their wives and children too. ¾ Dairy farmers are not tied up to the traditional methods of animal husbandry. They are ready to adopt innovations. Researcher-farmer relationships can be easier established for farmers. ¾ Dairy farms can produce large amounts of milk in better hygienic conditions than herders, and thus represent better partners for dairies. 3. How would you assess the profitability of dairy farming? Although all respondents agreed that dairy farming is quite profitable, they also stressed the strong seasonal fluctuation of the milk production. Much milk is produced between late spring and autumn while there is a ‘milk-off period’ between winter and spring. 68
4.6 Results and conclusions of the World Bank 2003 survey 4.6.1 Description of surveyed farms While 73% of the farms were located in four places within the Ulaanbaatar area, the remaining 17% were located in three sums of the Tuv province including the Sumber sum4, which is as far as 150 km from the city (Tab. 4.15). Table 4.15: Location of surveyed farms (N=83) Region
Ulaanbaatar
Place
Nariinii am
Number of farms Share
Jargalant
Tuv province
Khandgait
Gachuurt
Bornuur
Bayanchandmani
Sumber
44
6
11
8
3
2
9
53%
7%
13%
10%
4%
2%
11%
Source: SCANAGRI SWEDEN & CPR MONGOLIA 2003,31-32
About 20% of the farmers had migrated to their current places including Khandgait, Nariinii am, Gachuurt and Shar khad. Most migrants had lived in the Ulaanbaatar city and the Tuv province. Seventy-five percent of the farms were set up between 1995 and 2000 while only eight percent before 1992 and six percent after 2000 (Fig. 4.5). Figure 4.5: Distribution of the sampled farms according to their start-up years (N=83) 6%
8% 11%
40%
35%
Before 1992
1992-1994
1995-1997
1998-2000
2001-2003
Source: SCANAGRI SWEDEN & CPR MONGOLIA 2003,33-34
The incomes from dairy production were essential for 80% of the farms while not for the remaining 20%. Farms in the latter group obtained incomes from pastoral animal husbandry and vegetable production. The farm liquidity seemed satisfactory for most farms since 35% of the farmers considered their incomes sufficient, 42% intermediate and the remaining 23% insufficient for securing their livelihoods.
4
With only about 20 dairy farms, the Sumber sum has little significance as a dairy farming place. Farms in Sumber were involved in the survey because it was one of the target areas of the DANIDAproject “Restructuring of mechanized dairy farms”.
69
However, while comparable shares of the farms, for which the dairy incomes were essential, considered their incomes sufficient or intermediate, most of those farmers with alternative incomes sources did not assess the dairy incomes as sufficient. It is possible that they expected more income from the dairy business; but it is possible too that they invest not as much resources into dairying as do the specialized farmers (Fig. 4.6). Figure 4.6: Comparison of the sampled farmers according to their responses on the relevance and the level of their incomes from dairy farming (N=83) 70
Frequency
60
26%
50 40
35%
30 20
12% 71% 18%
39%
10 0 essential
sufficient
not essential
intermediate
insufficient
Source: SCANAGRI SWEDEN & CPR MONGOLIA 2003,33-34
4.6.2 Characterization of dairy management Dairy herd The herd sizes of the surveyed farms ranged between two and 60 cows. While nearly a half of the farms had up to 10 cows, 27% of them had more than 15 cows and 11% had more than 20 cows. Only four percent of the farms possessed more than 25 cows. On average, these four farms had a herd size of 41 cows (Tab. 4.16). Table 4.16: Dairy herd structures of surveyed farms (N=83) Number of cows
≤5
6 to 10
11 to 15
16 to 20
20 to 25
>25
Total
Number of farms
12
29
20
13
6
3
83
Cows
4
8
13
18
24
41
12
Heifers
1
3
3
4
7
2
3
Female calves
2
3
5
6
8
6
4
Bulls
0
0
0
1
1
1
0
Male cattle (>6 months)
1
2
3
3
4
0
3
Total number of cattle
8
16
24
32
44
50
23
Source: SCANAGRI SWEDEN & CPR MONGOLIA 2003,35-36
70
None of the farms with up to five cows had a bull. On the contrary, 24% of the farms with five to ten cows, 35% of the farms with 11 to 15 cows, 54% of the farms with 16 to 20 cows, and each of the farms with more than 20 cows possessed one or two bulls. In addition to the shortage of dairy cattle in the area, the high price of dairy cows, which was about $200, restricted the desire of the farmers to expand their herds through purchases. Therefore, heifers were raised for supplementing the dairy herd while the male cattle were usually sold or slaughtered at the age between one and two years. Although the survey data do not include information on the insemination methods, the cows were probably inseminated naturally. The interest in artificial insemination (AI) was growing, which however, was restricted by the lack of AI services (cf. 4.5.7). The cows delivered between February and May usually, but also in December, January. About 25% of the farms regulated the time of mating for more milk production in winter and spring when the milk price is highest. There was some evidence that farms with up to ten cows will increase their herd sizes while larger farms will stabilize at a herd size of about 30 cows. If the smaller farmers will realize their plans, farms with 15 to 25 cows will be the majority in the near future5. Feeding The dairy cattle were fed hay and bran during the stall period. Daily hay rations of a lactating cow ranged between four and 20 kg and the bran rations between one and 14 kg. The averages were nine kg hay and five kg bran. During the grazing season (from late spring to mid autumn), only 13% of the farms fed the cattle bran. The bran ration of a lactating cow was 2.5 kg on average, ranging between 1.5 and four kg per day. All other farms grazed the cattle without supplementary feeding. Calves were fed three kg hay and 1.5 kg bran per day during the stall period. The hay rations ranged between one and six kg. During the grazing season, only five percent of the farms fed the calves: the average bran ration was one kg per day.
4.6.3 Production and marketing of milk The lactation yields of individual farms ranged between 900 l and 3,100 l per cow. The average was 1,953 l. Most common was the range between 2,000 and 2,500 l (Fig. 4.7). The amounts of the milk production ranged between 2,800 l and 90,100 l per year. Least milk was produced by a two-cow farm while the maximal amount by a farm with 34 cows. Unusually, the latter farm produced more milk than a 60-cow farm (Tab. 4.17). Milk was sold in three ways: 70% of the farms supplied dairies while another 20% sold to intermediaries and the remaining 10% sold their milk on food markets or in the streets of the Ulaanbaatar city. The average prices per liter were $0.39 between late autumn and spring, and $0.18 during the grazing season. Highest prices were obtained with outlet selling while the dairies paid lowest prices. 5
The assumption refers to the year 2003, in which the survey was carried out.
71
Figure 4.7: Distribution of the sampled farms according to the average lactation yield (N=83) 1%
5%
4% 19%
42%
29%
up to 1000 l
1000 to 1500 l
1500 to 2000 l
2000 to 2500 l
2500 to 3000 l
more than 3000 l
Table 4.17: Average milk yields and total productions of farms with different herd sizes (N=83) Average number of cows
≤5
6-10
11-15
16-20
21-25
>25
Lactation yield per cow
1,605
1,905
2,142
2,154
1,883
1,817
Total milk production per year
5,893
14,714
27,940
38,481
45,017
71,100
Source (for Fig. 4.7 and Tab. 4.17): SCANAGRI SWEDEN & CPR MONGOLIA 2003,35-38
4.6.4 Use and need of services The only commonly used service was the veterinary service. It appears quite satisfying since 94% of the surveyed farmers were content with the veterinary services. The farmers reported few minor problems concerning mastitis and infertility. An AI service was set up in Jargalant by the Research Institute of Veterinary Medicine in 2002. The regular charge per insemination was $8.7 but the DFA had negotiated a special fee of $4.4 for its members and a repeat service fee of $2.2 if pregnancy did not occur. The need for AI was recognized by many farmers. They complained that the service was not available in their areas. Only three farmers had been able to raise credits. They used the loans of the Agricultural bank and the Anod bank for haymaking. Fifty-nine percent of the farmers were DFA-members. The survey data do not explain the services of the DFA in detail. Obviously, the farmers required more services. Most needed was a loan service.
4.6.5 Profitability Profitability calculations were performed for seven farms. The annual net revenues per cow ranged between $427 and $559, and resulted in profits between $79 and $467, and farm profits between $1,226 and $11,904 (Tab. 4.18). 72
Table 4.18: Results of the profitability analysis (N=7) Farms
Farm A
Farm B
Farm C
Farm D
Farm E
Farm F
Farm G
10
16
32
23
7
7
4
14
1,634
1,388
1,831
1,675
2,059
2,433
2,240
1,894
16,336
22,200
58,580
38,530
14,410
17,033
7,840
24,990
0.29
0.28
0.30
0.29
0.27
0.25
0.24
0.27
Net revenue
4,303
5,841
16,339
10,304
3,532
3,914
1,709
6,563
Net revenue per cow
430
365
511
448
505
559
427
464
Hay
593
1,683
1,771
2,747
393
186
146
1,074
Bran
446
1,792
1,846
2,010
270
385
170
988
Other feedstuffs
11
-
109
18
8
2
9
22
Water
22
73
52
31
78
21
17
42
Hygienic stuff
3
4
9
17
3
-
3
6
Cattle tax
16
51
18
10
1
-
-
14
Repair of building
-
436
87
-
-
-
87
87
Straw for cattle
-
-
-
-
-
6
-
1
DFA-membership fee
-
-
10
-
-
-
10
3
Hired labor
-
481
314
628
-
-
-
203
AI
-
-
57
9
-
-
-
9
Veterinary service
110
62
161
262
89
44
39
110
Total
1,201
4,583
4,435
5,733
843
643
482
2,560
Profit
3,102
1,258
11,904
4,571
2,689
3,271
1,226
4,003
Profit per cow
310
79
372
199
384
467
307
303
Number of cows Milk yield per cow, l/year Milk sales, l/year Average price, $/l
Mean
Revenue, $/year
Costs, $/year
Profitability, $/year
Source: SCANAGRI SWEDEN & CPR MONGOLIA 2003,62
4.6.6 Problems, priorities and plans of the farmers Nine pre-determined problem areas were ranked by the farmers. The average scores reveal the financing as the most important problem since the banks were reluctant to lend to the farmers. Pastures were scored critically too. The accumulation of many farmers and herders in same places results in overgrazing. In addition, there was increasing concern over the deterioration of the water supply at the pastures. The third problem was the shortage of feed. No alternatives to hay and bran were available. Many farmers were also not able to provide their lactating cows with adequate feed rations due to the extreme increase of feed prices in spring. Medium priorities were given to the problems associated with milk sales, haymaking, and quality of the dairy cattle. Farmers who were not contracted by dairies troubled with milk sales during the grazing season. Haymaking was often inhibited for several reasons including the lack of hayfields and the lack of finances. 73
A comparison of the individual rankings with the farm sizes reveals that the deterioration of pastures was concerning all farms. Financing was another common problem for the farms except the larger ones with more than 25 cows (Tab. 4.19). Most farmers assumed development perspectives through expansion and improved breeding measures. A considerable number of the farmers felt the necessity to grow fodder crops. Other possible measures included direct marketing, on-farm milk processing plants, use of milking machines and the purchase of a car (Fig. 4.8). Table 4.19: Ranking of problem areas†, clustered according to herd sizes of the farms (N=83).
†
Number of cows
≤5
6 to 10
11 to15
16 to 20
21 to 25
>25
Total
Number of farms
12
28
20
13
6
3
30
Finances
4.0
2.8
2.1
2.1
3.8
4.3
2.8
Availability and quality of pastures
3.3
2.8
3.2
3.1
3.5
3.7
3.1
Supply of fodder
5.3
3.8
3.4
4.7
4.7
1.0
4.0
Milk sales
4.2
3.8
4.9
5.5
4.3
5.7
4.5
Haymaking
4.6
4.9
4.8
4.2
6.7
2.7
4.7
Quality of cattle
5.0
4.9
4.6
5.5
3.3
5.0
4.8
Supply of useful information
6.8
6.6
7.6
5.8
7.8
8.3
6.9
Barn comfort
6.3
7.8
7.0
7.5
7.5
7.7
7.3
Veterinary service
7.8
8.1
8.3
8.3
7.8
8.7
8.1
Lower scores indicate higher significance of the problems, Source: SCANAGRI SWEDEN & CPR MONGO2003,47-48
LIA
Figure 4.8: Development plans of surveyed farmers, multiple answers possible (N=83) Frequency of answers
Increasing the cow number
58
Upgrading the quality of cattle
58
Improving the feeding
50
Growing fodder crops
50
Milk processing
43
Mechanizing the milking
40
Owning a car Outlet selling
Source: SCANAGRI SWEDEN & CPR MONGOLIA 2003,62
74
32 23
5 Results of the analysis of sample farms 5.1 Farming system characterization The sampled farms are family-owned commercial livestock farms. The dairy farming approach is semi-intensive: the average duration of the grazing season is 176 days. The size of crop land, a widely agreed criterion for farm classification could not apply to this study since the farmers did not produce crops, except for only one farmer growing oat on five hectares. A characterization of the farms was therefore done according to the economic importance of dairy production for each farm. According to NYAMBAT et al. (2003,23), in the pastoral animal husbandry, a stock of 200 or more sheep-equivalent heads6 can provide regular surpluses of income while smaller stocks are kept for subsistence. Thus, farms with a non-dairy stock of 200 or more s.h. were considered as differentiated livestock farms and those with less than 200 s.h. non-dairy animals as specialized dairy farms. Eighty-seven percent of the surveyed farms were specialized dairy farms, while the remaining 13% were differentiated livestock farms. The specialized dairy farms were then subdivided according to their possession of non-dairy animals as follows. 1. Specialized dairy farms (15 farms, 50% of the sample): Farms in this class possess no more animals or one to two horses besides dairy cattle. 2. Specialized dairy farms with non-dairy stock for subsistence (11 farms, 37%) This class consists of farms with a non-dairy stock of 38 s.h. on average. Dairy farming is the only source of cash since the other animals are kept for subsistence (sheep and goats for meat consume and horses for transport). 3. Differentiated livestock farms (4 farms, 13% of the sample) Farms in this class have 353 s.h. non-dairy animals on average. Although other animals provide marketable products including meat, skin, wool and fermented horse milk (airag), the farmers consider their farms as specialized dairy farms too because the dairy production demands most farm resources and provides most revenues. A further classification of the farms was done according to the size of dairy herd, whereas the latter can also be referred as farm size (NYAMBAT et al. 2003,37; GOMBOSUREN 2004,48). NYAMBAT et al. (2003,38) suggests that a medium-sized dairy farm should have 15 cows, but a larger herd of 20 to 25 cows is required for profitable dairy farming. This classification was used with a minor modification in this study: the surveyed farms were divided into three classes as follows: 1. Small farms with less than 15 cows; 2. Medium-sized (referred as medium) farms with 15 to 30 cows; and 3. Large farms with more than 30 cows.
6
The sheep-equivalent head coefficients for camels, horses, cattle, sheep and goats are 5.0, 7.0, 6.0, 1.0 and 0.9 respectively (NSO 2002,45). The coefficients are used for accounting purposes.
75
The sampled farms have three to 73 cows. The average is 16. Most of them are small while there is only one large farm. The small farms have ten cows and the medium farms have 19 cows on average (Fig. 5.1). Figure 5.1: Structure of the sampled farms according to the farm size (N=30) 3%
47%
50%
small
medium
large
5.2 Review of farm development A half of the sampled farms were set up during the privatization of state-owned dairy farms between 1992 and 1994 and another half after 1994. However, it must be differed between the start-up year of a farm and the year of starting to keep dairy cattle. While the farms set up between 1998 and 2004 had not had any dairy cattle before, those that were set up between 1992 and 1996 had already owned some (usually less than five) cows and earned some income from milk sales. On the other hand, farming was only parttime and the incomes were not regular. Therefore, in this study it was assumed that a farm was set up when any of the below criteria started to apply: • Dairy farming becomes the main occupation of the household members. • Dairy farming becomes the main source of household income. The frequency of start-ups decreased after 1994 but started to increase in 2000 again. During the five years between 2000 and 2004, four times as many farms were set up as during the preceding five years (Fig. 5.2). This is because dairy farming started to attract people with non-agricultural backgrounds (cf. 4.1). Forty-seven percent of the respondents had worked at former state-owned dairy farms. Those with an agricultural education (30% of the sample) were veterinarians or zoo technicians and another 17% farm workers. Most of them (40% of the sample) started up their farms between 1992 and 1996 by expanding their already available dairy stocks. The remaining 53% of the respondents have non-agricultural backgrounds. Most of them (33% of the sample) started dairying in or after 2000. Seventy-three percent of the respondents considered dairy farming as the only possible business when they started up (Fig. 5.3). 76
Figure 5.2: Distribution of the sampled farms according to the year of start-up (N=30) 10
Frequency
8 6 4 2 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Figure 5.3: Reasons of the respondents for starting up the dairy business (N=30) Frequency of answers
Dairy farming was the only possible business for me
22 19
I wanted to become a dairy farmer anyway 10
My relatives stimulated me to do so I was stimulated by other dairy farmers
6
Alternative jobs were paid bad
6
There weren't any employment opportunities
5
The respondents obviously considered dairy farming profitable, and they were confident in being able to run a dairy farm. When the collapse of the centrally planned economy resulted in a mass unemployment in the urban and peri-urban areas, the release of the dairy cattle from state farms offered a business opportunity. While 63% of the respondents already had a distinct preference for dairy farming, 37% of the respondents had taken other possibilities of employment into consideration before. They decided to run a dairy farm after they could find only poorly paid or no jobs. In addition, a half of the respondents were stimulated either by their relatives or by familiar dairy farmers. 77
Generally, those who started up before 2000 considered dairy farming as a possibility to earn a living after they were not able to find adequately compensated jobs, and set up their farms with less than ten cows and a simple barn, in which they invested up to $1,000. On the contrary, those who started up later considered dairying as a profitable business after they had tried some other businesses. Most of them purchased 10 to 20 cows at once and invested up to $10,000 into a modern barn designed similarly to the 20-cow barn built by the US-American farmer Bill Yodor in Udleg. The start-up investments were made with released capital from sales of private assets or livestock. Ten percent of the farms were involved in the DANIDA project ‘Restructuring of mechanized dairy farms’, which was implemented between 1994 and 1999 (see 4.1). One farmer established a company and took a soft loan in order to buy 260 cows from the dissolved state farm that he worked at and to build a barn.
5.3 Socio-economy 5.3.1 Household size and structure The farmers’ households have two to six members. The most common number of household members is five while the least common is three (Fig. 5.4)7. Figure 5.4: Distribution of the sample farms by number of household members (N=30) 10 9
Frequency
8 7 6 5 4 3 2 1 0 two
three
four
five
six
Number of household members
Five of the six two-person households are couples, whose children live separate. Only one of these households has a child under 16 living in. Three of them consist of seniors over 60 years. These are the only senior couples among the sampled farmer households. A further two-person household has one senior member. Two of the three three-person households have children under 16. None of them includes a senior member. The ages of the household members range from 30 to 56. 7
The numbers include only persons living on the farms permanently.
78
All of the four-, five- and six-person households have one to four children. The youngest couple consists of a 29 year old man and his 26 year old wife while the oldest couple is a 63 year old man and his 57 year old wife. Fig. 5.5 summarizes the age structures of the households. There are little differences between the three-, four- and five-person households in the average number of adult members under 60 (2.25, 2.29 and 2.33 respectively). The differences between these classes in the household size could be simply led back to the differences in the number of children. The six-member households have both most working-age persons and most children. Figure 5.5: Age structure of the sampled households (N=30)
Number of persons
6 5 4 3 2 1 0 2-persons
3-persons
4-persons
adults (16 to 59 years)
5-persons
seniors
6-persons
children
5.3.2 Off-farm employment and incomes Seventeen percent of the sampled households have one adult person employed off-farm. One of these households and another 30% of the sample obtain off-farm incomes in the forms of pension, social security and children’s allowance. One farmer is a full-time conservationist. But since he is responsible for the area where he lives (Gunt) and organizes his working time independently, his employment in fact is part-time. He earns $67 and his wife receives a pension of $40 per month. This is the household with most off-farm income. Two farmers work part-time as a civil servant in the city and as a commune driver, and earn $33 and $38 respectively per month. In two cases the farmer’s wife is the one who works off-farm. They work as a school teacher and a railway woman respectively. At home they contribute to the farm work despite being busy with housework too. Each of them earns $100 per month. Twenty-three percent of the households besides the conservationist’s receive a single or a double pension to a sum of $27 to $84 per month.
79
Two households receive social securities of $13 and $27 per month for the chronic illness of one person per each household. One household receives children’s allowance of $4 per month. The off-farm incomes are, however, nothing more than little contributions to the household budgets that are basically financed by the incomes from milk sales.
5.3.3 Living standard Monetary expenses for consumption range between $20 and $82 per person and month (p.m.). In addition, meat and milk to a value of $3 to $35 are consumed from the own farm. The households were divided into five classes according to the total expenditures for consumption. Most households fell into the range between $51 and $75 p.m., while 30% above and another 30% below this level. The average is $66 p.m. (Tab. 5.1). Table 5.1: Consumption expenditures of the sample households, $ per person and month (N=30) Monthly expenditure classes
≤25$ (poor)
26-50$
51-75$
76-100$
≥101$
Total
2
7
12
8
1
30
7%
23%
40%
27%
3%
100%
Food
10
17
25
29
34
24
Clothes
4
5
7
9
18
7
Celebrations and gifts
3
3
5
7
11
5
Tuition fee of children
0
3
3
5
0
3
†
4
4
9
13
18
9
Total monetary expenditure
21
33
50
63
79
48
Meat
2
5
7
12
12
8
Milk
2
7
10
10
20
9
25
45
67
86
111
66
Number of households Share in the sample Monetary expenditure:
Other expenses
Value of foodstuff from own farm:
Total expenditure †
Other expenses include expenses for cultural goods, household goods, utensils, medicals and hygienic goods, firewood, repair materials, transport, communication, public utilities, domestic services, health care and other goods and services.
Two households i.e. 7% of the sample have the least expenditures of $25 p.m. They can be considered as poor since the minimum level of subsistence for Ulaanbaatar area was fixed at 30,000 Tugrik or $25 p.m. in 2005 (HEALTH AND SOCIAL WELFARE MINISTRY OF MONGOLIA 1997,18; NSO 2005,309). At the other end of the list is the household with highest expenditures of $111 p.m. The amount is 68% more than the sample’s mean and 444% more than the mean of the poor households. It was found that 90% of the surveyed households have a level of consumption that is above the average level in Ulaanbaatar area. The differences are considerable; the average 80
total expenditure p.m. of these 27 farms is by 80% more than the regional average. There is no way but to conclude that most dairy farming households around Ulaanbaatar have livelihoods well above the average (Tab. 5.2). Table 5.2: Comparison of the expenditures of the sampled households with averages of Ulaanbaatar, given in $ per person and month (N=30) Compared groups
Households in † Ulaanbaatar
Samples below the regional average
Samples above the regional average
255,500
3
27
Monetary expenditure
37
22
51
Total expenditure
39
29
70
Number of households
†
Source: NSO 2006,70, 72 and 262
The respondents, however, had a modest view of their living standards. None of them did consider his livelihood as above average. Ninety percent of them assessed their livelihoods as average, while the remaining 10% as poor. One of the three respondents that stated to be poor is one of those two poor households indeed. The remaining two however, expend $44 to $70 p.m. and thus, are not poor. On the other hand, the respondent of the second poor household considers himself as average and not as poor. These responses indicate that the perception of livelihood is a subjective matter and does not necessarily correlate with the monetary value of consumption. The consumption expenditures were proportional to the farm size. The small farms expend least amounts for consumption while the large farm is the one with most expensive consumption. Its consumption expenditures are twice as much as those of the small farms and nearly three times as much as the average in Ulaanbaatar (Fig. 5.6). Figure 5.6: Comparison of average household expenditures of different farm classes (N=30)
$ per person and month
120 111
100 80 70
60 40
58
20 0 small farms
medium farms
large farm
81
5.3.4 Mobility While only 19% of all livestock farming households in Ulaanbaatar have a car (NSO 2006,179), 57% of the sampled households including 36% of the small farms, 73% of the medium farms and the large farm have cars. While 65% of these farms have only one car: either a sedan or a UAZ-469, which is a famous Russian sport utility vehicle (SUV), or a truck, the remaining 35% have two or three cars in various combinations (see 5.5.5). Another two farmers i.e. 7% of the sample have motorcycles. Eventually, 36% of the sampled households possess neither cars nor motorcycles. Besides the possession of a vehicle, the mobility depends on the location. Jargalant and Udleg are along the railway line. Also, Tuul, Khandgait and Gachuurt are reached by public transport from the city. The farmers in these places can go to the city by train or bus anytime. From the city they can go to remote places by public transport or by hiring a car e.g. in case of procuring hay in the Selenge province. The farmers in Gunt, Nariin and Shar khad are disadvantaged due the lack of connection to the railway and public transport, whereas Gunt is still in a better condition because it is relatively close to the city. By taxi, the 10 km stretch of dirt road between the closest bus station and the village is driven in 20 minutes, for a charge of $2 (cf. 4.2).
5.3.5 Availability of communication and information media The farms are not connected to the phone lines. Neither is it possible to use mobile phones in the villages. None of the respondents possesses a computer. The main source of information is television. Each household possesses a color TV. Usually, a farmer’s family has dinner after milking in the evening, and watches afterwards TV from 8 P.M. to 22 or 23 P.M. During this time, they can watch the news and some talk shows or entertainment programs. The ‘Forum’, a weekly talk show with participants from different social strata is the most favorite program. Although each household possesses a radio and is able to receive some FM channels, the entertainment broadcasts of the FM channels are only consumed by children. The farmers agree that newspapers are more informative than radio. However, subscriptions are not common. A subscriber usually waits for his newspapers for a week or longer due to delays of the post delivery. Therefore, only 20% of the respondents subscribe to newspapers. They live in the centers of the villages Jargalant and Gachuurt, and pick up their newspapers at the village post office. Usually, the newspapers are delivered on a weekly basis. Thus, the farmers subscribe to weekly and monthly newspapers but not to daily ones. The most popular newspaper is the ‘TV news’ because of its register of TV programs and the English lessons for children as well as the trade advertisements. The majority of the farmers prefer to buy newspapers in the city. The farmers usually go to the city once a week and bring newspapers with other consumer goods. Consequently, each farmer has a chance to obtain newspapers once a week at least. Unfortunately, only one farmer reads the monthly paper ‘Mongol farmer’, which is issued by the ‘Mongol Farmer’ College and contains useful information for farmers. 82
5.4 Entrepreneurship qualities of farmers 5.4.1 Age The average age of the farmers is 47 years. While most farmers are between 30 and 60 years old, the part of the farmers younger than 30 years is seven percent and that of the farmers older than 60 is ten percent (Fig. 5.7). Figure 5.7: Age structure of the sampled farmers (N=30) 10
Frequency
8 6 4 2 0 ≤30 years
31-40 years
41-50 years
51-60 years
≥61 years
Age classes
Even after considering the share of the farmers in the age class 30 to 40, the age distribution of the respondents indicates an overall majority of older farmers. While there may be many reasons for that, the most significant one is the lack of capital for the younger generation. Since credits are only limitedly available a young man/woman who wants to set up an own farm must have own funds. However, this is only possible for those who had run other businesses before. A more feasible option is to get provided with farm capital by his/her parents. But the parents are required to have capital reserves beyond their needs then. Young people with financially weak parents have no possibility to own a dairy farm. Another reason for the lack of young farmers is that there are no inherited farms in the study area since the first farms were set up not earlier than in 1992 (cf. chapter 5.2). First farmers are over 50 years old now (by 2005), still fit for work and are not hurried to entrust their children with their farms yet. First successions of dairy farms can be expected between 2015 and 2020. It will be probably not until 2030 that the majority of the currently present farms are managed by a second generation of farmers. Unless credits become more accessible for young people who want to start-up dairy farming, most dairy farmers in Ulaanbaatar area will not be younger than 40 until 2015 at the earliest. A further reason that is less significant than those above, but should not be neglected is the lack of motivation. Some farmers’ children prefer to stay in the city after college.
83
5.4.2 Education and experience The matriculation standard in Mongolia is attained after ten years of secondary school. After the eighth class, about a half of the pupils leave the school and start to work or enroll at vocational schools. All of the respondents had attended school: 43% of them for eight years and 57% for ten years. Afterwards, 30% of the respondents enrolled at a vocational school and 16% at universities in Mongolia, the former Soviet Union and Bulgaria. Of those who were enrolled at vocational schools, more than a half graduated in veterinary medicine or animal breeding and the others in civil engineering. The university graduates studied veterinary medicine and animal breeding, except for one who studied Mongolian language and literature. Altogether, 30% of the respondents obtained a degree in agricultural education: 13% a university degree and 17% a vocational school degree (Fig. 5.8). Figure 5.8: Educational level of the respondents (N=30) 13%
17%
17%
3%
37% 13% eight years school vocational training vocational training in agriculture
secondary education diploma diploma in agriculture
Table 5.3: Distribution of the respondents according to previous experience in dairy farming (each dot represents a farm) (N=30) Level of farmers’ previous experience I’m experienced in dairy farming:
Year of start-up 1992-94
1996-99
2000-02
since my childhood and I worked at a state farm
●●●●●●
since my childhood
●●●●
●
●
since I worked at a state farm
●●●
●
●●
since starting up my farm
●●
●
●
2003-04 ● ●● ●●●●●
About a half of the former farm employees had already experienced dairy cattle keeping in their early ages since their parents were farm workers or pastoral herders, as another 27% percent of the respondents. Evidently, most of the well experienced farmers started up before 1995 and most inexperienced farmers after 1995 (Tab. 5.3). 84
Ten farmers marked on the top left in the table 5.3 could be assumed as highly experienced. They are experienced in dairy cattle keeping since their childhood and in addition, some of them worked at a state-owned farm later. On the contrary, six farmers marked down right in the table were identified as least experienced. These new farmers had no experience in dairy farming until they set up their farms between 2000 and 2004. The remaining farmers could be assumed to have a medium level of dairy farming experience. Small and medium farmers are presented by each experience level while the large farmer has a medium level of experience (Fig. 5.9). The diagram also reveals that a generalization in this case is difficult since the majorities of the highly experienced farmers as well as the least experienced farmers are smallholders. Figure 5.9: Distribution of the respondents of different farm classes by experience level (N=30) 16 14
1
Frequency
12 10 8
9
4
6 4 2
2 6
4
4
medium
low
0 high small farms
medium farms
large farm
Some low experienced farmers hire milkers who used to work at former state farms. But the milkers are often not helpful if not even damaging. A farmer in Tuul village made the following statement: “I have been relying on my milker. Since I am not experienced in dairy farming and she worked at a state-owned dairy farm earlier I trusted her and paid her above the average here. But I am starting to doubt at her skills. Initially (in 2003), each cow was milked at all four teats. Now, most cows have only two productive teats. Four cows died in 2004. In 2005, five cows did not calve. I do not know what to do now, and neither does she.” This case reflects the confrontation of farmers lacking knowledge with their problems. A farmer does not only need technical knowledge, but also managerial skills. While a farmer has not necessarily to do the farm work by himself, he must be able to control the performance of his workers at least. Attendance of farmers’ training is not common. Only 23% of the respondents had attended trainings. The most intensive and most useful training was organized by the ‘Mongol Farmer’ college in 2002 (Tab. 5.4).
85
Table 5.4: Type and term of trainings in dairy farming that seven respondents participated in (ranked by the year of training) Nr.
Year
Place of the training(s)
Year of the training(s)
Duration of the training(s)
1
1992
‘Mongol Farmer’ college
2002
45 days
2
1993
Agricultural University of Kharikovsk (Russia)
1988
6 months
3
1994
DANIDA, DFA, MFA and abroad
Each year since 1994
1 to 14 days
4
2000
DFA
2004 and 2005
1 day
5
1996
DFA
Each year since 2000
1 to 14 days
6
1993
Jargalant
1996
14 days
7
1992
MFA
2004 and 2005
14 days
5.4.3 Motivation While 87% of the respondents are content with their business, 10% of the respondents stated to be unhappy. Two of these three unhappy farmers are tired of farm work and feel being forced to do so in order to assist their children. If they cared only for themselves they would settle down in the city. They are 56 and 63 years old. The third farmer that does not like his job is a 30-year old man. Being the youngest child, he was defined to stay in his parents’ house and received dairy cattle from his siblings. He would like to give up the farm and live in the city. One farmer is not content with his business for not providing sufficient income. Three of his children attend colleges, demanding $1,000 per year for their tuitions and $2,000 for living. At the average milk price of $0.30 per liter these costs are covered with the revenue of 10,000 liters. This amount is yielded from four cows whereas he has a total of nine. The medium farmers seem to be most content with their farms and so does the large farmer. While many small farmers are content, those who are not content are small farmers too (Fig. 5.10). Figure 5.10: Level of contentment of the respondents with the dairy farming business (N=30) 20 1
Frequency
16 8
12
medium farmers
8 4 0
7
8
2 fully content
86
large farmer
content
small farmers 1 not content
3 unhappy
Frequently agreed advantages of dairy farming were the possibility of organizing work and leisure time on their own as well as the income level of dairying that they consider is sufficient. For nearly a half of the respondents, being an independent entrepreneur and making own decisions is an important advantage. It can be concluded that most farmers enjoy their independency and are satisfied with their incomes. They will probably not give up unless changes in their economic situation force them to do so. Since the income was interpreted as the main motivator, the farmers were asked if they felt any changes in their livelihoods through the farming business. While 67% of the respondents including most medium farmers and the large farmer but also some small farmers admitted positive changes, 30% responded neutrally and the remaining one farmer felt deterioration instead of improvement (Fig. 5.11). Figure 5.11: Effect of the dairy business on the livelihoods of the respondents (N=30) 20
1
16 Frequency
large farmer 12
13
medium farmers 2
8
small farmers 4
6
7 1
0 improved
not changed
deteriorated
Those three unhappy farmers do not see any improvement of their livelihoods. One of them feels his livelihood even deteriorated. The remaining seven farmers that did not feel any improvement of their livelihoods have different backgrounds, making a generalization impossible. For four of them, which had started up the business in 2003 or 2004, the period of only one or two years has been probably too short for an assessment of livelihood changes. The remaining three farmers have been operating their farms since 1993 and 1998 respectively. A confusing fact is that all of these farmers had stated to be content with their business in response to another question (cf. Fig. 5.10). Thus, they are satisfied even when the incomes do not really come up to the desired level since they could not earn better incomes with any other business. On the other hand, it can be assumed that the expenditures of their households increased meanwhile, possibly through the growth of their children. An opposite of the latter cases is a farmer who feels an improvement of his livelihood through dairy farming, but is discontented with it. His economic situation was already described in connection with the Fig. 5.10. By asking him about the background of his dissatisfaction, the author could find out that he indeed is content with his farm, but frustrated by the increasing costs of his household. His farm is too small for his requirements. Unfortunately, he does not have the necessary resources to expand his farm. 87
5.4.4 Capability of planning and controlling The author attempted to characterize the planning and controlling abilities of the respondents. While it is not possible to make any final conclusions on the basis of interviews, some indications could be derived. Each farmer is supposed to have outlooks for what is to be done and when e.g. that inputs are to be purchased when they are cheap. But in order to realize his intentions, a farmer needs to be prepared e.g. to ensure cash for the purchase of inputs at the right time. Thus, if a farmer is sure that he makes plans and realizes them, he probably expresses that he sets targets and is able to control the farm activities in order to realize his targets. Thirty percent of the sampled farmers responded that they manage their farms according to concrete plans for production and sales. Seventeen percent of the farmers admitted to make plans, but not always to realize them. Another 20% only plan the milk sales. The remaining 33% were not sure if they have ever made a plan. Larger farmers appear more rational since the average number of cows of those farmers who make and realize plans is 25 while that of the farms without any concrete planning is 11. The large farm and 40% of the medium farms are ‘managed by objective’ while almost a half of the small farms are operated without plans (Fig. 5.12). Figure 5.12: Planning approaches of the respondents (N=30) 12
Frequency
10 1
8
4
6 6
2
4
3
6 4
2 2
2
0 Regular planning of Regular planning of production and sales, production and sales, and proper realization but partial realization
small farmers
Regular planning of milk sales
medium farmers
No concrete plans
large farmer
An insemination calendar, which is a normal calendar that the dates of insemination, the expected and the real birth for each cow are noted on, and milk records are used for controlling purposes. Both tools are used by 57% of the respondents including the large farmer, most medium farmers, and a half of the small farmers. Twenty-three percent of the respondents use one of these tools while the remaining 20% do not use any of them. Most of the latter farmers are smallholders (Fig. 5.13).
88
Figure 5.13: Distribution of the respondents according to use of controlling tools (N=30) 18 1
16
Frequency
14 12
9
10 8 6 4
2 7
2
3
0
1 Insemination calendar and milk records
Insemination calendar
small farmers
1 2
4
Milk records
None of the tools
medium farmers
large farmer
The performance of everyday activities was assumed as another indication of controlling. Gratifyingly, 57% of the respondents do not feel any trouble with their daily work. Only one farmer has difficulties everyday. The remaining 40% could not give a straight yes or no. Nevertheless, most of them considered the performance of their farms rather positive. There was no evidence of a better management of larger farms in this case. While the large farmer and most medium farmers stated not to have any troubles with their everyday work, most small farmers also considered their performance as trouble-free (Fig. 5.14). Figure 5.14: Responses of the settlement of daily activities (N=30) 18
1
16
Frequency
14 12
8
10 8 3
6 4
8 5
2
4 1
0 trouble-free
almost trouble-free
small farmers
mostly troublesome
medium farmers
always with difficulties
large farmer
89
5.4.5 Membership of the Dairy Farmers’ Association Thirty-seven percent of the respondents are members of the DFA. They include the president of the association. However, the author could find out during the survey that the presidency was a symbolic position, which was an idea of the Danish experts who founded the DFA. The leader of the association de facto is the secretary, who is not a farmer. The DFA-membership of the respondents depends on their location. While 60% of the respondents in Udleg, Jargalant, Nariinii am and Shar khad are DFA-members, those nine respondents in Gunt and Gachuurt include only one DFA-member. The respondent in ‘Khandgait’ had become a DFA-member when he lived in Jargalant earlier. None of the respondents in Tuul village is DFA-member.
5.4.6 Farmer-to-farmer connections A common concept of farmers’ communication is that of farmers exchanging information in a friendly atmosphere. This is illustrated in many handbooks of rural extension. In many publications of extension education it is assumed that a farmer-to-farmer communication is already given: less experienced farmers get advices from more experienced farmers, who are supposed to be open-minded and helpful. The survey revealed that this picture is too simple for the reality and relationships are very complex. Only a third of the respondents ask other farmers for advices. Each respondent has only four to five persons on average that he communicates regularly with. Most of them happen to be his relatives or friends who are not necessarily dairy farmers. There are driving and inhibiting forces for the communication between the farmers. But apparently, there are more inhibiting than driving forces. The author could identify two important social conditions that affect farmer-to-farmer connections. Local (i.e. locally established) farmers vs. new farmers Farmers that had lived longer in the same village have built a sub-structure in the community, which is not easily penetrable for new farmers. The latter are often not welcomed by the locals due to the limited pasture capacities. Twenty-three percent of the respondents are immigrants. They had settled down in their villages in or after 2002 and are still not familiar with most of the village inhabitants. There is no structure that integrates new farmers to the community. There are two possibilities for a new farmer to join the community: he finds the attraction of local farmers, or he finds a way to communicate with them. New farmers that have something useful to offer easily get in communication with the locals. It might be innovative technology, pure-bred cattle, or a truck for milk transport. A farmer with craftsman’s skills does also attract other farmers. However, new farmers rarely have attractive objects or skills. Out of the seven immigrants among the surveyed farmers, only one farmer could be considered as an ‘attractive immigrant’. This was a farmer in Gunt. He had started up with ten cows in 2003 and expanded his farm with an investment of $20,000 in 2004. By 2005, he possesses the most modern barn in the vil90
lage, a motorized well, automatic watering facility, a double-pail milking unit, two trucks and a UAZ-469. He showed the local farmers how to equip a modern dairy farm. He transports milk from five to six farms to the city. In addition, he has integrated a small sawmill in his yard and often receives orders from neighboring farmers. He is in a permanent communication with the farmers in his village. Since the remaining immigrants do not have any attractions, they have had to rely on their communication skills. A farmer met another farmer from the province of his origin after he immigrated in Jargalant in 2003. The second farmer had been running his farm since 1993. During the two years of living in neighborhood, the newcomer could profit from his new relationship to a great extent. Another farmer had great difficulties due to the lack of know-how when he started in Nariinii am in 2003. After some unsuccessful attempts of appealing to some local farmers, he has developed a personal relationship with a milker on the largest farm in his village and is able to take advantage of this relationship for his business. In contrast to Jargalant, Gunt, Nariinii am, Shar khad and Gachuurt, the villages Tuul and Udleg have less strongly developed differences between local and new farmers since most dairy farms in these places were set up after 2000. The farmers communicate with each other with little social barriers. The author gained the impression that farmers in Tuul village are most communicative with each other. They had a friendlier attitude to their neighbors than the farmers in other villages. This is probably because the farms are quite small and have little competition for pastures. In addition, all of these farms are relatively new: the need for information exchange may be stronger than the feeling of competition. Udleg differs from Tuul for having more established and larger farms. First farms in Udleg were set up in the middle of 1990s while in Tuul not until 2000. While the 20-cow farm of the US-American farmer Yodor is located in Udleg and surrounded by some imitations with 20 to 30 cows, no farm in Tuul village has more than 15 cows. In Khandgait, the sampled farmer is recognized as an experienced farmer since he and his wife used to work at the former state farm in Jargalant: he as a veterinarian and his wife as a milker. Inequality and Envy Farmers avoid communication with other farmers, who they think have caused or are involved in inequalities in the community. Perception of other people as equal or unequal is very complex and affected by many factors. Unfortunately, inequality is more easily perceived than equality. Most farmers do not accept successes of others as such. The common opinion about a successful farmer is that he simply has had more opportunities than other farmers. It causes an atmosphere of envy within the community and hinders the development of relationships. It is difficult to interpret envy as cause or consequence, neither is it possible to judge the complex of envy as right or wrong. Therefore, some cases are simply described below. The very first reason for the feeling of inequality was the unequal allocation of the capital from the former state farms through the privatisation between 1992 and 1994. An illustrative case was in Gachuurt; the zoo technician of the farm owned 260 cows, three tractors 91
and a truck from the local farm on credit. When he offered other farm employees the possibility to buy cattle on credit, they had refused. Now, those who had not received cattle tend to believe the rumor that he did not pay off his credit. Hence, most farmers in Gachuurt avoid him. Also, the DANIDA project left many farmers with a feeling of inequality, which still exists (cf. chapter 4.1). Those who were not involved in the project stressed during the survey that they did not receive anything free in contrast to those who benefited from the project as farmer J. in Nariinii am. The latter received a modern barn and ten cows free of charge. In addition, he was involved in study tours in Denmark and France at the expense of the project. Now, he is a well-known and prestigious farmer. But farmers in Nariinii am tend to avoid him. He is accepted as one with a strongly developed claim making capacity, but not as an experienced farmer. Farmer D. in Gunt has caused a feeling of inequality in his place in a different way. As it is already described above, he established a modern farm within two years. His progress, however, was perceived by other farmers in the village differently. Some farmers appreciate his achievements now he showed them how to run a modern dairy farm. He was also very communicative and did not refuse to give advices. But most farmers avoid him. Four farmers in his neighborhood were asked about their opinion of him and if they would ask him for advices. They agreed that D. made the progress only because he was able to invest sufficiently. They saw no reason to ask him for advices, since they were more experienced than him, the newcomer in their village. Feeling of inequality also arises when a farmer feels exploited by another farmer. This is typical for farmers without a truck. They are sure of being exploited by those with a truck through the payments for milk transports. Often there are arguments about the transport fee, particularly when the fuel price increases.
5.5 Availability and costs of production inputs 5.5.1 Land The large farm grows oat on five hectares next to the farm building. The farmer owns that field in addition to his farmyard of about 5,000 m². None of the other sampled farms had privatized any land besides their farmyards. Ten percent of the sampled farmers own legal rights for using hayfields between two and 30 ha against a payment of $0,67 per ha. The hayfields are in distances of 20 to 50 km from their farms. The remaining farmers make hay in areas that are 100 to 200 km away from their farms without legal rights, or do not make hay at all. From an economic point of view, both variants of haymaking have advantages as well as disadvantages. For a farmer with legal rights on a certain hayfield, the payment is recovered with less transport costs compared to that of a farmer preparing hay without paid land using rights. In addition, it is not unusual that a farmer makes hay on some larger area than he paid for. 92
5.5.2 Labor The labor forces of the sampled farms can be divided into family forces and hired forces. A further structuring of each group is given below. a. Family labor forces: 1. Full-time forces: farmers and their adult children who work full-time on the farm. The capacity of a full-time force was defined as one Labor Unit (LU) and the work productivity per hour as man hour (mh). Considering a work load of 50 h per week and 48 working weeks, a full-time labor force can work 2,400 mh per year. The farms have up to two full-time forces. The average is 1.1 LU. 2. Part-time forces: farmers with off-farm employment, wives who are also responsible for housework, and adult children that work only part-time on the farm. The capacity of a part-time labor force was estimated at 0.6 LU i.e. 1,440 mh/year. The average amount of part-time forces at the sampled farms is 0.6 LU. 3. Occasional workers: farmers’ wives with off-farm employment, adult children who live in the city but assist their parents occasionally, and children at the productive age of 12-16 years who contribute to the farm work after school and on weekends. The work capacity of a person in this category was estimated at 0.3 LU i.e. 720 mh per year. The farms have occasional workers to the scope of 0.4 LU on average. 4. Seniors: Since seniors between 60 to 70 years can still perform many farm duties as milking, cleaning, feeding etc. to a mean extent of 0.5 LU. On average of the sample, however, they only attain 0.2 LU, indicating relatively little importance. b. Hired labor forces: Workers are hired either on a full-time or a part-time basis. The full-time workers are involved in all sorts of farm work while part-time workers are milkers if female and herdsmen if male. The capacity of a hired full-time worker was estimated at 1 LU while that of a hired part-time worker at 0.3 LU. The sampled farms have more family labor forces than hired workers. The mean total labor capacity is 2.8 LU, of which 2.3 LU (82%) are family labor forces and 0.5 LU (18%) are hired labor forces (Fig. 5.15). But not each farm hires workers: 53% of the farms are run by family members only but still attain an average capacity of 2.8 LU. The farms with only family labor forces tend to be smaller farms with an average herd size of 13 cows while the farms with both family and hired workers have 20 cows on average. The numbers of hired workers range between one and five. The remaining farms hire up to two part-time workers, or one full-time worker, or a couple8. In the latter case, the husband usually works full-time and the wife part-time.
8
The working couple usually lives next to the farm and spends most of the day on the farm. The relationship between the farmer and the workers is much closer than that between a single worker and a farmer. The benefit for the farmer is the permanent availability of the workers. The workers, on the other hand, benefit to a greater extent since the employment in fact is co-operation. They graze their own cattle with the farm’s cattle and prepare hay for their own need using the farm’s machines.
93
Figure 5.15: Structure of labor forces of the sampled farms, given in mean Labor Units (N=30) 2.5
Labor Unit (LU)
0.2
2.0
0.4
1.5
0.6
1.0 1.1
0.5
0.2 0.3
0.0 Family labor full-time
Hired labor
part-time
occasional
senior
The total labor capacities of the farms range between 1.6 and 6.6 LU. While more than a half of the farms attain a capacity of two to three LU and 23% between three and four LU, only seven percent of the farms exceed the four-LU level. Since 77% of the sampled farms have labor capacities between two and four LU, this can be considered as the most common range for dairy farms in the study area (Tab. 5.5). Table 5.5: Capacity and structure of labor forces of the sampled farms (N=30) Levels according to labor capacity Number of farms Share in the sample
1-2 LU
2.1-3 LU
3.1-4 LU
4.1-5
>5 LU
5
16
7
1
1
16.7%
53.3%
23.3%
3.3%
3.3%
Family labor forces: Full-time
0.6
1.1
1.6
2.0
1.0
Part-time
0.4
0.6
0.6
1.8
0.6
Seniors
0.4
0.2
0.1
0
0
Occasional workers
0.3
0.4
0.7
0.3
0
Total
1.7
2.3
3.0
4.1
1.6
Full-time
0
0.2
0.3
0
5.0
Part-time
0.1
0.1
0.2
0
0
Total
0.1
0.3
0.5
0
5.0
1.8
2.6
3.5
4.1
6.6
Hired labor forces:
Total labor capacity
Except for the case of the large farm, which has a total capacity of 6.6 LU, there is no evidence of a correlation between the labor capacity and the farm size. While the farm with least labor capacity of 1.6 LU has 12 cows, the farm with second highest labour capacity of 4.1 LU has only four cows. 94
The hired full-time workers are paid $62 per month while the hired part-time workers are paid $21 per month. A basis rate of $0.31 per hour could be derived both for the full- and part-time workers from their month’s wages. In order to estimate the opportunity costs for family labor forces, different costs were imputed for the farmers and the remaining family labor forces since the farmers are the most productive labor forces and have, at least theoretically, best potentials to find an adequately paid job. Assuming that a farmer is 50% more productive than a hired full-time worker, he was imputed a payment rate of $0.47 per hour, which is 50% more than that of hired workers. All other family forces were imputed the rate of the hired workers.
5.5.3 Finances The farms are mainly financed from internal funds. While overheads are covered by the incomes from milk sales, large-and middle-scale investments into barn, equipment and cattle are financed with released capital from sales of private assets or livestock, and partly from the farm incomes. The farmers often spend private receipts for dairy inputs. They cut their household expenditures temporarily if cash is needed for the farm. Twenty percent of the sampled farmers have current accounts. The interest of a current account is 12 to 14 percent p.a. The remaining farmers save cash at home. Sixty-seven percent of the farmers do not have surpluses after paying their living expenses and the overheads of their farms. Shortage of cash occurs from rarely (13%) across sometimes (37%) to regularly (50%). The most critical season is fall where the farmers spend all of their savings for making hay and purchasing feedstuffs. If a farmer has children studying, the tuition fee ($200 to $400 per year) is paid in September. Early spring was identified as another critical period for the finances. Most farms are out of cash since most cows are dry. The feed prices are 50% higher than in fall. In addition, the traditional New Year’s celebration takes place in February. The celebration costs an average household $300, which is about the turnover of 1,000 l milk. While the farmers need credits, it is very difficult to obtain a credit. The only available type of credit is loan. Business loans with relatively low interest of 24% to 36% p.a. are not granted to an average dairy farm since the latter lacks collateral. Herders’ loans with interest rates of 36% to 48% p.a. are most accessible for the farmers (cf. chapter 4.3.5). The last option for getting cash short term is to borrow it from relatives at a low interest or interest-free. Sixty-three percent of the respondents had never had a loan while 24% of them raised loans regularly. However, only one of them was able to obtain a business loan of $10,000 with the interest of 30% p.a. The remaining farmers raised herders’ loans between $1,000 and $4,000 at interest rates of 33.6% to 48% p.a. The loans were spent for haymaking, and for purchases of feedstuffs and cattle. One respondent had bought a cow on a soft loan offered by the Korean NGO ‘Global Civic Sharing’ in Jargalant in 2004 (cf. 4.3.5).
95
5.5.4 Water and electricity Only 13% of the sampled farms have wells in their farmyards. The investment to a well with a depth of 30 m is approx. $2,500. All other farms water their cattle at community wells against a monthly fee of $0.30 per head during the stalling season. For drinking water the farmers pay $0.50 per t. During the grazing period, the cattle are watered at rivers free of charge. One farmer had installed an automatic watering facility including an electric pump, a water tank, pipes and bowls to a total value of $1,350. The fixed costs of the whole equipment were estimated at $222, the repair costs at $45 and the energy costs for the pump at $40 per year. A life-span of 10 years was assumed for the pump while one of 20 years both for the tank and the remaining parts. Ninety-seven percent of the farms have water tanks with volumes between one and three thousand liters and values between $250 and $500. The fixed costs of the tanks are $35 to $70, while the repairs cost between $10 and $15 per year respectively. The tanks can be used for an estimated period of 20 years. Each farm is connected to electricity and pays US Cent 4.9 per kilowatt during the day (between 6 a.m. and 9 p.m.) and US Cent 1.1 per kilowatt at night (from 9 p.m. to 6 a.m.).
5.5.5 Vehicles9 More trucks are available than passenger cars. Out of the 17 farms with cars, 12 farms (40% of the sample) have either a single truck or one in combination with a sedan or a SUV, or with both of them. The most common truck is the ZIL-130, a Russian truck with 170 hp at 3,600 rpm. One farm has another Russian truck, the GAZ-53, which looks similarly to the ZIL-130 but is less powerful (115 hp at 3,200 rpm). Eventually, four farms have small trucks with approx. 80 hp at 4,200 rpm of the brands Mazda Bongo, Hyundai Porter or Daihatsu Hijet. The trucks are used for the transport of milk, feed and cattle, but also for the transport of persons and consumer goods. The share of the farms with a passenger car is 59% of the farms with cars. The most present passenger car is the UAZ-469, a Russian SUV with 72 hp at 4000 rpm. This brand has proved its suitability for the rural areas of Mongolia for more than 20 years. Sedans on the other hand, are not favored due to their limited loading capacities and unfitness for dirt roads. Nevertheless, four farms have sedans of the brands Mazda, Honda and Hyundai. Eventually, one farm has a Russian van UAZ-2206 (called furgon) in combination with a UAZ-469 (Fig. 5.16). Twenty-three percent of the sampled farms have tractors: three farms have outdated Russian MTZ-80 (80 hp) tractors and four farms have new 25 hp tractors from China. Most of these farms have one or two trucks too. The small tractors were bought at a reduced price of $1,500 at the MFA in the recent years. The main purposes of the tractors are transport and hay-making (Tab. 5.6).
9
Some information on the vehicles was given in the chapter 5.3.4.
96
Figure 5.16: Structure of sampled farms with one or more cars according to car types 2
2
no automobile
1
sedan
1
SUV 13
small truck truck
4
SUV + van sedan + truck SUV + truck 3
sedan + SUV + truck 2
2
Table 5.6: Distribution of sample farms with a tractor according to availability of trucks (N=7) Zil-130 25 hp tractor 80 hp tractor
Small truck 2
Zil-130& Small truck
Zil -130 & GAZ-53
No truck
1 1
1 1
1
While most of the vehicles are outdated, they are still in good condition and thus, were assessed with market values. The sum of the vehicles’ market values per farm ranges between $1,500 and $10,500. A life-span of five years was assumed for the outdated vehicles and one of 12 years for the new 25 hp tractors. Depreciation and imputed capital costs are the most significant fixed costs for the vehicles except for the 25 hp tractors. However, the farmers do not consider accumulating funds for covering these costs. The paid fixed costs are the tax and the insurance, which however, have a small portion in the total fixed costs. The maintenance costs of the garages were estimated at one percent of the market value for each vehicle. The garage costs as fixed costs have little importance. Although the vehicles are used for both dairy and non-dairy livestock production, as well as for private purposes, it was possible to estimate to what extent they were used for dairying. The trucks and the tractors are used mainly for the dairy production. Thus, 75% of the annual fixed costs of these vehicles were allocated to the dairy production. The sedans on the other hand, are used mainly for private purposes. Only 33% of their fixed costs were allocated to the dairy production. The SUVs and the van are used for the transport of both persons and goods. The fixed costs of these vehicles were therefore shared 50:50 between dairying and other purposes (Tab. 5.7). 97
Table 5.7: Fixed costs of vehicles Types of vehicles
Unit
Trucks
Sedans
Zil-130
Gaz-53
25 hp
3,000
3,000
2,500
3,000
1,500
2.500
1,500
1,500
years
5
5
5
5
5
5
5
12
Depreciation
$/year
600
600
500
†
600
300
500
300
125
$/year
270
270
225
270
135
225
135
135
Tax & Insurance
$/year
60
60
50
50
40
40
0
0
Costs for garage
$/year
30
30
25
30
15
25
15
15
Total
$/year
960
960
800
950
490
790
450
275
Use for dairy farming
%
75%
75%
75%
50%
33%
33%
75%
75%
Fixed costs for dairy farming
$/year
720
720
600
475
162
261
338
206
$
Expected life-span
Excel
Tractors 80 hp
Market value
Small
SUV & Van
Other
Fixed costs
Capital costs
†
At the imputed interest of 18%, based on the average for saving accounts.
The variable costs of the vehicles consist of costs for repair and maintenance, which were estimated on an annual basis, and costs for the consumption of fuel10. The costs for repair and maintenance also include the costs for replacement parts and materials except for fuel (Tab. 5.8). Table 5.8: Variable costs of vehicles Types of vehicles
Unit
Type of fuel Fuel price
$/l
Trucks Zil-130
Gaz-53
Small
SUV & Van
Sedans
Tractors
Gas
Gas
Diesel
Gas
Gas
Gas
Diesel
Diesel
0.61
0.61
0.75
0.61
0.66
0.66
0.75
0.75
Excel
Other
80 hp
25 hp
Fuel consumption Cars Tractors
l/100 km
40
30
10
18
8
10
l/h
8
4
6
3
300
250
Variable costs Fuel costs Cars Tractors Repair and maintenance
$/100 km
24.4
18.3
7.5
11
5.3
6.6
$/h $/year
300
300
250
250
150
200
The allocation of the fuel costs to dairy farming is problematic since the scopes of the use of the vehicles cannot be determined. The costs were then estimated for each determinable use for dairy farming purposes separately and, eventually, 50% of the sum was added for non-determinable types of utilization.
10
It was assumed that the annual use of the vehicles does not exceed the threshold of depreciation, and thus, the depreciation was included in the fixed costs.
98
5.5.6 Dairy housing Each farm has a self-constructed wooden barn. Eighty-three percent of the barns are tiestall barns and 17% are open, free-stall shelters. The open shelters are comparable with the winter shelters of pastoral herders in the central provinces of Mongolia. They are built with wood and are not equipped inside. There are two stalls: one for calves and another for other cattle. Cows are not separated and only tied up during the milking. The floor is covered with dung. The difference between the inand outside temperatures is minimal (Fig. 5.17). Figure 5.17: An open, free-stall barn in Tuul village
The farms with open shelters are small and medium. The farmers plan to convert their shelters into tie-stall barns as soon as they are able to finance the conversion. Thus, the open shelters could be considered as a transitional form of cattle housing. The farmers are aware of the inappropriateness of an open shelter for the sensitive dairy cattle due to the low hygiene and exposure of the cattle to the harsh weather conditions in winter and early spring (cf. 3.1). The tie-stall barns have boxes for calves and heifers, storage rooms, but do not include a milking parlor. The barns have various designs and different levels of comfort. A comparison of a barn in Udleg with one in Tuul village below illustrates the differences. The two-row barn with 30 cow spaces in Udleg is an imitation of the barn built by the US-American farmer Bill Yodor in the neighborhood (cf. 4.1). It was built from wood and has a five cm layer of insulation on the outside, covered with three cm boards. Inside the barn there are iron feeding racks, mangers, water bowls between every two cows, and electric cow trainers. The platform is 120 cm wide and 1,600 mm long. The stall floor consists of wooden layer on concrete ground and is covered with synthetic rubber cow mats. Forty-five cm wide dunging passages are integrated. The 15-cow barn in Tuul is constructed of wood in- and outside. Water bowls and cow trainers are not available. Also, manger and dunging passage are not integrated. The cows are tied with a nylon band down to the platforms (Fig. 5.18). 99
Figure 5.18: Illustration of two tie-stall barns with different levels of comfort
While there are many factors that decide about the comfort of a barn such as know-how about barn designing or availability of materials etc., an easily determinable one is the amount of investment. While this was easily done for barns that were built lately, the investments for barns built before 1995 could not be determined since they had been repeatedly converted, extended and repaired in the meantime. Hence, a valuation of old barns was made on the basis of the costs for the last large-scale repair or the last extension, and the amount of the initial investment was added. The year of the last large-scale repair or the last extension was considered as the construction year of a renewed barn for the costing purpose. The barns were divided into four classes according to the levels of investment as follows: 1. Low-cost barns with an investment value of up to $50 per cow space. 2. Lower medium-cost barns with an investment value of $50 to $100 per cow space. 3. Medium-cost barns with an investment value of $100 to $200 per cow space. 4. Cost-intensive barns with an investment value of more than $200 per cow space. The barns of most sampled farms belong to the low and the lower medium-cost classes, while 10% of the barns were identified as cost-intensive. The low cost class includes all of the five open shelters (Tab. 5.9). According to the different investment values, different life-spans were estimated for the barns of each class. Shorter life-spans of 15 and 20 years were considered as appropriate for the low-cost and lower medium-cost barns respectively due to their simple designs and relatively low material expenses. On the contrary, a life-span of 25 years was implied to both the medium-cost and the cost-intensive barns since the differences between these classes were more due to the different conditions of comfort as availability of iron racks and design of mangers etc. than due to the quantity and the quality of building materials. The total fixed costs per cow space range between $7 and $50 per year. Most significant fixed costs are the imputed costs for capital, whereas this is not fully understandable for most farmers. The depreciation costs are understandable for the farmers, but no funds are accumulated for a new barn. 100
Table 5.9: Fixed costs of the barns, averages of each investment class (N=30) Barn classes
Unit
Low-cost
Lower medium-cost
Mediumcost
Costintensive
Total
Number of barns (i.e. farms)
n
12
8
7
3
30
Share in the sample
%
40%
27%
23%
10%
100%
Number of cows
n
16
14
18
20
16
Cow spaces of barn
n
19
16
19
23
18
Total investment
$
747
1,118
2,604
8,278
2,032
Investment per cow space
$
39
71
146
360
104
Life-span
years
15
20
25
25
20
Remaining life-span by 2005
years
13
17
22
23
17
$
645
924
2,239
7,573
1,784
Depreciation
$/year
50
56
104
331
92
Capital costs
$/year
67
101
234
745
183
Maintenance
$/year
7
11
26
83
20
Total
$/year
124
168
365
1,159
295
Fixed costs per cow space
$/year
7
11
20
50
16
Investment
Valuation
Current value in 2005 Fixed costs
For all classes, the barns have more capacities than currently used, indicating housing potentials of the farms for extending their dairy herds. The average capacity of the barns is 18 cow spaces while the farms have an average of 16 cows. The barn with the mostly excessive capacity is the 100-cow barn of the large farm, which has 73 cows. The barns of the higher investment classes tend to be larger than those of lower investments. The medium farms invested 68% more than the small farms per cow space. The high investment values resulted in highest fixed costs for the medium farms. The large farm however, has a low-cost barn, in which only $44 per cow space was invested. The barn also results in least fixed costs per cow space. Nevertheless, the latter is an exceptional case and does not cause a correlation between the size of a farm and the value of its barn (Tab. 5.10). Table 5.10: Fixed costs of the barns, averages of each investment class (N=30) Farm size classes
Unit
Small
Medium
Large
Number of barns (i.e. farms)
n
14
15
1
Number of cows
n
10
19
73
Cow spaces of barn
n
11
20
100
$
945
2,892
4,360
years
18
22
15
Investment per cow space
$
79
133
44
Fixed costs per cow space
$/year
13
21
7
Total investment Life-span
101
5.5.7 Dairy and hay-making equipment The farms have a poor inventory of dairy equipment. Seven percent of them possess mobile double-pail milking machines and 73% have coolers with the volume of 300 l. Each farm has buckets and cans with volumes between five and 40 l, which could be partly assessed with market values of $5 to $20 and result in fixed costs of up to $10 per year. Sixty percent of the farms possess any of the following hay making machines: hand scythe, horse scythe and tractor mower. There are two different types of mower depending on the power of tractor (80 hp or 25 hp). A matching rake is available for each of them. The hand scythes and hand rakes are the simplest and the cheapest hay making tools. But since a farm usually has two to three hand scythes and rakes, the total costs should be considered in the sum of the unit costs. The remaining farms use horse scythes or tractor mowers. A life-span of ten years was estimated for these tools (Tab. 5.11).
5.5.8 Feed Hay is made or purchased while wheat bran is only purchased. One respondent grows oat on five ha and yields 30 t of grain for cattle feeding. The proportional variable costs of oat production are $25 per t. Another farmer purchases five tons of wheat grain at $80 per t for feeding his cattle in winter. Table 5.11: Annual costs of dairy and hay-making equipment Equipment Unit
Number of farms
Purchase value
Life-span
Fixed costs
Variable costs
Total costs
N
$
Years
$/year
$/year
$/year
Milking machine
2
800
10
152
50
202
22
200
10
38
35
73
Hand scythe & rake
8
30
15
5
10
15
Horse scythe & rake
3
200
10
38
50
88
Mower and rake for 25 hp tractor
4
300
10
57
80
137
Mower & rake for 80 hp tractor
3
300
10
57
120
177
Cooler
The total hay provision of the sampled farms is between nine and 140 t. Twenty percent of them cover their requirements by hay making and 40% with purchase. The remaining 40% combine the both options (Tab. 5.12). Table 5.12: Amount and sources of hay provision (N=30) Sources of supply
Hay making only
Purchasing only
6
12
12
prepared
68 t (100%)
0
24 t (54%)
purchased
0
36 t (100%)
14 t (46%)
Number of farms Hay provision
102
Both
Hay making Hay making usually starts in the first half of August and persists 14 to 30 days. Using hand scythes, horse scythes or tractor mowers, the farmers yield 10 to 140 tons of hay and cover 33 to 100 percent of their total requirements. Some small and medium farms use hand scythes for yielding up to 24 t, to which all of them need to purchase additional hay. These farmers consider hand scything as a costextensive approach of hay making. The paid costs in fact are lowest of all variants. However, due to the extremely high labor intensity, the imputed costs of labor are much higher than that for horse scything or tractor mowing. Thus, hand scything results in highest total variable costs per ton of hay. Horse scything is the variant with a medium level of both mechanization and labor intensity. While the paid variable costs for horse scything are less than that for the tractor mowing, the total variable costs are higher. Three medium farms apply this approach and yield 15 to 50 t, covering 38 to 100 percent of their total requirements. Some medium farms and the large farm yield between 36 and 140 t of hay with tractor mowers and cover 62 to 100 percent of their requirements. They attain the best labor productivity, but the highest paid variable costs too. Due to the low labor intensity, the total variable costs of this approach are lowest (Tab. 5.13). Table 5.13: Comparison of different hay making approaches Approach of hay-making
Unit
Hand scything
Horse scything
Tractor mowing
Number of farms
N
8
3
7
Average amount of hay
t
13
32
74
Share in the total provision
%
59
79
88
Distance of hayfield from farm
km
43
67
69
Duration of hay making
day
30
22
26
Labor requirement
mh
730
860
1354
Labor productivity
kg/mh
18
37
52
Hay making
$/t
11
7
11
Hay transport
$/t
7
13
10
Total
$/t
19
20
21
+ Imputed costs for unpaid labor
$/t
19
6
3
= Total variable costs
$/t
38
27
24
†
Paid variable costs
†
The paid variable costs of hay making include expenses for food, repair of scythes and may include fuel costs and payment for temporary helpers.
From an economic point of view, horse scything is more attractive than tractor mowing. By minimizing the transport costs, for example down to $10 per t, the paid variable costs would be only $17 per t, which is by $4 less than that of the tractor mowing. Although the total variable costs of both variants would be about the same, a horse mower implies much less fixed costs than the tractor mower (cf. 5.5.7). In addition, horse scythes are af103
fordable for small and medium farms. A horse and a horse mower can be purchased at a total of $400, while a tractor mower costs $300 and requires a tractor. Commercial hay and bran The farmers prefer to buy hay in favorite regions as Bayanchandmani in the Tuv province and Zuunkharaa in the Selenge province. The average price of hay is $48 per t. They also prefer to buy hay between 15.August and 15.September because the price is lowest then. But many farmers are short of cash at that time and purchase additional hay in spring at prices that are 30 to 50 percent higher than in fall. Ten percent of the respondents buy hay in their home villages and pay 20 to 30 percent more than in Zuunkharaa. They are aware of the advantages of purchasing hay with high quality at low prices in other regions as Zuunkharaa, but they consider renting a truck and traveling 200 km as unprofitable since they buy small amounts of one or two tons at one purchase. The purchase in Ulaanbaatar is most expensive and thus, is the last option. This is done only by those who are not able to buy all the required hay at one purchase. These are small farms except for a medium one. On the raw material markets hay is available any time (table 5.14). Table 5.14: Alternative options for hay purchase (N=24) Purchase in home villages Farms Number of cows Amount Price (incl. transport) Work load
Purchase in Tuv province
Purchase in Zuunkharaa
Purchase in Ulaanbaatar city
3
4
9
8
14
14
16
9
21 t
35 t
34 t
10 t
$54/t
$44/t
$42/t
$55/t
0
2.8 mh
1.8 mh
1.4 mh
The farmers use their own trucks or rent trucks for hay transports. A Zil-130 truck is loaded with four tons and one with a trailer with six tons of hay. Bran is purchased from the flour mills ‘Altan taria’ and ‘Ulaanbaatar guril’ or at raw material markets in Ulaanbaatar, usually in August and September. Seventy percent of the sampled farms, covering all farm size classes, buy bran directly from flour mills at $57 per t including the transport costs. The total bran provision per farm is 18 t on average. Another 30% of the farmers buy bran at raw material markets at $72 per t. They are small and medium farms with a mean annual provision of five tons. These farms also buy hay in the city or in their home villages. Besides being not able to organize the purchase of bran from flour mills, they do not procure the total amount in fall due to a shortage of cash. Consequently, they procure additional bran in winter and spring when the prices are 30 to 50 percent higher than in autumn.
104
5.6 Dairy management 5.6.1 Herd management Structure The herd structures of the sampled farms underline both a specialization in milk production and a reproductive herd management. Most male cattle are slaughtered when they are 18 to 24 months old while female cattle are raised for dairy herd replacement. According to GOMBOSUREN (2005,49), the productivity of a dairy cow in Mongolia decreases after six lactations. Thus, a herd replacement rate of 17% is required for a stable herd structure. Considering cattle losses, however, a herd replacement rate of 20% i.e. a cow-heifer ratio of 5:1 is more realistic. It is attained by the sampled farms (Tab. 5.15). Table 5.15: Herd structures of the sampled farms (N=30) Farm classes
Small
Medium
Extra large
Total
14
15
1
30
Number of farms Cows
10
19
73
16
Heifers (>24 months)
2
4
15
3
Young heifers (12 to 24 months)
2
5
25
4
0.4
0.6
2
0.5
Male cattle (>24 months)
1
1
0
1
Young male cattle (12 to 24 months)
2
4
0
3
Calves
8
12
35
11
25
46
150
40
Bulls
Total number of cattle
The cows are between six and eight years old and have lactated three to five times on average. The respondents consider a cow that has lactated less than five times as young. Most farmers slaughter cows after six to eight lactations while 17% of the respondents do not fix age limits for cull cows. Most farms do not have excessive cows that they could sell yet. Only one farm sells one or two cows annually. A third of the farmers sell cows occasionally e.g. if they are in need of cash or the cows are overage. Unnatural losses of cows occur less frequently as that of young cattle below the age of 24 months, of which about 10% die unnaturally every year. The most common reason for cattle losses is the lack of feed, which weakens the body condition in winter. In addition, the following reasons were mentioned by the farmers: -
Theft and wolf attacks at the pasture
-
Eating plastic bags at the pasture (only in Tuul village)
-
Diseases with invisible symptoms, interpreted by farmers often as anger of natural spirits e.g. as consequence of cutting a holy tree or polluting a river.
105
Breeds ‘Alatau’ and ‘Black-and-White’ are the most common dairy breeds. Sixty-seven percent of the farms have ‘Alatau’ cattle and 57% ‘Black-and-White’ cattle while only 23% have ‘Simmental’ and only one farm ‘Steppe Red’ cattle. Altogether, 438 out of the total of 485 cows are either ‘Alatau’ or ‘Black-and-White’ (Fig. 5.19). Figure 5.19: Breed structure of the total cow population of 30 sample farms (N=485)
8%
1%
47%
44%
Alatau
Black-and-White
Simmental
Steppe Red
Regional preferences are evident in the distribution of the breeds. While ‘Alatau’ cattle are mostly available in Udleg, most of the ‘Black-and-White’ cattle are in Gachuurt and Nariin. ‘Simmental’ cattle are available in Nariin and Jargalant while ‘Steppe Red’ cattle only in Shar khad. Sixty-three percent of the farms have a single breed herd: 37% of Alatau, 23% of ‘Blackand-White’ and one herd of ‘Simmental’ cattle. The remaining 37% have mixed herds of two or three breeds in the combinations and shares given below: • ‘Alatau’ + ‘Black-and-White’ at 13% • ‘Alatau’ + ‘Black-and-White’ + ‘Simmental’ at 10% • ‘Black-and-White’ + ’Simmental’ at 8% • ‘Alatau’ + ‘Simmental’ at 3% • ‘Alatau’ + ‘Black-and-White’ + ‘Steppe Red’ at 3% The large farm and 71% of the small farms have single breed herds. The large farmer consciously has a single breed herd. The small farmers, on the other hand, probably start with a single breed and reproduce the herd without buying any other cattle due to their limited finances. More flexible are the medium farms, of which 53% have single breed herds and the remaining 47% have mixed herds. Nevertheless, it still is obvious that larger farms prefer single breed herds since larger medium farms i.e. those with more than 20 cows had single breed herds. 106
5.6.2 Breeding and reproduction It was not possible for an average dairy farmer to apply AI until 2004. Only few farmers including one of the respondents could obtain semen through their personal relationships to the Institute of Animal Husbandry. In 2004, the MFA initiated the AI project (see 4.3.2). Twenty percent of the sampled farms belonged to the first 64 farms that were involved in the pilot phase of the project free of charge. Two other farms paid a reduced rate of $5. Altogether, 27% of the sampled farms applied AI in 2004. Unfortunately, a half of these farms were discontented with the results of the insemination and refused further application of the AI. The remaining farmers were satisfied with the mean fertility rate of 80% and applied the AI again in 2005. Including these and some other farmers, 20% of the sample farmers were involved in the AI project in 2005. But in 2005, the AI itself costs $11 per cow and another $10 is spent for the transport and hosting of the AI technician. Sixty-seven percent of the respondents have always inseminated their cows naturally. However, a half of them are interested in AI and seek information about the involvement in the project. Forty-four percent of the respondents do not plan to apply the AI since they are satisfied with the natural insemination. Some of them had also heard negative rumors about AI. The most popular one tells that semen from France was inappropriate for cows in Mongolia because the crossbred dairy cows in Mongolia were smaller than the pure-breeds in France. A calf from the French semen would be therefore too big and damage the health of a crossbred cow. This rumor had been neither confirmed nor refuted by experts. A total of 80% of the respondents inseminated their cows naturally in 2005: 47% with own bulls and 23% with their neighbors’ bulls. These farmers have a full control over the insemination. The remaining 10% - all of them are small farmers - do not control what bull inseminated their cows at the pasture. Fails in fertilization are considered regular by 20% of the farmers, occasionally by 60%, and rarely or absent by 20%. The initial mating of heifers occurs at the age between the 24th and the 30th months and the first calving between 30th and 48th months, mostly after the 36th month. Most cows deliver in March and April (Tab. 5.16). Table 5.16: Calving periods Periods in which most cows calve
Number of farms
January to March
1
February to April
10
March to April and October to December
2
March to May
9
April to June
5
April to June and September to October
1
November – January
2
107
5.6.3 Grazing Grazing is an essential part of the semi-intensive dairy production system. The farmers save significant amounts of feed costs by utilizing the pastures free of charge. In addition, the nutrients provided by pasture plants are partly irreplaceable by commercial feedstuffs. The grazing approach of each farm is characterized by its period and duration. The sample farms have 11 different grazing periods. The most common period is between mid-May and mid-October. By the end of May at the latest, all of the sampled farms are grazing their cattle while by the end of October, 83% of the farms are back in the stall modus (Fig. 5.20). Figure 5.20: Grazing schedules of the sampled farms (N=30) April I
II
May III
I
II
June III
I
II
July III
I
II
August III
I
II
Sept. III
I
II
October III
3 farm, 244 days from April to December 1 farm, 214 days from April to November 2 farms, 214 days from mid-April to mid-November 1 farm, 202 days from April to the end of October 3 farms, 183 days from mid-April to mid-October
3 farms, 183 days from the end of April to the end of October
3 farms, 170 days from mid-May to November 1 farm, 169 days from mid-April to October 3 farms, 153 days from May to October
6 farms, 153 days from mid-May to mid-October
4 farms, 139 days from mid-May to October
108
I
II
Nov. III
I
II
III
The average duration of grazing is 176 days. Shorter durations of the grazing season indicate a higher level of intensification since longer stall periods result in higher costs for feeding and labor. As shown in the Fig. 5.20, the start date of the grazing season appears to correlate with its duration. While four farms with the longest grazing season start grazing at the end of March or early in April, those four farms with the shortest grazing season start in the middle of May. Hence, it can be assumed that more intensified farms graze shorter by entering the grazing season later than less intensified farms. In accordance with the above assumption, the lowest level of intensification could be imputed to the small farms while the highest level to the large farm. The duration of the grazing season is above the average for small farms while far below the average for the large farm. For both the large and the medium farms, the duration of the grazing season is below the average of 176 days (Fig. 5.21). Those four farms with the shortest grazing season of 139 days include one small and two medium farms in addition to the large farm while the farms with the longest grazing season of 244 days include two small farms and one medium farm. The pasturing approach is relatively homogeneous. The cattle are driven to the pasture at 6 or 7 A.M. after the morning milking and back at 6 P.M. After the evening milking the cattle were pastured near the settlement until 10 P.M., resulting in a total of 13 hours of grazing per day. While 40% percent of the respondents send a herdsman to the pasture, which mostly occurs to be a child, the remaining 60% graze the cattle without herding. Figure 5.21: Durations of the grazing season at the sampled farms (N=30) 220 200
198
Days
180
176 168
167
160
139
140 120 100 small
middle-sized
large
extra large
A third of the respondents camp with their cattle on pastures outside the settlement between June and mid September. But this is only possible for farmers with vehicles for milk transport since it is not possible to store milk in a cooler due the lack of electricity in a camp. The pastures are used free of charge (cf. 4.3.3). Since everyone has equal rights to use them, overgrazing is a major problem. The farmers deal with the problem by grazing the cattle as far as about four to five km from the settlement.
109
5.6.4 Milk extraction The cows are milked either by the farmer’s wife or by a hired milker. The respondents milk by hand except for one farmer using a double-pail milking unit for simultaneous milking of two cows. None of the respondents has a milking parlor. A milking session persists about 15 minutes per cow when hand milking and about 7-8 minutes while milking with the machine. Before milking, the udder is usually wiped with a wet cloth (83% of the sample farms) or washed with warm water (17% of the farms). While milking, the cows are fed bran. During the grazing season, the cows are milked outside the barn. The morning milking takes place between 5 and 7 A.M. and the evening milking between 6 and 8 P.M. During the stall period, the morning milking is performed between 6 and 8 A.M. and the evening milking between 5 and 7 P.M. After milking, milk is poured into cans with volumes of 10 l, 20 l or 40 l, and cooled in a cooler or a tub with cold water until it is transported for selling. At the time of the survey (June 2005), 47% of the sampled farms had all of their cows lactating. The remaining 53% of the farms achieved a lactation rate of 63 to 96%. The lactation proceeded 305 days on average and was followed by a dry period of 60 days. The average lactation yields range between a minimum of 1,845 l and a maximum of 3,090 l. The average is 2,460 l. Eighty-seven percent of the farms have mean lactation yields between 2,000 l and 3,000 l. While a slight majority of them have averages less than 2,500 l, the remaining farms belong to the range between 2,000 and 2,500 l. Only three farms have mean lactation yields that are less than 2,000 l, only one farm has an average above the 3,000 l level (Fig. 5.22). Figure 5.22: Distribution of the sampled farms by mean lactation yields per cow (N=30)
40% of the farms, average 2,743 l
3% of the farms, average 3,090 l
10% of the farms, average 1,905 l
47% of the farms, average 2,292 l up to 2,000 l
110
2,000 to 2,500 l
2,500 to 3,000 l
more than 3,000 l
The average daily yield during the lactation period of 305 days is 8.1 l per cow. The average daily milk production is 122 l. The least amount of 19 l/day is produced by a threecow farm while the maximal amount of 570 l/day is attained by the large farm with 73 cows, of which 70 were lactating in June 2005. The total milk productions range between 5,895 l/year for the three-cow farm and 173,950 l/year for the 73-cow farm. The average is 37,213 l/year. Although milk production is influenced by multiple factors, and is individual for each cow, there is some evidence that smaller farms are less productive than larger ones. The small farms attain only about 90% of the average lactation yield of the large and the medium farms. Between the average yields of the medium farms and the large farm, on the other hand, there is a relatively little difference of approx. 4% (Tab. 5.17). Table 5.17: Comparison of milk yields of the sampled farms (N=30) Farm size classes
Small
Medium
Large
Mean
Number of farms
14
15
1
30
Number of cows
10
19
73
16
Average daily yield per cow, l
7.6
8.5
8.1
8.1
2,328
2,582
2,485
2,460
71
140
570
122
21,589
42,680
173,950
37,213
Average lactation yield per cow, l Daily milk production per farm, l Annual milk production per farm, l
The lactation is affected by the semi-stationary character of the farming system. Not only is the whole grazing season included in the lactation period, but it often overlaps with the most productive phases of lactation. For 93% of the farms the lactation period begins in March or April, and includes 178 grazing and 127 stall days on average (Fig. 5.23). Figure 5.23: Integration of the lactation period in the semi-stationary farming system (N=28) Mar.
Apr.
Stall period
May
Jun.
Jul.
Aug.
Sep.
Grazing season (178 days)
Oct.
Nov.
Dec.
Jan.
Feb.
Stall period
Lactation (305 days)
The remaining two farms organize the breeding differently. They inseminate their cows in February or March so that the cows deliver in November and December. Thus, the lactation period consists of 125 grazing and 180 stall days. On average of the sampled farms, the lactation period consists of 175 grazing and 130 stall days. Approximately, 65% of the total lactation yield is produced during the grazing season and the remaining 35% during the stall period. This relation can be led back to the relation of the grazing and stall days within a lactation period. But there is difference between the milk yields too. The daily yield per cow is 9.1 l during the grazing season while only 6.5 l during the stall period. 111
The peak is attained by most farms in July, between the 60th and the 120th day of lactation. The average daily milk yield per cow reaches 11 l. This productivity level remains constant until September and starts to fall down due to a decrease in the lactation curve and a decrease in the nutritional value of the pastures. During the last 65 days of the lactation, which are mostly between the end of November and the end of January, the average milk yield per cow is only five liters per day (Fig. 5.24). Figure 5.24: Average lactation curve of the sampled farms in 60-day periods, presented with means and deviation spans† 14 12 11
Liter/day
10 8
10
8 7
6
5
4 2 0 0-60 days Apr.-May †
60-120 days Jun.-Jul.
120-180 days Aug.-Sep.
180-240 days Oct.-Nov.
240-305 days Dec.-Jan.
The months to each period are approximate.
Although all farms tend to produce more milk during the grazing season than during the stall period, this is especially obvious for the small farms. They produce 74% of their total milk production during the grazing season. Only approx. 70% of the milk yield in the grazing season is achieved in the stall season. Most balanced, on the contrary, is the large farm, having little differences between the seasons in its production volume (Tab. 5.18). Table 5.18: Comparison of the mean milk yields of the sampled farms (N=30) Farm size classes
Small
Medium
Large
Mean
Duration within the lactation period Grazing season
183 days
170 days
139 days
175 days
Stall period
122 days
135 days
166 days
130 days
Grazing season
9l
9l
9l
9l
Stall period
6l
7l
7l
6l
Grazing season
69%
62%
51%
65%
Stall period
31%
38%
49%
35%
Daily milk yield per cow
Share in the lactation yield
112
5.6.5 Utilization and marketing of milk In contrast to the amount needed for calf feeding (17%), the amount of home consumption is very little i.e. only four percent of the total milk production. On average, 79% of the year’s production is sold. Not necessarily do smaller farms consume less milk than larger farms. The small farms for instance, consume more milk than the medium farms and the large farm. The high milk consumption however, results in a critical share of only 73% for milk sales. It seems that the small farms are relatively subsistence-oriented. Due to the lack of financial resources to afford commercial foodstuffs that could substitute milk they use a large part of their farm produce for home consumption. The highest share of sale is attained by the large farm, which utilizes only one percent of the milk production for home consumption (Tab. 5.19). Table 5.19: Average amounts of milk utilization for different purposes (N=30) Farm classes
Small farms
Medium farms
Large farm
Mean
14
15
1
30
Number of farms Units
liter
%
liter
%
Production
21,589
100
42,680
100
Calf feeding
4,007
19
7,150
Consumption
1,732
8
15,850
73
Sold
liter
%
liter
%
173,950
100
37,213
100
17
21,900
13
6,175
17
1,469
3
1,525
1
1,594
4
34,061
80
150,525
86
29,445
79
Milk is marketed five ways shown in the Tab. 5.20. The most common way is delivering to a dairy in the Ulaanbaatar city. While the dairies offer lowest prices, they guarantee the purchase of contractually fixed amounts. Therefore, nearly a half of the farms including 36% of the small farms, 47% of the medium farms and the large farm deliver dairies. Dairies collect milk with their trucks everyday. But farmers that possess a truck prefer to transport their milk to the dairies in order to get a price that is by $0.04/l higher than paid by the collecting trucks. The advantage in this case is $0.02 per l since the proportional variable costs of the milk transport are $0.02 per l. Some small and medium farms, particularly in places close to the city such as Gunt, Gachuurt and Tuul, supply to groceries in the city. This option enables the farmers to obtain better prices than offered by the dairies. On year’s average, the price difference is $0.03 per l. The price is bargained between the farmer and the buyer. Instead of contracts, verbal agreements are made on the delivery and the payment conditions. The transportation of milk is organized by farmers with trucks. They charge $1 to $2.5 depending on the amount of milk. The risk of supplying a grocery is that the grocery may refuse to purchase the total amount of milk due to bad sales. In that case, the farmer has to find another way to sell the rest. But this is unusual. Also, since a farmer usually supplies two to three groceries, the rest milk is not more than 10% of the total amount. Generally, the farmers are satisfied with supplying groceries. 113
Table 5.20: Comparison of alternative options of milk marketing (N=30) Options of milk selling
Supply to a dairy
Share of farms
Supply to a grocery
Outlet selling
Supply to an Intermediary
Supply to a canteen
43%
27%
17%
10%
3%
22
14
7
14
15
142
64
35
84
110
20-32 km from the city†
2
6
4
2
1
‡
11
2
1
1
0
farmer
5
8
5
1
1
buyer
8
0
0
2
0
Milk transported by the farmer
$0.27
$0.27
$0.31
$0.27
$0.27
milk collected by the buyer
$0.23
-
-
$0.23
-
Contract/verbal agreement
yes
yes
no
yes/no
Yes
(Seasonally) fixed prices
no
no
no
No
No
Price set by
buyer
buyer/farmer
farmer
buyer/farmer
buyer
Bargain problems
yes
yes
no
Yes
yes
Unsold milk
no
sometimes
often
Sometimes
sometimes
Average number of cows Average amount of daily sale Number of farms 50-72 km from the city Milk is transported by: (Frequency of answers)
Year’s average price, per l
Conditions and risks
†
‡
Gachuurt (incl. Khuandain am), Khandgait, Gunt and Tuul; Jargalant, Nariinii am, Udleg and Shar khad
The riskiest option of milk marketing is outlet selling. While a farmer is able to attain best prices if he, his wife or his children sell milk at a food market or in the streets of the city, there is no guarantee for all milk is sold. In addition, the person who sells the milk might meet a food inspector and gets fined due to the lack of a license for food trade. Some small farms obtain a price advantage of $0.08 per l compared to those supplying dairies by outlet sales by taking the risks associated with this option and expend a whole LU-day for that. These farms are located in Gachuurt and Tuul, except for one in Udleg. While the farmers in Gachuurt and Tuul transport their milk by bus or trucks of their neighboring farmers, those in Udleg prefer the train. The next option is supplying to an intermediary, who then sells milk at outlets. Intermediaries usually buy milk in the villages, but neither is a regular purchase guaranteed, nor are they obligated to buy the entire amount the farmers offer. Usually, the intermediaries pay the same prices as the dairies. The only advantage of an intermediary compared to a dairy is the flexibility. While the dairies require the contractually fixed amounts of milk to be supplied on time, the intermediaries accept variations in the amount and time of supply. Moreover, a farmer can stop supplying an intermediary without consequences any time. This is not possible when supplying a dairy.
114
One small farm in Jargalant and two medium farms in Gunt had chosen this option, but are not content with their choice. There are often arguments with the intermediaries because of the milk price. These farms will stop supplying intermediaries as soon as they find an alternative6. An unusual way of milk selling is to supply a canteen: most canteens prefer to buy not perishable milk in Tetra Pak® packs or milk powder. One of the sampled farmers supplies the canteen of the ‘Gandan’ monastery in the Ulaanbaatar city. The canteen offers the same price paid by the groceries. Unfortunately, the canteen sometimes buys less milk than arranged. Hence, supplying a canteen seems to be as unsafe as supplying a grocery.
5.6.6 Feeding 1. Feeding in the grazing season The feed rations consist of pasture grass and are partly supplemented with bran. Bran is fed by hand at milking in the morning and in the evening. The grazing season starts in April or May. These are the most critical months. For 93% of the farms, March and April are the main calving months. For the remaining two farms, of which calving seasons are between November and January, it is the mid-lactation period. Thus, appropriate feed rations are necessary for exploiting the milk production potentials of the cattle. On the other hand, it is a time of financial chaos. After the dry period of most cattle, the farmers are short of cash. The prices of hay and bran are highest. In addition, food prices usually increase in spring. If a farmer has children graduating from high school or college, up to $1,000 are needed for the graduation ceremonies. Against these backgrounds, many farmers start the grazing as early as possible. Forty-six percent of the sampled farms including small, medium and large farms start grazing in April. Once grazing has started, the hay feeding is stopped. Grazing in April, however, does not provide energy and protein amounts beyond the requirements for the body maintenance of a lactating cow whereas the energy (NEL) requirement increases from 29 MJ/day in March to 33 MJ/day due to increased physical efforts. The farmers therefore feed the cattle bran supplementary for the whole month of April regardless of grazing or not. The average bran ration is 3.9 kg/day. The average milk yield is 8.4 l/day. Sixty percent of the farms stop the bran feeding in May; mostly in the last third of the month. They have an average milk yield of 8.9 l/day (per cow). The remaining 40% of the farms feed bran in an average ration of 3 kg/day. The average milk yield of these farms is 10.3 l/day in May.
6
Intermediate trade became popular in Mongolia in the early 1990s when the state-run trade structure broke down and private possession of vehicles was not common. The intermediaries transported foodstuffs and raw materials from rural and peri-urban producers to retailers in the urban centers and industrial goods back to the rural households. Today, most nomadic herders still supply intermediaries while peri-urban farmers prefer to deliver processors or retailers in the urban centers directly. Transportation of goods has become easier since nearly every other farmer has a car.
115
By the mid or the end of June, the pastures are fully recovered. Best milk yields are attained between July and August. The average daily yields per cow are 10.4 l/day in June, 10 l/day in July and 9.4 l/day in August respectively. Some farms stop the bran feeding in June or July. By the beginning of July, 63% of the sample farms are grazing their cattle without bran feeding. The mean yield of these farms is 9.2 l/day. The remaining 37% of the farms feed bran during the whole grazing season, even though in reduced rations between 1 and 2.5 kg/day, and yield an average of 11.1 l/day. In September, all cattle are still grazing. About a half of those farms that stopped the bran feeding during the summer resume it by starting with relatively small rations of up to 2.5 kg/day in the end of August or in September. The share of the farms feeding bran reaches 77% of the sample by the end of September. The average milk yield of these farms is 8 l/day while that of the farms not feeding bran yet is 6.8 l/day. The grazing season ends for 70% of the farms either in the beginning or in the middle of October. All of them feed bran. The average bran ration while grazing is 2.2 kg/day and increases to 2.6 kg/day when the stall period begins. The average yield of these farms is 6.7 l/day. The remaining 30% graze their cattle for the whole month of October. Six out of these nine farms feed bran with a mean ration of 2 kg/day, and yield 6.8 l/day while those three farms not feeding barn yield yet 5 l/day. By the middle of November, 90% of the farms have already started the stall period. The average milk yield for the whole month of November is 5.8 l/day for these farms while 5 l/day for the remaining 10% of the farms, which graze their cattle until the end of November. All farms feed bran: the average ration is 2.5 kg/day. The daily feed ration over the whole grazing season consists of 10 kg DM containing 62 MJ NEL and 1,431 g nXP on average. Pasture grass contributes for 92% of the DM, 89% of the NEL and 88% of the nXP amounts. Bran is fed on 103 out of the 175 grazing days. The ration contains approx. 2.5 kg DM crude fiber, which is 21% of the total DM. The ration enables an average milk yield of 8.5 l/day (Tab. 5.21). Table 5.21: Daily feed ration and daily nutrient requirements of a lactating cow during the grazing season, means of the sampled farms (N=30) Fresh mass, kg
Dry matter, kg
Energy, MJ NEL
Protein, g nXP
Nutrient supplies from the feed ration Pasture grass
24
11
55
1,198
Bran
1.4
1.2
7
156
Total
25
12
62
1,354
Body maintenance
33
360
Gravidity
0.1
2
Milk production (9.1 l/day)
28
757
Total
61
1,119
Nutrient requirements
116
The farms are divided into two categories according to the energy supply of their lactating cows during the grazing season in Tab. 5.22. The comparison reveals that underfeeding of dairy cattle is linked with longer grazing season and shorter bran feeding period. Furthermore, smaller farms tend to underfeed their cows. Table 5.22: Comparison of the sampled farms with according to daily feed rations of lactating cows during the grazing season (N=30) Energy (NEL) supply per day
Up to 60 MJ
60 to 70 MJ
Number of farms
11
19
Average number of cows
13
18
Milk yield in the grazing season, l/day
7.8
9.8
Duration of the grazing season, days
196
165
60
131
NEL, MJ
58
63
nXP, g
1,020
1,176
FM, kg
23
24
DM, kg
11
11
FM, kg
0.7
1.7
DM, kg
0.6
1.5
FM, kg
24
26
DM, kg
11
12
NEL, MJ
58
64
nXP, g
1,264
1,406
Duration of bran feeding, days Nutrient requirements
Feed ration Pasture grass Bran
Total
2. Feeding in the stall period The stall period mostly persists 189 days between the end of October and the end of April. While hay is fed three times a day: before or after milking in the morning, after watering in the afternoon and before milking in the evening, bran is fed twice a day i.e. at milkings. The average hay ration is 9 kg/day and the average bran ration is 3 kg/day. Two farmers feed their lactating cows grain in addition to hay and bran. During the three months between December and March, each cow is fed four kg oat grain and two kg wheat grain per day respectively. The grain is fed after the watering in the afternoon. The farmers feed cows according to their milk yields, which usually decrease in winter when the lactation period comes to its end. The hay ration for instance, is up to 12 kg/day in late fall while only 6 to 8 kg/day during the dry period, which is mostly between December and February. During the two to three weeks before the calving, the ration increases to 8 to 10 kg/day and after the calving it can reach 12 to 14 kg/day if the farm can afford it and the milk yield of the cow justifies this ration. 117
The average daily ration over the period is 10 kg DM, and contains 48 MJ NEL and 1,073 g nXP. Hay contributes for 80% of the DM, and for 71% of both the NEL and the nXP. The crude fiber concentration of the rations is approx. 25%, which is relatively high. The stall season includes 130 days of the lactation period and 59 days of the dry period. Therefore, the nutrient requirements of a cow include much more nutrients for the gravidity than in the grazing season. While the share of energy requirements for the gravidity is relatively small i.e. 4% of the total requirement, the protein requirement for the gravidity is 11% of the total protein requirement. The energy requirements for the body maintenance are less than during the grazing season due to the reduced movement. But still, 64% of the energy and 43% of the total protein requirements are needed for body maintenance. The remaining amounts of energy and protein enable the production of 6.5 l milk per day during the time of lactation. There are surpluses of both NEL and nXP: the weakening lactation potentials, low quality of the feedstuffs and uncomfortable conditions in the barn, and insufficient exposure etc. may lead to a lower feed utilization rate during the stall period than during the grazing season (Tab. 5.23). Table 5.23: Daily feed ration and the daily nutrient requirements of a lactating cow during the stall period, means of the sampled farms (N=30) Fresh mass, kg
Dry matter, kg
Energy, MJ NEL
Protein, g nXP
Nutrient supplies from the feed ration Hay
9
8
34
764
Bran
2.6
2.3
13
297
Grain
0.1
0.1
1
13
Total
11
10
48
1,073
29
360
2
93
Milk production (6.5 l/day)
14
379
Total
45
832
Nutrient requirements Body maintenance Gravidity
The NEL amounts in the individual rations range between 37 and 66 MJ, and the nXP concentrations between 837 and 1,488 g. The farms were divided into four groups according to the energy supply of their feed rations during the stall period. It was found that smaller farms tend to apply less nutritive feed rations than larger farms. The first groups i.e. the groups of farms with feed rations containing less than 50 MJ NEL include 86% of the small farms and 67% of the medium farms. The third group consists of five medium farms and one small farm. Nevertheless, the group of farms with most energetic feed rations includes the large farm and one small farm too (Tab. 5.24). 118
Table 5.24: Comparison of the sampled farms according to daily feed rations of lactating cows during the stall period (N=30) Energy (NEL) supply
up to 40 MJ
40 to 49 MJ
50 to 59 MJ
60 to 70 MJ
Number of farms
2
20
6
2
Average number of cows
7
14
18
44
Milk yield in the stall period, l/day
2.7
6.0
8.5
9.3
Duration of the stall period, days
121
186
211
219
NEL, MJ
36
44
50
55
nXP, g
618
793
952
1,073
FM, kg
7
9
10
10
DM, kg
6
8
9
9
FM, kg
2.0
2.4
3.0
3.8
DM, kg
1.8
2.1
2.7
3.3
FM, kg
0
0.1
0
0.8
DM, kg
0
0.1
0
0.7
FM, kg
9
11
13
15
DM, kg
8
10
11
13
NEL, MJ
37
46
53
64
nXP, g
837
1,027
1,188
1,426
Nutrient requirements
Feed ration Hay Bran Grain
Total
Farms with longer stall periods tend to have more nutritive feed rations. The farms in the first group keep their cattle for only 121 days in barn per year while those in the fourth group have an average stall period of 219 days. Also, the lengths of the stall period for the farms in the remaining two groups are proportional to the energy supplies of their feed rations. A further ranking of the groups could be made according to their average milk yields. As it is expectable, the farms in the third and the fourth groups have best milk yields while the farms in the first two groups have least yields. Causing differences in the productivity, the different feed rations clearly indicate different levels of intensification. However, there seems to be a difference between the optimum and the maximum of intensification. The farms in the fourth group have not only most nutritive feed rations but also most surpluses of nutrients. The gross supplies of energy and protein per liter milk are 14 MJ NEL and 310 g nXP for the farms in the first group, 8 MJ NEL and 171 g nXP for the farms in the second group, 6 MJ NEL and 140 g nXP for the farms in the third group, and 7 MJ NEL and 153 g nXP for the farms in the fourth group. Hence, the highest efficiency of feeding is achieved by the farms in the third group rather than by those in the fourth group. 119
3. Nutrient supplies and balances per year The average DM-intake of a cow is 4,063 kg per year. Hay is fed on 189 days and bran on 294 days. Grain is fed by two farms for 90 days. Grazing provides nearly a half of the total energy and protein supplies. Forages (pasture grass and hay) contribute for 84% of the total DM, 81% of the NEL and 80% of the total nXP supplies (Tab. 5.25). Table 5.25: Structure of the average feed intake per cow and year Fresh mass
Dry matter
Energy, NEL
Protein, nXP
Amount, kg
Amount, kg
Share
Amount, MJ
Share
Amount, kg
Share
Pasture grass
4,162
1,867
46%
9,634
48%
210
47%
Hay
1,683
1,525
38%
6,566
33%
146
33%
Bran
736
656
16%
3,683
18%
85
19%
Grain
18
16
0.4%
108
1%
2
1%
Total
6,599
4,063
100%
19,991
100%
443
100%
A dairy cow with a live weight of 450 kg is able to take in 3,285 kg DM of forage and 1,643 kg DM of concentrates per year on average (WIEDENMANN et al. 1999,256). While the forage supply is sufficient, the concentrate intake is equal to only 41% of the intake potential. An average feed ration could be supplemented by concentrates to the amount of 971 kg DM per year. A total of 960 kg DM of crude fiber is supplied per year. This is 24% of the total DMintake, and is too much if compared to the optimal concentration of 18% recommended by KIRCHGESSNER (2004,335). The oversupply of fiber could damage the health, the fertility and the productivity of the cows. Although the grazing season is shorter than the stall period, both the daily and the total nutrient intakes are higher during the grazing season. This is not only because of the higher DM-intakes, but also due to the higher nutrient contents of the pasture plants: 52% of the total DM-intake, 55% of the total NEL and 54% of the total nXP are supplied during the grazing season (Tab. 5.26). Table 5.26: Average nutrient intakes of a cow during the grazing season and the stall period Season
Daily ration DM, kg
NEL, MJ
Total ration nXP, g
DM, kg
NEL, MJ
nXP, kg
Grazing (176 days)
12
62
1,354
2,079
10,823
237
Stall period (189 days)
10
48
1,073
1,985
9,168
205
The total nutrient requirements of a cow with the average milk production of 2,460 l per year are 19,372 MJ NEL and 365 kg nXP. While most of the energy is required for body maintenance, more than a half of the total protein requirement is caused by milk production (Tab. 5.27). 120
Table 5.27: Structure of average energy and protein requirements per cow and year Energy, NEL Amount, MJ Body maintenance Gravidity Milk production Total
Protein, nXP
Share
Amount, kg
Share
11,206
58%
131
37%
420
2%
17
5%
7,746
40%
207
58%
19,372
100%
345
100%
The annual energy requirement is covered with 97% and the annual protein requirement is covered with 80% of the supplies. The relatively low utilization rate of crude protein can be led back to the negative RNB-values of the pastures in late autumn and spring. There are surpluses of 619 NEL and 87 kg nXP per year. However, given the underutilization of the physiological potentials of the cattle for concentrate intake, the surpluses should not be understood as such, but should rather be considered as losses. While there may be various biotic and abiotic factors resulting in unutilized nutrients, the simplest explanation is the consideration of mechanic losses during the feeding. During the lactation period, 527 kg DM of bran and 5 kg DM of grain are fed and provide 3,045 MJ NEL and 69 kg nXP. On the assumption that the nutrient contents of the concentrates are fully converted into milk production, the concentrates enable the production of 917 l milk according to their energy contents, and 817 l according to their protein contents. If we take the lower value and compare it with the average lactation yield of 2,460 l the share of milk production from concentrates is 33%. The remaining 67% of the lactation yield is produced by forages. 4. Feeding and farm size The total feed rations per year support the assumption that smaller farms are less intensified than larger farms (cf. 5.6.3 and Tab. 5.24). The small farms feed least amounts of DM. They also have least proportions of concentrates in their feed rations. The large farm, on the other hand, uses both the highest amount and the highest proportion of concentrates in the feeding of dairy cows (Tab. 5.28). Table 5.28: Comparison of the amounts and the structures of the dry matter supply in the dairy cattle feeding at the sampled farms (N=30) Feedstuffs
Small farms
Medium farms
Large farm
Amount, kg
Share, %
Amount, kg
Share, %
Amount, kg
Share, %
Pasture plants
1,963
50
1,803
44
1,493
34
Hay
1,398
35
1,615
39
1,938
43
605
15
711
17
1,033
23
3,966
100
4,128
100
4,463
100
Concentrates Total
Similar structures apply to the energy and protein supplies. Grazing provides more than a half of both the energy and the protein supplies for the small farms. For the medium farms, grazing still provides most nutrients, but the proportions of nutrients provided by 121
hay and concentrates in the total supplies are higher than for the small farms. The large farm has highest proportions of nutrients from concentrates and lowest proportions of those from the pasture (Fig. 5.25 and 5.26). Figure 5.25: Amounts and structures of energy supply in the dairy cattle feeding of the sample farms (N=30)
MJ NEL per cow and year
25,000 28%
20,000
20%
17% 15,000 31%
34%
52%
46%
35%
small farms
medium farms
large farm
37%
10,000 5,000 0
Pasture plants
Hay
Concentrates
Figure 5.26: Amounts and structures of protein supply in the dairy cattle feeding of the sampled farms (N=30) 500
27%
kg nXP per cow and year
450
20%
18%
400 350 300
31%
35%
51%
45%
small farms
medium farms
250
38%
200 150 100
35%
50 0
Pasture plants
Hay
large farm
Concentrates
However, even if the large farm uses relatively high amounts of concentrates in the cattle feeding, it is far from exploiting the potentials of the dairy cattle. The supply of concentrates is only 63% of the amount that could be absorbed. On the contrary, the forage supply is satisfying; further increases of the forage rations would not necessarily improve the productivity of the cows (Tab. 5.29). 122
Table 5.29: Percentages of the sampled farms for the utilization of the feed intake potentials of dairy cattle (N=30) Feedstuffs Forages Concentrates
Small farms
Medium farms
Large farms
102
104
104
37
43
63
While the concentrate rations increase proportionally to the herd sizes of the farms, the share of milk production from forages has a reverse tendency. The latter was estimated at 61% for the small farms, at 58% for the medium farms and at 35% for the large farm. 5. Watering During the grazing period, the cattle are watered at rivers near the pasture twice a day: in the afternoon and in the evening before milking. During the stall period, the cattle are watered from the private well of the farm, or a local well if a farm does not own a well. Since most cows are dry in late winter and early spring, 70% of the farms water their cattle once a day. The remaining 30% of the farms water their cattle twice or three times a day in winter. If the cattle are watered only once a day, then in the afternoon; if twice, then the second watering occurs after the hay feeding in the morning; and if three times, then after each hay feeding. The water intake of a cow was estimated by the farmers at 30 to 40 l if watered once a day and at 60 to 80 l if watered twice or three times a day. One farmer had installed an automatic watering facility in his cow barn, which enables permanent watering of the cattle throughout the year. 6. Calf feeding The duration of the suckling period ranges between four and six months. The average is five months. After this period, suckling is stopped either through the aversion reflexes of the cow, or by abrupt weaning. The amount of suckled milk is estimated at 2.5 l per day. From the age of 14 to 21 days, the calves are fed hay and bran. Once the grazing season begins, the calves start to pasture and are fed a bran ration of 0.5 to 1 kg/day. Some farms stop the bran feeding when the pastures are fully recovered, which mostly occurs in June. A calf born in the typical calving period between March and April is two or three months old when bran feeding is stopped. In the case that a calf reaches the age of feeding during the stall period, the calf is fed 1.5 to 2.5 kg hay and 1.5 to 2 kg bran a day. Some farms also give the calves mineral salt for licking. The total amount of the suckled milk ranges between 300 and 450 l depending on the duration of the suckling. The average is 400 l. The hay supplies for the first six months range between 24 and 405 kg, and the bran supplies between 16 and 324 kg. The averages are 91 kg hay and 123 kg bran. Most farmers sell their male calves at the age of six months in order to save costs for winter feeding. Female calves are usually raised, but they attain the marketable age after six months too. 123
5.6.7 Balancing of labor During the stall period, most labor is required for milking and feeding. Milking is usually done by two persons: a woman and a man. While the woman milks, the man feeds the cows bran, carries the buckets and holds the calves for stimulating the udders of the cows. Other regular works include littering, sweeping, ventilating and heating of the bran, hygienic care of animals etc. Typical irregular works during this period are repairs and maintenance of the barn and the equipment. More labor is required during the grazing season than during the stall period due to the herding of the cattle. While the herding is in most cases the task of children, five farms spend a full LU for that. In addition to the herding and the milking, there are some other regular works during the grazing season such as medical and hygienic care of the animals or cleaning of the yard. Transport of milk and concentrates and milk sales are regular works, yet they cannot be allocated to any particular season. The average annual labor requirement per cow is 361 mh. While 90% of the total requirement is needed for regular works, the remaining 10% are required for irregular works (Tab. 5.30). Table 5.30: Labor requirements per milking cow, averages of the sampled farms (N=30) Types of works
Days/ year
Frequency per day
LU/day
mh/cow and day
mh/cow and year
Regular work during the stall period Milking & bran feeding
130
2×
2
0.3
36
Hay feeding
189
3×
1
0.1
13
Mucking out
189
1×
1
0.04
8
Other
189
2
0.2
44
Regular work during the grazing period Milking & bran feeding
175
2×
2
0.3
49
Grazing
176
1×
1
0.4
70
Other
176
2
0.2
30
Transport of bran and grain
3
1×
1
0.5
1
Transport and sale of milk
126
1×
1
0.6
74
Transport of purchased hay
4
1×
1
0.5
2
Haymaking (incl. transport)
16
1×
2
1.2
19
Insemination, birth and medical care
5
1×
1
2.0
11
Cattle trade
3
1×
1
0.3
1
Repairs and maintenance of barn and equipment
7
1×
2
0.6
5
Other regular works
Irregular works
Total labor requirement
124
361
While the total labor requirement increases proportionally to the farm size, the requirement per cow decreases. The small farms have least total labor requirements, but most requirements per cow. They also have the lowest rate of utilization of labor resources. The large farm has the best labor utilization rate of 83% (Tab. 5.31). Table 5.31: Balancing of average labor capacities of the sampled farms (N=30) Small farms
Balancing Number of cows
Medium farms
Large farm
Total
8
16
73
16
455
271
181
361
Total requirement for dairy farming
3,486
4,855
13,198
4,552
Total labor capacities
5,897
7,152
15,840
6,856
62%
68%
83%
67%
Requirement per cow
Rate of labor utilization for dairy farming
However, there are differences if a farm has only dairy cattle or additional businesses too. A further comparison was therefore made between the specialized dairy farms only. The 26 specialized dairy farms utilize 68% of their labor capacities. On average, a farm has 2,268 mh free. According to the estimated working capacity of 2,400 mh per LU (see 5.5.2), about one person per farm is de facto unemployed. Both the labor requirement per cow and the total requirement tend to increase proportionally to the labor capacities while the rate of labor utilization decreases. The farms with least labor capacities of one to two LU for instance, have least labor requirements but a relatively high rate of labor utilization. On the contrary, the farms with 2.1 to 3 LU and 3.1 to 4 LU have more requirements, but less effective utilization of labor (Tab. 5.32). Table 5.32: Balancing of labor for specialized dairy farms, classified by labor capacities (N=26) Level of labor capacity Number of farms Number of cows
1-2 LU
2.1-3 LU
3.1-4 LU
4.1-5
>5 LU
Total
5
14
5
1
1
26
12
14
16
4
73
16
Family labor forces, LU:
1.7
2.2
2.9
4.1
1.6
2.3
Hired labor forces. LU:
0.1
0.4
0.6
0
5
0.5
1.8
2.6
3.5
4.1
6.6
2.8
4,272
6,189
8,352
9,840
15,840
6,748
255
323
545
870
181
368
Total labor requirement, mh/year
3,056
4,129
5,546
3,478
13,198
4,519
Balance of labor, mh/year
1,216
2,059
2,806
6,362
2,642
2,228
Rate of labor utilization, %
72
67
67
35
83
68
Total labor forces, LU Total labor capacity, mh/year Labor requirement per cow, mh/year
The large farm is an exception. It has both most labor capacities and requirements, but least requirements per cow. Despite the best utilization rate, the amount of the unutilized labor is 1.1 LU. This farm could cover its labor requirements by hiring four workers instead of five. 125
5.7 Economy of milk production 5.7.1 Gross margin The outputs of dairy production include milk, calves and cull cows. Considering a useful life of six years and 3% losses per year, the amount of cull cows per cow and year is 0.14. The marketable age of calves is reached at about six months. Even if female calves are usually not sold, they could be assessed with the market value of male calves. The assessment was therefore based on the price $41.5 for both female and male calves. The spin-off outputs were standardized for all farms. The gross output mainly depends on the milk production while the spin-off outputs contribute for 9%. The average gross outputs per cow range between $498 and $1,042. The variable cost of herd replacement is based on the average price of a pregnant heifer. Given the useful life of six years for cows and 3% animal losses, the rate of herd replacement is estimated at 20% per year (cf. 5.6.1). On average, 62% of the proportional variable costs are caused by feeding. These include the expenses for the purchase of hay and concentrates as well as the costs of haymaking (cf. 5.5.8 and 5.6.6). Depending on their equipment and herd sizes, the farms have variable costs of up to $8 per cow for mechanization. These include the variable costs of cooler, milking machines, water tanks and the automatic watering facility. (cf. 5.5.7). The costs for the consumption of water and electricity are relatively low. Both of these inputs are used for multiple purposes including the household requirements. The estimated average of $7.1 per cow rather seems to be overestimated for the regular operation of the farms. Nevertheless, considering unforeseen risks as spoiling of water etc., the estimation should be realistic (cf. 5.5.4). Between $1 and $17 per cow are spent for veterinary services and drugs for the cattle, and another $7 to $12 are spent for AI whereas the latter is applied only by 40% of the farms. The livestock tax is rated at $0.4 per cow. Although it is not paid by smaller farms, it was standardized for all farms. The small farms will start paying the livestock tax when their herd sizes increase or their household sizes decrease, which can occur anytime (cf. 4.3.3). Irregular proportional variable costs were standardized at $25 per cow and. These costs can include unforeseen treatments of cattle, and purchases of medicals, feedstuffs or other stuff beyond the regular consumption etc. The total proportional variable costs of the sampled farms range between $302 and $478 per cow. The average is $358. The average gross margin (GM) is $383 per cow. This is equal to 51% of the gross output (Tab. 5.33). The individual GMs range between $196 and $644. A classification of the GMs into the following three levels appears seems appropriate: low (less than $300), medium ($300 to $500) and high (more than $500). Thirty percent of the farms have low GMs while another 50% have medium GMs, and the remaining 20% have high GMs. 126
Table 5.33: Calculation of average gross margin of sample farms, per cow with calf (N=30) Options of milk selling
Unit
Quantity
Price incl. VAT $/unit
Total amount, $/year
l
2,460
0.27
670
Cull cow (-3% losses)
Head
0.16
207
34
Calf (6 month old, -10% losses)
Head
0.9
41
37
Outputs Milk
Gross output
741
Proportional variable costs Herd replacement (+3% losses)
Head
0.2
332
65
l
2,460
0.011
27
Milk for calf
l
400
0.27
106
Purchased hay for cow
kg
952
0.048
45
Purchased hay for calf
kg
59
0.048
3
Bran for cow
kg
736
0.062
45
Bran for calf
kg
123
0.062
7
Grain (for cow)
kg
18
0.053
1
Haymaking for cow & calf
kg
763
0.020
16
Milk transport Feedstuffs
Total
223
Variable costs for mechanization
1.5
Water and electricity
7.1
Veterinary service and medicals
5.2
AI
4.3
Livestock tax
0.4
Other
25
Total variable costs
358
Gross margin
383
5.7.2 Profitability Short-term profitability is attained if the milk price is more than the variable costs per liter milk. The latter is considered as the threshold of production. The sum of both variable and fixed costs per liter milk is considered as the threshold of profitability. A milk price above this threshold enables long-term profitability of milk production. The calculation of the costs excludes the spin-off outputs since it aims at determining only the costs for milk production. In addition to the proportional variable costs, the total variable costs include the imputed costs for current assets and costs for labor. The total value of current assets was derived from the value of a pregnant heifer and the requirement of current assets for haymaking. Since the heifer’s value was standardized, differences are 127
only caused by the requirements for haymaking. The mean input of current assets is $341 per year. The costs are determined by an imputed rate of 18%, which is equal to the average interest for savings. The mean requirement of labor is 361 mh per cow. Family labor forces contribute for 323 mh and hired workers for the remaining 38 mh (cf. 5.6.7). According to valuation rates in the section 5.5.2, the labor costs are $119 per cow. The threshold of production is $0.20 per liter. Since this is less than the milk price, the milk production is profitable in the short-term (Tab. 5.34). Fixed costs are caused through the use of fixed assets as machines and barns. The average requirement of fixed assets per cow is $138 and the fixed costs are $59 per cow (cf. 5.5.5; 5.5.6 and 5.5.7). Table 5.34: Calculation of total costs of milk production per cow, sample means (N=30) Positions
$ per year
Proportional variable costs
358
-
Value of spin-off outputs (cull cow + calf)
71
+
Imputed costs for current assets
61
+
Labor costs
=
Variable costs of milk production
476
Threshold of production (short-term minimum price limit)
0.20
+
=
Wages for hired workers
12
Imputed costs for family labor forces
117
Fixed costs (for machines and barn)
Depreciations
30
Imputed costs for fixed assets
25
Maintenance costs
2
Insurances
2
Total costs of milk production
535
Threshold of profitability (long-term minimum price limit)
0.22
Since the total costs are still less than the milk price, the milk production is profitable in the long-term. The net profit (NP) is $0.05 per liter of milk, and $135per cow.
5.7.3 Sensitivity of the profitability to market risks Two major risks could emerge any time and threaten the profitability of the dairy production immediately: decrease of the milk price and increase of the feed prices. Sensitivity analyses were performed in order to assess the possible effects of these risks on the profitability. Three different levels of productivity were compared: low (1,800 l/year), medium (2,400 l/year) and high (3,000 l/year). The analyses are ceteris paribus. A. Decreasing milk price and the profitability Falls of the milk price could result in critical GM-decreases for each productivity level as shown in the Fig. 5.27. If the producer price would decrease by 7.5% to $0.25 per l, the GM of a highly productive cow would decrease by 11%, the GM of a cow with medium 128
productivity by 13% and the GM of the low-productivity cow by 18%. A price fall by 30% to $0.19 would have the consequence that even a highly productive cow would not attain a medium GM of $300. The GM of a low-productivity cow will become only $55. Figure 5.27: Gross margins at different productivity levels and different producer prices of milk
Gross margin, $/cow and year
600 3,000 l
500 400
2,400 l 300 200
1,800 l
100 0 0.19
0.21
0.23
0.25
0.27
Producer price of milk, $/l
The NP would react to price falls more dramatically than the GM. For low-productivity cows the net loss will become $193 per cow if the milk price would decrease by 30%. A medium productivity cow would cause losses of $79. The NP of a cow with high productivity would decrease from $275 to $35 (Fig. 5.28). Figure 5.28: Net profits at different productivity levels and different producer prices of milk
Net profit, $/cow and year
300
3,000 l
200 2,400 l
100
0 0.19
0.21
0.23
0.25
0.27 1,800 l
-100
-200 Producer price of milk, $/l
129
The tendencies of both the GM and the NP reveal that farms with low productivity are most vulnerable to possible changes of the milk price. The $300-threshold for the medium level GM is still attained for a high-productivity cow if the milk price would fall by 25%, while a medium-productivity cow would have a GM below that threshold at a slight price fall of 10%. The high-productivity cow will still have a positive NP at a price fall of 30% while the medium-productivity cow has a negative NP at a price decrease of 20%. B. Increasing feed prices and the profitability Feed prices will probably increase during the next years. The fuel prices are increasing permanently and the demand for feedstuffs is increasing due to the increasing requirements of the stationary livestock farms in peri-urban areas. While an increase of dairy farms is obvious, there is some evidence that the number of pig farms in Mongolia is increasing too. Also, progressive herders are starting to intensify their production systems by feeding the cattle with hay and bran supplementary during the winter. In addition, Chinese pork producers buy about 50% of the bran produced by the flour mills in Mongolia (SCANAGRI SWEDEN & CPR MONGOLIA 2003,11). The calculations for the sensitivity of the GM and the NP to increases of the feed prices are much generalized. Instead of considering each feedstuff separately, the average price of a model ration ‘ten kg hay plus four kg bran’, which is very common in dairy farming during the stall period, was used as the basis of the analysis. Six price levels including the basic price of $0.61 and increases of 10%, 20% and 30% were assumed. A further assumption was that the farms cover 57% of the total hay requirements with purchased hay and the remaining 43% with hay they make by themselves. These shares are the averages of the sampled farms. The analysis resulted in less critical scenarios for high- and medium-productivity cows and a more dramatic scenario for low-productivity cows compared with the sensitivity analysis for milk price changes. While a 30% decrease of the milk price would lead to a 46% decrease of the GM for a high-productivity cow, a 30% increase of the price for the model feed ration would result in a 32% decrease of the same GM. For a mediumproductive cow, the GM would decrease by 53% at a 30% decrease of the milk price, but only by 47% at a 30% increase of the feed prices. A low-productivity cow would, on the contrary, suffer a 72% decrease of its GM at a 30% decrease of the milk price, but a 85% decrease at a 30% increase of the feed prices. Similar comparisons can be done for the changes of the NP too. The $300-threshold of medium level GM would become unattainable for a mediumproductivity cow if the feed prices would increase by approx. 15%. A high-productivity cow would still retain a medium-level GM even if the feed prices would increase by 30%. In the latter scenario, the GM of the low-productivity cow would become only $29 (Fig. 5.29). While at a 30% increase of the feed prices the NP of a high-productivity cow would still remain positive, the NP of a medium-productivity cow would become negative at a 25% increase. The already negative NP of the low-productivity cow would become -$219 at a 30% increase of the feed prices. A farm may be able to cope with losses of $48 per cow temporarily, but it is very difficult to balance losses of $219 per cow (Fig. 5.30). 130
Figure 5.29: Gross margins of different productivity levels at different prices of feedstuffs
Gross margin, $/cow and year
600 3,000 l 500 400
2,400 l
300 200
1,800 l
100 0 0.61
0.67
0.73
0.79
Price of 10 kg hay + 4 kg bran, $
Figure 5.30: Net profits of different productivity levels at different prices of feedstuffs 400
Net profit, $/cow and year
300
3,000 l
200 2,400 l 100 0
1,800 l 0.61
0.67
0.73
0.79
-100 -200 -300 Price of 10 kg hay + 4 kg bran, $
A farm with low-productivity cows will therefore lose its vitality, which is already critical under the current market conditions, by a slight increase of the feed prices unless it stops the hay purchases and bran feeding, makes sufficient hay and grows fodder crops. The extreme sensitivity of the profitability of low-productivity cows underlines the importance of the quality of the dairy cattle. Even if highly productive cows are expensive and require a high degree of intensification, the returns fully justify the costs and keep the vulnerability of the profitability to market risks at a low. This is one of the major explanations for the competitiveness of highly productive cows. 131
5.7.4 Comparison of the farms While the farms could be compared by either the GM or the NP, a comparison according to the GM was preferred since the key question in this section is the short-term profitability. The long-term profitability is evaluated on the farm level in the section 5.8. The farms are divided into three classes according to the GM-levels, which were suggested in the section 5.7.1, and compared below (Tab. 5.35). Table 5.35: Comparison of farms classified in different GM levels (N=30) Level of gross margin (GM)
Low
Range of the GM, $ per year
Medium
High
Up to 300
301 to 500
>500
9
15
6
30%
50%
20%
17
14
22
191
173
164
Ration during the grazing season, MJ/day
60
62
64
Ration during the stall period, MJ/day
45
47
55
Total, MJ/year
19,310
19,703
21,733
Capital intensity, $/cow
459
456
564
Labor intensity, mh/cow
485
325
247
2,234
2,418
2,905
72%
65%
53%
Daily milk yield during the grazing season, l
8.5
9.2
9.6
Daily milk yield during the stall period, l
5.3
6.2
8.9
Milk price, $/l
0.25
0.27
0.30
Gross output, $/year
620
727
955
Hay, kg/year
1,532
1,748
2,203
Bran, kg/year
707
839
1,139
Grain, kg/year
40
12
0
Milk for calf, l/year (for six months)
433
410
325
209
219
247
38
22
26
Other
111
106
112
Total
358
346
385
GM, $ per year
261
381
571
GM per 1000 MJ NEL energy supply
13.5
19.3
26.3
GM per mh
0.8
1.4
2.5
GM per $100 capital
59
84
111
Number of farms Share in the sample Number of cows Duration of the grazing season, days Feeding (supply of NEL)
Milk production per cow, l/year Share of milk production during the grazing season
Proportional variable costs, $/year Feedstuffs (for cow and calf)
Feed costs Milk transport
132
a. Farms with low GMs Although most farms in this class are small, the average number of cows is 17 since the class includes the large farm. Without the latter, the average would have been 10. It is the class of the least intensified farms. This is clearly indicated by the duration of the grazing season. Not only do the farms graze their cattle longest, but also feed least nutrients. During the grazing season, a lactating cow is fed 1.1 kg bran each day. The total ration provides 60 MJ NEL and enables a yield of 8.5 l milk. During the stall period, the average daily ration consists of 8 kg hay plus 2.2 kg bran and 0.2 kg grain. The ration provides 45 MJ NEL and enables a milk yield of 5.3 l (cf. 5.6.6). In accordance with the long grazing season, the share of milk production during the grazing season is higher than those of the farms with medium and high GMs. While the capital intensity is comparable with that of the farms with a medium GM, the high labor intensity of 485 mh per cow indicates a low level of mechanization. In addition, smaller farms as those in this category tend to have less total requirements of labor, but more requirements per cow than larger farms. Similarly to the labor intensity, the transport costs per unit of milk are relatively high. A total of $209 is spent for the feeding of a cow and its calf. Forty-six percent of the hay is made by the farmers and the remaining 52% are purchased, and so are the concentrates. While the hay and bran rations are smaller than the rations of the farms with medium and high GMs, the milk consumption of the calf is highest. This is related to the low intensification level: the farmers prefer a longer suckling period due to the shortage of feedstuffs. The farms with lower GMs use inputs to such extents that are comparable with those of the farms with medium GMs, but have a lower capacity to distribute the costs. Thus, they have higher proportional variable costs per unit. Compared to the farms with high GMs, however, the farms with low GMs have both a lower level of intensification and lower variable costs per cow. The average lactation yield is 2,234 l. Out of this already little amount, a considerable share of 433 l is suckled by the calf so that the marketable amount is only 1,801 l. Since most milk is produced during the grazing season, in which the price is lowest, the farms attain a year’s average price of $0.25 per l, which is the least compared to the average prices attained by the farms with higher GMs. Some 625 l are sold during the stall period. Not only is the mean GM of $261 itself the lowest, but so are the mean GMs per unit of major inputs including energy, labor and capital. The GM per mh, for instance, is 43% less than that of the farms with medium GMs and 68% less than that of the farms with high GMs. The farms with low GMs utilize the inputs most inefficiently. b. Farms with medium GMs This class consists of eight medium farms and seven small farms, which have a medium level of intensification. The latter is clearly revealed by the duration of the grazing season and the feed rations. Also, the farms have a medium level of productivity at their average lactation yield of 2,418 l.
133
An interesting feature characterizing the farms in this class is their capital intensity, which is comparable with that of the farms with low GMs. In addition, the variable costs of $346 are much lower than the average of the low-GM farms, which is $358. Despite higher intensification, they keep the expenses low e.g. through cost-saving approaches as haymaking or purchase of bran at lower prices in fall. Hence, they have a higher productivity at low costs, and yield a higher GM than the low-GM farms. The returns also indicate better utilization if inputs e.g. while the farms in this class have a comparable level of capital intensity as the low-GM farms, their GM per $100 is 42% higher. c. Farms with high GMs Most interesting are the farms in this class. The class consists of five medium farms and one small farm with an average herd size of 21 cows. Although there may be various reasons for their high profitability and efficiency, the features from the Tab. 5.35 allow a basic characterization. The farms in this class graze the cattle shorter and feed them more nutrients than the farms with lower GMs. The average bran ration during the grazing season is 1.7 kg/day. Combined with the grass intakes, the ration provides 64 MJ NEL/day. The average milk yield per cow and day is 9.6 1. During the stall period, the daily ration consists of 10 kg hay and 3.2 kg bran, providing 55 MJ NEL. The average daily milk yield during the stall period is 8.9 l. In addition to having a higher productivity, the farms in this class have less fluctuation of the milk yield over the season in comparison to the farms with low and medium GMs. For two farms in this class the lactation period begins in November or December. By means of adequate feed rations these farms exploit the lactation potential of the cows to a high degree: the average daily yield during the stall period is 11.1 l. However, the remaining farms still yield an average of 7.9 l/cow during the stall period even though it overlaps with the end phase of the lactation period. Due to the relatively long stall period and the high milk yields, the farms in this class produce 47% of the total milk yield during the stall period. The average production of 1,365 l during the stall period is by 118% higher than the average of the farms in the low-GM class. A high share of the production in the stall period combined with high milk prices enables highest outputs and GMs. The average GM of $571 for this class is by 119% higher than the average of the low-GM class and by 50% higher than that of the mediumGM class. The high productivity and profitability of the farms with high GMs have their prices: the capital intensity of $564 per cow is by 23% to 24% higher in comparison to those of the farms with low and medium GMs. However, the high capital intensity is justified by the productivity: the GM per $100 is $111, which is much higher than that of the farms with low and medium GMs. Thus, the profitability of the farms in this class is conditioned by the high productivity on one hand, and by the high production efficiency on the other. Not only is the GM per unit of capital investment is highest, but so are the GMs per energy and per mh too.
134
5.7.5 Conclusions The comparison of the farms revealed that differences in the GMs are caused by the productivity of the cows mainly, which in turn depends on the level of the intensification. Common variables characterizing the level of intensification are the duration of the grazing season and the feed rations. While the average duration of the grazing season is 176 days, less intensified farms graze their cattle for up to 244 days and intensified farms graze between 139 and 176 days. A typical grazing period for the latter farms is between 15. May and 15.October while less intensified farms usually start grazing in April and end in November. A particular relation between the grazing and the milk productivity is the overlapping of the most productive phase of the lactation with the least nutritive period of the pastures. Most cows deliver in March and April. Many less intensified farms start the grazing in April and stop the hay feeding although the nutrients from the pasture barely cover the requirements for body maintenance. They yield six to eight liters per cow and day despite relatively sufficient bran rations of three to four kg per cow and day. Intensified farms, on the contrary, increase their hay rations up to 14 kg and the bran ration up to five kg after the calving, and yield 10 to 11 l. The milk yields peak on most farms in May. While intensified farms are able to yield up to 13 l, less intensified farms still yield six to eight liters with reduced bran rations. The milk production potential of the summer grazing i.e. grazing between June and August was benchmarked at 9 l/day in the section 4.4.2. The intensified farms yield 10 to 12 liters by feeding bran rations of two to three kg. The less intensified farms, on the other hand, have stopped the bran feeding, or cut it down to 1 to 1.5 kg meanwhile, and yield only seven to nine liters. In September, the pastures start to lose their nutritive values due to increasing fiber and decreasing protein contents. While the most intensified farms increase their bran rations up to four kg, and still yield nine to 11 l in September and October, less intensified farms re-start the bran feeding with rations of 1.5 to 2 kg and yield six to seven liters. Most intensified farms stop the grazing in the beginning or in the middle of October, and start to feed the cows ten kg hay and three to four kg bran. A ration of ten kg hay plus four kg bran provides 59 MJ NEL, and enables the production of 10 l milk. The milk yields fall to seven to eight liters in November and to five to six liters in December. The dry period begins in January or February. The less intensified farms gradually increase the bran ration from September to the beginning of the stall period, which is usually in November. The average feed ration during the stall period consists of eight kg hay and two kg bran, and provides 41 MJ NEL. The milk yields fall down to four to five liters in November and to three to four liters in December. The feed rations do not necessarily affect the proportional variable costs immediately. Many intensified farms keep the variable costs low through cost-saving approaches as haymaking or input purchases at low prices. In addition, since intensified farms tend to be larger farms, they are able to distribute the costs better than smaller farms. Eventually, the intensified farms have the machines (e.g. tractor mowers), the financial resources, and the intellectual capacities for more efficient farm management. 135
Generally, it is not possible to define certain economic thresholds for high or low levels of intensification. The common understanding of the intensification as the amount of capital input is questionable since, for example, higher feed rations do not necessarily imply higher variable costs as explained above. Furthermore, the possession of haymaking machines certainly results in higher capital intensity, but the investment is re-gained by the low variable costs of feeding. On the other hand, a small farm that lacks financial resources for purchasing the necessary equipment for haymaking could save feed costs too by borrowing a tractor and a mower or by co-operating with a farm that has the machines. Another case is the barn: an expensive barn is not necessarily better than a barn, which is built with less investment but fulfils the requirements of the cattle on their environment. The term intensification as it is used in this study is therefore a complex of both quantity and quality. Quantity means that inputs should be available to the necessary amounts. Quality refers to the efficiency of the farm management. There are other factors affecting the productivity of the cows besides feeding, which however, were not analyzed in details in this survey. One of the most important factors is the breeding. There has been no research on dairy breeds in Mongolia for the last 20 years. It is only assumed that all dairy cattle are crossbred now and their performances have been decreasing due to incestuous breeding. A better breeding management involving proper planning and controlling as well as the regular use of AI could increase the productivity. An evaluation of the economic impacts of AI is not possible yet since most farmers started to apply AI in 2004 or 2005. But even if the AI does not result in descendants with better performances, the fee of the AI-service, which is $11 per cow, would not reduce the GM substantially. This is the revenue of some 40 l milk. The time of insemination is another important factor for the profitability. It seems to be advantageous if the cows are inseminated in spring and calve in winter when the prices are highest. However, the nutrient requirements of the cattle increase whereas the feed prices are highest too in winter and early spring. In the case of calving in spring, on the other hand, a considerable part of the increased nutrient requirements of the cattle are covered with grazing, which is free of charge. Therefore, a farmer can take advantage from calving in winter only if he is able to afford the feed costs. Financially weak farms would fall into a financial crisis instead of profiting, and could damage the health of the cows and the calves through underfeeding in the early lactation period. In the context of winter feeding, the dependence of the profitability on feed prices was revealed by the sensitivity analyses in the section 5.7.4. At a price increase of 30%, which is quite possible in Mongolia where fodder crops are not grown and the demand for feedstuffs is increasing, the GM of a cow with the average annual yield of 2,400 l would fall from $362 by 47% to $192. More dramatic is the scenario for a 1,800 l cow, of which GM would decrease from a still acceptable level of $199 to only $29. The GM of a 3,000 l cow, on the contrary, would decrease least: from $525 by 32% to $354. Changes of milk prices would also affect the profitability seriously. At a price decrease of 30%, the GM of a 3,000 l cow would decrease by 46% to $283 and that of a 2,400 l cow would decrease by 43% to $169. Again, a low-productivity cow would suffer most: the GM would fall to $55. Generally, farms with cows with higher productivity have a better ability to overcome market risks. In most cases, these farms have a higher level of intensification too. 136
There seems to be a relation between the profitability and the farm size. While the variable costs are quite comparable, the medium farms have a larger GM than the small farms. However, the climbing trend of the GM is broken by the large farm, of which GM is even less than the average of the small farms. Differently from the small farms, which suffer a chronic shortage of inputs, the low profitability of the large farm is to be led back to management failures since the farm has highest variable costs (Fig. 5.31). Figure 5.31: Structures of average gross outputs of different farm classes
Gross ouput in $ per year
800
600 425
344
299
400
200
359
355
377
small farms
medium farms
large farm
0
Proportional variable costs
Gross margin
5.8 Farm economy A quantification of incomes and variable costs on farm level is difficult since the farms have not only cows and calves, but also heifers and male cattle. In addition, some farms have sheep, goats and horses. Calculations of costs and outputs for each age and type of cattle were not done in this survey since the survey has a specialized focus on the dairy production. However, profitability measures referring to a single lactating cow as described in the previous section do not enable an assessment on the incomes and the liquidity of the farms, which are very relevant for dairy extension work. Therefore, an assessment of the farm economy was conducted under the assumption that the outputs from the animals besides the cows and the calves cover the variable costs for these animals without surpluses, and the total GM of a farm is equal to the total GM of dairy production.
5.8.1 Profitability The measures of the farm profitability are summarized in Tab. 5.36. The farms are classified into four categories according to their management incomes: farms with negative MIs (23% of the sample), farms with low MIs (27% of the sample), farms with medium MIs (30% of the sample), and farms with high MIs (20% of the sample). Since the MIs range between a minimum $-1,569 and a maximum of $10,418, the classification is very rough indeed. The table is followed by a comparison of the farms and principal conclusions. 137
Table 5.36: Comparison of the sampled farms by farm profitability measures, $ per year (N=30) MI-levels (categories)
Negative
Low
Medium
High
Mean
MI-range, $
Less than 0
1 to 1,000
1,000 to 5,000
more than 5,000
Number of farms
7
8
9
6
30
Number of cows
8
14
13
32
16
258
349
418
521
383
Labor input, mh
3,798
4,864
3,575
6,293
4,514
Capital input, $
3,967
7,598
6,276
14,797
7,794
Machines (vehicles and other)
1,273
2,041
1,413
2,134
1,692
Bran
296
1,245
760
1,934
1,016
Total
1,570
3,286
2,173
4,069
2,708
2,023
5,130
5,578
14,849
6,483
- Fixed costs (excluding imputed capital costs for fixed assets)
543
872
640
975
746
- Overheads6
282
520
487
1,177
586
- Wages
157
263
211
758
322
0
50
0
795
172
1,041
3,426
4,241
11,144
4,658
Amount of unpaid labor, mh
3,454
4,200
3,183
3,923
3,666
Amount of equity capital, $
3,967
7,494
6,276
12,506
7,308
1,222
1,575
1,142
1,488
1,345
- Imputed costs of equity capital
714
1,349
1,130
2,251
1,315
Profitability of unpaid labor, $/mh
0.1
0.5
1.0
2.3
0.9
-13%
26%
50%
105%
40%
-895
502
1,969
7,406
1,997
Gross margin (per cow)
(Depreciable) fixed assets
Total gross margin
- Interest payments = Farm income
- Imputed costs of unpaid labor
Profitability of equity capital, % Management income
The differences already begin with the GMs. The farms with negative MIs have a low mean GM (cf. 5.7.1), the farms with low and medium MIs have a medium mean GM, and the farms with high MIs have a high mean GM. The total GM (TGM) is the product of the GM and the farm size. The TGMs are proportional to the MIs too, as this is clearly revealed by the TGMs of the farms with negative and high MIs. Nevertheless, the mean TGMs of the farms with low and medium MIs are relatively comparable. The farm income is the sum of returns to the unpaid production factors and the compensation for the entrepreneur’s risk. It makes the differences between the MI-categories larger e.g. while the mean TGM of the high-MI farms is 634% higher than the mean TGM of the negative-MI farms the distance between the profits of these groups is 971%. 6
The overheads were estimated at 10% of the proportional variable costs.
138
A further comparison is based on how much of the TGM is left as farm income after covering the fixed costs, the overheads, the wages and the interest of loans. The ratio of the farm income in the TGM is 51% for the farms with negative MIs, 67% for the low-MI farms, 76% for the medium-MI farms, and 75% for the high-MI farms respectively. While there are various reasons for the different ratios, most important are the fixed costs. In order to explain the fixed costs, the values of fixed assets were included in Tab. 5.36. The fixed assets are the machines and the barns. Most fixed costs are caused by machines, especially by vehicles. A critical difference between the barn and the machines is that a barn is normally used at its full capacity while machines tend to be used below their capacities. This is simply because a barn causes low variable costs while a vehicle consumes fuel, oil and replacement parts at considerable expenses. Farmers are eager to buy vehicles, but there are few occasions in which the costs of driving are justified. Also, most farms use their tractors only for haymaking. The use of machines below their capacities, however, causes unnecessary fixed costs. Thus, a farmer should always ask himself if the fixed costs of his machines are a) affordable and b) justified. Affordability can be simply interpreted as the ratio of the fixed costs in the TGM while justification means that the fixed assets, especially the machines are used at their full capacities. Generally, larger farms tend to have a better justification of the fixed costs. As implied above, the justification of the fixed costs for machines is more critical than for barns. The ratios of the fixed costs (without imputed capital costs) in the TGM are 27% for the negative-MI farms, 17% for the low-MI farms, 11% for the medium-MI farms while only 7% for the farms with high MIs. If we look at the two extremes, we can find out that the farms with negative-MIs are smaller than those with high MIs i.e. the latter have both a better affordability and a better justification of the fixed costs. The fixed costs per cow are $68 for the negative-MI farms, $62 for the low-MI farms, $49 for the medium-MI farms, and $30 for the farms with high MIs. Furthermore, the farms with negative MIs have the highest share of machines in its total value of fixed assets. They obviously have overcapacities of machines that cause a burden of unjustified fixed costs. This is also true for the farms with low and medium MIs, even if to less extents. Compared to the fixed costs and the overheads, wages and interest payments have little significance. The farms with negative and medium MIs do not have loans, while the farms with low MIs have an average interest payment of $50 per year. Both the wages and interest payments are relatively high for the farms with high MIs. The highest wages and interest payments are paid by the large farm, which employs five workers full-time and regularly raises a bank loan of $7,500 at the interest of 36% p.a. The unpaid labor is compensated with $0.9 per mh on average. Converted to month’s salary of $180, the rate is relatively high in Mongolia, where the average salary is $84 (NSO 2006). The farms with medium and high MIs have higher rates than the average, while the farms with low MIs have a rate of $0.5 per mh, which is equal to a month’s salary of $100. The mean rate of $2.3 per mh for the high-MI farms can be converted into a month’s salary of $460, which is comparable with the salaries of industry managers. The farms with negative MIs, on the other hand, have a compensation rate of only $0.1, which can be converted into a month’s salary of only $20. 139
The average rate of return to the equity capital is 40%. Compared to the 18% interest of saving accounts, this rate is quite satisfying. The farms with medium and high MIs have higher rates: the 105% rate of the high-MI farms marks the profitability of well managed dairy farms. The 26% rate of the low-MI farms is still higher than the alternative 18%. The farms with negative MIs, on the other hand, have a negative rate i.e. they are not able to compensate the utilization of their equity capital with the returns a saving account would yield, after compensating the unpaid labor at average wage rates. The amount available for the compensation of the entrepreneur’s risk is measured with the management income (MI), the final result of the farm profitability. Seventy-seven percent of the sampled farms have positive MIs, i.e. they are profitable. They make net profits between $62 and $10,418 per year. The remaining 23% of the sampled farms are unprofitable; they make net losses between $405 and $1,569. The differences between the MIs are larger than those between the farm incomes. The mean MI of the farms with high MIs is 1,375% higher than the mean of the low MIs and by 276% higher than the mean of the medium MIs. Also, the difference between the mean MIs of the farms with low and medium MIs is 292%, while the farm incomes differ only by 24%. The farms with medium MIs utilize family labor forces and equity capital resources more efficiently and yield a better profitability than the low-MI farms. The comparison reveals that besides the TGM, the fixed costs and the utilization of farm’s own labor and capital resources are very important for the profitability. While there are various factors affecting the farm profitability including those in connection with the profitability on the production level (GM) in the section 5.7, and the factors described above, a further significant factor is the farm size. The following linear regression applies to the dependence of the MI on the farm size: y = 144x − 338 ∗
y - Management income, $ per year x – Number of cows, n ∗
- Significant at the 0.01 level.
The regression is particularly revealed by the farms with high and negative MIs. The high-MI category consists of the large farm and five medium farms including all of those three farms with more than 20 cows. The negative-MI category, on the contrary, consists of six small farms and one medium farm. However, there are considerable exceptions as that the farm with the lowest MI i.e. with most losses is not a small but a medium farm, and the farm with the highest MI of $10,418 is not the large farm but a medium farm too. The general tendency of larger farmers having higher MIs seems not to apply to the farms with medium and low MIs: the medium-MI category consists of three medium farms and six small farms while the low-NP category consists of six medium and two small farms. Thus, a small farm can be as profitable as a medium farm. However, that seems to be true for farms with more than nine cows since the small farms with medium MIs have nine cows at least. Also, the low-MI category includes small farms with ten or more cows. All of the small farms with less than nine cows, on the other hand, have negative MIs. 140
Despite the exceptions described above, the mean MIs of the farm size classes clearly show a climbing trend (Fig. 5.32). The diagram also shows that the high imputed costs of family labor forces, which are comparable in all farm size classes, are a major inhibiting force for the profitability of the small and medium farms. Figure 5.32: Structures of the average total gross margins of different farm size classes 22000 20000
5,272
18000 16000
$ per year
14000
4,612
12000
1,291 10000
5,020
8000
3,103
6000 4000 2000 0
578 788 1,185 150 777 small farms
Fixed and overhead costs Imputed costs of unpaid labor Management income
1,588 5,602
1,498 513 1,565 medium farms
large farm
Costs for hired labor and borrowed capital Imputed costs of equity capital
The climbing trend in the above diagram may also appear proportional at first sight. But if we convert the mean MIs of each farm size class back to MIs per cow, the averages are $58 for the small farms, $163 for the medium farms, and $72 for the large farm. The large farm indeed has a high amount of MI, but it is far less profitable than the medium farms. Its profitability is almost comparable with that of the small farms. The low profitability of the large farm was also revealed by its GM, and was led back to management failures in the section 5.7.5. Larger farms are usually more intensified than smaller farms, but they are more difficult to manage at the same time. Obviously, a herd of 73 cows is too challenging for a family-run dairy farm.
141
5.8.2 Liquidity Liquidity is the number one priority for any business in a market economy. A dairy farm with a high MI is not sustainable if lacks real surpluses of income. The liquidity is best expressed by absolute measures. It is about the results and not about the efficiency. Given the significant regression of the absolute amounts of the MI on the farm size (see 5.8.1), it can be assumed that larger farms have a better liquidity than smaller farms. Thus, a characterization of the farms in this section is based on the farm sizes (Tab. 5.37). Table 5.37: Comparison of the sampled farms by farm liquidity measures, $ per year (N=30) Farm classes Farm income
Small farms
Medium farms
Large farm
Mean
2,551
6,189
11,175
4,658
406
321
0
350
= Total income
2,957
6,509
11,175
5,007
+ Depreciations
377
790
2,534
655
0
472
7,500
486
= Consumable income
3,334
6,827
6,209
5,176
- Living costs
2,099
3,010
2,375
2,563
= Cash surplus
1,235
3,817
3,833
2,613
+ Off-farm incomes
- Loan repayments
The small farms have highest off-farm incomes, probably because a) the incomes from the farming business are too little, and b) a great extent of unutilized labor resources is available. Some medium farms have off-farm incomes too. The large farm, on the contrary, is financed only from the farm incomes. The total income is the amount left after covering the costs of farm operations. But it does not include loan repayments. In addition, depreciations usually flow into the incomes. The ‘consumable income’ is the real surplus of cash inflows. The mean consumable incomes of the farm classes reveal the weakness of the large farm. Despite having a herd size, which is nearly four times the herd size of the medium farms, the large farm has less cash after paying the farm outflows than the medium farms. The average number of household members for both the small and the medium farms is four. The living costs of the medium farms are, however, 43% higher than those of the small farms. Although the small farms keep their consumption expenses low, the latter still have a 63% share in the consumable income. On the contrary, the medium farms spend only 44% of their consumable income, and the large farm, which is run by a twoperson household, spends 38% of its consumable income for consumption. The cash surplus is the amount that remains after paying the expenses for both the farm and the farmer’s household. It can be used for new investments. At the same time, it reveals how much reserve for a new loan (repayment + interest) a farm has within a year. The cash surpluses of the farm size classes range between $1,325 and $3,833. Considering the cash surplus as the short-term capacity of new investments, some simple comparisons on what the farms of each class are able to afford are made in Tab. 5.38 (cf. 4.3.5; 5.5.5 and 5.5.7). 142
Table 5.38: Examples of investments affordable by mean cash surpluses of different farm classes Farm size classes
Cash surplus, $ per year
Alternative 1
Alternative 2
Alternative 3
Small farms
1,235
three cows
one double-pail milking machine + one cooler + one heifer
one double-pail milking machine + one horse + scythe & rake for horse
Medium and large farms
3,817 and 3,833
nine cows
one used ZIL-130 truck + one double-pail milking machine
one used 80 hp tractor + mower & rake for 80 hp tractor + one ‘Excel’ sedan + cash of $500
At the average interest of 36% p.a. and a pay-off term of one year, the limits of new loans are $908 for the small farms, $2,807 for the medium farms, and $2,818 for large farm.
5.9 Problems, perspectives and targets of the farmers Most farmers agree that their business is profitable even if they prefer the expression ‘rather profitable’, which could be interpreted as ‘relatively profitable’ (Fig. 5.33). Figure 5.33: Farmers’ judgment of the profitability of their farms (N=30)
13%
13%
7%
67% profitable
rather profitable
rather not profitable
not profitable
The four farmers who judged their farms as ‘profitable’ instead of ‘rather profitable’ are medium farmers with 16 to 28 cows. Those six farmers who were sure of not making any profits, on the other hand, have small farms except for one with a 15-cow farm. The term ‘profitability’ indicates for the farmers the cash flow rather than the profitability in the economic sense. However, it was found that the subjective judgments of the farmers meet the profitability measures of their farms. The farmers feeling more profitability 143
have more profits both on the production and the farm level than those who do not feel any profitability (Tab. 5.39). Table 5.39: Comparison of self-judgments and economic measures of profitability (N=30) Judgment level
Profitable
Rather profitable
Rather unprofitable
Unprofitable
Number of farms
4
20
2
4
Number of cows
16
18
13
7
519
382
337
278
Net profit, $ per year
5,442
2,033
74
-667
Cash flow, $ per year
5,129
2,698
1,165
160
GM per cow
The farmers perceived much the same problems as were identified in the World Bank survey in 2003 (see 4.6.6). Apparently, little has changed in the circumstances of the dairy farms between 2003 and 2005. Furthermore, no clear differences between the farm classes were evident in the responses. The lack of credits and feedstuffs are the most worrying problems, followed by the overgrazing of the pastures and the deterioration of dairy cattle. For solving the problem with the credits, the farmers could not suggest any solution but to rely on external support (cf. 5.10). For improving the feed supply, the farmers have different opinions. The large farmer plans to expand the oat cropping, which currently has an extent of five ha. About a half of the medium farmers and few small farmers plan to grow fodder crops in near future. They would grow oat for green fodder and corn for silage. Most small farmers and some medium farmers do not think they are able to grow fodder crops and hope that crop farms, perhaps with government support, would do that. The farmers are helpless against the overgrazing, which has been permanently increasing due to the increasing number of livestock farms as well as the immigration of herders in their places. One farmer has the idea of building a new farm in a new area that is less threatened by the overgrazing. He needs an investment of $10,000 for realizing his plan. This might be the best option under the current legal frame, in which the privatization of pastures is not allowed (cf. 4.3.3). Most farmers consider their farms too small. Ninety percent of the sampled farms plan to expand their herds. Most desired herd sizes are 20 and 30 cows. The responses reveal that the optimal herd size of 20 to 25 cows, which was suggested by NYAMBAT et al. (2003,38), is the desired optimum too. A herd with more than 30 cows on the other hand, is not desirable for most farmers. But this conclusion does not rule out the possibility that, once a farmer has 20 to 25 cows, he could be interested in a further expansion (Tab. 5.40). Table 5.40: Present and desired herd sizes of the respondents (N=30) Desired number of cows
10
15
20
25
30
50
100
Present number of cows
6
11
14
15
20
16
73
Number of farms
3
6
8
4
7
1
1
144
About a half of the small and medium farmers and the large farmer plan beef production through the fattening of male calves. However, they are aware that the plan cannot be realized without ensuring the feed supply with additional investments. The farmers also expressed their discontentment with the milk prices. They accept the prices offered by the dairies or other buyers (cf. 5.6.5). In order to get out of their defensive position and to increase their incomes, all farmers plan to process milk. Small-scale milk processing equipment belongs, besides cars, to machines the farmers would not hesitate to buy once they have the necessary amounts of financial resources. Those farms without trucks need trucks (see 5.5.5). A medium farmer and the large farmer, who already have trucks, would like to have milk transporters. Few medium farmers also plan to buy passenger cars, or to replace their cars. About a half of both small and medium farms plan to buy 25 hp tractors. The main purpose of the tractors would be haymaking (cf. 5.5.5 and 5.5.7).
5.10 Requirements of the farmers on external support The farmers were asked what services they wish from a dairy extension organization. The responses could be organized into five categories, which are prioritized for each farm class in Tab. 5.41 and explained underneath. Table 5.41: Types of external support desired by the sample farmers (N=30). Multiple responses. Type of service
Small
Medium
Large
Advising service
10
8
18
Credit assistance
9
8
17
Training
4
6
10
Political lobby
5
4
Material help
3
1
1
Total
10 4
As shown above, the farmers feel a strong need for advice. However, they prefer individual advising to training. Training is perceived as much academic and general but little problem-oriented. Several farmers stated that trainings are usually carried out by professors, who are not aware of the praxis situation. One farmer remembered a training for dairy farmers in Udleg in 2005, which he did not attend, and rightfully so since the professor talked about sheep for three hours, but nothing about dairy cattle. Favorite subjects for advising/training are fodder cropping, milk processing and feeding. In addition, the following training/advising subjects were suggested: ¾ Business management. Two medium farmers in Nariinii am and Khandgait, who have a university degree in veterinary medicine and a vocational school degree in animal breeding respectively, would like to learn about business management. ¾ Marketing. One farmer with a university degree in Mongolian language and literature, whose farm is located in Gunt, plans to purchase milk processing equipment and would like to acquire strategies for direct marketing of dairy products. 145
¾ Intensified farming. One medium farmer in Gachuurt, who has a secondary education, wants to gain systematic knowledge about intensive farming in order to prepare himself for the further development of his farm. ¾ Use of a milking machine. One farmer in Jargalant, who has a vocational school degree in civil engineering, plans the purchase of a milking machine and wants to learn about the proper use of the machine. ¾ Barn comfort. One farmer in Jargalant, who has a university degree in animal breeding, pointed out that many new farmers underestimated the importance of barn comfort, thus this should be included in any training for dairy farmers. It was found that more experienced and more educated farmers are able to articulate their requirements better than the less experienced ones. For example, the farmers in Tuul village, which is the place with least experienced farmers, were not able to name any favorite service or subject of advising while most farmers in Nariinii am, Jargalant and Gunt were able to not only formulate their own requirements, but also share their opinions about what new farmers should learn, implying that they could teach new farmers too. All farmers agreed that lecturing is the least appropriate form of farmers’ training. Onfarm demonstrations or the use of demonstration material should be integrated in trainings. However, several farmers agreed that, depending on the subject, training could begin with a seminar or an introduction lecture, and proceed with demonstrations. For distance training, the farmers prefer TV as an appropriate media and would like to buy handbooks if these would deal with useful topics. Some farmers suggested that one farmer in each village could act as the seller of handbooks. Radio and newspapers were considered not popular enough to reach the majority of the farmers. The second most required service is assistance in obtaining credits. This is particularly important for small and smaller medium farms since they have most difficulties in fulfilling the requirement of the lenders on collateral capital (see 4.3.5 and 5.5.3). The farmers, however, want the lenders to understand the difference between the semi-intensive dairy farming and pastoral animal husbandry, and to assess the dairy cattle with adequate values. One third of the farmers also want the dairy extension service to lobby on behalf of the dairy farmers e.g. in land right issues and for a protection of the domestic milk market. A gratifying finding was that most of the sampled farmers do not expect material support from dairy extension. Several farmers pointed out that distribution of free things would cause inequalities and destroy the competition among the farmers, which is currently considered as quite fair. Only three small and one medium farmer would welcome a service giving free Moreover, none of the farmers would refuse paying service fees. All of them agreed that no product or service is free in a market economy. Provided that the extension service is really useful, 50% of the sampled farmers would pay ‘according to the performance of the service’ while the remaining farmers are able to pay ‘a small fee’.
146
6 Discussion and conclusions of the dairy sector analysis The dairy sector in Ulaanbaatar seems to have recovered from the crisis in the beginning of the 1990s and the stagnancy in the mid-1990s. The increase of dairy farms in the area and the high level of contentment that the farmers have with their businesses allow the conclusion that the sector is growing now. While the initial stimulation of development was given by the DANIDA-project ‘Restructuring of mechanized dairy farms’ in the 1990s, it was not until 2000 that the potential of the dairy farming was fully recognized. There is a considerable difference between the farmers who started up in the 1990s and those who entered the sector after 2000: the latter perceive dairying as a commercial business rather than a possibility to earn a living. There are approx. 420 dairy farms around Ulaanbaatar; most of them in Jargalant, Nariinii am, Shar khad, Gunt, Gachuurt, Tuul and Khandgait. These places are located within a radius of 72 km from the city center. While 52% of the farms have up to 10 cows, 33% have 10 to 20 cows and the remaining farms have more than 20, but mostly less than 50 cows. The current structure of the farms, however, is expected to change in the near future since most newcomers in the sector plan larger farms with 20 to 50 cows. There is also evidence of very large farms with 100 to 200 cows.
6.1 Chance for growth The dairy farming sector is growing because the growth is absorbed by the market. The farmers produced only 12 million liters of raw milk in 2005. The import of dairy products in Ulaanbaatar was equivalent to 18.2 million liters of liquid milk. Pastoral herders sold approx. 34 million liters in 2005. While the imports are justified by the lack of capacity to produce comparable products and the tendency of many urban consumers to buy foreign products, the dairy farms can take over a part of the market share of the herders due to their comparative advantages such as higher lactation yields and better financial capacities. Moreover, the increase of the population in Ulaanbaatar boosts the dairy market. The total effective demand of milk and dairy products is expected to increase - expressed in liquid milk amounts - from 64 million liters in 2005 to 79 million liters in 2015. If the current structure of the suppliers in the dairy chain will be preserved, there is an additional capacity of three million liters. In a more positive scenario, in which the dairy farms will take over a half of the herders’ market share, the farms could supply 36 million liters per year by 2015, which is three times the amount of their current supply. The chances are challenges at the same time. While there has been virtually no competition among the farms until now the increase in the number of farms will lead to a competition. There is also concern about the establishment of very large farms with more than 100 cows. Research and policy must prevent the currently existing dairy farms, most of which are small and medium farms, from losing their market shares. Otherwise, there will be consequences as increased poverty and unemployment. It is not appropriate to assume that the dairy farms are not able to compete, but we must consider both favorable and less favorable scenarios for the future development. In any case, there is need of institutional support for the dairy farmers. 147
6.2 Problems of the farms and development proposals 6.2.1 Enhancement of dairy cattle breed The deterioration of the dairy cattle is a well known problem. The enhancement of the breed is essential for the profitability of the dairy production since approx. 25% of the productivity of dairy cows is determined genetically (BALDANGOMBO 2000). A farmer could improve the genetic potentials of his dairy cattle by owning a purebred bull. However, keeping a bull appears to be only profitable for larger farms. For the small and medium farms, which are the majority of the dairy farms in the study area, however, the feeding costs are likely to exceed the benefits of a breeding bull. In the case of small farms, first we should ask if they have the financial resources to afford a bull and its feeding at all. Another problem is the lack of breeding bulls in the area. Generally, there is not much elbowroom for the farms to improve the natural insemination. Alternatively, the farms may get used to a regular use of AI. The AI services organized by the MFA have been using semen of Holstein and Brown Swiss cattle for the insemination of Black-and-White and Alatau cows with a considerable fertilization rate of 83%. However, the whole programme is a pilot project financed by the Government of France. It is not sure if the AI services will be still operating after the project ends in 2007. The AI technicians may be able to operate their services on their own, possibly with the support of a dairy extension service (see 7.2.1). But the opposite case is possible too. Another possible scenario is that the dairy farms are provided with heifers and cows by breeding farms. However, no breeding farm has been established yet. While some dairy farmers are willing to take up the breeding business, they might be not able to do so due to the lack of know-how or a lack of finances. Thus, external support is necessary for facilitating the development of dairy cattle breeding (see 7.1).
6.2.2 Improvement of nutrition management Since up to 35% of the milk productivity of dairy cattle is determined by the feeding (BALDANGOMBO 2000), nutrition management is the most important factor for the profitability. As the sample farms’ survey reveals, the GM is proportional to the nutrient supply (see. 5.7.5). Feeding is also the most problematic area for the dairy farms. Even those farmers with highest profitability have concerns about the feeding. The problems concerning the feeding include suboptimal feed rations, low and unequal quality of purchased hay and bran, and overgrazing of the pastures. What is worse is that the competition for hay and bran is increasing and results in price increases. According to the sensitivity analysis in the section 5.7.3, the GM of a medium-productivity cow with an annual milk yield of 2,400 l would decrease from $362 by 47% to $192 if the price of a model ration ‘10 kg hay + 4 kg bran’ would increase by 30%. Possible strategies to solve the problems are classified into five categories: optimizing the utilization of the available feedstuffs, ensuring the availability of feed, ensuring and improving the quality of the available feedstuffs, creating new sources of feed, and avoiding overgrazing of pastures. 148
6.2.2.1 Optimizing feed rations with conventional feedstuffs
A crossbred dairy cow with the average weight of 450 kg can take in 10 kg dry matter of forage and 3.5 kg dry matter of concentrates per day (see 5.6.5). A ration of 10 to 11 kg hay plus four kg bran would exploit this capacity. It is the ration for the stall period. During the grazing season, the grass intake should be supplemented by three to four kg bran. These averages should be increased during the early lactation period and may be decreased during the end phase of the lactation. Only seven percent of the farms exploit the intake potential of the cows by feeding the recommended ration of 10 kg hay and 4 kg bran during the stall period. The ration of the vast majority of the farms is 9 kg hay + 3 kg bran. About a third of the farms, which are mainly small farms, have small rations of only 8 kg hay + 2 kg bran. However, as the comparison of different rations during the stall period in the section 5.6.6 reveals, the farms feeding the highest ration of 10 kg + 3.8 kg bran have the best milk yields, but they spend more energy per liter of milk than the farms with the average ration of 10 kg hay + 3 kg bran during the stall period. While adequate feed rations improve the milk productivity, the law of minimum seems to apply. Once the nutrient supply meets a certain level, at which energy and protein supplies of approx. 53 MJ NEL and 1,200 g nXP per day are attained, the feed possibly is no longer the minimum factor. Instead, one or several of other factors as the fitness of the cow or barn climate variables will constitute the minimum. Unless the new minimum factor is identified and improved, further increasing of the feed ration will not increase the productivity. Nevertheless, those 73% of the farms that provide their cows with less than 50 MJ NEL per day, should increase their feed rations to 10 kg hay + 3 kg bran in order to attain the supply of 53 MJ NEL. Wheat grain is a concentrate available on the market. As for the ‘optimal’ ration, three kg bran could be supplemented by 2.6 kg of wheat grain. The price of 2.6 kg wheat grain is $0.21, and by $0.02 higher than the price of three kg bran. Similar comparisons can be made between bran and oat grain, which is, however, less available than wheat grain. Thus, bran is both the most available and the most economic concentrate. The feeding approaches during the grazing season are difficult to generalize since the qualities of the pastures are different. A comparison of the sampled farms revealed that most profitable farms start grazing in May and keep the bran ration at two to three kg throughout the season while those farms with lower productivity and profitability start grazing in April and reduce the bran ration gradually to 0.5 or one kg, or stop it between June and September. Generally, the early start of grazing itself is not a problem. It only needs to be supplemented by bran feeding and possibly by hay feeding if the pasture vegetation does not supply the nutrients ten kg hay would supply. An important problem is that the early lactation period may overlap with the early grazing: underfeeding results in underutilization of the production potentials of cows. Another problem of the grazing arises in fall: the pastures lose their nutritive values due to increasing fiber and decreasing protein contents; the RNB becomes negative. Altogether, the first measure most dairy farms should take towards a better nutrition management is to increase the feed ration to 10 kg hay + 3 kg bran during the stall period and keep the bran ration at least at two kg throughout the grazing season. Early grazing always has to be supplemented with bran feeding, and possibly with hay. An optimal feed 149
level is attained when a further increase of feed rations would not result in an increase of milk production, of which the economic value is more than the costs for the additional feedstuffs. Depending on the quality of the cow, the energy concentration in the daily feed ration should be between 50 MJ NEL and 60 MJ NEL. 6.2.2.2 Ensuring the availability of adequate amounts of feed
The paradox is that those farms with insufficient provisions of feedstuffs spend most money per unit of feed. These are usually small farms that are not able to make hay or purchase hay when the prices are low, and that are also not able to buy sufficient amounts of bran at low prices i.e. in the late summer and early fall. The reason for the problem is the lack of adequate funds at the right time. Forty percent of the dairy farms purchase all the hay they need. The average price of hay is $48 per t while the variable costs of haymaking are, including the imputed costs of family labor forces and the transport costs, between $24 for tractor mowing and $38 for hand scything. The cost analysis revealed that horse scything is both less capital-demanding and more economic than tractor mowing. The variable costs in this case are 27 $/t. A horse scythe with a rake can be purchased at the price of $200. For $100, a used one can be purchased. A horse can be borrowed from the neighbors or relatives. The horse scything therefore appears even affordable for the small farms. The horse scythe can also be shared by two or three farmers, each contributing $30 to $50 for the equipment that can be used for 10 years or longer with little annual repairs. If a price of $50 is still too much, the farms could use hand scythes at least. Hence, the lack of haymaking equipment is not the main problem. In order to discuss the problem of the small farms with haymaking in details, the case of a 10-farm in Gunt is taken as an example. The farm made 14 t of hay in 2004, which were 54% of its total requirement. Hay was made in a distance of 50 km from the farm. The costs of haymaking consist of the following positions: $20 for the repair of the scythes + $84 for food + $161 for hay transportation with a rented truck = $265 (19 $/t) variable costs that were actually paid + $227 imputed costs for family labor forces. = $493 (35 $/t) total variable costs. Fixed costs for the haymaking can be neglected in this case since the repair costs of $10 per each of the two scythes could also be used for purchasing hand scythes that are used but still in good condition. The imputed costs for the family labor forces do not cause immediate financial difficulties. In addition, relatively high costs for food were assumed. In reality, they could be cut down to about $50 to $60. The major problem is the transportation. Approx. 60% of the paid variable costs are spent for the transportation of hay. 150
Another problem is that the farmer was not able to hire helpers since he was not able to pay for them. With helpers, the farm could have prepared all the hay it needs for a year and saved $20 per each ton of the purchased hay or a total of $240. Two helpers could have been hired for a total payment of about $100 maximally. Due to the lack of $100 at the right time, the farm makes a net loss of $140. If calculated in terms of expenses, the amount of the purchased hay could be prepared with $228 instead of the total price of $660. In short, the cash surplus of the farm could have been by $400 higher if the farmer had had $365 at the time of haymaking. Since there is little possibility for small farms to raise a loan for haymaking, there remains only one option: temporary release of equity capital. If the farmer in the example above had sold one of his cows for $400 and used $100 for haymaking, $300 would have been left from the cow sale and in addition, he could have increased his cash surplus by $400. Only with this amount he could be able to buy a new cow and regain his initial herd size. And there would be $300 still left. Alternatively, he could have spent the $300 for making 15 t of hay and sold them for a total of $720. Similar calculations can be made for purchasing hay or bran at cheaper prices in fall as well. In any of these cases, most small farms and many medium farms have no choice but to release capital. More about possible capital release schemes and the possible functions of the related extension work is discussed in the section 7.3.1. 6.2.2.3 Ensuring and improving the quality of conventional feedstuffs
While many farmers are not happy with the quality of hay, it is possible to ensure a high quality: through right timing of haymaking. Although the nutritive value of pasture plants peaks in July (GENDARAM 2004,34), the farmers usually start haymaking in August or possibly in September. The major problem of that delay is the lack of motivation. The farmers should be severely reminded of the advantages of right timing for haymaking (cf. 6.3.5). A low-cost approach for improving the dairy cattle feeding was suggested by a Mongolian-Swiss expert team that conducted a survey on dairy farming: to add 100 g of urea (which are affordable at $0.03) to the daily feed ration. The nitrogen supplement should raise the milk production potential of the diet by up to three kg (USUKH et al. 2007,32). Although the conclusion sounds too promising, the suggested approach is worth experimenting. Especially that hay is often made in fall, when the RNB-balance of pasture plants has become negative, thus reducing the protein concentration for the rumen bacteria, the use of urea could balance the nitrogen supply of the feed rations during the stall period. Urea furnishes ammonia which can be incorporated into the building blocks of protein – amino acids – by the microorganisms in the rumen. A problem with urea is its unpalatable character, and thus its daily ration must not exceed 110 g (DUNHAM & CALL 1989,5). It should be mixed with bran, or added into mineral salt (USUKH et al. 2007,32). 6.2.2.4 Production of fodder crops
Although optimal feed rations with hay and bran of high quality enable a lactation yield of 3,000 l or more, the farmers need new sources of feed. The primary reason for this requirement is the strong dependency of the farmers on the prices of feedstuffs. Simply the fact that the bran price doubled in 2005 (whereas the milk price did not change) reveals 151
how risky dairy farming currently is. Further price increases are expected due to the increasing demand of Chinese pig farmers and the sharpening competition of domestic livestock farms for inputs (SCANAGRI SWEDEN & CPR MONGOLIA 2003,11). Another reason for the necessity of alternative feedstuffs is the laxative nature of bran: the bran ration should not exceed 3 kg/day or maximally 4 kg/day. If the productivity of the cows is to be increased, substitutions for bran are needed. Requirements on creating new sources of feed go into three directions: to the industry for producing feed, to the crop farms to grow fodder plants, and to the dairy farmers themselves for growing fodder plants. While the firs two options are discussed in the section 7.2.2, the last option is discussed below. Provided that certain conditions including availability of funds, seeds and technical advice as well as the ownership of fertile crop land but to name the most important ones, are given, some large and larger medium farmers are willing to take the risk of fodder cropping (cf. 5.9). While there are a large variety of fodder crops, the continental climate of the study area reduces the range of alternatives. Perhaps it is the best for the farmers, who have limited ability to absorb economic risks, to start with plants that had been grown in Mongolia and therefore recommended by Mongolian researchers. The major species are briefly described in the following. A. Silage crops The major crops recommended for silage making are corn, sunflower and Sudan grass. The yield of corn is estimated at 150 to 200 quintal/ha without irrigation and at 250 to 300 q/ha with irrigated technology, the yield of Sudan grass at 50-60 q/ha without irrigation and at 100 q/ha with irrigated technology (GREEN GOLD PROGRAMME 2006,3) while that of sunflower is estimated at 100 q/ha (ULGIIT & STEWART 2006,14). Corn is one of the favorite fodder crops of the dairy farmers. However, former state farm employees noted that they had crop failures with corn while not with sunflower, and thus sunflower was preferred to corn. The crop failures occurred mainly due to the lack of irrigation. Therefore, for farmers with limited financial resources for affording adequate irrigation equipment, sunflower appears more appropriate for silage making in spite of the disadvantage in the yield quantity. Sudan grass is also favored by researchers due to its high drought tolerance although there is not much experience with Sudan grass silage. The researchers tend to prefer crop mixtures both for minimizing the risk of crop failures and for ensuring a high quality of silage. Sunflower and corn should be mixed with barley, oats or pea. As for the grass silage, they recommend the mixtures oats+barley+pea, Sudan grass+oats+barley+pea if the field is not irrigated. For irrigated technology, they recommend the mixtures corn+oats+barley+pea and Sudan grass+oats+pea (GREEN GOLD PROGRAMME 2006,1). B. Green fodder The recommended crops for green fodder production are barley, oats, rye and raps. All of these crops have been grown in Mongolia. Sudan grass and corn can be grown for green fodder too. For the dairy farmers oat is the most favorite crop. Oats have already been grown by the large farmer in the sample farms’ survey in Gachuurt. The farmers would
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rather invest their limited resources into a new business if it is done by someone else, to whom they can relate, with success. A favorable perennial plant is alfalfa. In a non-irrigated technology, the average green yield of alfalfa is 25 to 30 q/ha (BATSUKH 2004,64). However, it is not widely known among the farmers, thus implying high risk. The US-American farmer Bill Yodor tried to grow Mongolian and American varieties of alfalfa on 60 ha between 2001 and 2002. In the first year, the American alfalfa died over winter while Mongolian alfalfa survived. In the second year, however, the Mongolian alfalfa also died after it did not rain until the middle of August (YODOR 2002,146). This case also underlines the importance of technical expertise for growing crops. Other grass species recommended by researchers are ryegrass, rough stalked meadowgrass and meadow foxtail (GREEN GOLD PROGRAMME 2006,5). C. Forage root crops A crop that has little attention of the farmers yet, but is more tolerant to unfavorable climate conditions, is fodder beet (Beta vulgaris, ssp. altissima var.). The yield potential is estimated at 600 q/ha of tuber or 840 q/ha of biomass in irrigated technology. If not irrigated, the average tuber yield is 300 q/ha. For a dairy herd of 25 cows, GOMBOSUREN (2004,51) considers a small fodder beet field of two hectares sufficient. Given the lack of reliable research results, it is not possible yet to prioritize the fodder crops named above. Of much relevance for choosing the right plants would be the availability of financial resources of the farmers besides the drought tolerance of the crops. Most farms would probably prefer those alternatives with least demand on investment i.e. requiring neither special equipment, nor large fields. Fodder beet, Sudan grass and the cereal species would be appropriate for these farms. Larger farms are able to absorb greater risks by trying out corn and sunflower for silage, and alfalfa and rape for green fodder. A major problem for fodder cropping is the ownership of crop land. Bidding, the main principle for owning crop land is considered as unfeasible by the dairy farmers. They are waiting for the Farmers’ Law, which would allow them free ownership of crop land for fodder cropping (cf. 4.3.3). Those who cannot wait for the Farmers’ Law may rent abandoned land from local authorities or crop land from crop farms. Another side of this issue is the location of the crop land. Given the already dense population in the villages and the increasing and uncoordinated immigration of thousands of households with livestock around Ulaanbaatar, crop land is barely available in the area. The farmers would find crop land in areas that are located 100 to 150 km away from the city. Most probable places are Bornuur, Bayanchandmani, Batsumber and Jargalant soums in the Tuv province, which are not too far from the city, and in which many crop farms are available, thus offering better possibilities to lend machines from crop farmers or to co-operate with them e.g. in harvesting neighboring fields jointly. The farmers have two options for integrating the fodder cropping into their farming operations if they start cropping in a remote area: either to spend the vegetation period there, and to return after the harvest back to their villages, or to move with their farms to the areas where their crop fields are. A third option might be to employ a crop farmer season153
ally for taking care of their crops. A fourth, but rather unfeasible option is to send someone from the farm family e.g. the son of the farmer to the crop field for the entire vegetation period. The description of the situation above might have made clear that there is a large distance between the wish of the farmers to grow fodder crops and the action. Numerous problems are lying ahead: from finding crop land across choosing the right varieties of the right species up to the adjustment of the farm organization to the integration of crop farming. It is therefore understandable that the sample farmers named fodder cropping as the most favorite subject of advising/training. 6.2.2.5 Avoiding overgrazed pastures
There is no evidence that the Farmers’ Law, which was proposed in 2003, will be passed in near future. The passing of the law cannot be influenced by the farmers, who do not have the power to lobby. But even if the Farmers’ Law is passed, there is no guarantee that the problem with the overgrazing around Ulaanbaatar is solved. The majority of the politicians, including many of the decision-makers in the agricultural sector, are against the ownership of the pastures. In addition, even if the ownership of pastures is somehow regulated, the limited capacity of the pastures in the dairy farming places will not allow each farmer to own sufficient pasture. The only possible solution by now is to move to a less overgrazed area, as this was suggested by a farmer in Gachuurt who took part in the sample farms’ survey. While he considered an amount of $10,000 sufficient for starting a new farm with his nine cows, the capital demand may be much higher for large and medium farms. Meanwhile, the rural-urban immigrants have spread in the whole Ulaanbaatar area, and each immigrated household is usually followed by several households from its kinship. Hence, the optimal place for a new dairy farm must have good infrastructure, but it should be located as far from the city as possible. Outside the Ulaanbaatar area, there is a choice of various locations for dairy farms. Despite their good infrastructure conditions, Bayanchandmani and Bornuur soums of the Tuv province are still not too densely populated, and so is Batsumber soum (of which center is Mandal). Udleg seems to be still not affected by overgrazing since none of the farmers in Udleg considered overgrazing as a problem in the sample farms’ survey. The farmers may need professional support for making decisions on whether or not to move, where to move, and how much costs and benefits the move will result in (see 7.1).
6.2.3 Optimization of barn conditions Although the sample farms’ survey did not include a detailed analysis of the barn environment, the latter is another important factor for the profitability of the dairy farms besides the breeding and the nutrition management. Even if the feed supply would be improved, suboptimal barn conditions would still limit the milk productivity.
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JONES (1990) defines the following effects of optimal barn environment for dairy cattle: ¾ Avoiding of diseases (clinical and sub-clinical); ¾ Optimization of the milk production potential; ¾ High feed intake potential, which leads to high milk productivity, faster growth and high fertility. ¾ Good protection of the barn and decrease of repair costs. He suggests the ABC-concept for analyzing and optimizing the barn environment. The main elements of this concept are Air, Bunk and Comfort. A. Air Based on his research on the former state farms, BALDANGOMBO (1992) defined the optimal range of the barn temperature between 7 and 12°C. Also in Germany, BRANDES (1999) assumes the optimum at 7°C. However, LUTZ (2000) reminds that the optimum depends on the productivity of the cows. MARSCHANG (1989) goes further to suggest the optimum for high-productivity cows at 0°C. The US-American farmer Bill Yodor, who worked on his farm in Udleg for three years, suggested a range between 3 and 5°C as the optimal range for winter (YODOR 2002). Despite these different suggestions and conclusions, low barn temperature in winter generally seems to have minor effects on the productivity of dairy cattle. According to LUTZ (2000), barn temperatures up to -30°C do not reduce the productivity if the cattle have a permanent access to feed with adequate nutrient contents. The common opinion of dairy farmers in the study area, according to which coldness in winter decreases the productivity, does therefore seem to be wrong. On the contrary, heat is a major reason for stress. A depression of the productivity already starts at 17°C (BRANDES 1999). Higher temperature leads to a decrease of the feed intake, thus to an energy deficiency, and results in low productivity. Ongoing heat stress also increases the risks of infertility and claw diseases (KENNEDY 1999). In the study area, where the grazing season is between May and October, heat stress is uncommon. But it still cannot be excluded. Especially in spring, many farmers who fear the danger of coldness could actually promote the heat stress. In addition, isolating the barn climate leads to a deterioration of the barn air (cf. SAMDANDOVJ et al. 2003). The optimal humidity of the barn atmosphere is estimated at approx. 70% by BALDANGOMBO (2000). An important reason causing high humidity levels is the respiration of the cattle, through which 10 to 15 l water in winter and up to 20 l in spring is released to the barn atmosphere. Humidity increases in winter can decrease the isolating effect of the skin, and cause cold stress. In addition, a highly humid bran atmosphere is an ideal environment for pathogens. In order to keep the barn air cool and dry, at least four full air rotations per hour are required in winter, and up to 30 air rotations per hour in warmer months of spring and fall (BRANDES 1999). Optimization measures may include the opening of non-carrying sidewalls that could be closed with adjustable curtains as well as the installation of high eaves. Barns with little possibility of reconstruction could be equipped with ventilators (cf. SCHOLZ 2004).
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Based on the literature review, the optimum ranges for the air temperature and the humidity in dairy cow barns in the study are assumed at the ranges 7 to 12°C and 70 to 75% respectively. Further research on the subject may start with these as control variants. B. Bunk The technique of feeding depends on the form of the barn. The majority of the barns in the study area are tie-stall barns. An advantage of tie-stall barns is the possibility of feeding each animal individually. Important requirements for a good bunk management in a tie-stall barn are: ¾ The manger should be by 10 to 15 cm higher than the stand in order ease the feed intake (LUTZ 2000). ¾ The manger should be approx. 50 cm wide and have a smooth surface (BRANDES 1999). ¾ Rubber or similar elastic material is to be preferred for the wall between the manger and the stand, which should be approx. 32 cm high and 12 cm wide. An optimal bunk management includes optimal water supply. At the average water requirement of four to five liter per kg milk (BOXBERGER et al. 1986), a cow with a daily milk yield of 10 l must drink 40 l water at least. The water intake should occur shortly after the feeding and the milking (LUTZ 2000). If an automatic watering facility is installed in the barn, the intensity of water run must be about 20 Liter per minute in order to meet the drinking speed of 18 to 25 l per minute (BOXBERGER 1986). C. Comfort A barn must offer the cattle a stress-free environment since high milk productivity is the result of low stress level (BRANDES 1999). Stress is usually least if the cattle are provided with possibilities that enable them to conduct their natural behavior (JUNGBLUTH et al. 2005,67). In a tie-stall barn, all functions are concentrated on the stand. Thus, the cows have considerable risks of wounding while standing up, laying down, lying or during the feed consumption. If not wounding, the cattle could develop unhealthy behavior. The usual stand with its length of approx. 160 cm requires particular care so that manger and rack do not prevent the moves of the cow. Cows with higher productivity are more sensitive to the environment variables than those with lower productivity. An essential component of a comfortable barn is appropriately constructed floor (SINGH et al. 1993). In tie-stall barns, the floor of the stand must fulfill several requirements. On the one hand, a stable stand e.g. built with cement is required for the cows to be standing with balance. On the other hand, the surface must be dry, insulating and soft in order to enable lying with comfort. The dairy farms currently cover concrete stands with rubber matting and wooden stands with straw and sawdust. It is generally agreed that straw covering is more comfortable for the cattle, but it is expensive due to the transport costs.
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In order to keep the stands clean, some farms have installed cow trainers. While the cow trainer is an effective tool for avoiding excreta on the stand, inappropriate application of the device may damage the fertility (JUNGBLUTH et al. 2005,71). Most dunging passages are 40 cm wide, thus suitable for cleaning with shovel. Given the low level of the mechanization and the limited investment potentials of the dairy farms in the study area, they may be the best solution. Larger barns could be designed more suitably for mechanized technology. The least illumination level should be 100 lx in the milking area and 50 lx in the remaining barn space (SCHÖN et al. 1998,155). This level of illumination is attained if the total surface of the windows is equal to ten percent of the floor surface. Tie-stall barn vs. Free-stall barn Barn optimization should not only be limited to short-term measures, but should also include more sustainable solutions. On the contrary to the climatic and management variables, which can change within short periods, variables of the barn construction remain stable for a longer period (BENZ 2002). Besides improving the currently existing tie-stall barns, the introduction of the free-stall system should be taken into consideration. The following comparisons of both systems were taken from the literature: ¾ PIOTROWSKI & GARTUNG (1987) first concluded that the free-stall barn should be only preferred if the herd size is more than 30 cows. After three years, however, they admitted that a free-stall barn can also be appropriate for a herd with 20 cows if certain constructional adjustments are made and suitable equipment is available (PIOTROWSKI & GARTUNG 1990). ¾ In a tie-stall barn, farm workers have a high level of physical stress. In a free-stall barn the stress can be reduced by approx. 15%. Also, the work security is better (PIOTROWSKI & GARTUNG 1990). ¾ The free-stall barn allows most attitudes (social, nutrition, comfort, relaxing, excretory, reproductive, expression, exploration, avoiding attitudes and locomotion) of the cattle. On the contrary, the tie-stall system does hinder many of the attitudes. The free-stall barn also enables favorable conditions the cattle and appropriate construction of lying, going, milking, and feeding areas due the separation of these functions (SCHLICHTING & SCHMIDT 1987). While bovines have a natural desire to move (ALBRIGHT 1997), the tie-stall barn forces the cattle to minimal motion. BENZ (2002) therefore judges the free-stall system as animal-friendlier than the tiestall system. Also, bovines care for their hygiene through licking (SAMBRAUS 1990). In a tie-stall barn, however, the limited space on the stands prevents the cattle from licking the rear part of their bodies. This is only possible in free-stall barns (HERMANN 1997). ¾ A free-stall barn offers better possibilities for avoiding infertility, udder diseases as well as claw and limbs diseases (BEHRENS 1987). ¾ The tie-stall barn enables a better controlling of individual animals. But the freestall barn is better in aspects associated with bio-stimulatory effects (SMIDT & SCHLICHTING 1987). 157
¾ From an economic point of view, a free-stall barn is profitable for herds with 40 or more cows. However, this assessment does not include the comfort of a free-stall system both for the animals and the workers. If we, however, consider the capital demand and its costs for each alternative, the free-stall barn appears to be economic for smaller herds too (DOLUSCHITZ & ZEDDIES 1987). Given the current start-ups of dairy farms with larger herds of about 30 to 40 cows and the plan of most farms to expand their herds to 30 cows, the majority of the dairy farms in five to ten years will have 30 to 40 cows. With this herd size the farmers would be able to benefit from the advantages of the free-stall system. Despite the lack of empiric knowledge, Mongolian researchers have been suggesting the introduction of the free-stall system in dairy farming since the 1980s (GONCHIG 1986; BALDANGOMBO 2000) In a recent study, NYAMGEREL (2002) investigated the profitability of a cubicle shed. The investment was estimated at $156,300. With a GM of $1,228 per cow and a net profit of $0.03 per liter of milk, the investment would result, during a period of 20 years, in an internal rate of return of 44% and a net current value of $172,286. Equipment Currently that most farms are small and have very limited financial resources, the improvement of barn equipment is not a priority target. However, the existing large farms and start-ups with 20 to 40 cows may improve their production systems by mechanizing the operations in the barn. Milking is the most problematic process in the barn. The fact that 30 to 50 percent of the working time is spent for milking can be neglected with the counterargument that labor costs are low. But the risks resulting from inappropriate hand milking for the health of the cows (see 5.4.2) could be avoided by mechanization of the milking. Optimal mechanization of the milking involves the choice of a right machine and a proper use of it. A milking parlor may be too expensive. Even the largest farm in the study area will have difficulties to afford a milking parlor from its annual cash surplus of $3,833. On the contrary, a simple double-pail milking machine is affordable even by many small farms. Eventually, a pipe-line milking plant is the variant with a medium level of investment. But as SCHÖN et al. (1998,422) recommend a pipe-line milking plant for herds of more than 25 cows, it is evidently only appropriate for large farms. For the small and medium farms, which are the vast majority of the currently existing dairy farms, the pail milking unit is the only feasible solution. Other processes that could be mechanized are the feeding and the manure removing. However, the following reasons justify the handwork: ¾ The majority of the farms have less than 20 cows, for which mechanized feeding and manure removal are too expensive. ¾ Mechanization in a tie-stall barn is generally difficult and cost-intensive. Another problem is the storage of milk. In order to keep the number of germs fewer than 100,000 per cm², milk must be cooled down to +4°C within two hours after the milking and kept at this temperature until the transportation (SCHÖN et al. 1998). The farmers usually pour milk into 40-liter cans after the milking and store them in a tub with cold water 158
for one to three days up to the transportation. None of the farms has a milk cooling tank and only approx. 10% of the barns have a dairy room. The profitability of a milk cooling tank is questionable for a daily milk yield less than 200 l anyway. Under the current conditions therefore, milk cooling in a cold water tub is economic. However, the farmers must get used to the keeping of the tub temperature at the optimum of 4°C and proper controlling. A further solution is the integration of a dairy room into the barn. But it must be not directly accessible from the cow stands for hygienic reasons.
6.2.4 On-farm milk processing On-farm milk processing is recognized by the farmers as a promising way to improve their profitability in the long term. This view is rather conditional than spontaneous since many dairies tend to prefer milk powder to raw milk for the following reasons: ¾ The transport costs of raw milk are permanently increasing due to the price increases of fuel, and thus reduce the motivation of the dairies to process raw milk. ¾ Raw milk is more perishable than milk powder, and thus more risky for the dairies. ¾ The farmers do not pay VAT while the dairies do. Milk becomes automatically by 10% more expensive once it belongs to a dairy. Accordingly, the consumer price of processed milk is much higher than the price of milk sold in kiosks or food markets directly by the farmers. Many customers buy the cheaper unprocessed milk. One may assume that direct milk sales of the farmers should be increased. But the milk sale on streets or kiosks does not guarantee regular incomes for the farmers. It is not profitable for small and remote farms to transport their milk everyday to the city and spend a whole day of a labor force for the sale. The farmers are often not able to sell off their milk and the rest spoils. On the other hand, there has been a market established for imported dairy products that could also be produced in Mongolia. Primary targets of possible substitution are those seven tons of butter, 130 tons of cheese and 348,000 liters of yogurt that were imported and sold in Ulaanbaatar in 2005 (see 4.3.4). If one sees the shelves of the supermarkets that are full of import products from Russia and the EU, the statistics seem to underestimate the real sales’: the statistics are delivered by the customhouse, which is known as the most corrupt institution in Mongolia. While the supplementing of the imports seems to be a task of the dairies rather than being one of the farmers, experiences from industrialized countries show that on-farm processing is possible and profitable even in areas where the market is overloaded by the industrial mass production. Therefore, the feasibility and the profitability of this possibility in the study area should be analyzed closer. However, milk processing requires financial resources. Investments are required for processing machines, storage rooms and packaging machines as well as for packaging materials; not to mention the fees for numerous food inspections and the taxes. Most farmers would be only able to finance a milk processing plant through co-operation (see 7.4.2).
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6.2.5 Improvement of farm management The term ‘farm management’ in this section includes those functions that are not processoriented but system-oriented i.e. changes in these functions would affect the performance of a whole farm rather than the technology processes individually. Farming system The specialized dairy farming system has the advantage that all technology processes are directed to the target of dairy production. The management of the processes is easier e.g. the provision of inputs and the construction of the barn are directed only to the needs of the dairy cattle, and the farmer can spend all of his working time for dairy farming. However, none of the dairy farms is specialized in a narrower sense. All of them are dairy-and-breeding farms and most of them are dairy-and-meat farms, whereas meat is produced primarily for home consumption. As for the raising of heifers, there is no other choice as long as there are no specialized breeding farms in the area. On the contrary, the profitability of raising male cattle for meat consumption is questionable. The following aspects stimulate a discussion: ¾ The requirements of male cattle of dairy breeds on feeding and barn environment, thus the costs of their keeping are as high as that of the dairy cows. A significant share of the already scarce inputs is therefore expended for the male cattle. ¾ Many farmers probably have the attitude of pastoral herders to increase the total number of animals. Thus, the subjective driving force behind the decision to raise male cattle may be stronger than a rational planning of the herd structure. Although further analysis is required for final conclusions, the raising of male cattle seems to increase the pressure on the farms, particularly on smaller farms, to provide the dairy cows with adequate amounts of inputs. In addition, the mortality of calves is considerable. Perhaps it is better for a financially weak dairy farm not to raise the male descendants of dairy cows. Instead, the farm could keep some cattle of the native breed, which can be raised with the pastoral herding approach. The farmer will then not have to share the inputs, especially the feed of the dairy cows, and he will still have a relatively large stock. Native cattle also do not require a barn, thus saving the fixed costs of the farm. Sheep is another source of meat. Sheep can also be kept on a year-round pastoral basis, and do not require a barn, though an open shelter is useful in winter. It is not correct to assume that native cattle or sheep cause less costs than male cattle of dairy breeds. Although the proportional variable costs for pastoral herding is much lower than the costs for keeping cattle in barn, the major disadvantage of pastoral herding, and especially that of sheep herding is the high labor requirement. However, this can be balanced by the low labor costs, and more importantly, by the overcapacity of labor. The sample farms’ survey revealed that, on average, each farm has unused labor capacity of one full-time labor force. Some farms use only 36% of their labor capacities. Another possible change of the farming system is the integration of fodder cropping, which was already discussed in the section 6.1.2. A further possibility to improve the farming system is the integration of small-scale vegetable farming. The availability of excessive labor capacity at most farms allow growing vegetables in their farm yards. In ad160
dition to saving consumption expenses, the farmers can also utilize the rest of the plants for cattle feeding. Small vegetable fields do not require mechanization, and can be fertilized with manure. Some dairy farmers consider vegetable farming as not compatible with their business since they camp outside the village in the summer. This argument is, however, groundless since even school children or retired people can take care of vegetables, and vegetable farming also does not require everyday work anyway. Once the plants are planted in May, in which most farmers are still at their farms, they can spend ten to 15 half-days per month for the vegetables. In principle, no generalization about changes in the farming system is possible. The farms have different conditions, and the farmers have different plans. As long as there are no experiences with the alternatives e.g. those discussed above, all of them are suggestions. The farmers may need professional support for deciding how to optimize their farming systems. Farm size The sample farms’ survey revealed that profitability on both the production and the farm level are proportional to the farm size, except for the large farm, which is less profitable than the medium farms. However, a rapid conclusion that a farm should have a herd of 15 to 30 cows in order to maximize its profitability must be avoided. In a final analysis, the herd size itself is both cause and result. The profitability largely depends on the intensification of the production, whereas those farms with larger herds have a better ability to intensify their farming technology. As a result of their high intensification level, these farms are able to expand their herds. A general rule must be not to mechanically increase the herd size but to increase it in harmony with the level of intensification. A farm should increase its herd size only after it has exploited the potentials of its current herd. Although this rule seems to be a matter of course, the ambitious plans of the sampled farms to attain a herd size of 30 cows despite the difficulties to cope with their current herd capacities are a reason for the concern that they want to have large farms at the expense of intensification. The enlargement plans are probably driven by subjective forces rather than by rational outlooks. Concretely, the priority target of each dairy farm should be to increase the lactation yield of its cows to an achievable maximum of 3,100 l/year. A farm can attain a total yield of 15,000 l/year either with five 3,000 l-cows, or with ten 1,500 l-cows. The first case is more profitable since a large share of nutrients is converted into milk while in the second case a large share of the nutrients is utilized for body maintenance of the cows and not for milk production. In addition, a small barn can be optimized with less investment than a larger barn. Thus, those 97% of the farms that yield less than 3,000 l/year per cow should focus on increasing the productivity rather than on enlarging their herds. Given the difficulties in obtaining credits, small and some medium farmers should also consider the option of downsizing. Through the sale of a few cows, they will release capital necessary for intensification, thus for improving the productivity of the remaining cows. In the end, the sustainability of a dairy farm will be ensured by a high level of productivity rather than by a large number of cattle with minimum productivity. This is well illustrated by the low profitability of the large farm in the sample farms’ survey.
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Those three percent of the farms that already are exploiting the milk production potential of their cows should expand. Economic theory suggests enlarging a farm until the marginal benefits do not exceed the marginal costs anymore. However, in the practice, the management capacities of a farm are limited. According to the results of the sample farms’ survey, a large herd of 73 cows does obviously challenge a family farm too much. An optimal herd size is therefore highly individual for each farm, depending on the managerial competences of the farmer. But there are natural factors limiting the possibility of expanding too, such as the pasture capacity. Although it is not possible to define an optimum, a herd with 30 to 40 cows seems to be still manageable by an average farmer and would not lead to substantial difficulties with the grazing yet: the farm with highest profitability in the sample farms’ survey was a 30-cow farm in Nariinii am, which is an overgrazed area with some 120 dairy farms. Farm finances and input procurement Financing is the most important problem for the dairy farms. Without adequate funds, neither improvements of the technology, nor purchases of cattle are impossible. A large share of the limited farm income is also spent for home consumption, which is permanently increasing due to numerous reasons including the growth of the children to the college age, the price increases of foodstuffs etc. It is not appropriate to consider the financing alone. The latter is not a target, but is required for achieving targets. While farmers also need money for improving their living conditions, the primary target of spending additional funds is the improvement of the input procurement. The farms are different regarding their finances. Many small and some smaller medium farms are in a chronic shortage of funds, and thus keep the levels of both the intensity of dairy production and the home consumption as low as possible. If larger amounts of funds are acutely needed e.g. for the tuition of the children or for the treatment of a sick household member, they have no choice but to sell from their cattle. On average of the small farms in the sample farms’ survey, 74% of the farm income is spent for household consumption. The vicious circle goes on: low intensity => low productivity => little income => little potential to increase the intensity => low intensity. Under these circumstances, they have to cope with extreme difficulties not to lose their existence. Most critical times of a year are spring and fall. In spring, the nutrient requirements of the cows increase drastically after the delivery, while fall is the time of feed procurement, barn repair and paying the tuition of the children. These farms do not have access to credits. The shortterm limit of an average small farm with eight cows for raising a loan was estimated at $908 in the section 5.8.2. The large farm, most medium farms and some small farms, on the other hand, are able to cover their living costs without much pressure on the farm overheads. They only get in an acute shortage of funds in fall and some of them in spring too. But that does not mean they do not need more funds. Indeed, these farms need more money for improving their profitability through improvement of the feeding, purchase of cattle and equipment or through an optimization of their barns, or through fodder cropping. Moreover, most of them need loans for a better housing. While a medium farm with 19 cows is able to repay a loan of up to $2,807 within one year, the limit is $2,818 for the large farm. Many farms 162
in this group are potentially able to raise loans by proving the necessary documents and using their vehicles as collateral. Some of them have already been raising loans regularly. But the loans are too small and spent only for haymaking. In a final analysis, most small farms need a loan for attaining a relatively appropriate level of production intensity while the remaining farms need loans for attaining an optimal level of intensity, and for a further expansion of their farms. The acute shortage of funds in fall is felt by all farms while that in spring does particularly affect the small farms. Before seeking additional funds, a farmer should ask himself if the internal funds of his farm are utilized appropriately. However, bookkeeping and budget planning are seldom done by the farmers, not least due to the strange mentality of older people in Mongolia, which forbids planning and controlling of things, and is expressed by idioms like “Those who plan their lives, die earlier” or even “Planned things will never happen”. Relatively softer expressions are “Do not count your animals, let them just increase quietly”, and similarly “Do not count your money if you want it to increase” and “Do not tell anyone of your plans, just keep them in yourself”. The farmers simply spend more money in times of higher incomes, and less if their incomes decrease. While concrete conclusions on optimizing the flow of internal funds should be always situation-specific, the following general recommendations were derived from the sample farms’ analysis: ¾ Since most of the incomes of small farms and some medium farms are used for household consumption, the farmers should look for possibilities of reducing the living costs. Measures for reducing the costs for food may include the purchase of flour and vegetable in large amounts at low prices in fall, provided a storeroom is built in the farmyard, and the keeping of sheep or native cattle instead of slaughtering dairy cattle or keeping male cattle of dairy breeds. A more important measure is to reconsider enrolling the children in college immediately after the high school graduation. The children may stay on the farms or work off-farm for a few years in order to earn at least a part of the costs for their college attendance. Besides, the agricultural vocational school in Bayanchandmani has been reformed and offers scholarships meanwhile. For farm successors, a vocational school graduation supplemented by later attendance of short-term trainings could be as useful as a college graduation. ¾ A fictive or real account for household consumption should be set up. The living expenses including a plus of about 20% for unforeseen costs should be estimated for a year and the financing of these expenses should be planned. A possible method is to contribute a certain percentage of the revenues, which vary during a year depending on the lactation period, each month or quarter. By separating the living expenses, the amount available for financing the dairy production can be estimated and its utilization can be planned. If the farmers desire to conduct this measure but have mental barriers for keeping an account i.e. ‘hiding money from themselves’, an external individual or organization should help them with a saving account. ¾ Possibilities of saving from the revenues should be examined. Certain goals such as ‘$1,000 must be available by the end of July for haymaking’ or ‘$500 on January 01 for the purchase of a cow’ should be set and payments per each month are to be determined. 163
The major weakness of most farms is the lack of cash for haymaking and feed purchase in August and September. Since in spring the revenues are spent back for feed, in summer the milk prices are low and in winter the cows are dry, there is little possibility to save cash for haymaking. Nevertheless, spring must be defined as the ‘time of cash making’. All feed must be purchased in fall or winter so that a part of the revenues in (late) spring, when both the milk yield and milk price are still high, is saved for haymaking and feed purchase for the next year. However, despite all efforts to optimize the flow of internal funds, the already limited finances of the farms do not allow much improvement of their finances. While larger farms may profit from a proper bookkeeping and budget planning to a greater extent, small and most medium farms would not. Even if a part of the spring revenues is saved, it might be not sufficient for making an adequate amount of hay, and purchasing adequate amounts of feedstuffs. External funds are necessary. Unfortunately, there is no evidence of a better access of smaller farmers to credits. Those farmers who have sufficient collateral, but are not able to prepare a proper application, need to improve their credit application skills or to get professional support. As for the remaining farmers, banks and other credit institutions will probably not change their requirements for credit eligibility on behalf of them since there are many other clients fulfilling the criteria. Nevertheless, a dairy extension organization could try to facilitate a development of the financial services (see 7.2.3). Also, new credit facilities could be created by an extension organization (see 7.3.1).
6.2.6 Necessary changes for development Division of labor and responsibilities is essential for the development of any sector in a market economy. The dairy sector in Ulaanbaatar, however, is characterized by an asymmetry, in which the dairy farmers lack reliable partners to share tasks. An organized input supply chain does not exist, the dairies struggle with their overdue loans and outdated equipment, a link between farmers and researchers is barely available, and little policy support is felt by the farmers. The development of dairy farming sector requires the following actions. A. Policies ¾ Clarification of the legal status of dairy farmers. The ‘Farmers’ Law’ has to be passed as soon as possible. The dairy farms are to be allowed to own or lease land at privileged conditions and to be treated as business entities by the banks. ¾ Privileged status for villages with dairy farmers. The local administrations need more staff and finances in order to organize the farmers and support them. ¾ Enhancement of pastures. The farmers should immediately obtain legal rights on the use of pastures so they can take care of pastures. In many areas, the pastures need to be improved through the cultivation of nutritive plants. ¾ Promotion of industrial feed production. The government has to support initiatives of producing concentrates, mineral fodder and other supplementary feedstuffs. 164
¾ Regulation of the VAT-asymmetry between the farmers and the dairies. A reduced rate of the VAT should be arranged for the dairies. B. Development proposals ¾ Integration of fodder cropping with dairy farming. While larger farms should grow fodder crops for themselves, smaller farms could co-operate with crop farms. ¾ Improvement of breeding through a more intensive use of the AI. The MFA should extend the availability of semen and AI services. ¾ Improvement of equipment. Every dairy farm should possess a truck or a mini-truck at least, and a tractor. While a truck is used for transport of milk and inputs, the tractor can be primarily used for hay making and crop production. Milking machines and parlors have to be introduced in order to prevent mastitis, to reduce the hygienic risks caused by hand milking and to increase the work efficiency. ¾ Promotion of the dairy processing industry. The domestic dairies have to substitute all the dairy products that have been imported up to now. Moreover, export opportunities for dairy products have to be exploited. On the other hand, imports of dairy products should be reduced through an appropriate taxation policy. ¾ Dairy extension. The farmers should improve their know-how in farming technology and management. A vital network of dairy extension has to be established. ¾ Improvement of higher education in agriculture. The MSUA has to reform its curricula towards more praxis-orientation. Graduates should be able to deal with real problems. ¾ Spatial regulation. New places that are suitable for dairy farming should be identified and dairy farming in those places should be encouraged. Migrants with livestock must be able to settle down in allowed places only.
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7 Strategies for dairy extension work 7.1 Target fields of farm consultancy The contents of farm consultancy can be derived from the farm development proposals in the section 6.2.1. Related extension strategies are described below.
7.1.1 Enhancement of the dairy cattle breed An extension service may help the farmers in applying both natural insemination and AI appropriately. But the success of natural insemination is not as promising as that of AI due to the lack of purebred bulls in the study area (see 6.2.1). Thus, the major role of extension is to facilitate the development and an extensive use of AI services (see 7.2.1). The farms may be provided with heifers and cows by breeding farms. However, this option is less feasible than the above alternative since breeding farms are not available yet while both experienced AI technicians and equipment are available. But the AI technicians might fail to establish their business even with support of a dairy extension service. Another reason making breeding farms necessary is the shortage of dairy cattle. Since most farms are planning to expand their herds, less and less cattle could be sold from the already limited stock (a total of 7,500 cows in and around the study area). On the other hand, the increasing population in Ulaanbaatar creates market capacity for new farms. Thus, more dairy cattle are needed and so are breeding farms. Dairy extension should facilitate the establishment of breeding farms. The latter would not only allow the currently existing farms to expand rapidly, and make start-ups in the dairy business easier, but they could also offer the possibility of a more specialized dairy production system: if heifers or cows are available at affordable prices, the general feeling of the farmers about spending too much labor, effort and costs for raising female calves would make many of them to directly purchase milking cows from breeding farms. While it is inappropriate to interpret the pros and cons of this approach in advance, two major results seem to be expectable: ¾ Small farms could save costs and invest the saved amount into the intensification of their production. ¾ Calves’ losses will be reduced. Altogether, small and smaller medium farms, which are building the majority of currently existing dairy farms, would most benefit from breeding farms. Given the advantages of breeding farms, it becomes not possible to compare the support of AI services as an extension priority with the support of breeding farms as another priority. It seems that both are necessary. Dairy extension will have to focus on both of these targets. The question now is how dairy extension could facilitate the establishment of breeding farms. Since cattle’s breeding is a business, it seems appropriate to leave it to the market forces whether someone does set up a breeding farm or does not. But these forces have been very weak so far: there is no breeding farm although the price of dairy cows has been increasing by 100 to 200 percent per year in the recent years. Instead, dairy farms have been set up with a great intensity. Perhaps some of those who want to start-up dairy166
ing should re-consider their decision and start-up a breeding farm instead. There is need of extension for informing, motivating and assisting the farmers. A generic problem in the agricultural sector is the lack of research and extension. For those who want to take up an agricultural business, there is limited possibility to receive professional support or business-related information at least. Due to underfinancing much research is done with literature review, translations from foreign sources, and laboratory experiments. Empiric research on the praxis situation of farming is barely done unless externally funded. Most people are therefore given no choice except the pragmatic approach of informing themselves by learning the situation with their own eyes. What they can see is a boom of dairy farms around Ulaanbaatar. They can also read numerous newspaper articles about how profitable dairy farming is. Most of new dairy farmers could have actually decided to start-up a breeding farm if they had seen an example. A possible approach for motivating people to start cattle breeding business may be to establish a demonstration farm. But this is often associated with the problem that people with non-agricultural backgrounds, as most of those who are planning to start an agricultural business, will rather feel that the demonstration farm is only successful because it is run by professionals. Another approach is to try to persuade those newcomers to build a breeding farm. This is, however, probably not feasible since, as was mentioned above, people tend to invest into a business which has proven its profitability. Even best business plans may not be convincing enough. What they see is that no one has a breeding farm yet. A more feasible option is to motivate relatively established large or medium farmers to try out the breeding business. Extension could play an important role in helping them to find breeding stock, and planning the business. Since the farmers are aware of the market potential for dairy cattle, they may be willing to invest into a breeding farm with some external ‘push’. The major problem would be the financing of the new production enterprise. The dairy extension service might help them to find external funds. It was already explained that the general attitude of smaller entrepreneurs is to take up a business that has proven to be profitable. Once one or two breeding farms are established in the main farming regions such as Nariinii am or Jargalant, or in the surrounding areas, imitations will follow with a high probability as for example the Bill Yodor’s dairy farm in Udleg has been followed by hundreds or imitations.
7.1.2 Improvement of the nutrition management Extension should assist the farmers in: ¾ Optimizing the feed rations with the currently available feedstuffs; ¾ Ensuring the availability of adequate amounts of feed; ¾ Ensuring and improving the quality of the available feedstuffs; and ¾ Producing fodder crops
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Extension contents to the first three issues in the above list can de directly derived from the section 6.2.2. While the improvement of the technical expertise of the farmers in fodder cropping might be a priority of dairy extension work, this could enable the farmers to solve only a part of their problems. They would rather require a full service that assists them in finding and contracting crop land with adequate fertility, purchasing inputs, and managing their farms under the new circumstances. While such a service could be performed by an extension organization, its costs are not affordable for a single farmer. Thus, extension contents requiring individual services such as monitoring of the vegetation, or business planning for crop production should be distinguished from contents that can be performed through mass or group extension methods such as the organization of input provision, training in fodder cropping etc. The extension service could also find crop land, which can be utilized by several farmers, through its connections to local authorities and the MFA. In the section 6.2.2, it was also discussed about the possibility of the farmers to move to less overgrazed areas. The farmers may need professional support for making decisions on whether or not to move, where to move, and how much costs and benefits the move will result in. A dairy extension service could negotiate with the local authorities in the new places about the leasing or the ownership of hayfields, water and energy supply for the new farms, and look for possibilities of organizing milk sales efficiently.
7.1.3 Optimization of barn conditions Since barn climate variables were not investigated in this study, it is not possible to elaborate concrete extension contents. Empiric research on barn environment is necessary. The subject is very suitable for on-farm research. Most farmers would not refuse to find out the weaknesses of their barns and to know possibilities of improvement. For those who plan to set up a new farm, the barn planning is an essential part of their business plan anyway. Thus, many new farmers would be able to pay for a proper barn planning. The JONES’ (1990) ABC-concept, which was explained in detail in the section 6.2.3, seems to be very appropriate for dairy extension work to elaborate advising/training contents due to its simple structure and clear priorities.
7.1.4 On-farm milk processing Since on-farm milk processing is desired by almost all farmers, and offers a real possibility to increase the incomes of dairy production, this should be a priority content of dairy extension. Know-how about appropriate utilization of processing machines can be gained by the farmers relatively fast and cheap. More difficult is know-how on the management. While an extension service can train the farmers in the basics of business management, the farmers will need time to become good dairy managers. Thus, the extension service may have to monitor the management of a farmer-run dairy plant in the initial phase. Milk processing requires financial resources. Most farmers would be only able to finance a milk processing plant through co-operation. The immediate function of dairy extension in this case is organizational development (see 7.4.2). 168
7.1.5 Improvement of the farm management First of all, extension should assist the farmers in optimizing their farming systems towards an optimal utilization of the resources. Group extension methods may be suitable for stimulating a discussion with the farmers on the issue, but concrete advices should always be elaborated case-specifically. Some general suggestions were given in the section 6.2.5. The ambitious plans of the farmers to enlarge their herds should be considered critically from the view of extension since most farmers are not able to supply their current herds with sufficient inputs. Restraining the farmers from their herd enlargement plans might be a difficult task for the dairy extension. The starting point of extension work is to identify the reasons for the quantity-focused management of the farmers. The following reasons appear possible: ¾ The farmers relate the success of larger farms to their sizes. ¾ The ‘herders’ mentality’ to increase the number of their animals as far as possible is inherited by the farmers. ¾ The farmers lack insight into the problem with the intensification. They are probably not sure if they could yield more milk through better production intensity. The dairy extension service must explain the farmers that a better intensification will lead to a better profitability of the farm. Moreover, steps to more intensification as the optimization of feeding, enhancement of cattle or improvement of barn conditions must be explained to the farmers. Learning all the possibilities to improve their profitability without enlarging their herds, the farmers may reconsider their plans. Since financing is the most important problem for the farmers, a dairy extension service should help the farmers optimize the flow of their financial resources. The discussion of extension functions regarding the farm financing must cover a broader spectrum including the issue of input procurement. Dairy extension should try to bring about a change in the behavior of the farmers. The starting point is the analysis of the farm economy including an inventory. Bookkeeping should be introduced by means of simple sheets for receipts and expenditures both for the farm and the household. The records should be monitored by an advisor each quarter and a balancing should be done once a year. Using the records and the balance, the utilization of internal funds should be discussed with the farmers and possibilities of improvement should be looked for. It might be not easy to introduce bookkeeping due to mental barriers of the farmers. Thus, incentives should be created. An important incentive is that the farmers are required to keep book in order to receive credits. Although it is not possible to predict any improvement of the farmers’ access to credits through dairy extension – the banks have always been considering herders and farmers as most risky clients – in some cases advisors may find out ways that work e.g. preparing a proper application, adding to the value of houses and barns through minor investments that make them actually appear expensive etc. A dairy extension organization should also try to facilitate the development of financial services (see 7.2.3). Finally, the extension service itself may offer credits. 169
7.2 Facilitation of services and linkages 7.2.1 Promotion of AI services During the implementation of the AI pilot project, two major mistakes were made by the MFA: i) the ministry should have used the semen provided by the government of France for the establishment of a breeding farm with a gene bank instead of running AI services immediately, and ii) the fee for AI was set at $11, which is only a half of the actual cost of the service. If the AI services should be run on the own responsibility of the AI technicians after the pilot project, they have to charge $25 to $30 per insemination. The sudden change of the price would lead to a decrease in the motivation of the farmers. However, as long as there is no alternative, they will eventually have to accept the AI service against the fee of $25. Theoretically, there is no convincing advantage of AI to natural insemination. However, most if not all breeding bulls in the study area are genetically deteriorated. No purebred bulls or semen have been imported since the end of the 1980s in Mongolia. On the contrary, AI services are using semen of controlled purebred bulls. There is the risk that many of the AI services will give up if they will not be able to find customers after the pilot project is finished. So far, they have not had to worry about the self-sufficiency of the business since they have been earning $50 per month from the MFA while the service fees go back to the ministry. All of them have own farms. Thus, if they would not get customers who are willing to pay the service fee of $25 in future, they would concentrate back on their farming business without much concern. Extension work should therefore be directed to both the farmers and the AI technicians. The latter are vulnerable to liquidity problems since semen and insemination equipment as well as the wages for assistants have to be paid on time, whereas it is not sure if they will have regular incomes. Most of them are not familiar with the management of a service as a business. The GTZ-project ‘Privatization of Veterinary Services in Mongolia’ has been carried out in Mongolia since 1999, and its end is scheduled for August 2008. It might be not appropriate to compare AI services with veterinary services since the latter are essential in Mongolia and the veterinarians are distributed countrywide. Nevertheless, some activities of the project appear exemplary for extension activities aimed at AI technicians. The following activities particularly attract attention: ¾ Management advising for veterinarians, ¾ Establishment of a ‘Union of Veterinarians’, ¾ Training of veterinarians in extension methods, ¾ Supporting veterinarians in training activities for herders. The target of the project, which is aimed at supporting the veterinarians to become advisors rather than providers of animal treatments, could be borrowed for extension activities aimed at the AI technicians. Management advising, which could also include extension subjects such as advising and problem solving methods might be useful for the AI techni170
cians to satisfy their customers better. Mobilizing them to establish a ‘Union of AI services’ or a similar organization could be another target of dairy extension, and would enable them a better coordination, information exchange and eventually, to take a position in the rural policy. A better organization of the AI services also enables a better co-operation with the dairy extension service. After all, a dairy extension service will always need competent partners to solve the problems of the farmers.
7.2.2 Strengthening the input supply chain Due to the lack of market information and technical expertise, the farmers, especially those with little experience, often need an intermediary for input purchase. The input market indeed is unorganized and uncontrolled. Besides providing the farmers with market information, the dairy extension organization could intermediate the feed supply, cattle sales, and purchase of dairy equipment. The following advantages can be expected from this function: ¾ Futures via the extension organization reduce the sale’s risk for both the suppliers and the farmers. ¾ Farmers can rely on the quality of the inputs they purchase through the extension organization since the latter will control the inputs. ¾ Transport costs can be reduced if larger amounts of inputs are purchased. ¾ Transaction costs of input sales can also be minimized if large amounts are purchased. The most important input is feed. The problem with the shortage of feedstuffs and the possibility of dairy farmers growing fodder crops were already described in the section 6.1.2. There are two other possibilities to boost the feed supply: industrial feed production and fodder cropping by crop farms. Below is a discussion of these options. Dairy extension could facilitate the industrial feed production by providing market information to potential investors. But the role of dairy extension in this context should not be overestimated since the investors are aware that the target of dairy extension is to assist the farmers and not the feed factories. They would rather hire own consultants. Nevertheless, it should be made clear that there is some market potential for industrial feedstuffs and a co-operation with the farmers through the dairy extension service (as long as there is no farmer organization) is necessary for a profitable feed production. An essential requirement for an active involvement of extension in this case is to have an extensive base of information on the needs of the dairy farms and a close co-operation with the farms. Similar assumptions can be made for the facilitation of the fodder cropping by crop farms. But the scenario of crop farms being contracted by dairy farms has a major constraint: if the crop farms should grow fodder crops at all, and they know that with fodder crops a high profitability of dairy production can be achieved, then they would probably decide to run own dairy farms, as it has been done by a former crop farm, now an integrated cropdairy farm in Bayanchandmani since 2002. Meanwhile, the farm has 60 dairy cows and grows corn, oat, alfalfa and sunflower on approx. 30 ha (TSOGTBUYAN 2005).
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There are many other problems linked with the contracting of crop farms. Many crop farmers do not have experience with fodder cropping, and thus their uncertainty is high. Limited access to credits restrains investments into new equipment while high interest rates and permanently rising fuel prices do not allow fixing prices for crops in advance. Altogether, it is not realistic to assume a system of contracting between dairy farms and crop farms to be established in immediate future. From the author’s view, a more feasible solution for ensuring the availability of high-quality forage is to assist dairy farmers in fodder cropping (see 6.2.2.4 and 7.1.2).
7.2.3 Facilitation of financial services Improving the credit supply A possible approach for improving the credit supply is the acceptance of future milk production as collateral by the lenders (cf. USAID 2006). The extension organization could try to persuade the lenders of the high returns to the equity capital, which were estimated between 50% and 105% for a half of the sampled farms (see 5.8.1). But the success of such work is doubtable since the lenders would not see any reason to increase their risks. As for the small farms, most of them fail a creditworthiness assessment in any case since the average profitability of their equity capital is only 20%, much less than the average interest of 36% p.a. for bank loans. Extension may also facilitate a dialogue between policy makers, development agencies, lenders and farmers on allocation of soft loans to small farmers. The major task of the extension organization would be the elaboration of proposals that are both feasible and fulfilling the requirements of all stakeholders. A possible starting point of the dialogue is the economic analysis of dairy farms in the chapter 5 of this thesis. However, ZELLER (2003,3) warns that “We must learn from the past failures of directed, subsidized agricultural credit programs even if these failures have been documented many years ago. This knowledge is still relevant today”. Promoting supplier and buyer credits Buyer and supplier credits are the primary source of finances for agricultural production in many countries (PEARCE 2003,16), but not yet in Mongolia. Possible forms of such credits for the dairy farms would be i) trader credits on feedstuffs and ii) contract farming. Although there is an extensive base of positive experiences with these kinds of agricultural financing, in most cases the initiative is taken by an outsider i.e. a development agency or the government. Without external financing for the initial phase, the feasibility of supplier or buyer credit is questionable. The major problem is that neither the input suppliers and nor the processors have the financial capacity to run a credit program: they rather seek credits for themselves. ZELLER (2003,27) suggests that agribusiness firms use contracts with the farmers for borrowing from commercial banks. It is, however, not sure if the dairies with their already overdue credits will be allowed to borrow more credits using future milk production as collateral (cf. 4.3.4). In addition, many dairies lack the motivation to help the farmers since they have a more attractive alternative of processing milk powder. Similarly, the flour mills have been increasing the bran supply to China
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rather than to the domestic market in the recent years. The situation somehow reflects the asymmetry in the food sector of a small country with large neighbors and a liberal policy. In a final analysis, supplier and buyer credit systems can be developed only if external financing is guaranteed and the rural policy creates incentives for the input suppliers and the dairies. Such incentives may include the promotion of raw milk processing through increasing the import tax on milk powder, and the promotion of bran supply to the farmers through increasing the export tax on bran. A further political measure would be the support of the feed industry with soft loans or other arrangements under the condition that the feed factories will primarily supply domestic farms. Also, a dairy market regulation should include strict requirements on the quality of dairy products, thus increasing the motivation of the dairies to process raw milk. Provided that the rural policy creates a market environment, in which feed suppliers and dairies consider trade credits and contract farming profitable, the immediate function of dairy extension will be brokering. Extension activities should be directed at facilitating the credit transactions. A dairy extension organization can also offer technical advice for increasing the effects of the credit program. Though linked with the risk of affecting the image of the extension organization negatively, a systematic controlling of contracted farms is a possible task of extension too.
7.2.4 Linking farmers and researchers Dairy extension can, and must fulfill its role in the Agricultural Knowledge and Information System (see 2.3). While farmers’ trainings can be carried out by the extension organization itself, the farmer-researcher linkage should be strengthened. The priority areas of research were defined in the preceding sections as follows: ¾ Nutrition of dairy cattle, ¾ Fodder cropping, and ¾ Barn construction and equipment. A dairy extension organization should arrange on-farm trials with researchers. Besides informing and motivating both farmers and researchers on the research activities, the extension organization should also conduct active measures as the designing of concrete research projects or training for the researchers in participatory methods. Although only larger farms are able to finance on-farm trials, thus profit from their results, recommendations based on the results can also be elaborated for smaller farms. Therefore, it is not an urgent target to involve as many farmers as possible. Instead, the emphasis must be set on the quality and usefulness of the trials on few farms. Nevertheless, attention must be given to involving farmers in different areas.
7.3 Formation of new services Advising on farm technology and management will result in limited impacts as long as the majority of the farms do not have access to credits and are not able to procure sufficient inputs. While a dairy extension organization could also try to improve the supply 173
chain and the services for the farmers, there are more inhibiting forces than driving forces for change (cf. 6.2.2; 6.2.3 and 6.2.4). Thus, a dairy extension organization may intervene in the input supply chain in order to ensure that the farmers have real chances to improve their profitability. As it was explained in the previous chapters and sections, the farms suffer chronic shortages of capital, feed and dairy cattle. The rationale, design, possible impacts and the feasibility of integrating loan service, feed trade and cattle breeding into a dairy extension organization are discussed in the below sections.
7.3.1 Establishment of financial services Since there are limited possibilities of external financing, one of the most important tasks of dairy extension is the facilitation of local financial institutions. In principle, there are three possible providers of the financial services: the farmers themselves organized in formal or informal groups, an extension organization, and an independent lender. International experience shows that the involvement of lenders in agricultural lending is constrained as their lending operations are savings-based. They lack sufficient long-term financial resources for agricultural lending (KLEIN et al. 1999,8). In addition, a usual lender will be more attracted to urban borrowers, who have both more collateral and a better ability to accept higher interest. Farmers might be consulted on building saving and credit groups, either in the form of rotating savings and credit associations (ROSCAs) or a credit union. Most feasible is the establishment of smaller groups consisting of 10 to 20 farmers, who are friends or relatives. However, the sustainability of such groups is not ensured since many farmers will require loans at the same time while the accumulated savings would be insufficient to cover the needs. Without external financing, a membership-based financial institution is unlikely to be established. Even if external financing is ensured, the farmers will have difficulties with the management. None of them has a formal education in economy, nor do they have experience with a credit co-operative. The dairy extension can help them with the management of the co-operative, but the decisions will be made by the latter, thus the risk of collapsing still remains high. It will need time to establish such a financial institution, and its viability remains doubtful during this time. At the time being, there is no other choice than to integrate financial services into an extension organization. The extension organization will need initial financing for the financial services. This should be arranged in a dialogue with policy makers and development agencies. An effective and low-risk approach is the implementation of a pilot project in a selected location. The following two products seem to meet the needs of the farmers, cause minimal transaction costs, and ensure low risks for the lender. 1. Sale-and-lease The extension organization buys cows from farmers, but the cows remain at their farms i.e. they are leased back to the farmers. The farmers have to pay the amount plus an interest of 3% per month, which is the average for bank loans, within a period of three to 12 months. If the farmer fails to repay the credit, the cow will be taken away and sold. The risk of this scheme is the possible death of the leased cow. In this case, another cow will be taken for compensation. In order to ensure that the farm will still be able to afford 174
a minimum level of livelihood after having lost two cows, the assessment of the creditworthiness will be done on the basis of the incomes. For a four-person household, the standardized minimum of living expenses is $1,200 per year. The consumable income of an average small farm with 10 cows was determined at $3,334. If we subtract the off-farm incomes, $2,928 will remain. Thus, an average 10-cow farm without off-farm incomes can be assumed to have a total consumable income of $2,928 per year, which results in a lump sum of $300 per cow (see 5.8.2). Therefore, a four-person household should have a minimum of four cows to ensure a minimum level of consumption. In order to get involved in the sale-and-lease program, the farm must have six cows at least. For a twoperson household, the minimum level of consumption can be attained with the income from two cows. In this case, a herd size of four cows is required for the creditworthiness. 2. Sale-and-buy An alternative approach is to buy cows from the farmers and to keep them on a farm, which is contracted by the extension organization. The farmers are guaranteed the possibility to buy their cows back when they are able to pay the price, which, however, might have increased meanwhile. This option is more attractive for the extension organization since the cows are utilized during the time i.e. the total profit consists of interests plus a half of the profit from the milk production. The other half of the profit will be paid to the contracted farmer. On the other hand, the extension organization itself takes the risk of cattle losses. Thus, the contracted farmer must be selected carefully. The assessment of creditworthiness should be done similarly as used in the sale-and-lease variant, but the minimum number of cows can be decreased by one since the risk of cattle loss is not taken by the farmers. A four-person household, for instance, must have a minimum of five cows. If it sells one cow to the extension organization and cannot purchase it back, it can still sustain its livelihood with the remaining four cows.
7.3.2 Feed trade The extension organization buys large amounts of hay and bran in fall when they are cheapest, and sells it to farmers in need during the winter and the spring. Even if same prices are offered as those on the raw material markets in Ulaanbaatar, the purchase from a local storehouse is more economical for the farmers due to less transport costs. Hay can be purchased at 42 $/t in Zuunkharaa in fall. In late winter and early spring, the market price of hay reaches 60 $/t. The extension organization may offer hay at a slightly lower or the same price. The sale of 1,000 t hay at the price of 50 $/t would result in a gross margin of $8,000 minus the costs for the storage. Storage of hay is not expensive once a storehouse with appropriate conditions is built. Based on the costs for barn construction in the section 5.5.6, the costs for the building of a storehouse for hay can be estimated at a maximum of $5,000. Variable costs for the storage of hay include the repair of the storehouse and the labor costs. The latter cannot be high as the only works demanded would be the in- and out-storing of hay. A similar calculation can be made for bran provision. Bran can be purchased at 57 $/t including transport costs in fall. In winter, the price gets up to 72 $/t. By purchasing 500 t of
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bran in September and selling it after three to five months of storage, the extension organization has a turnover of $7,500. An extended version of the feed supply system may include trade credits. The credit should bear the usual interest of three percent per month. The assessment of the creditworthiness may be less strict than in the case for the loan assessment. Cattle or vehicles can be accepted as collateral. Established farmers could be allowed to use future milk production as collateral. In order to avoid a shortage of cash for haymaking and feed purchase in July and August, the trade credits should be paid off by the end of June.
7.3.3 Breeding Although it might become a complicated task requiring much investment and effort, and threatening the advisors to focus on their own business rather than on advising farmers, the operation of a breeding farm comes into consideration of the extension organization if no one else does it. The initial financing for a 20-cow breeding farm will require $10,000 for the purchase of cows and a breeding bull, and approx. $10,000 for the barn. Based on the gross margin calculation of high-productivity dairy cows, variable costs during the first three years would be $24,000 for the cows, and $15,000 for the heifers. Milk revenues during this time would cumulate to a total of $48,000. After three years, the sale of 20 heifers will result in $6,000 so that the total GM over the period of three years is $15,000. In order to increase the revenues, the farm can also sell semen or offer natural insemination with its bull. In addition, cull cows will add to the revenues. The start-up financing of approx. $30,000 could be paid off within a period of four or five years. The breeding farm can also provide the farmers with cows on credit. In this case, the same credit scheme as that for the feed supply would be applied.
7.4 Organizational development 7.4.1 Lessons from international experiences RONDOT & COLLION (1999) broadly divide the function of farmer organizations (FOs) into three categories: advocacy, economic and technical, and local development. While those activities associated with economic and technical functions are more effective when confined to local organizations, other types of activity, such as policy advocacy, are more effective when carried out at the regional or national level (STOCKBRIDGE, DORWARD & KYDD 2003,3). PERTEV (1994,27) points out that “If there is one principal lesson farmers can draw from history, it is the following: that, when farmers are not strong, many sections and sectors of the society are ready not only to tell the farmers what they should do, but even worse, to speak on their behalf”. Political decisions always involve a competition between different interests. Those groups that are better organized win in the competition, and ensure political support for their further development. The example of the proposal of the Farmers’ Law in Mongolia represents an example of such competitions. The Parliament of 176
Mongolia passes several laws on a single day, while the Farmers’ Law has been waiting for at least a political discussion for the last three and a half years. Competition is not only between the sectors, but also between the sub-sectors within a sector. Within the agricultural sector of Mongolia for instance, there is competition among the farmers and herders for pasture resources and political support, while there is also a competition between milk powder importers and dairy farms for the milk market. Many problems have been well known within the dairy sector, such as the milk powder import or the VAT-disadvantage of the dairies (see 4.3.3), but the discussion does not reach the national policy level. Thus, dairy farmers need a better organization in order to make their voices heard. The Dairy Farms’ Association has never been active in the policy: its activities have been limited to trainings, fairs and exhibitions. Meanwhile, it is not clear anymore if the association exists at all. The FOs in the world provide a wide range of services to their members including input supply, marketing and processing of farm produce, financial services, technology and marketing advising, and facilitation of collective production activities. A particular advantage of the FOs in conducting these services is the low transaction costs due to economies of scale. “Producer associations help lower transaction costs for processors and other buyers because they can deal with one party rather than many scattered, individual farmers” (PEARCE 2003,5). Financial services can be managed by the FOs, thus saving the transaction costs of a bank. They are also able to afford expensive services such as private extension since they can distribute the costs to their members. A far-reaching structure for a strong linkage between farming, processing, and input supply is the involvement of a FO in the food processing business, as the Operation Flood in India. In this programme, dairy farmers were organized into Dairy Cooperative Societies (DCS), which received milk and offered various services to their members. The DCSs were subsequently organized under a Milk Producer’s Union with usually one in a district. The latter was responsible for milk collection, processing and marketing of dairy products as well as for the delivery of production inputs and technical services to the DCSs (UMALI & SCHWARTZ 1994,80). Not only farmers benefit from effectively working FOs. Their comparative advantages against individual farmers enable input suppliers and processors to save costs and minimize the supply and payment risks. Participatory research may become only possible if researchers and farmers come together through institutional arrangements. Extension organizations are able to reach a large number of farmers through the established structures of the FOs. NGOs are also in many cases only able to perform their task of empowering farmers through these structures. Eventually, the targets and the activities of the FOs do meet the public interests in economic growth and ecological sustainability. The interests of different stakeholders in FOs are summarized in the Tab. 7.1. There are both successful and less successful FOs in the world. The Dairy Farms’ Association in Mongolia, which was founded by Danish dairy experts in 1994 and has been stagnating since the end of the project, proves to be an unsustainable organization. It is not able to finance its core activities: training and fairs, with the membership fees. The farmers in turn, hesitate to pay the fee to an organization without regular activities.
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Table 7.1: Different stakeholder interests in Farmer Organizations Interests Overall objectives
Stakeholders Farmers Improved livelihood opportunities & security
Private sector Knowledge and business opportunities to increase profits
NGOs
Public sector
Improved rural service delivery, economic growth, welfare & poverty reduction
Specific objectives in their own dealings with FOs Access to commercial services
Financial, input & output markets, & technical services
Low transaction costs
Trust, grading etc. Economic of scale transactions
Improved information flow
Market & technical information
Power
Farmer lobbying
Cost effective rural entry
New markets
Improved food security
Household food security
Market (& technical) Community (& market & technical) information information Empowerment New suppliers/clients
For a wide range of economic & social services Household food security
Household & national food security
Source: CHIRWA et al. 2005,2.
STOCKBRIDGE, DORWARD & KYDD (2003,22) give the following list of factors that are commonly associated with successful farmer co-operation: 1. Homogeneity – people engaged in collective activities are relatively homogeneous in terms of their socio-economic status and cultural values. 2. Size – the size of the FO matches the organizational abilities of its members and is appropriate for the type and scale of activities being collectively undertaken. 3. Choice of services – the services provided by the FO reflect the demands of its members and are matched by the ability of the FO to deliver them. 4. Commercial activities – the FO is able to identify and undertake activities that make good business and commercial sense. 5. Self-reliance and autonomy – the FO is not dominated by outsiders (e.g. government, donors and NGOs) in pursuit of their own respective agendas and in the long run is not overly dependent upon outsiders for support and guidance. 6. Finance – the FO has the financial capacity to support its own activities and is not heavily dependent upon subsidies. 7. Skills and education – a minimum level of skills and education are represented amongst the FO’s membership. 8. Participation – strong incentives exist for active participation by members in decisionmaking and in the use and/or provision of services.
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9. Organizational structure and governance – the structure of the organization facilitates good governance and effective day to day management of the organization and ensures that the leadership is accountable to members. 10. Legislation – the legislative framework within which FOs operate promotes good governance whilst at the same time avoiding excessive regulation and the harm this can do to the autonomous development of FOs. 11. Focus – resources are focused on undertaking a limited number of activities effectively rather than a larger number of activities less effectively. STRINGFELLOW et al. (1997) point out that an important lesson from the failures of numerous FOs lies in their attempts to undertake activities that they do not have the experience or skills to undertake collectively. He therefore suggests FOs to concentrate on a limited number of activities. CHIRWA et al. (2005,4) also conclude that FOs should not try to provide too many services, nor services that are very demanding of technical, managerial or financial resources - otherwise they may become over-extended and unable to sustain effective and timely services at attractive prices. However, farmers will require more functions from a FO in the long term. Especially, if there are no other organizations to share the tasks the FO cannot limit its focus on smallscale activities only. Thus, an organized structure of capacity building is required for the development of effective FOs. While usual members may be rather interested in training with direct benefits for their farming business, the leaders of the FOs should improve their knowledge and skills required for successful leadership such as claim making, negotiation techniques and conflict management etc. In a final analysis, it may be the best approach for a FO to start with a single activity and to expand its functions step by step and to improve its competence at the same time. COULTER et al. (1999) found out that successful FOs are generally involved in relatively simple marketing, input supply and credit operations involving liaison with market intermediaries higher up the marketing chain. While the knowledge and skills of the leaders can be improved substantially, the organizational viability of a FO can still remain weak. A good leader does not only need skills, but also personal qualities to gain legitimacy. Farmers tend to rather accept a leader with whom they can identify themselves. The leader must be elected by farmers and his/her mandate must be clear both to him-/herself and the members. The members on the other side, need an internal cohesion, which develops from various factors including “homogeneity, kinship, traditional group activities, small group sizes that permit regular face-toface contact between members, transparent rules and record keeping, regular meetings and elections, and a written constitution designed and agreed upon by all members” (STOCKBRIDGE, DORWARD & KYDD 2003,27). Small size and homogeneity are often required for a successful FO. “Transaction costs will be effectively reduced if the FO has a homogenous membership base and a focus on a narrow range of high value activities” (CHIRWA et al. 2005,4). A large organization is difficult to manage, has a large extent of heterogeneity among its members and has difficulties to facilitate the internal information flow. Also, financial management and accounting become more complex. The leaders spend most of their time for dealing with organizational issues and not for activities targeted at increasing the profits of the members. Larger farmer organizations are often focused on receiving donor support rather than on 179
improving the self-sustainability of their members (LEVAY 1983; BINGEN et al. 1995; ARal. 1995; COLLION & RONDOT 1998).
NAIZ et
STRINGFELLOW et al. (1997) and HUSSI et al. (1993) highlight the importance of commercial orientation for the sustainability of FOs. They conclude that while many FOs can also perform social services in the public interest, in the long run, those FOs with clear commercial profile remain sustainable and independent on external support. “Cooperatives function best when focused on commercial activities, and appear to be most sustainable when they have a high business turnover and multipurpose commercial activity” (COLLION & RONDOT 2001,5). For performing commercial tasks, external relationships are crucial. First of all, a FO must have sufficient authority and a wider acceptance as a reliable partner by agribusiness firms. It must develop relationships with the ultimate goal of helping its members. Contractual arrangements must be clear and the responsibilities must be shared fairly. A common form of business relationship is contract farming. In this case, the agribusiness firms provide farmers with inputs and services in exchange for commitment by farmers to supply them with fixed amounts of their output (cf. 2.6). If the contracts are negotiated with FOs, farmers gain additional bargaining power. Both parties benefit from lower transaction costs than in the case if the agribusiness firm negotiated a separate contract with each farmer (STOCKBRIDGE, DORWARD & KYDD 2003; HUSSI et al. 1993). However, even if the commercial orientation is crucial for the sustainability of a FO, most farmers in developing countries are not able to finance their organizations fully. Financial support from donor organizations or the government is necessary. Public investment in the support of FOs is justified since the latter contribute to the economic development and poverty reduction, which are the priority targets of the public sector. Experiences suggest that although a direct subsidizing is necessary in the initial phase of development, the external supporters should focus on indirect support in the forms of capacity building and facilitation rather than subsidizing in the long term. The state must ensure self-sustaining development of FOs by creating a legal framework, which enables them to operate successfully in a commercial setting but forces them to accountability to their members. (cf. ESMAN & UPHOFF 1984; BURKEY 1993; CHAMALA & SHINGI 1997; KIDD, LAMERS & HOFFMANN 1998; HUSSEIN 2001; WORLD BANK 2001).
7.4.2 Extension strategies for establishing dairy farmer organizations According to CHAMALA & SHINGI (1997), the following four functions of extension lead to an immediate linkage of extension and farmer organizations: ¾ Empowerment, ¾ Community-organizing, ¾ Human resource development, and ¾ Problem-solving and education. A priority goal of a dairy extension organization in the study area will be the establishment of local dairy farmer organizations. The extension organization should initiate a pilot project with the farmers in a certain village. More comprehensive monitoring and 180
evaluation will be enabled if the project is run in two villages, ideally in Jargalant as a place with many farmers, and Gachuurt as a place with fewer farmers. Parallel to the implementation of the project, trainings and workshops in other places should be organized. Explaining the farmers about the importance of empowerment and human resource development would be not sufficient for motivating them to join the FO and to pay membership fees. Suggesting too many functions for the FO may be confusing for the farmers. Instead, one clear task should be defined, and a clear organizational structure should be set up. Only after the first task has been implemented, and the members have seen how the system works, further tasks should be defined. In principle, all of the services suggested for a dairy extension organization in the section 7.3 are possible for the FO to start-up. But a more appropriate approach is the sharing of tasks between the extension organization and the FO. While the extension organization focuses on improving the input supply and advising, which would demand both more capital and competence, the FO could start with a less demanding task. Improving the milk collection seems to be a possible task. Currently, there are the following two approaches of milk collection: 1. Those farms possessing trucks are the collection points. This approach is applied in Gachuurt, Jargalant, Udleg and Gunt. 2. Milk is transported by a truck of the dairy. This is the case in Nariinii am and Shar khad. The farmers in Khandgait and Tuul, but also some farmers in the other places transport their milk to the city since they deliver to end users. Organized milk collection would enable the dairies to contract a single partner instead of many individual farmers, and thus to reduce their transaction costs and risks. The incentive for the farmers is to reduce the transport costs as well, and to reduce the risk of milk spoilage. The milk collection center should have a milk cooler, so that the farmers also save costs for the purchase of coolers. There is a high motivation of farmers to produce end products instead of selling raw milk at low prices and high risks (see 6.1.4). At the same time, they are aware that a processing plant is neither affordable nor profitable for a single farmer. The establishment of a commonly owned milk collection center is therefore the first step to the realization of their goal. This could be the major incentive to join the FO and to pay membership fees. It is possible that few larger farmers are able to collect the amount needed for the purchase of milk cooling and processing facilities. But in this case smaller farms will be excluded. Instead, the equipment should be purchased on credit, and paid back from the total revenues, thus including the participation of each member. However, many medium and large farmers would be probably not willing to co-operate with small farms due to the justified fear of compensating the risks caused by the small farms. A feasible approach of establishing a FO involves certain criteria for the membership. The members should have comparable levels of profitability and liquidity. It appears appropriate to set up the first FO with large and medium farms. In the advanced phase of the pilot project, FOs with small farmers could be established too. As for the first FO, a 181
GM of $300 per cow and a cash flow of $3,800 should be required for the membership. In addition, a deposit of $400 (approx. 10% of the average cash surplus) should be charged at the start. For small farms, the deposit may be $200. Those who pay this amount prove their ability to share the risk and show that they do not associate the membership in the FO with development grants. The amounts are also necessary for creating the fund of the FO. Even if the equipment is purchased on credit, a FO must have funds. The credit will be repaid partly from the fund, and partly from the revenues. Although it is not possible to define the size of the FO in advance, a realistic estimation would be 10 to 20 farmers. It is possible that multiple FOs are established in one village. A large size is generally to be avoided for the initial phase. At a later stage of the development, the FOs could merge. The leader of the FO must be elected. The extension organization should make the members clear that the leader is not one who decides, but one who implements the decisions made by the members themselves. The leader is also the accountant, the treasurer and the secretary of the organization at the same time. When the functions of the FO are expanded in future, the tasks of the leader could be reduced and further positions can be arranged. The immediate role of extension is to motivate the farmers to build FOs. For doing so, negotiations with many stakeholders are necessary. The extension organization should try to persuade the stakeholders including the MFA, local authorities, dairies and further relevant actors of the advantage of FOs for them, but also to find out to what extent they can support the FOs. The MFA might allocate subsidies to the FOs within the framework of the ‘White Revolution Programme’, while the local authorities might lease a building for milk storage at reduced rates. Once the interests, expectation and co-operation opportunities of all stakeholders are revealed, the FO itself should be founded officially. After electing the leader, and building the fund, the first action of the FO should be to elaborate an action plan that should fulfill the expectations of both the stakeholders and the member farmers themselves. The extension organization can facilitate further negotiations of the FO with the authorities, dairies and lenders. The milk cooling equipment should be purchased. Some dairies might be interested in leasing the equipment. Otherwise, the MFA should help the farmers lease the equipment on favorable terms. The MFA should also subsidy the wage for the leader of the FO for the first one or two years. Without this subsidy, it would be a problem to find a leader at all. The leader will also be involved in a full advising program on organizational management, which will be conducted by the extension organization. While the members of the FO will not feel a need for training on milk cooling, they will probably demand training on milk processing. The operation of a milk processing plant would require not only training on processing technology and management, but also marketing arrangements. The extension organization will take on the role of a mediator in the negotiations. Depending on the demand and the level of trust, the extension organization can also take on the management of the dairy temporarily i.e. until the FO’s own manager has acquired sufficient competence. But before starting the whole program on dairy processing, the FO should have purchased the equipment. Ideally, milk processing equipment should be purchased only after the credit for the milk storing equipment is paid off. 182
In a final analysis, the FO in the suggested form has a material base in the form of an adequately equipped milk collection center (and a dairy in future), but it also has the character of an extension circle, comparable with those in Germany, due to the close linkage to the extension. Without the support of the extension organization, the establishment of the FO cannot be expected in near future, given the lack of motivation and competence of farmers, nor is organized support in the form of subsidies easy to realize. The government and the donors do not know the situation and the needs of the farmers. On the other hand, it is not only the farmers that would take advantage of FOs, but also the extension organization itself too. By empowering the farmers, it creates new opportunities for itself, and thus ensures its existence. The development of the dairy farming sector will proceed with or without extension service; the extension organization itself has to take care of its relevance. Extension and the FOs should develop parallel, and an evolutionary approach should be applied. In the initial phase, the task of the FOs should be limited to the establishment of a milk collection centre while the extension organization should take on more tasks including feed trade, loan service and possibly the operation of a breeding farm in addition to its advising tasks. These functions should be shifted to the FOs step by step, always with concern at the desires and the potentials of the FOs. While the milk collection center can develop to a dairy, the dairy can then offer loans or operate the feed storehouse as well. The extension organization will focus on advising and training. Eventually, the extension organization itself can be owned by a FO or dissolved. As HOFFMANN (2006, pers.com.) said: “a good advisor makes himself unnecessary”.
7.5 Extension methods The following recommendations of CAMPBELL & BARKER (1997,71), which are based on LIONBERGER’s (1968) model of the adoption process, seem to be useful for choosing appropriate extension methods: ¾ Mass media and popular theatre to provide new or additional information in the ‘awareness’ stage; ¾ Group meetings, radio and field days to increase knowledge in the “interest” stage; ¾ Result and method demonstrations, and farmer exchange to improve skills in the ‘evaluation’ stage; ¾ Individual visits, farmer exchange, on-farm trials, and method demonstrations to induce behavioral change in the ‘trial’ stage; and ¾ Recognition programs, competitions, and incorporating practices into farming systems to consolidate attitudinal changes in the ‘adoption’ stage. The appropriateness of different extension methods for the farm consulting work is discussed below. Without trying out the methods, there will be only assumptions.
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7.5.1 Mass extension Mass extension methods could be, first of all, used for informing the farmers about the activities of the dairy extension service. Furthermore, they are appropriate for informing purposes. While the farmers prefer the TV as an appropriate media for extension messages, broadcasting on TV is very expensive. Instead, newspapers are cheap and offer the possibility to store information with little costs. Compared with the radio, newspapers allow illustrations. In order to save costs, newspapers can be printed in black-white and in the format of simple newsletters.
7.5.2 Group extension Ideally, a dairy extension service should advise each farm individually. But the expenses of such services would go beyond the limits of feasibility. Thus, group extension methods will be preferred. In the initial phase of its operation, the dairy extension service will need to frequently organize group discussions in order to discuss the problems of the farmers and improvement possibilities. The dairy sector analysis in the previous chapters and the farm development proposals described in the section 6.1 of this thesis can be used as the basis of discussions. Group discussions should be also used for elaborating concrete proposals such as the planning of on-farm trials. On-farm demonstrations are appropriate for introducing new techniques such as the milking machine or for demonstrating well designed barns. A particular form of group extension is the training. In the sample farms’ survey it was found that most critical are those farmers without a formal education in agriculture and took on dairy business after 2000. Many of them rely on their workers. Unfortunately, some workers do not meet the requirements and the lack of competence results in low productivity and profitability. Training for these farmers is necessary even if they consider it as not useful. In order to promote their interest, the training must offer incentives. A formal certificate can to be a good incentive. The dairy extension organization could obtain a license from the Ministry of Education to offer such trainings. In order to avoid scheduling conflicts, the training should be divided by modules with duration of one week. The training should consist of ten modules consisting of seven obligatory and three elective modules as follows: a. Obligatory modules ¾ Basics of dairy farming ¾ Nutrition of dairy cattle ¾ Cattle breeding ¾ Fodder cropping ¾ Basics of veterinary medicine ¾ Basics of production economy ¾ Basics of farm management and planning
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b. Elective modules (three should be selected out of the following modules) ¾ Business management ¾ Controlling ¾ Mechanization of dairy farming ¾ Technology of milk processing ¾ Vegetable farming ¾ Organization and management of Farmer Organizations The certificate should not only be a prestige object, but a useful document. For example, it can be required for certain services such as the loan service that is offered by the dairy extension organization. The training modules should start in fall when the farmers have procured feed for winter, and proceed throughout the winter. The farmers should finish the whole course within two years. Farmers with agricultural education could also attend the training, but they should be given the possibility to skip modules by taking the respective exams without attendance. Independently from the formal training proposed above, specific short-term trainings on individual subjects of farm technology or management will be carried out if considered necessary and if there is a motivation of the farmers to attend them.
7.5.3 Individual extension Even if individual extension is expensive, it is necessary for some services. Examples of such services are described below. Controlling The starting point is the analysis of farm economy including an inventory. Bookkeeping should be introduced by means of simple sheets for receipts and expenditures for both the farm and the household. The records should be monitored by an advisor each quarter and a balancing should be done once a year. While the economic year in official balances for tax purposes begins on January 01 and ends on December 31, in a balance for internal controlling of dairy farms the economic year should begin on August 01, prior to the haymaking and the purchase of other commercial feed. On the basis of the records and the balance, the utilization of the internal funds and possibilities of improvement should be discussed with the farmer. On-farm trials While on-farm trials may be carried out at several farms in different places at the same time, the progress on each farm needs to be monitored individually. In the initial phase of its operation, local advisors of the dairy extension organization may take the responsibility to do so. In a later stage, the farmers may become able to take necessary measures and properly keep the trial records. 185
Business plan service The extension organization may offer a business plan service to farmers who plan to expand their farms or integrate new enterprises to their farms. Also, newcomers would be interested in a business plan service offered by a professional extension organization. The above examples reveal that individual extension is needed in cases where the subject of the discussion is an individual farm or an object located at a particular farm. This is the case when the advisor needs to visit individual farms. Furthermore, there are many cases in which a farm visit is not necessary, but an advising session takes place in the advisor’s office.
7.5.4 Use of printed materials Printed materials are essential for dairy extension work. Mass extension is mainly conducted through printed materials. Also, group extension methods including training need printed materials either in the forms of training aids, or in the form of information newsletters. Individual extension also requires the aid of printed materials. A dairy extension organization may issue a new newspaper or co-operate with the Mongol Farmer College, which issues the newspaper ‘Mongol Farmer’. Although in the first case the management of the newspaper is independent, the second case offers the chance to use the good reputation of the Mongol Farmer College. A further possibility to make the newspaper attractive for the farmers is to integrate information which is not related to the farming, but is useful for the farmers and their families. The sample farms’ survey revealed that the farmers buy the ‘TV news’ because of its register of TV programs and English lessons for children. Thus, a newspaper containing the TV programs and English lessons for children in addition to farming-related information would have a better chance to get sold. Besides newspapers and handbooks, booklets containing important information in easily understandable format should be used in the extension work. For example, a booklet about dairy cattle feeding may include simple rules as ‘10 kg hay + 4.4 kg bran = 10 l milk’ or ‘7.3 plus 1 kg hay = 1.2 l milk’. A booklet on barn designing may include pictures and schemes of a model barn, and include rules as ‘surface of windows = 10% of the floor surface’. The farmers have been paying little attention to planning and controlling: only 30% of the sampled farmers were sure that they make concrete plans and control their realization. Explaining the farmers about farm management may yield insufficient effects. Instead, controlling tools including insemination calendar, milk record books, and sheets for feed rations or for bookkeeping should be supplied to the farmers. They would enable regular monitoring of the farms and provide the extension organization with data that can be used for market research or benchmarking. Least experienced farmers need a farming calendar, which includes suitable dates of insemination, haymaking or hay purchase etc., similar to a calendar for vegetable farming.
186
The farmers lack market information. For example, a farmer in Gunt bought a double-pail milking machine in China at $800. The same milking machine is, however, offered by a company in the Ulaanbaatar city at the same price. If the farmer had known about this company, he could have saved the transport costs of approx. $100. A dairy farming catalogue should be therefore issued by the dairy extension service. The catalogue should contain addresses of input suppliers and dairies, veterinary services and AI technicians, but also the addresses of relevant institutions as the Animal husbandry division of the MFA, the DFA, the Mongol Farmer College and the University of Agriculture etc. In order to sell a large number of copies, and thus to cover the costs, the dairy extension organization may extend the dairy farming catalogue to a ‘Catalogue for Livestock Farmers and Herders’.
7.6 Suggestions for a pilot project 7.6.1 Organization and structure In order to ensure an independent management, the dairy extension organization must not belong to any existing institution. Since a NGO is exempted from the income tax, the status of a NGO is most appropriate for the dairy extension organization. The proposed extension service should consist of a head office and local branches. The head office should be located in the Ulaanbaatar city and be responsible for 60 farms in Khandgait and Tuul. Local branches should be established in Jargalant and Gachuurt. The branch in Jargalant will serve 286 farms in Jargalant, Gunt, Nariinii am, Shar khad and Udleg while the Gachuurt branch will serve 63 farmers in Gachuurt and Khuandain am (cf. 4.2). Ideally, the local offices are located in the local authorities so that the farmers could also contact the advisors whenever they have an occasion to come to their village authorities. Table 7.2: Customer base for each branch of a pilot dairy extension service Places Number of
Ulaanbaatar (head office) farms
Jargalant
Gachuurt
Total
cows
farms
cows
farms
cows
farms
cows
Farms with: ≤10 cows 11 to 20 cows 21 to 30 cows >30 cows
15 15 0 0
90 225 0 0
80 45 15 7
480 675 375 280
15 10 5 2
90 150 125 80
110 70 20 9
660 1,050 500 360
Total
30
315
147
1,810
30
445
207
2,570
It is assumed that 50% of the potential clientele will be involved in the activities of the extension service: the real customer base consists of 30 farms for the head office in Ulaanbaatar, 147 farms for the Jargalant branch, and 30 farms for the Gachuurt branch. The farms have a total number of 2,570 cows (Tab. 7.2).
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7.6.2 Staff The head office is occupied by a manager, a secretary and an advisor. The local office in Jargalant is run by three advisors, and the Gachuurt office is run by one advisor. While the manager should be an agricultural economist, the advisors are required to have comprehensive knowledge and experience in dairy technology, and basic knowledge of agricultural economy. Competence in extension methods are important, but cannot be required since education in agricultural extension has not been established in Mongolia yet. Basic requirements on the advisors besides technical expertise are personal motivation to perform advisory work, communication skills and computer skills. While the advisor in the head office may be residential in the city, the advisors in Jargalant and Gachuurt should be locals. Farmers should not be hired as advisors, as they neither have the time for perform the task, nor is it sure if they do not use the resources of the extension organization for private purposes. Instead, former farm employees, especially those who had been in leadership or experts’ positions, are to be preferred. They can be found in Jargalant and Gachuurt. Part-time farming, which most of them have, is acceptable. The advisors will be provided with training on agricultural economy, accounting, business management, dairy technology and extension methods. The trainings should be organized with experts of each discipline. As long as the advisors are provided with regular training, there is no need for an external supervisor. The manager can take on the role of a supervisor whenever it is necessary.
7.6.3 Facilities and equipment The head office should be equipped with two personal computers for the manager and the secretary, a laptop for the advisor, a phone and a multi-function printer, and basic office furniture. Each local office needs basic furniture and a phone while each advisor needs a laptop. A total of five laptops are required. The extension organization needs a sedan for the head office and one for the Jargalant branch as long as core extension activities are not carried out. If extension activities are carried out, a van will be needed for common use, and two more sedans are needed for the local branches in Jargalant and Gachuurt. Storehouses for feedstuffs will be built near each office. If we assume that the client farms will need 1,700 kg hay and 800 kg bran for each cow, and they purchase 50% of their total hay provision (cf. 5.5.8 and 5.6.6), the clients of the head office purchase approx. 268 t hay and 126 t bran each year. The clients of the Jargalant office purchase 1,539 t hay and 724 t bran, and the clients of the Gachuurt office purchase 378 t hay and 178 t bran each year respectively. Assuming that the farmer clients will purchase 75% of their needs from the dairy extension service, the storehouse in Ulaanbaatar needs to have capacity for 201 t hay and 95 t of bran. The storehouse in Jargalant should have a capacity for 1,154 t hay and 543 t of bran, and the storehouse in Gachuurt needs a capacity for 284 t hay and 134 t bran. By rounding the numbers, the storehouse of the head office needs a capacity for 200 t hay and 100 t bran, the storehouse in Gachuurt needs a capacity for 300 t hay and 140 t hay and that in Jargalant requires a capacity for 1,150 t hay and 550 t bran. 188
7.6.4 Networking The extension organization has to build a viable institutional network. The following strategies should be followed. Research-Extension linkage: The State University of Agriculture has most research capacities both in terms of competent researchers and research instruments. Thus, a priority of the extension organization is to find out opportunities for linking researchers and farmers at appropriate terms of funding. Research subjects that meet the interests of both the farmers and the researchers were highlighted in the section 6.2.4. Preferably, researchers working on their thesis are the potential target groups since extension needs research projects with clear structure and well evaluations rather than on-going trials, of which results are not available for years. Though subjectively, the author made the experience while investigating significant literature in dairy farming and meeting various researchers that older researchers often tend to be less open to new ideas and proposals than younger researchers. In addition, many of them still share the vision of a centrally planned economy. The rapidly changing market situation and the overall liberalization of both the policy and the national economy, however, make it difficult to agree with their views on the development of the private sector. Thus, it might be more effective for the extension organization to work with younger researchers who are open to new ideas and alternative views. Extension-Education linkage: Although the State University of Agriculture is the core institution of agricultural education in Mongolia, the Mongol Farmer College has a better reputation as an education institution among the farmers meanwhile. Thus, farmers’ trainings in Ulaanbaatar such as those certificated trainings suggested in the 7.6.2 should be organized at Mongol Farmer College. As for the competence of the trainers, there is no difference between the university and the college since most of the teaching staff of the Mongol Farmer College work at the State University of Agriculture at the same time. Linkage to the rural policy: A strong linkage to the Animal Husbandry Division of the MFA should be established. Besides seeking political support for many decisions, which go beyond the limits of competence and power of the extension organization, such as the ownership of crop land or pastures by farmers, the extension organization could take material advantage from the linkage for its client farmers e.g. in the form of purchase of tractors and equipment at reduced rates. As long as farmer organizations are not established yet, the extension organization should be the communication channel between the farmers and the rural policy. This is also a strategy to strengthen the position of the extension organization within the wider network of rural policy. Linkage to local authorities: Local authorities have a high relevance for dairy extension. They are the only institutions that have been permanently operating in their areas. In addition, many farmers still feel that they have to submit to the authorities. There are many indications for this perception: the participation in the elections is higher in the rural and peri-urban areas than in the urban centers, the farmers come to rather useless meetings held by village authorities while they hesitate to visit occasional trainings and meetings organized by development projects. During the sample farms’ survey many farmers asked if the survey was organized by the village government, indicating their consideration of the village authorities as the only institutions in touch with them. Thus, a linkage to these institutions is essential for successful extension work. The relationship should be based on 189
mutual benefits and may be fixed contractually. Mutual benefits emerge if, for example, the extension organization rents rooms that are otherwise unused or if the village authority calls community meetings and the extension organization uses the presence of many farmers for group extension purposes. Linkage to the dairies: The extension organization should establish itself in the output chain and strengthen this position permanently. For doing so, a formal relationship to the dairies is necessary. It must be based on mutual interests. The establishment of farmer organizations as an extension task might find a particular interest of the dairies and their willingness to cooperate. Input suppliers as banks, haymakers and flour mills may be reluctant to enter any formal relationships with the extension organization since they would not see any immediate benefits. In the long run, however, they may become interested in a co-operation in order to reduce their transaction costs (see 6.2.2).
7.6.5 Cost-Benefit Analysis In this section, the costs and benefits of a pilot project with the duration of ten years is analyzed by means of a multi-period investment appraisal. The aim of the analysis is to find out if and to what extent the extension organization proposed in the previous sections would be able to finance extension activities from the profits of the feed trade and the financial service it carries out. The project is assumed to be financed by a loan. Alternative interest rates between 6% and 24% p.a. are assumed and the outcomes are compared. The initial budget for the project facilities is independent on whether extension services are offered or not. The total budget is $29,000 (Tab. 7.3). Table 7.3: Initial budget of facilities and equipment for a pilot project of dairy extension Positions
Costs, $
Storehouse in Jargalant (1,700 t)
10,000
Storehouse in Ulaanbaatar (300 t)
2,500
Storehouse in Gachuurt (440 t)
3,500
Sedans (×2)
6,000
Personal computer
1,000
Laptops (×5)
4,000
Multi-purpose printer Phones and office furniture Total
500 1,500 29,000
The operation costs include the variable costs and the overheads of the project as well as the costs for the purchase of feedstuffs and the financing of the financial service. The salaries suggested for the project staff are comparable with the salaries in the industry and relatively high for agricultural experts. The variable costs of the vehicles were based on an estimated average use of 20,000 km per year for vehicle (cf. 5.5.5). The rents are $50/month for the head office in Ulaanbaatar and $25 for each of the local offices. The 190
overheads were estimated at $3,800. The variable costs for the storage and sales of feedstuffs include the costs for renting tractors and helpers, and maintenance costs of the storehouses. Unforeseen expenses were estimated at $2,000. The costs of the financing service were estimated under the assumptions that 50% of the client farmers will use the financial service, and that one cow per each farm with up to 10 cows, two cows per farm with 10 to 20 cows, and three cows per farm with 20 to 30 cows will be sold to the project and leased back. A total of 24 cows will be sold to the head office, 119 cows to the branch in Jargalant, and 30 cows will be sold to the Gachuurt branch then. At the average price of $400 per cow, the total capital requirement for establishing the leasing service is $69,200. The total costs are $209,206 per year (Tab. 7.4). Table 7.4: Annual operational costs of a pilot project of dairy extension at current values Positions
Costs, $
Salaries (incl. 19% for social insurance) Manager (net salary $250/month)
3,570
Secretary (net salary $100/month)
1,428
Five advisors (net salary $150/month for each)
10,710
Variable costs of the vehicles (fuel, oil and repairs)
3,000
Rents (for the offices) and overheads
5,000
Costs for feed purchase Hay (1,639 t at $42/t)
68,838
Bran (772 t at $55/t)
42,460
Financing of the financial service (for 50% of the client farmers)
69,200
Variable costs of feed storage and sale
3,000
Other expenses
2,000
Total
209,206
Revenues are created by the financial (leasing) service and feed sales. It was assumed that only the sale-and-lease scheme of the financial service is used in the project (cf. 6.3.1). The rate of the leasing was set at 30% p.a., which is by 6% lower than the average interest of smaller bank loans, in order to serve a large share of the clientele. In this case, the payments of the farmers include the loan repayment of $69,200 and a total of $20,760 for the interest. Hay is sold at $52 per ton and bran at $65 per t. The total revenue of the feed trade is $135,408 per year without considering the inflation. After the end of the project the storehouses still have a total book value of $8,000 (at current prices), which was considered as in-payment in the calculations. If the interest of the loan for the project is 24% p.a., which is, meanwhile offered for business credits by some banks in Ulaanbaatar, the project will be still able to repay the loan with its interest and have a net current value of $40,152. The benefit-cost ratio of the project would be 1.03. Despite the profitability, the net surplus of $10,905 per year would be insufficient for financing extension activities. Also, a loan with 18% interest would result in annual surpluses of only $12,753, which is a critical amount for sustaining a dairy ex191
tension service. Higher surpluses would be attained if the project is financed with a soft loan with 12% interest p.a. (Tab. 7.5). Table 7.5: Results of the multi-period investment appraisal of the suggested pilot project with different rates of interest for the credit financing (without extension activities yet) Positions
Unit
Interest rate of the loan 12% p.a.
18% p.a.
24% p.a.
Assumptions: Credit volume
238,206
238,206
238,206
year
10
10
10
%
5
5
5
Net current value of the amounts paid in
$
1,651,761
1,266,493
1,007,360
Net current value of the amounts paid out
$
1,578,034
1,217,924
974,980
Benefit-Cost Ratio
$
1.05
1.04
1.03
Net current value of the investment
$
82,574
57,311
40,152
Equivalent annuity
$
14,614
12,753
10,905
Term Assumed inflation
$
Outcomes:
In order to conduct extension activities, the project needs an additional investment of $12,500 for the purchase of two more sedans and a van. The sedans need to be replaced after five years. Also, the variable costs of the vehicles will increase from $3,000 to $8,500 per year. In addition, a minimum amount of $20,700 per year (at $100 per client farmer) could be suggested for financing the extension activities. We could assume that, if the extension manager and the advisors would be able to perform good services that meet the needs of the farmers i.e. as those services suggested in the sections 6.1 and 6.2, they might be able to cover up to 25% of the costs from service fees. In that case, the current value of the investment into extension activities, which is calculated from the expected service fees minus costs caused by the extension service, for the term of ten years is $135,672. Unfortunately, this is more than the amount the project could afford, which is $82,574 in the case it is financed by a soft loan and $40,152 if the project is financed with a business loan. There are two possibilities to sustain the extension service: limitation of the extension work to services that are affordable for both the extension organization and the farmers. Alternatively, the extension organization could be subsidized until a sustainable base of equity capital is formed. In the meantime, both the extension services and the profitability and ability of the farmers to pay for extension may have increased so that many services are financed by the farmers fully. In addition, the subsidized extension organization can focus on establishing farmer organizations, from which, as was explained in the section 7.4, not only the farmers but also the extension organization itself would benefit. In a summary, there is no real possibility to establish a dairy extension service without initial subsidizing yet. The total amount of the subsidy should be, depending on the interest of the loan for the extension organization, between $53,098 and $95,520 at the current value. More would be needed if the suggested budget of $100 per client would be revealed as insufficient. 192
7.7 Conclusions One might wonder if a dairy extension organization will be able to perform all the tasks described in the sections 7.1 to 7.4. There may also be the question if such a comprehensive extension service is necessary. Without having tried out the activities, it is not possible to give any judgments yet. But the promising economic performance of many farms, the expected increase of dairy farms in the study area, and the lack of services for dairy farms lead to the justified assumption that a dairy extension organization is necessary, and it should also be actively involved in the development of the business environment of the farms. We must, however, be careful with the scope of extension activities. In the initial phase, a dairy extension organization should carry out activities that are linked to existing objects or established systems such as the promotion of already existing services or farmer trainings. Creating new things such as the setting up of a breeding farm is more demanding and it is not sure if these things work. The facilitation of farmer organizations is another task that demands much effort and has much risk both for the farmers and the extension organization. An extension organization with little capacity of taking risks or one that takes too much risk is not sustainable. Especially, a commercial extension organization will always be considered by the farmers critically: failures will not be tolerated. On the other hand, the extension organization has to take care of its finances. Given the critical attitude of the farmers toward training, farmer trainings will probably not create much revenue. Individual consultancy is expensive and affordable for a very few farms. In a final analysis, the so called core activities of extension including training, advising, and facilitation of services can be only sustained if the extension service is subsidized. A commercial extension organization, therefore, has to start with profitable activities. After all, the dairy extension should be considered from both the farmers’ and the advisors’ perspectives. The latter will only bring good performance if paid adequately. While a breeding farm can be very risky since it is something entirely new, the feed trade is a more feasible, but also a highly profitable business. Also, the loan service is a feasible option for increasing the revenues. Most of all, both of these services are required by the farmers. By offering what the farmers need and what they are willing to pay for, the extension organization can not only benefit financially, but also become known by the farmers within a short time with no extra work for that. The farmers will come to the extension organization and not the organization to the farmers as if it would require something from the latter. The target is, however, improvement of the dairy farming. Therefore, the extension organization will invest a part of the income from the loan service and the feed trade into the core activities of extension. One might wonder if those extension activities are necessary if the organization is already able to make profits with the above services. This is a shortsighted view: only if the farmers are able to use the inputs best, they will improve their incomes, and will be able to pay more. For doing so, the farmers need extension service, and they admitted that in the sample farms’ survey. The integrated concept of extension and input supply is based on a fair relationship of taking and giving. It is not intended that the extension organization will become an input supplier or a bank. These functions are only needed for sustaining the extension organization until a user193
financed commercial extension service in its classic form, as it is available in Netherlands for example, is feasible. The future development of the farming sector will lead to an increasing demand for more professional advising and research-oriented activities. Along the increasing competition of the farms, the value of knowledge in the dairy production will increase up to a level, on which the advising service becomes financially selfsustaining. The dairy extension will then be able to release itself from other tasks e.g. by giving up the loan service and selling its storehouse, and focus on non-material forms of assistance. In this context, the establishment of farmer organizations is an essential part in the development of the dairy farming sector. In the long run, extension functions should be taken over by the FOs and not by outsiders. This is an important point because once the extension organization becomes a profitable enterprise the business will attract investors from non-agricultural sectors. In contrast to the extension organization, the latter will only focus on the maximization of their profits. Therefore, vital FOs are essential for the development of the dairy farming sector, and a dairy extension service must facilitate the development of FOs. The cost-benefit analysis of the pilot project revealed that while the loan service and feed trade are profitable, the surpluses are insufficient for the financing of extension activities. The proposed project would, if it is financed with a soft loan at 12% interest, need a subsidy of approx. $53,000 in order to sustain the extension service at the annual budget of $100 per client farmer. If the extension service, as it is a commercial organization, is financed with a business loan with the usual interest of 24% p.a., the total amount of the subsidy is approx. $100,000. A well managed extension service may be able to obtain more than the suggested 25% of the budget back in the form of service fees. On the other hand, the above estimation does not consider possible increases of the income e.g. through an increase of the clientele, which is quite expectable. Nonetheless, an increase of the net current value of the investment by $100,000 is unrealistic to expect. Thus, the only feasible option of financing the extension service is a joint financing by the clients, the extension provider and the sponsor. This form of financing was also suggested by HOFFMANN (2004,88) for new extension services in Germany. Even if the project would be subsidized, it does not necessarily mean that the subsidy is not paid back. Although possibilities and conditions of paying back the subsidy are not investigated in detail, we may assume that by investing a larger amount, the project will be able to yield higher revenues. A part of the revenues could be invested back into profitable businesses. The setting-up of a breeding farm, which was considered as too risky above, could be arranged by low-risk approaches such as contracting of local farms in the initial phase of the project. Given the relatively small size of the clientele (207 farms), we may broaden our view of possibilities. Dairy extension can also be integrated into a larger organization of livestock extension, which would serve both livestock farmers and herders. A large clientele would enable the organization to take advantage of economies of scale. For example, a ‘Catalogue for Livestock Farmers and Herders’ would be sold in a larger number than a ‘Catalogue for Dairy Farmers’.
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8 Summary Being the political and the economic center of Mongolia, the Ulaanbaatar city has a population of one million, which is about 40% of the entire population. Statistics forecast further increase of the population to 1.2 million by 2015. The total consumption was equivalent to 64 million liters of liquid milk in 2005 and is expected to reach 79 million liters in 2015. The opportunity should be used by local dairy farms, which supplied approx. 12 million liters in 2005 to the dairies in the city. In addition, a part of the market share of pastoral herders, which is currently 34 million l, could be taken over by the farmers. In order to strengthen their position in the dairy chain and increase their market shares, the farmers need professional support in the form of dairy extension. The aim of this study was to analyze the dairy farming sector in Ulaanbaatar and to develop strategies for dairy extension work. The study started with a re-evaluation of a World Bank survey on dairy farming in Mongolia from 2003. A field survey was carried out in 2005. Analysis of secondary material, expert interviews, key farmer interviews and farm visits were conducted in order i) to study the recent history of dairy farming, ii) to quantify the farms in the area and to identify their locations, iii) to characterize the political, legal, market, and institutional environment, within which the farmers operate, and iv) to collect ideas of different stakeholders in the dairy sector. The sector analysis was completed by a sample farms’ survey, which is a detailed analysis of 30 dairy farms. Based on the results of the dairy sector analysis, priority contents of dairy extension were elaborated and strategies for extension methods and for the organization and management of dairy extension were suggested. A cost-benefit analysis for a pilot project of an integrated agribusiness-extension organization was conducted in order to find out to what extent a commercial firm is able to finance extension activities. Findings show that the dairy sector has been recovering from the post-privatization crisis in the early 1990s and the stagnation in the mid-1990s. Major driving forces for the development of the sector have been high milk prices and the awareness of the profitability of dairy farming among the peri-urban population of Ulaanbaatar. The development is indicated by the intensive increase of dairy farms, the increase of the industrial dairy production, and the high level of contentment of the farmers with their incomes. Meanwhile, some 420 dairy farms have been established in the study area. While 55% of the farms in the study area have small herds of up to 10 cows, 30% of them have 11 to 20 cows, and the remaining 15% are larger farms with more than 20 cows. The farmers lack a supporting business environment. The government is struggling with the ‘White Revolution Programme’, which has been carried out since 1999 without concrete results. Similarly, there is no structure that integrates the dairy farmers into the Agricultural Knowledge and Information System. In a final analysis, both the policy and the research are far behind the market forces that have been leading to an intensive development of the sector. The sampled farms are family-run commercial dairy farms. Most of them are specialized in dairy production. The semi-intensive farming system is characterized by a grazing season with the average duration of 176 days and a stall period of 189 days per year. Grazing is free of charge. The crossbred dairy cows have an average lactation productivity of 2,460 l. After using 15% of the milk production for calf feeding and home consumption, an average farm sells a total of 29,445 l per year. The average gross margin per cow is 195
$383, and the average management income is $1,997. The unpaid family labor forces are compensated with approx. $180 per month, which is by 114% higher than the average salary in Mongolia. The average rate of return to the equity capital is 40% and by 22% higher than average interest of saving accounts. An average farm has a cash surplus of $2,613 per year. Generally, farms with a higher intensification level have both higher productivity and profitability. Simple indicators for the intensification level are the duration of the grazing season and the feed rations. The farm size proved to be a further variable that the farm profitability significantly depends on. Smaller farms often suffer a chronic lack of financial resources, and struggle with the nutrition of the cattle and the farm management. On the other hand, a large farm with 73 cows in the sample was less profitable than medium-sized farms with 15 to 30 cows. It seems that, although an expansion of the herd after attaining a satisfying level of productivity may be profitable, the management capacities of the farmers are a limiting factor for expansion. Based on the survey, the following target fields were identified for farm consultancy measures: enhancement of dairy cattle, improvement of nutrition management, optimization of barn conditions, on-farm milk processing, and improvement of farm management. Furthermore, the extension service should promote the AI services, facilitate the development of financial services, strengthen the input supply chain and bring together the farmers and the researchers. An essential target of dairy extension is the establishment of farmer organizations. It was concluded that farmer organizations will be most effectively established if a certain target is set e.g. the improvement of milk collection, and the members have comparable levels of profitability and liquidity. Due to their close linkage to the extension and focusing on clear targets, the proposed form of farmer organizations is comparable with that of extension circles in Germany to some extent. A major problem of the dairy extension work is the financial sustainability. Even if the dairy farming is highly profitable, the cash surplus of $2,613 does not allow much opportunity for fully user-financed extension. Thus, a self-sustaining extension service is only feasible if it does not only facilitate but conduct income-generating services too. Cattle leasing and feed trade seem to be appropriate services to meet the needs of the farmers and to ensure a cash flow for the extension organization at the same time. By implementing these services, the latter will be able to obtain considerable amounts of financial resources that currently flow to feed traders, and to use the surpluses for core extension activities. However, a cost-benefit analysis revealed that while these services are highly profitable, the surpluses are insufficient for the financing of extension activities. Thus, initial subsidizing is necessary. A part of the problem is the relatively small size of clientele. In order to increase its liquidity, the dairy extension could also be integrated into a general livestock extension service with a larger clientele. The vision is that of a parallel development of dairy extension and farmer organizations. The future development of the sector will lead to an increasing demand for knowledge based services. Along the increasing competition of the farms, the value of knowledge will increase up to a level, on which the extension service is financially self-sustaining. The dairy extension will then be able to release itself from other tasks and, rightfully so, to focus on non-material forms of assistance, to avoid role conflict and to be able to do better through specialization. The delivery of agribusiness services, but also that of the core extension activities should be gradually shifted to the farmer organizations. 196
9 Zusammenfassung Ulaanbaatar, die Hauptstadt der Mongolei, ist das politische und wirtschaftliche Zentrum des Landes. Die Stadt hat eine Million Einwohner, das sind 40% der gesamten Bevölkerung. Statistischen Ermittlungen zufolge wird die Stadt im Jahr 2010 1.2 Millionen Einwohner zählen. Die Menge des gesamten Konsums von Milch und Molkereiprodukten im Jahr 2005 entsprach 64 Millionen Liter Rohmilch. Bis zum Jahr 2015 wird ein Anstieg des Konsums auf 79 Millionen Liter erwartet. Von dem Wachstum des Marktes sollen vor allem die lokalen Milchviehbetriebe profitieren, die im Jahr 2005 nur 12 Millionen Liter Milch produzierten. Überdies ist ihnen möglich, einen Teil des Marktanteils von pastoralen Viehzüchtern, der zurzeit 34 Millionen Liter beträgt, zu übernehmen. Um ihre Position innerhalb des Milchsektors zu stärken und ihren Marktanteil zu erhöhen, brauchen die Milchviehbetriebe professionelle Unterstützung in Form von Beratung. Das Ziel dieser Arbeit war es, den Milchviehsektor um die Stadt Ulaanbaatar zu analysieren und Strategien für Beratungsarbeit zu entwickeln. Die Arbeit begann mit der Auswertung einer empirischen Untersuchung über die Milchviehbetriebe in der Mongolei, die 2003 von der Weltbank durchgeführt worden war. Die Auswertung dieser Daten ermöglichte einen ersten Überblick über die Betriebe, ihre Produktionssysteme, Wirtschaftlichkeit sowie Probleme und Perspektiven. Im Jahr 2005 wurde eine Untersuchung vor Ort durchgeführt. Durch die Analyse von sekundären Daten, Interviews mit Experten und Bauern wurden die folgenden Ziele verfolgt: i) Analyse der Geschichte des Milchviehsektors in den letzten Jahren, ii) Quantifizierung der Betriebe im Untersuchungsgebiet und Identifizierung ihrer Standorte, iii) Charakterisierung der politischen, rechtlichen und institutionellen Rahmenbedingungen sowie der Marktbedingungen für die Betriebe und iv) Erfassung von Meinungen verschiedener Akteure wie z.B. von Ministerialbeamten, Forschern, Bauern, lokalen Bürgermeistern über die Bedeutung des Milchsektors und den aktuellen Stand und die Zukunftsentwicklung. Die Sektoranalyse wurde durch eine Stichprobenuntersuchung ergänzt, an der 30 zufällig ausgewählte Betriebe teilnahmen. Aus den Ergebnissen der Untersuchung wurden Beratungsinhalte abgeleitet und Vorschläge zu Methoden, zur Organisation und zum Management der Beratung für Milchviehbetriebe erarbeitet. Mittels einer mehrperiodischen Investitionsrechnung wurde die Wirtschaftlichkeit eines Pilotprojektes ermittelt um herauszufinden, inwieweit ein kommerzielles Unternehmen Beratungsaktivitäten finanzieren kann. Die Ergebnisse der Untersuchung zeigen, dass der Milchsektor, nachdem er die Krise nach der Privatisierung staatlicher Milchviehbetrieben in den frühen 1990er Jahren überstand und danach eine Stagnierungsphase durchlief, sich allmählich zu entwickeln beginnt. Die wesentlichen treibenden Kräfte für die Entwicklung waren die relativ hohen Milchpreise und das Bewusstsein der Bevölkerung in den peri-urbanen Gebieten von Ulaanbaatar über die Rentabilität der Milchviehhaltung. Die positive Entwicklung des Sektors wird vor allem durch die hohe Intensität von Neugründungen von Milchviehbetrieben, einen Anstieg der industriellen Milchproduktion und die Zufriedenheit der Bauern mit ihrem Einkommen angezeigt. Es existieren insgesamt ca. 420 Milchviehbetriebe im Untersuchungsgebiet. Während 55% von ihnen kleinere Herden mit bis zu 10 Kühen haben, sind weitere 30% mittelgroße
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Betriebe mit zwischen 10 und 20 Kühen und die restlichen 15% haben größere Herden von mehr als 20 Kühen. Die Bedingungen des Geschäftsumfeldes der Milchviehbetriebe sind nicht besonders fördernd. Das ‚White Revolution Programme’ der Regierung, das seit 1999 durchgeführt wird, hat bisher keine konkreten Ergebnisse erzielt. Ebenso fehlt es an einer Struktur, die die Betriebe in das landwirtschaftliche Wissenssystem integriert. Es lässt sich zusammenfassen, dass die Politik und die Forschung weit hinter den Marktkräften zurückgeblieben sind, die die intensive Entwicklung des Sektors vorantreiben. Die Stichprobenbetriebe sind kommerzielle Familienbetriebe. Die meisten von ihnen sind in der Milchproduktion spezialisiert. Das semi-intensive Produktionssystem wird durch eine durchschnittliche Weideperiode von 176 Tagen und eine Stallperiode von 189 Tagen pro Jahr charakterisiert. Die Weidenutzung ist noch kostenfrei. Die Milchkühe haben eine durchschnittliche Milchleistung von 2,460 l pro Laktation. Der Anteil der Milchproduktion der für die Fütterung der Kälber und den Haushaltsbedarf verwendet wird, wird auf 15% geschätzt. Die durchschnittliche Menge des Milchverkaufs beträgt 29,445 l pro Jahr. Der durchschnittliche Deckungsbeitrag pro Kuh beträgt $383 und der durchschnittliche Unternehmensgewinn $1,997. Die Entlohnung der unbezahlten Familienarbeitskräfte beträgt umgerechnet $180 pro Monat, was um 114% höher ist als das durchschnittliche Arbeitseinkommen in der Mongolei. Die durchschnittliche Eigenkapitalrentabilität beträgt 40% und ist somit um 22% höher als der durchschnittliche Zinssatz für Spareinlagen, die als alternative Nutzung des Eigenkapitals in Frage kämen. Ein durchschnittlicher Betrieb hat einen Cash Flow von $2,613 pro Jahr. Im Allgemeinen erzielen Betriebe mit einer intensiveren Produktion höhere Rentabilität. Einfache Indikatoren für die Produktionsintensität sind die Dauer der Weideperiode und die Futterrationen. Überdies besteht eine signifikante Abhängigkeit des Unternehmensgewinns von der Betriebsgröße. Kleinere Betriebe leiden unter ständiger Unterfinanzierung und haben die meisten Schwierigkeiten mit der Gestaltung angemessener Futterrationen und der Betriebsführung. Andererseits erzielt ein sehr großer Betrieb mit 73 Kühen weniger Rentabilität als mittlere Betriebe mit 15 bis 29 Kühen wenn die Rentabilität am Gewinn pro Kuh gemessen wird. Daher scheint es, dass eine Vergrößerung der Herde nur für solche Betriebe vorteilhaft sein kann, die bereits ein hohes Produktivitätsniveau erreicht haben, soweit deren Leiter die höheren Anforderungen an die Betriebsführung erfüllen kann. Basierend auf den Ergebnissen der Untersuchung wurden die folgenden Schwerpunktbereiche für einzelbetriebliche Beratungsarbeit festgestellt: Verbesserungszüchtung von Milchkühen, Verbesserung der Fütterung, Optimierung der Stallbedingungen, Einführung der betriebseigenen Milchverarbeitung und Verbesserung der Betriebsführung. Darüber hinaus sollte der Beratungsdienst die Nutzung der künstlichen Besamung fördern, den Zugang von Bauern zu Krediten verbessern, die Versorgung mit Betriebsmitteln verbessern, und die Zusammenarbeit zwischen Landwirten und Forschern fördern. Ein wichtiges Ziel der Beratungsarbeit ist der Aufbau von Selbsthilfeorganisationen in Form von Erzeugergemeinschaften. Es wurde angenommen dass eine Gemeinschaftsstruktur am effektivsten zustande kommt, wenn sie ein klares Ziel verfolgt und deren Mitglieder vergleichbare Rentabilität und Liquidität erwirtschaften. Aufgrund ihrer engen Kooperation mit der Beratung und ihrer klaren Ziele ist die vorgeschlagene Form der Erzeugergemeinschaft z.T. mit den Beratungsringen in Deutschland vergleichbar. 198
Das wesentliche Problem bei der Einführung von Beratung für die Milchviehbetriebe im Untersuchungsgebiet ist die Finanzierung. Wenn auch die Milchviehhaltung rentabel ist, reicht die Nutzerfinanzierung bei einem durchschnittlichen Cash Flow von $2,613 pro Betrieb nicht aus, um die Kosten der Beratungsarbeit zu decken. Daher ist die Beratungsarbeit nur durchführbar wenn sie alternative Einnahmen finanziert wird. Ein Kreditschema, bei dem die Bauern ihre Kühe an den Beratungsdienst verkaufen und zurückleasen können sowie Futtermittelhandel wurden als mögliche Geschäfte angenommen, die gleichzeitig dem Bedarf der Bauern entsprechen und zur Finanzierung der Beratungsarbeit beitragen. Über den Futtermittelhandel kann der Zahlungsfluss von Futtermittelhändlern zur Beratungsorganisation umgeleitet werden. Es hat sich jedoch bei der Investitionsrechnung herausgestellt, dass auch die Einnahmen dieser Geschäfte noch zu gering sind um die Beratungsarbeit zu finanzieren. Deshalb wird eine Subvention benötigt, um den geplanten Beratungsdienst zustande zu bringen. Ein wesentlicher Grund für die geringe Liquidität der beiden oben genannten Geschäfte ist die geringe Anzahl der potentiellen Klienten. Eine Möglichkeit, eine größere Klientel zu gewinnen wäre, statt eines spezialisierten Beratungsdienstes für Milchviehbetriebe einen allgemeinen Beratungsdienst für Tierproduktion aufzubauen. Die in dieser Arbeit vorgestellte Vision beinhaltet eine parallele Entwicklung der Beratungsarbeit und von Erzeugergemeinschaften. Die Entwicklung des Milchsektors wird in Zukunft zu einem stärkeren Bedarf an Beratung und Forschung führen. Ein stärkerer Wettbewerb zwischen den Betrieben wird wahrscheinlich zu einer Zunahme der Bedeutung des Wissens führen. Wenn der Zeitpunkt erreicht wird, an dem Beratungsarbeit für Milchviehbetriebe ohne Subvention möglich ist, kann sich der Beratungsdienst ihre sonstigen kommerziellen Dienstleistungen aufgeben und sich auf die eigentliche Beratungsarbeit konzentrieren. Die beratungsfremden Funktionen der Beratungsorganisation, aber auch die Beratungsaufgaben sollen später schrittweise von den Erzeugergemeinschaften übernommen werden.
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The books of this series deal with empirical research, problem oriented and decision and action oriented investigations, and not primarily with building theories or even basic research. The orientation is critically optimistic, based on the confidence into human strength, into positive development of personalities, groups, societies and cultures. Change processes are analysed, aiming at showing up, how to help and to support effectively. The studies shall document examples of successful transformations, adaptations and innovations, without being trapped by blind progress enthusiasm. The readers shall experience Social Science as living, understandable and orientating, as offering sense in an increasingly intransparent and crazy appearing world. While the themes can be as manifold as life, and do not exclude any country or problem of this earth, the different authors have in common to strive for the quality criteria of the editors, like interdisciplinarity, methods pluralism, pragmatism, ethics and aesthetics in the design and presentation of this research.
List of published titles so far: Band 1, Jochen Currle Landwirte und Bodenabtrag Empirische Analyse der bäuerlichen Wahrnehmung von Bodenerosion und Erosionsschutzverfahren in drei Gemeinden des Kraichgaus 1994, 244 S., ISBN 3-8236-1239-5, EUR 25.60 Explorative Studie zur bäuerlichen Wahrnehmung des Umweltproblems Bodenerosion, das mit zunehmender Intensivierung und Mechanisierung der Landwirtschaft immer mehr an Brisanz gewinnt. Band 2, Petra Feil Endogene Neuerungsverbreitung als Teil des sozio-kulturellen Wandels Eine Analyse der kleinbäuerlichen Lebenswelt in zwei Dörfern im Südbenin 1994, 280 S., ISBN 3-8236-1240-9, EUR 25.60 Eine kleinbäuerliche Lebenswelt wird analysiert, insbesondere die Wechselwirkungen zwischen kulturellen, sozialen, wirtschaftlichen und technischen Veränderungen. Band 3, Ulrike Eigner Messung der Lebenshaltung auf kommunaler Ebene Konzeption und empirische Überprüfung eines Bewertungsinstruments im andinen Hochland Perus 1995, 250 S., ISBN 3-8236-1244-1, EUR 25.60 Entwurf eines Bewertungsinstrumentes zur Messung des Lebensniveaus auf kommunaler Ebene anhand des KomponentenIndikatoren-Ansatzes. Band 4, Thomas Becker Bauern - Schnecken - Enten Die Reaktion der Bauern eines philippinischen Dorfes auf die Einführung der Schadschnecke Golden Apple Snail 1995, 93 S., ISBN 3-8236-1247-6, EUR 15.30 Explorative Studie am Beispiel eines Dorfes in Zentralluzon, die die Situation der Bauern, deren Wissen und Erfahrungen und deren Lösungsansätze für das Problem beschreibt, daß sich die auf den Philippinen eingeführte Schnecke innerhalb von kürzester Zeit zu einem gravierenden Reisschädling entwickelt hatte.
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Band 5, Klaus Hummler Striga-Beratung Entwicklung eines visuell unterstützten Beratungsprogrammes zur Kontrolle von Striga hermonthica in der Nordregion Ghanas 1996, 213S., 4 Farbseiten, ISBN 3-8236-1255-7, EUR 25.60 Thema ist die partizipative Erarbeitung eines visuell unterstützten Beratungsprogrammes, das afrikanischen Bauern und Beratern Problemlösungen bei der Bekämpfung des parasitischen Unkrauts Striga hermonthica bietet.
Band 6, Eberhard Bauer Beratung in der Entwicklungszusammenarbeit Empirische Analyse erfolgversprechender Vorgehensweisen und wiederkehrender Probleme zur Begründung von Verbesserungsvorschlägen 1995, 246 S., ISBN 3-8236-1253-0, EUR 25.60 Zunächst werden erfolgversprechende Vorgehensweisen in der Beratungsarbeit der deutschen Technischen Zusammenarbeit beschrieben; anschließend wird die Eignung partnerzentrierter Ansätze für die Praxis der Zusammenarbeit überprüft. Band 7, Barbara Mehlig Probleme der Beratung existenzgefährdeter Gartenbaubetriebe Erfahrungen verschiedener Beratungsinstitutionen 1995, 88 S., ISBN 3-8236-1254-9, EUR 15.30 Bei Unternehmenskrisen im Gartenbau haben Beratungskräfte verschiedener Institutionen unterschiedliche Ansätze im Vorgehen bei der Beratung. Eine Zusammenarbeit der Institutionen ist im Interesse der Betroffenenen. Band 8, Klaus-Dirk Seibold „Agrimanager“ in Frankreich Untersuchungen zum Informationsverhalten von landwirtschaftlichen Unternehmern und zum landwirtschaftlichen Wissenssystem im Département Cher 1996, 288 S., ISBN 3-8236-1256-5, EUR 25.60 Die Arbeit liefert wichtige neue Erkenntnisse für die weitere Forschung in den Bereichen Unternehmensführung und Wissenssystemforschung und kommt zu plausiblen und relevanten Schlußfolgerungen für die landwirtschaftliche Praxis. Band 9, Wolfgang Bokelmann et al. Landwirtschaftliche Beratung im Land Brandenburg Eine Evaluierung erster Erfahrungen 1996, 81 S., ISBN 3-8236-1258-1, EUR 15.30 Ohne konkrete Vorbilder aus den alten Bundesländern wird in Brandenburg ein Beratungsansatz durch private Träger mit öffentlichen Zuschüssen praktiziert, eine Vorgehensweise, die sich, insgesamt gesehen, bewährt hat. Dieses Beratungssystem wurde 1994 von einem interdisziplinären Forschungsteam wissenschaftlich evaluiert. Band 10, Petra Haug Kommunikationssituation und Gesprächsbedarf von Bäuerinnen, die pflegebedürftige Angehörige versorgen Eine explorative Studie bei vier Betroffenen im Großraum Stuttgart 1996, 118 S., ISBN 3-8236-1262-X, EUR 15.30 Ein Kernproblem für Bäuerinnen, die pflegebedürftige Angehörige zuhause versorgen, ist, daß sie einmal frei darüber sprechen können. Authentische Gesprächsausschnitte werden scharfsichtig interpretiert. Aus der Problemanalyse läßt sich eine Fülle von Maßnahmen zur Verbesserung der Situation der Betroffenenen ableiten. Band 11, Niko von der Lühe Landwirtschaftliche Beratung oder Tauschhandel? Zur Funktionsweise des T&V-Beratungssystems in den CARDER Atlantique und Borgou, Republik Benin 1997, 285 S., ISBN 3-8236-1264-6, EUR 25.60 In diesem Band wird die Funktionsweise von zwei nach dem Training & Visit-System organisierten landwirtschaftlichen Beratungsdiensten im Benin analysiert. Der Fokus der Analyse richtet sich auf die Interaktion zwischen Feldberatern und Bauern, denn hier wird nach Ansicht des Autors über Erfolg und Mißerfolg von Beratung entschieden. Daher wird auch klar, warum T&V als Beratungsansatz versagt.
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Band 12, Horst Luley Information, Beratung und fachliche Weiterbildung in Zusammenschlüssen ökologisch wirtschaftender Erzeuger 1996, 354 S., ISBN 3-8236-1261-1, EUR 25.60 In der Untersuchung wird für die Zeit zwischen 1988 und 1995 umfassend dargestellt, wie die in der Arbeitsgemeinschaft Ökologischer Landbau (AGÖL) zusammengeschlossenen Anbauverbände und die Öko-Beratungsringe ihre Mitglieder informieren, beraten und fachlich weiterbilden.
Band 13, Bettina Dengler Deutsch-italienische Ehepaare Analyse ausgewählter Fälle zum Umgang mit kulturellen Unterschieden und zur Migrationssituation 1997, 125 S., ISBN 3-8236-1265-4, EUR 15.30 Wie Betroffene mit dem Problem interkulturelle Kommunikation und Migration umgehen, wird am Beispiel von sechs deutsch-italienischen Ehepaaren aufgezeigt. Die daraus resultierenden Konflikte und deren Bewältigungsmuster werden in Form von Paarinterviews authentisch dargestellt und sowohl fachkundig als auch einfühlsam interpretiert. Band 14, Ulrike Kallhardt Anlageberatung in Banken Ein Versuch zur Bewertung der Beratungsqualität anhand von Testberatungsgesprächen 1997, 121 S., ISBN 3-8236-1275-1, EUR 15.30 Hier wird der Versuch unternommen, anhand von Testberatungsgesprächen, welche die Autorin selbst durchführte, die Qualität von Anlageberatung zu bewerten. Da große Mängel in der Beratungsqualität festgestellt wurden, werden Lösungsansätze beschrieben, die zu einer Verbesserung der Beratungsqualität führen könnten. Band 15, Dorothee Dersch Transformation und Autonomie im Leben tunesischer Bäuerinnen Eine struktural-hermeneutische Analyse eines Beratungsprojekts 1997, 354 S., ISBN 3-8236-1277-8, EUR 25.60 Am Beispiel eines Beratungsprojekts der GTZ in einem neugeschaffenen Bewässerungsgebiet in Nordtunesien wird der schwierige Weg von Bäuerinnen in die Moderne nachgezeichnet und Entscheidungsmuster und Handlungsorientierungen werden nach der Methode der strukturalen Hermeneutik fallrekonstruktiv analysiert. Band 16, Thomas Aenis Das Wissenssystem der Schafhaltung in Brandenburg Eine Analyse von Kommunikationsbeziehungen der beteiligten Institutionen und Organisationen aus Produktion, Forschung und Beratung 1997, 105 S., ISBN 3-8236-1278-6, EUR 15.30 In dieser Studie werden die Kommunikationsbeziehungen im Wissenssystem schafhaltender Betriebe in Brandenburg analysiert. Band 17, Wilhelm Ehret Reorientation of Extension A case study of participatory action research with a Non-Government Organization in Northern Nigeria 1997, 275 S., ISBN 3-8236-1279-4, EUR 25.60 A reorientation process of five years is documented which the author accompanied as a „participative action researcher“ in Nigeria. First the methodology of extension was changed, followed by a reorientation of the entire organization including the integration of sectors such as agriculture, health, rural water supply and sanitation. Band 18, Lorenza Schlotmann Privatisierung von Beratungsdiensten Drei Fallstudien zur landwirtschaftlichen Beratung in Ecuador 1997, 134 S., ISBN 3-8236-1280-8, EUR 15.30 Der Privatisierungsprozeß landwirtschaftlicher Beratungsdienste des Südens wird anhand von drei Fallstudien aus Ecuador problematisiert. Dabei geht es insbesondere um die Frage, wie eine größtmögliche Orientierung an den unterschiedlichen Zielgruppen und deren maximale Beteiligung am Beratungsprozeß erreicht werden kann.
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Band 19, Hong Yu Chinas bäuerliches Wissenssystem im Wandel Fallstudie in vier Dörfern der Hebei-Provinz 1997, 185 S., ISBN 3-8236-1284-0, EUR 25.60 Erkenntnisse über die veränderten Verhaltensweisen und Handlungsmöglichkeiten der Zielgruppe werden auf die Betrachtung des „bäuerlichen Wissenssystems im Wandel“ verengt. Die vier explorativen Fallstudien in vier unterschiedlichen Dörfern der Provinz Hebei in China zeigen, daß Entwicklungsinitiativen, sowohl im landwirtschaftlichen als auch im außerlandwirtschaftlichen Bereich ihren Anstoß und ihre Energie im wesentlichen von der Basis her, also durch die ländliche Bevölkerung selbst, erhalten.
Band 20, Ulrich Klischat Beratung von Agrargenossenschaften in den neuen Bundesländern Eine qualitative Studie über Beratungsbedürfnisse und Methoden aus der Sicht von Beratern und Beraterinnen 1998, 202 S., ISBN 3-8236-1285-9, EUR 25.60 Der Schwerpunkt liegt in der Beschreibung von Beratungserfahrungen, wie sie Berater bei der Zusammenarbeit mit Menschen in Agrargenossenschaften gesammelt haben. Dazu wurden in den fünf Bundesländern Ostdeutschlands 35 Berater mittels qualitativer Interviews jeweils zur Zusammenarbeit mit einer konkreten Agrargenossenschaft befragt. Band 21, Sabine Gündel Participatory innovation development and diffusion Adoption and adaptation of introduced legumes in the traditional slash-and-burn peasant farming system in Yucatan, Mexico 1998, 133 S., ISBN 3-8236-1292-1, EUR 15.30 An innovative legume-based green manure system has been sucessfully introduced in several regions of Central America. However this innovation has only been adopted by very few rural Mayan communities in Yucatan although they are facing a severe socio-economical and ecological crisis. Band 22, Michael Waithaka Integration of a user perspective in research priority setting The case of dairy technology in Meru, Kenya 1998, 153 S., ISBN 3-8236-1295-6, EUR 25.60 In this book the author recollects the problem of priority setting for dairy research at programme level at the Kenya Agricultural Research Institute (KARI). Band 23, Reto Ingold Zur Wirksamkeit umweltbezogener Beratung Drei Fallstudien aus der kantonalen landwirtschaftlichen Beratung in der Schweiz 1998, 217 S., ISBN 3-8236-1297-2, EUR 25.60 Erstmals wird in der Schweiz die Rolle der kantonalen landwirtschaftlichen Beratungsdienste im Bereich der Umweltberatung wissenschaftlich beleuchtet. Am Beispiel von drei Fallstudien werden die Grundlagen für eine Qualitätssicherung in der umweltbezogenen Beratung erarbeitet. Band 24, Mohan Dhamotharan Tradition und Umbruch eines lokalen Wissenssytems Fallstudie zur Struktur und sozialen Organisation lokalen Wissens am Beispiel des Niembaumes in Tamil Nadu, Indien 1999, 99 S., Tabellen und Grafiken, ISBN 3.8236-1299-9, EUR 15.30 Die Entwicklungszusammenarbeit entdeckt zunehmend das lokale Wissen als Quelle für eine nachhaltige Entwicklung. Doch wird dabei Wissen vorwiegend als etwas wahrgenommen, das gesammelt und systematisiert wird. Die vorliegende Arbeit stellt anhand einer empirischen Fallstudie am Beispiel des Niembaums in Indien dar, daß eine solche Sichtweise wesentliche Aspekte des lokalen Wissenssystems übersieht, das aus dem dynamischen Wechselspiel von kognitiven Gebilden und einer eng damit vebundenen sozialen Organisation besteht. Band 25, Alexander Gerber Umweltgerechte Landbewirtschaftung in der landwirtschaftlichen Berufsbildung Situationsanalyse und Perspektivenentwicklung am Beispiel Baden-Württembergs 1999, 386 S., ISBN 3-8236-1310-3, EUR 25.60 Da die landwirtschaftliche Berufsbildung für die Umsetzung einer umweltgerechten Landbewirtschaftung eine zentrale Rolle spielt, wurde von der Agrar- und Bildungspolitik das umweltbezogene Bildungsangebot reformiert und erweitert. Das vorliegende Buch beschreibt Art, Umfang, Qualität und Erfolg dieser Maßnahmen.
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Band 26, Nicola Supke Planen, handeln, bewerten: Lernen durch Leittexte Eine explorative Studie zu ihrem Einsatz in der landwirtschaftlichen Ausbildung in Baden-Württemberg und Niedersachsen 1999, 126 S., ISBN 3-8236-1311-1, EUR 15.30 Die Ausbildung in der deutschen Landwirtschaft kann den heutigen Anforderungen an ein modernes Bildungssystem nur mit einer Veränderung der Methoden anstelle ständiger Ausweitung der Bildungsinhalte standhalten. Die Einführung der in den siebziger Jahren für die Automobilindustrie entwickelten Leittextmethode in die betriebliche landwirtschaftliche Ausbildung ist auf diesem Weg eine vielversprechende Neuerung geworden. Der vorliegende Beitrag untersucht fördernde und hemmende Faktoren in Bezug auf Einführungsmaßnahmen und praktische Anwendung, sowie den Erwerb von Schlüsselqualifikationen und die Qualität der angewandten Leittexte.
Band 27, Patrick A. Fischer Action Research in Extension Material and Message Developement: The Striga Problem of Northern Ghana revisited 1999, 253 S., ISBN 3-8236-1312-X, EUR 25.60 Documentation of an action research approach to the development of extension messages and material in regard to the Striga problem of Northern Ghana. The book provides methodological tools on how to tackle complex issues with a clientele mostly embedded in their oral culture. The result of the action research is approved by both extension workers and farmers. Band 28, Eva Sodeik Ungleiche Partner Handlungsoptionen von lokalen Selbsthilfeorganisationen und Forstprojekten im Norden Bénins 1999, 316 S., ISBN 3-8236-1313-8, EUR 25.60 Die Beteiligung der Bevölkerung an technischer Zusammenarbeit wird als Grundlage erfolgreicher Entwicklung betrachtet. Mit Hilfe des akteursorientierten Paradigmas der «sozialen Schnittstelle» werden zwei Fallstudien herangezogen, um zentrale Elemente der Zusammenarbeit zu bestimmen. Band 29, Jürgen Hagmann Learning Together for Change Facilitating Innovation In Natural Resource Management Through Learning Process Approaches in Rural Livelihoods in Zimbabwe 1999, 330 S., ISBN 3-8236-1314-6, EUR 25.60 Documentation of an intensive joint learning process in research and extension with small farmers for sustainable naturalresource management in Zimbabwe from 1990-1995. Description of the action research programm in concept development and of the operationalisations of the learning process approaches. Band 30, Meike Peschke Aktivieren für den Umweltschutz Aktionsforschung mit sechs Stuttgarter Kirchengemeinden im Projekt „Mitdenken & Handeln – Ökologie in die Kirche“ 1999, 184 S., ISBN 3-8236-1316-2, EUR 25.60 Aus der Analyse des Projektes werden Empfehlungen für kirchliche Ökologie-Projekte und für die die Kommunikation und Arbeitsorganisation in Kirchengemeinden, -Bezirken und der Landeskirche abgeleitet. Band 31, Maria Gerster-Bentaya Biotop oder Psychotop? Untersuchungen zum Konzept des Naturgartens und zu seiner Akzeptanz im Stadtbereich Stuttgart 1999, 266 S., ISBN 3-8236-1319-7, EUR 25.60 Es wird beschrieben, welche Bedeutung Gärten im Laufe der Geschichte hatten, wie sich dieses Bild mit der veränderten Einstellung der Menschen zur Natur wandelte und wie mit zunehmenden Umweltproblemen das Konzept der naturnahen Gartenbewirtschaftung entstand und verbreitet wurde. Faktoren für das Gelingen wie das Scheitern von Verbreitungsprogrammen werden in der empirischen Analyse aufgezeigt. Band 32, Andrea Gruber, Sabine Fersterer Beratungsstrukturen für die biologische Landwirtschaft Österreich im Vergleich mit ausgewählten europäischen Ländern 2000, 136 S., ISBN 3-8236-1321-9, EUR 15.30 Für die Zeit zwischen 1997 und 98 wird die Beratungssituation im österreichischen Biolandbau dargestellt. Gute Lösungsansätze für Problembereiche in Österreich bieten die im Vergleich untersuchten Beratungsleistungen und -methoden und Organisationsmodelle des europäischen Auslandes.
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Band 33, Marianne Kusemann Sozioökonomische Beratung landwirtschaftlicher Familienbetriebe Eine Untersuchung der Situation in Westfalen-Lippe und Brandenburg 2000, 98 S., ISBN 3-8236-1322-7, EUR 15.30 Seit über 30 Jahren gibt es Bemühungen um sozio-ökonomische Beratung in Europa, um die Auswirkungen des Strukturwandels in der Landwirtschaft für die Betroffenen zu lindern. Am Beispiel sehr unterschiedlicher Lösungsansätze in den beiden Bundesländern werden Empfehlungen für die Verbesserung der sozio-ökonomischen Beratung insbesondere in Brandenburg abgeleitet.
Band 34, Stefan Vogel Umweltbewußtsein und Landwirtschaft Theoretische Überlegungen und empirische Befunde 2000, 142 S., ISBN 3-8236-1323-5, EUR 15.30 Ein Modell von Umweltverhalten und -bewußtsein in der Landwirtschaft wird anhand von ca. 2000 Interviews von Bäuerinnen und Bauern aus dem Jahre 1991 geprüft. Die in den empirischen Ergebnissen erkennbaren Muster werden mit sozialwissenschaftlichen Erklärungsansätzen interpretiert. Band 35, Mohamed Salem Saleh Almagdi Sozialer Wandel und Agrarentwicklung im Delta Abyan im Südjemen Eine empirisch-historische Analyse der bäuerlichen Lebenswelt 2000, 217 S., ISBN 3-8236-1324-3, EUR 25.60 Beschreibt den sozialen Wandel und die Agrarentwicklung im Delta Abyan im Laufe der letzten fünfzig Jahre aus der Sicht der Bauern und Delta-Einwohner. Durch die empirisch-historische Analyse der bäuerlichen Lebenswelt wird die gegenwärtige Situation der Bauern im Delta Abyan deutlich, und lassen sich Ansätze der Entwicklungsförderung bestimmen. Band 36, Barbara Adolph People’s Participation in Natural Resource Management Experiences from watershed management projects in India 2000, 253 S., ISBN 3-8236-1331-6, EUR 25.60 During two years of fieldwork, farmers’ perception of project approach and project impact was analysed in a range of watershed management projects, using both qualitative and quantitative methods. In collaboration with both governmental and non-governmental agencies, strategies associated with project success were identified and recommendations for implementing these strategies were elaborated. Band 37, Katrin Haußer Energieberatung durch deutsche Energieversorgungsunternehmen Ein Überblick und eine Fallstudie zur Neckarwerke Stuttgart A.G. (NWS) 2000, 108 S., ISBN 3-8236-1333-2, EUR 15.30 Energieberatung in Deutschland wird charakterisiert, und in einer Fallstudie wird die Qualität der Energieberatung der Neckarwerke exemplarisch durch Klienten beurteilt. Band 38, Volker Hoffmann, Bettina Moritz (Hrsg.) Marktplatz Internet Empirische Studien zu seinen Potentialen und Problemen 2000, 187 S., ISBN 3-8236-1334-0, EUR 25.60 Nach einer problemorientierten Einführung werden drei Fallstudien beschrieben: Gestaltung von Internetseiten, Einkaufen am Beispiel von Büchern, Reisen und Medikamenten und Großhandel mit Zierpflanzen. Band 39, Gitta Röth Lokales Wissen im Beratungskontext Vernetzung von lokalem bäuerlichem Wissen mit dem landwirtschaftlichen Beratungsangebot in der Dominikanischen Republik 2001, 255 S., ISBN 3-8236-1335-9, EUR 25.60 Verschiedene Aspekte des bäuerlichen Wissens zum traditionellen Pflanzenschutz- und Bodenfruchtbarkeitsmanagement werden auf ihre Einbettung in die landwirtschaftliche Beratungsarbeit von NGOs und von staatlichen Institutionen in der Dominikanischen Republik hin untersucht. Band 40, Andreas Kress Die Rahmenbedingungen für partizipative Beratungsprozesse Eine Analyse des Einflusses externer Faktoren auf die nachhaltige Wirkung forstlicher Programme in Bolivien 2001, 227 S., ISBN 3-8236-1345-6, EUR 25.60
Band 41, Patricia Fry Bodenfruchtbarkeit: Bauernsicht und Forscherblick 2001, 180 S., ISBN 3-8236-1346-4, EUR 25.60 Die qualitative Untersuchung zeigt wesentliche Unterschiede auf: Bauern denken an die Wirkung, an den Ertrag und sehen Bodenfruchtbarkeit als nachhaltige Ertragsfähigkeit. Wissenschaftler suchen Ursachen und betrachten Bodenfruchtbarkeit analytisch als Faktorengefüge. Konsequenzen für den amtlichen Bodenschutz werden abgeleitet.
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Diese Arbeit beruht auf Untersuchungen im Arbeitsbereich von forstlichen Beratungsprogrammen in Bolivien. Als Ansatzpunkte zur Erfassung der Veränderungsprozesse dienen dabei die Betrachtung des traditionellen kleinbäuerlichen Partizipationsverhaltens und der historischen Entwicklung der forstlichen Beratung in Bolivien.
Band 42, Kai Stahr Dörfliche Kommunikationsnetzwerke 2001, 187 S., ISBN 3-8236-1348-0, EUR 25.,60 Im Mittelpunkt des Buches steht eine empirische Untersuchung über die Struktur von sozialen Netzwerken in acht Dörfern und deren Abhängigkeit von der lokalen Infrastruktur. Zusätzlich werden eine Reihe Erklärungen über die Wechselwirkungen zwisch der Struktur der Kommunikation in Dörfern, der Infrastruktur und der Ausbildung von Vertrauen durch Kommunikation gegeben. Band 43, Stefan Rist Wenn wir guten Herzens sind, gibt's auch Produktion Entwicklungsverständnis und Lebensgeschichten bolivianischer Amyrabauern: Wege bei der Erneuerung traditioneller Lebensund Produktionsformen und deren Bedeutung für eine Nachhaltige Entwicklung 2001, 335 S., ISBN 3-8236-1338-3, EUR 25.60 Die qualitativ-strukturelle Auswertung von fünf autobiographischen narrativen Interviews mit Aymarabauern aus Bolivien ergab, dass Pachamama ("Weltenmutter") ein zentrales Deutungsmuster ist. Es steht im Zentrum eines seelisch-geistigen Bewusstwerdungsprozesses (Individuation) der sowohl eine persönlich-individuelle, als auch gemeinschaftlich-gesellschaftliche Dimension aufweist. Band 44, Lorenz Bachmann Review of the Agricultural Knowledge System in Fiji Opportunities and Limitations of Participatory Methods and Platforms to Promote Innovation Developement 2001, 209 p., ISBN 3-8236-1350-2, EUR 25.60 The author describes the articulated agricultural knowledge system of the Small Island country Fiji with all its major actors. Local farmers, the agricultural research and extension departments of the Ministry of Agriculture are in the centre of analysis. The study examines the potentials of participatory methods and platforms to improve the process of agricultural innovation development. Band 45, Andrea Knierim Konflikte erkennen und bearbeiten Aktionsorientierte Forschung zwischen Landwirtschaft und Naturschutz in Brandenburg 2001, 170 S., ISBN 3-8236-1352-9, EUR 25.60 Naturschutz und Landwirtschaft beanspruchen oft die gleichen Ressourcen mit unterschiedlichen Zielvorstellungen. So kommt es zu Konflikten über den Schutz oder die Nutzung von Acker- und Grünlandflächen. Am Beispiel eines Großschutzgebietes im Nordwesten Brandenburgs wird in der vorliegenden Arbeit untersucht, wie mit Methoden der kooperativen Konfliktbearbeitung Vertreter des Naturschutzes und Landwirtschaftliche Landnutzer bei der Entwicklung einvernehmlicher Lösungen unterstützt werden können. Band 46, Hubert Hügle Mensch und Pflanze Intuitionen über Wechselwirkungen von menschlichem Bewusstsein und Problemen im Kulturpflanzenbau 2001, 80 S., ISBN 3-8236-1353-7, / EUR 15.40 Wichtige Beiträge zum Thema Kommunikation zwischen Mensch und Pflanze, zu Intuition und zur Erschließung des Unbewussten werden zusammengefasst, und aus dieser Perspektive wird eine Selbsterfahrung des Autors geschildert und interpretiert. Eine Pflanzenenergie wahrzunehmen, intuitiv ein Rezept für die Herstellung einer Pflanzenessenz zu finden, sind Fähigkeiten, die man im herkömmlichen Sinn nicht erlernen kann. Als Funktionen des Unbewussten sind diese schon im Menschen angelegt und müssen nur wieder erschlossen werden. Mit diesem Buch wird beschrieben, wie der Autor versucht, in diese Bereiche vorzudringen und erste Erfahrungen im praktischen Kulturpflanzenanbau zu machen.
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Band 47, Anja Christinck “This seed is like ourselves” A case study from Rajasthan, India, on the social aspects of biodiversity and farmers‘ management of pearl millet seed 2002, 198pp., ISBN 3-8236-1381-2, EUR 25.60 This book is based on fifteen months of intensive field studies carried out in the semi-arid state of Rajasthan, India. This work contributes to the actual debate on the conservation of genetic resources, seed systems and participatory plant breeding, and, more generally, the re-orientation of international agricultural research.
Band 48, Katrin Prager Akzeptanz von Maßnahmen zur Umsetzung einer umweltschonenden Landbewirtschaftung bei Landwirten und Beratern in Brandenburg 2002, 172pp., ISBN 3-8236-1382-0, EUR 25.60 Diese Studie beschäftigt sich mit der Akzeptanz von Maßnahmen, die einen Beitrag zu einer dauerhaft-umweltgerechten Landnutzung leisten sollen. Die Autorin untersucht mit Hilfe qualitativer Methoden die Einstellung von Landwirten und Beratern gegenüber den verschiedenen Maßnahmen sowie den Beratungsansätzen. Band 49, Kirsten Probst Participatory Monitoring and Evaluation: A Promising Concept in Participatory Research? Lessons from two case studies in Honduras 2002, 230pp., ISBN 3-8236-1386-3, EUR 25.60 Based on action research undertaken in two case study projects in Honduras, the book assesses the potential benefits and limitation of using Participatory Monitoring and Evaluation (PM&E) in participatory research and elucidates key conditions for its sucess in its implementation. It contributes to the actual debate on participatory research, and adds new aspects to the age-old topic monitoring and evaluation. Band 50, Petra Jacobi Supporting Urban Agriculture. The Case of Dar es Salaam, Tansania ISBN 3-8236-1387-1, EUR 25.60 (noch nicht erschienen)) Band 51, Angelika Thomas Landwirtschaftliche Bildung und Beratung zum Gewässerschutz in Deutschland Eine Analyse der Erfahrungen in den Bundesländern 2003, 270 pp, ISBN 3-8236-1392-8, EUR 25.60 Das Buch fasst die Erfahrungen, die seit dem Ende der 80er Jahre in der Gewässerschutzberatung, aber auch innerhalb der allgemeinen landwirtschaftlichen Beratung und in der landwirtschaftlichen Aus- und Fortbildung gewonnen wurden, zusammen. Grundlage für die im Buch diskutierten Probleme und Potenziale, durch landwirtschaftliche Bildung und Beratung zur Umsetzung einer gewässerschonenden landwirtschaftlichen Praxis beizutragen, bilden Gespräche mit über 100 Experten aus den verschiedenen Bundesländern. Durch die in Deutschland anstehende Umsetzung der Wasserrahmenrichtlinie erhalten die dargestellten Erfahrungen zum Gewässerschutz in der Landwirtschaft besondere Bedeutung und Aktualität. Band 52, Uta Bracken Wie die Leute so reden Eine Untersuchung von öffentlicher Kommunikation und gesellschaftlichem Wandel bei den Lobi in Bukina Faso. 2003, ISBN 3-8236-1393-6, EUR 25.60 In diesem Buch geht es darum, wie Kommunikation dazu beitragen kann, dass die Ideen und Wahrnehmungen oder Problemlösungen eines Einzelnen in der Öffentlichkeit Verbreitung finden und schließlich die Wahrnehmung und das Handeln einer ganzen Gruppe beeinflussen.
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Band 53, Marion Adams, Brigitte Kaufmann Tierhalter und lokales Wissen Indigene Charakterisierung lokaler Kamelpopulationen und Zuchtmaßnahmen von Nomaden in Nordkenia 2003, ISBN 3-8236-1394-4, 100 pp, 10 Farbseiten, EUR 25.60 In der vorliegenden Studie wurde mit Hilfe einer semistrukturierten Methode das indigene Wissen nomadischer Tierhalter in Nordkenia zur Charakterisierung ihrer Kamel-Lokalrassen, sowie das damit im Zusammenhang stehende nomadische Zuchtkonzept ermittelt. Dabei wurden Merkmale und Merkmalsausprägungen separat berücksichtigt um die von den Tierhaltern verwendeten Unterscheidungskriterien systematisch zu identifizieren.
Band 54, Walter von Danwitz Berufsfeldanalyse: Meister und Techniker im Gartenbau 2003, ISBN 3-8236-1395-2, EUR 25.60 Mit den vorliegenden Ergebnissen einer Berufsfeldanalyse der Absolventen/-innen von Gartenbaufachschulen der Fachschuljahrgänge 1985 bis 2000 erfolgt eine Standortbestimmung der beruflichen Fachschulfortbildung im Gartenbau. Die Untersuchung liefert Ansatzpunkte zur Evaluation des Lehrangebotes sowie für bedarfs- und zukunftsorientierte Reformen der Fachschule. Sie führt damit letztlich zu einer Abstimmung des Weiterbildungsangebotes auf die Anforderungen des Arbeitsmarktes. Band 55, Simone Helmle Identitätsfindung und Wohlbefinden Über die Symbolik der Handlung «Einkaufen im Bioladen» auf der Grundlage lebensgeschichtlicher Erzählungen 2004, ISBN 3-8236-1412-6, EUR 25.60 Im vorliegenden Buch werden lebensgeschichtliche Erzählungen von Menschen, die in einem Bioladen einkaufen, dargestellt und analysiert. Es zeigt sich, dass die Handlung „Einkaufen im Bioladen“ mit Wohlbefinden, aber auch mit Unbehagen verbunden wird. In Bioläden werden eben nicht bloß Produkte verkauft, sondern es werden auch „Geschichten“ erzählt, die von Bäuerlichkeit, Verantwortung, experimentellen Lebensweisen und Pioniererfahrungen handeln. Band 56, Khin Mar Cho Guidelines for the Implementation of a Participatory Extension Approach An Empirical Study of the Training Needs of Agricultural Extension Agents in Myanmar 2004, ISBN 3-8236-1416-9, EUR 25.60 This book attempts to assess the training needs of extension agents for the improvement of the quality of their knowledge and skills as well as their major duties and responsibilities. Other points of assessment were factors affecting the performance of extension activities, the agents’ understanding of the existing extension approaches, their awareness of and attitudes towards the participatory extension approach, and to point out guidelines for the future development of the participatory extension approach in Myanmar.
Band 57, Marianne Kusemann Bewältigung von Existenzgefährdung in landwirtschaftlichen Familienbetrieben 2004, ISBN 3-8236-1421-5, EUR 25.60 Die Existenz landwirtschaftlicher Betriebe wird seit vielen Jahren durch den hohen Anpassungsdruck beeinflusst, dem der Agrarsektor ausgesetzt ist. Auf der Grundlage von Fallbeispielen aus Westfalen-Lippe wird eine Theorie des Bewältigungsprozesses entwickelt. Das Erklärungsmodell beleuchtet häufig auftretende Probleme der Beratung, wie die späte Inanspruchnahme, das folgenlose Aufzeigen von Bewältigungsmöglichkeiten oder das Verlieren von Klienten im laufenden Beratungsprozess.
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Band 58, Guy Nouatin Dynamiques de la Participation au Bénin : Rôles et stratégies de différents groupes d’intérêts des processus de recherche agricole La participation des différents acteurs, organisations et institutions du secteur du développement rural est devenu ces deux dernières décennies l’un des points centraux autour duquel tournent tous les projets et programmes visant l’amélioration des conditions de vie des agriculteurs au sud de Sahara. Ce regain d’intérêt a invévitablement conduit à une inflation du sens et du contenu du concept de « Participation » Celui-ci semble devenir une machine qui tourne à vide, une sorte de slogan ou une formule magique et incantatoire dont l’objectif premier semble être le captage de la rente finacière intenationale. 2004, 250 pp.; ISBN 3-8236-1425-8, EUR 25.60
Band 59, Judith Riehle, Vanessa Tegge Landwirtschaft erleben Wirken Schulbauernhof und Kurzpraktikum gegen Imageverlust? Nur noch 3 Prozent der Bevölkerung sind derzeit in der Landwirtschaft tätig. Dieser Wandel hat zur Folge, dass nur noch wenige Menschen mit der Landwirtschaft in direkten Kontakt kommen. Viele der Informationen über Landwirtschaft werden durch die Medien und über Werbung vermittelt, wodurch häufig ein verzerrtes, romantisiertes oder ein absichtlich negatives Bild entsteht. Ein richtiges Verstehen der landwirtschaftlichen Zusammenhänge ist jedoch nur durch eigenes Erleben möglich. Nur wer die Leistungen eines Landwirtes kennt und anerkennt, wird die dort produzierten Nahrungsmittel wertschätzen können. Zwei Projekte, die sich insbesondere an Kinder und Jugendliche wenden, werden in diesem Buch vorgestellt. 2004, 142 pp.; ISBN 3-8236-1432-0, EUR 25.60 Band 60, Ulrich Schmidt Finanzierung privater landwirtschaftlicher Beratung in Transformationsländern Untersuchungen zur Wirtschaftlichkeit von Beratung am Beispiel der Erzeugergemeinschaft „Federatia Agriculturilor de Munte Dorna“ in Rumänien In diesem Buch wird die Wirtschaftlichkeit von Beratungsinitiativen innerhalb einer privaten Bauernorganisation, die als Projekt der deutschen Technischen Zusammenarbeit von 1994 bis 1999 in den Nordkarpaten Rumäniens unterstützt wurde, über einen Zeitraum von drei Jahren untersucht. Viele Einzelbeispiele werden zu typischen Finanzierungsverläufen zusammengefasst und es wird untersucht, welche Art von Beratungsleistungen unter den ungünstigen Rahmenbedingungen finanziert werden können, und wo die Grenzen dafür erreicht werden. Das Buch wendet sich an Planer und Verantwortliche in der Durchführung von Projekten, die sich mit Fragen zur Finanzierung von Beratungsleistungen durch bäuerliche Selbsthilfeorganisationen befassen. 2005, 152 pp.; ISBN 3-8236-1441-X, EUR 25.60 Band 61, Thomas Aenis PROZESS – ORGANISATION – TEAMS Gruppenkommunikation und dezentrale Steuerung anwendungsorientierter Forschung In dieser Arbeit wird ein praxisgetestetes Modell zur Steuerung anwendungsorientierter Forschung entwickelt, das Managern zukünftiger Projekte als Orientierungsrahmen dienen kann. Dafür werden in einem iterativen Ansatz der „Aktionsforschung zu Metathemen“ ein theoretisches Konzept zur dezentralen Steuerung mittels Gruppenkommunikation erarbeitet und ein konkreter Fall, das Verbundforschungsprojekt GRANO, untersucht. Drei zu steuernde Kommunikationsbereiche werden identifiziert: der Forschungsprozess, die Organisation und die Teams. 2005, XII + 246 pp.; ISBN 3-8236-1442-8, EUR 25.60 Band 62, Iris Lehmann Wissen und Wissensvermittlung im ökologischen Landbau in Baden-Württemberg in Geschichte und Gegenwart Die Ressource Wissen hat in der ökologischen Landwirtschaft einen besonders hohen Stellenwert. In den letzten Jahren wurde dieses Wissen wesentlich vermehrt. Doch kommen die neuen Erkenntnisse bei denen, die sie bräuchten auch an? Eine historische Untersuchung zur Entstehung von landwirtschaftlichem Fachwissen und der Wissensvermittlung im Agrarbereich stellt zunächst die gewachsenen Strukturen und relevanten Prozesse dar. Davon ausgehend, wurde der Fragestellung im Rahmen einer qualitativen Befragung von Öko-Landwirten aus Baden-Württemberg nachgegangen. Eine Analyse der Mängel des bestehenden Systems und Überlegungen zur Verbesserung des Wissenstransfers schließen dieses Buch ab. 2005, X + 232 pp.; ISBN 3-8236-1443-6, EUR 25.60
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Band 63, Christian Hill, Beate Arman Ausbildung im Ökologischen Landbau Politisches Ziel der Bundesregierung ist es, den ökologischen Landbau als umweltgerechtes Bewirtschaftungssystem zu fördern. Zur Ausbreitung und erfolgreichen Anwendung des ökologischen Landbaus in der Praxis ist es wichtig, entsprechendes Wissen in der landwirtschaftlichen Berufsbildung zu vermitteln. Um die Ausbildungssituation in Deutschland zu erfassen, wurden bundesweit Interviews an den zuständigen Landesministerien, BerufsFach- und Hochschulen sowie den freien Berufsbildungseinrichtungen des ökologischen Landbaus durchgeführt und Lehrpläne analysiert. 2005, XVIII + 262 pp.; ISBN 3-8236-1444-4, EUR 25.60
Band 64, Heribert Schmitz Partizipation und Partnerschaft Bauern, Forscher und Berater in Brasilien Spannungen in der Zusammenarbeit zwischen Forschung, Beratung und Bauernorganisationen können die Entwicklung nachhaltiger Formen der Landwirtschaft und des Ressourcenmanagements empfindlich behindern. Der Autor beschreibt anhand zweier Fallstudien im brasilianischen Amazonasgebiet die Konflikte, Machtbeziehungen sowie die Organisationsdynamik der beteiligten Akteure und diskutiert zentrale Elemente partizipativer Forschung und Beratung: Identifizierung des Bedarfs, Verhandlung, Vertrauen und Einfluß persönlicher Faktoren, wie Einstellung, Motivation und Fähigkeit der Forscher und Berater. 2005, XX + 312 pp.; ISBN 3-8236-1448-7, EUR 25.60 Band 65, Valerie Diallo Mensch und Natur in Mauretanien Zum Verhältnis ehemaliger Nomaden zur Natur und deren Schutz Da die mauretanische Gesellschaft wegen der Sesshaftwerdung seit den schweren Dürreperioden der 70er und 80er Jahren große Veränderungen durchlebte, sind an sie ganz neue Anforderungen gestellt, auch der Natur gegenüber. Für die Erarbeitung einer Kampagne zum Schutz der Artenvielfalt stellten sich verschiedene Fragen nach dem Naturverhältnis der Zielgruppe. Um der Komplexität des Themas gerecht zu werden, wurden die Gebiete Politik, Schulsystem und Islam untersucht. Beobachtungen durch die Projekttätigkeit und speziell während der Biodiversitätskampagne ergänzten die Datenerhebung. 2005, XVIII + 240 pp.; ISBN 3-8236-1452-5, EUR 25.60 Band 66, Ismail Daiq The Local Knowledge System for Plant Protection and Soil Conservation in Rain-Fed Agriculture in the West Bank, Palestine Agriculture in the West Bank, Palestine lost very much of its former importance and is endangered. Land and water resources are permanently menaced by confiscation through the Israeli Authorities. And young people look for better education and employment outside agriculture. With this development the respective local knowledge, especially about rain-fed agriculture is endangered as well. Quite a reason to assess and to document it, especially because rain-fed agriculture is the most sustainable option for the future, in an increasing struggle about water resources in the region. 2005, XVIII + 190 pp.; ISBN 3-8236-1454-1, EUR 25.60 Band 67, Stefan Canz Linking Small-Scale Farmers to Markets. A Multi-level Analysis with Special References to Malawi, Kenya and South Africa. The international development targets for poverty alleviation have shifted attention to specific linkages between trade liberalisation and poverty with the growing importance of the WTO. The linkages between trade and poverty are generally interpreted in two perspectives. Mainstream economists take an aggregate macro-economic approach and are generally positive about the impact on trade liberalisation on poverty. On the other hand, a micro-level perspective, focussing on a wider socioeconomic perspective on a livelihood level displays the alternative perspective. The two perspectives occupy different “domains” and are not easily integrated. This study aims to confront these two approaches and relates the findings to the general discussion regarding appropriate development strategies of the small-scale farming sector in developing countries. 2005, XVI + 230 pp.; ISBN 3-8236-1468-1, EUR 25.60
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Band 68, Bettina Dengler Approaching Vulnerability Rural Livelihoods in the West Bank, Palestine While Palestine and respective pictures of violence are almost daily on the agenda of news magazines, this book approaches the West Bank, the people and their realities from an illuminating and different perspective. Departing from three rural villages in the West Bank, the priorities, resources and strategies of households and individuals are profoundly described and analysed. 2005, XIV + 246 pp.; ISBN 3-8236-1475-4, EUR 25.60
Band 69, Halle Ekane Ignatius The Rationality of African Cultural Dynamism A Case Study in Bakossiland, South-West Province of Cameroon To change the culture of a people is not an easy undertaking. But changes and adaptations are necessary to ameliorate the welfare and wellbeing of the people in a changing world. This study about institutions in Africa provides necessary insights to discuss appropriate changes. 2005, XVIII + 258 pp.; ISBN 3-8236-1474-6, EUR 25.60 Band 70, Jutta Werner Nomades entre marginalisation, entreprenariat et conflits Stratégies des éleveurs mobiles du sud du Maroc face aux bouleversements du contexte pastoral et aux impératifs d’un développement durable Ce livre met en lumière le comportement économique des ménages nomades à travers leurs stratégies personnelles. Il se base sur des études de cas des nomades marocains. En reflétant le contexte et les conditions socio-économiques complexes de la pratique pasto-rale ce livre comble une lacune scientifique en adaptant des approches méthodologiques existantes aux spécificités de l’élevage mobile. 2006, XVI + 224 pp.; ISBN 3-8236-1477-0, EUR 25.60 Band 71, Carmen Kuczera Der Einfluss des sozialen Umfeldes auf betriebliche Entscheidungen von Landwirten. Agrarpolitische Neuerungen stellen Landwirte immer wieder vor geänderte Situationen, die Betriebsanpassungen verlangen. Solche betrieblichen Entscheidungen waren bereits häufig Gegenstand wissenschaftlicher Untersuchungen, jedoch meist aus ökonomischer Perspektive. Im Kern dieser empirischen Studie steht dagegen das soziale Umfeld der Landwirte als Entscheidungsfaktor, der mittels verschiedener methodischer Ansätze umfassend untersucht wird. Das Buch geht einerseits der Frage nach, auf welche Weise das soziale Umfeld der Landwirte Einfluss auf ihre individuellen Entscheidungen nimmt. Andererseits werden soziale Prozesse und Strukturen identifiziert, die die Einflussnahme des sozialen Umfelds erleichtern bzw. erschweren. 2006, XII + 198 pp.; ISBN 3-8236-1481-9, EUR 25.60 Band 72, Teklu Tesfaye Toli Coffee Forest Conservation: Local-level Institutions Influencing the Conservation and Use of Coffee Forests in Southwest Ethiopia In this book, Teklu Tesfaye explores local-level institutions that influence the conservation and use (management) of coffee forests in Southwest Ethiopia. He argues that a number of interacting local-level institutions, both formal and informal, influence the conservation and use (management) of coffee forests. Formal institutions were found to have been acting in a unilateral mechanism through top-down and narrow technocratic processes. They offer little chance, if any, for the participation of the ultimate resource users and thus failed to respond to their felt needs. They therefore were not in a position to safeguard coffee forests from the rampant deforestation... 2006, XVI + 188 pp.; ISBN 3-8236-1485-1; 978-3-8236-1485-2, EUR 25.60 Band 73, Rebecca Kemunto Raini IPM information network analysis Case study on information flow in integrated tomato pest management in Kenya This book addresses network mechanisms and the subsequent role they play in promoting or impeding information flow among the actors involved in tomato integrated pest management (IPM) in Kenya. Limited coordination between farm and non-farm actors in Kenya has contributed to poor IPM information flow and accessibility. Using social network analysis methods the existing emergent interaction structures underlying the organisations are revealed... 2006, XVI + 110 pp.; ISBN 3-8236-1486-X; 978-3-8236-1486-9, EUR 25.60
MARGRAF PUBLISHERS
Band 74, Mamusha Lemma The Agricultural Knowledge System in Tigray, Ethiopia Recent history and actual effectiveness The Agricultural Knowledge System (AKS) in Ethiopia is undergoing a significant transformation process as the demands and challenges facing it grow. In this book, the author analyses the history, current status and future direction of the AKS in Ethiopia with a particular reference to the Tigray region, focusing on the overall setting, the linkages between the different actors, and its recent developments. 2007, XII + 164 pp.; ISBN 978-3-8236-1496-8, EUR 25.60
Band 75, Prager Katrin Communication Processes in Agri-Environmental Policy Development and Decision Making A Case Study in Sachsen-Anhalt, Germany Communication about agri-environmental programmes encompasses participation, feedback and decision-making processes. As voluntary, incentive-based policies they rely on the acceptance of farmers and other stakeholders in order to achieve positive effects. Consequently, stakeholder preferences and needs must be fed back into the programme development phase as early as possible. Acknowledging bureaucratic constraints, the author proposes a participatory approach that contributes to the improvement of acceptance and legitimacy of agri-environmental programmes. Based on action research experiences in Sachsen-Anhalt (Germany), benefits and shortcomings of the approach are discussed.. 2007, XII + 178 pp.; ISBN 978-3-8236-1500-2, EUR 25.60 Band 76, Helmle, Artmann, Burkart Herausforderung Vogelgrippe Ergebnisse einer Befragung von Bürgern und Experten in Baden-Württemberg und Bayern Alarm, Alarm – so hieß es, als im Februar 2006 die ersten infizierten und verendeten Tiere auf der Insel Rügen gefunden wurden. Aviäre Influenza, so die Diagnose. Bedrohung erleben wir heute überwiegend durch die Berichterstattung der Massenmedien. Wie aber wirkten die Berichte auf das Gemüt der Bürger? Wie schätzten Bürgerinnen und Bürger das Handeln der Politiker und Behörden ein? Wie verunsichert fühlen sich die Bürgerinnen und Bürger in ihrem Alltag, etwa beim Einkauf von Geflügelprodukten oder im Umgang mit Haustieren? Wird die Gefahr durch übermäßige Berichterstattung eher verdrängt als realistisch wahrgenommen? Das Buch bemüht sich um Antworten zu diesen Fragen. 2007, X + 68 pp.; ISBN 978-3-8236-1498-2, EUR 25.60 Band 77, Rieken, Henrike Beratung im ökologischen Landbau Polens Das Buch gibt einen Überblick über den Stand der Öko-Beratung in Polen und zeigt Stärken und Schwachstellen auf. Im Fokus der empirischen Untersuchung stehen dabei die Meinungen und Einschätzungen der Öko-Berater und der Öko-Landwirte. Zentrale Fragen waren: Wie ist die Beratung organisiert, welche Methoden und Ansätze werden verfolgt und welche Themen stehen auf der Agenda ganz oben? Empfinden die ÖkoLandwirte das Angebot als zufriedenstellend oder gibt es noch Defizite? 2007, X + 106 pp.; ISBN 978-3-8236-1508-8, EUR 25.60 Band 78, Erdenebolor, Baast Improving Dairy Farming - A situation analysis of the dairy farming sector in Ulaanbaatar/Mongolia and development of strategies for extension work This book reviews the development of dairy farming in Ulaanbaatar, and analyses the current conditions in the dairy sector and the business environment of dairy farms. A sample analysis reveals the strengths and weaknesses in the dairy management and the economic performance of the farms. The knowledge of the situation and of farmer’s problems is used for defining the role and functions of dairy extension as well as elaborating extension contents and methods. 2007, XVI + 208 pp.; ISBN 978-3-8236-1510-1, EUR 25.60
MARGRAF PUBLISHERS
Band 79, Tutkun, Aysel Das Umstellungsverhalten auf BIO, BTS und RAUS, sowie die Bedeutung des Kommunikationsprozesses für eine nachhaltige Landwirtschaft. Die Initiierung eines Kommunikationsprozesses und seine weitere Gestaltung, die zu einem nachhaltigen Agrarleitbild führen sollen, werden als Schwerpunkt dieser Arbeit im qualitativen Sinn bearbeitet. Insbesondere das Fehlen eines allgemeingültigen Verständnisses darüber, was „nachhaltige Landwirtschaft“ bedeuten soll und wie sie erreicht werden kann, machen die Fokussierung auf den Kommunikationsprozess erforderlich. Am Beispiel der Obwaldner Landwirtschaft wird mit akteursorientierten Methoden der Kommunikation dargelegt, ob und wie ein Konsens zwischen allen Beteiligten über die Ziele und Maßnahmen einer nachhaltigen Landwirtschaft erreicht werden kann. 2007, X + 220 pp.; ISBN 978-3-8236-1511-8, EUR 25.60
Bei Margraf Publishers sind ebenfalls erschienen: Volker Hoffmann (Hrsg.) Beratung von Familien mit existenzgefährdeten Betrieben in der Landwirtschaft Dieses Buch gibt einen breiten Überblick über die Probleme, die Aufgaben, die Methoden und die Organisationsformen der Unterstützungsangebote. Es geht auf die Geschichte der letzten 30 Jahre ein, und gibt einen Einblick in das Geschehen quer durch Deutschland mit einem Ausblick auch auf die Nachbarländer. 2001, 304 S., ISBN 3-8236-1357-X, EUR 32.60 Hoffmann, Volker Bildgestützte Kommunikation in Afrika Grundlagen, Beispiele und Empfehlungen zu Angepassten Kommunikationsverfahren in Ländlichen Entwicklungsprogrammen südlich der Sahara. 2001; 350pp.; numerous b&w and cloured ills.; 21 x 15 cm; paper; ISBN 3-8236-1343-X; EUR 35.80 Hoffmann, Volker Communication sous-tendue par l’image en Afrique Principes, examples et recommandations concernant les méthodes de communication adaptées dans le cadre des programmes de développement rural conduits en Afrique subsaharienne. 2001; 340p; numerous b&w and cloured ills.; 21 x 15 cm; paper; ISBN 3-8236-1344-8; EUR 35.80 Hoffmann, Volker Picture Supported Communication in Africa Fundamentals, Examples and Recommendations for Appropriate Communication Processes in Rural Development Programmes in Sub-Saharan Africa. 2000; 352 pp.; numerous b&w and cloured ills.; 21 x 15 cm; paper; ISBN 3-8236-1342-1; EUR 35.80
MARGRAF PUBLISHERS
Müller, Klaus et al. Nachhaltigkeit und Landschaftsnutzung. Neue Wege kooperativen Handelns (Herausgegeben von: Müller, Toussaint, Bork, Hagedorn, Kern, Nagel, Peters, Schmidt, Weith, Werner, Dosch, Piorr). Nachhaltigkeit ist kein statisches Konzept, es bedarf der ständigen Fortentwicklung und Erneuerung. Im Rahmen des BMBF-Förderschwerpunktes «Ökologische Konzeptionen für Agrarlandschaften» entwickelte und erforschte das Verbundforschunsvorhaben GRANO über 5 Jahre in zwei Modellregionen neue kooperative Ansätze zur nachhalten Landschaftsnutzung. 2002; 410pp., 60 ills., 17x24 cm; paper; ISBN 3-8236-1383-9; EUR 30.00
Müller, Klaus et al. Wissenschaft und Praxis der Landschaftsnutzung. Formen interner und externer Forschungskooperation. (Herausgegeben von Müller, Dosch, Mohrbach, Aenis, Baranek, Boeckmann, Siebert, Toussaint); Das BMBF-Verbundforschungsprojekt GRANO umfasste die Entwicklung und Erforschung von Ansätzen in Bereichen der nachhaltigen Landschaftsnutzung. Entwicklung bedeutete für die beteiligten Wissenschaftlerinnen und Wissenschaftler: Vorhandenes Wissen identifizieren, anpassen und in regionalen Modellprojekten umsetzen. Forschung bezog sich auf den Prozess der partizipativen Planung, Durchführung und Evaluierung des Vorhabens. Das wissenschaftliche Symposium, welches im Juni 2002 zum Abschluß des Projektes in Chorin stattfand, diente dem wissenschaftlichen Dialog über transdisziplinäre Forschungs- und Entwicklungsprojekte in peripheren Regionen. 2002; 374pp.; 21 x 15 cm; 25 figs & 3 photos; paper; ISBN 3-8236-1388-X; Euro 25.00 Gunda Matschonat, Alexander Gerber Wissenschaftstheoretische Perspektiven für die Umweltwissenschaften In diesem Buch analysieren führende Wissenschaftstheoretiker den Stand der epistemiologischen Diskussion in den Umweltwissenschaften und zeigen Perspektiven für deren Weiterentwicklung auf. 2003, 222 S., ISBN 3-8236-1402-9, EUR 24.50 Uwe Jens Nagel, Thomas Aenis, Axel Dosch, Katrin Prager, Verena Toussaint Zur Wirkungsanalyse Transdisziplinärer Forschung. Ein Untersuchungskonzept der Nachhaltigkeit des Landnutzungsprojektes GRANO. Transdisziplinarität - also die Kooperation und Kommunikation von Wissenschaft und Praxis zur gemeinsamen Lösung gesellschaftlich relevanter Probleme - gilt als sinnvoller Ansatz für Umwelt- oder Landnutzungsforschung. Am Beispiel des BMBF geförderten Landnutzungsprojektes GRANO «Ansätze für eine dauerhaft-umweltgerecht landwirtschaftliche Produktion: Modellgebiet Nordost-Deutschland» entwickeln die Autoren das Konzept einer späteren Wirkungsanalyse und leisten damit gleichzeitig einen Beitrag zur Entwicklung von Beurteilungsverfahren transdisziplinärer Forschung. 2004, 132pp.; 15 x 21 cm; ISBN 3-8236-1429-0; Euro 22,00 Anja Christinck, Eva Weltzien, Volker Hoffmann (Editors) Setting Breeding Objectives and Developing Seed Systems with Farmers Setting objectives and priorities is a crucial component of successful breeding programs as it determines the future course of action, maximizes chances for success and the impact achieved, and clarifies roles and responsibilities of partners. The book provides valuable insights not only for plant breeders but also development workers who seek to encourage farmer innovations with regard to variety development. Bio-diversity specialists involved in in situ management of plant genetic resources, as well as educators and trainers in the above mentioned fields will find useful tools and overviews. 2005, 188pp.; 20 x 26 cm; paper, ISBN 3-8236-1449-5; 28 Euro
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The author: Baast Erdenebolor was born in Darkhan, Mongolia, in 1981. After completing his undergraduate studies at the State University of Agriculture in Ulaanbaatar in 1999, he studied agricultural economics at the University of Applied Sciences Weihenstephan and earned a Master of Business Administration (MBA) degree in 2001. He went on to study at the University of Hohenheim and obtained a Master of Science degree with specialization in plant breeding in 2003. Being impressed by the highly productive farming systems in Germany, he decided to get involved in the research of intensified farming in Mongolia and contributed his share with the study presented in this book. Erdenebolor obtained a Ph.D. degree in 2007. Since 2005, he is the chairman of the Farmer’s Knowledge Association (NGO), which performs fee-based agricultural extension services with strong emphasis on intensified farming in Mongolia. The book: Extension researchers and practitioners worldwide are being confronted with a new trend of market orientation. Privatization and commercialization are on the agenda of many extension services. Examples from some industrialized and developing countries show that most farmers tend to prefer private delivery of extension. Mongolia, an agricultural nation that has almost passed the transition to a market economy and attained a GDP-growth between five and ten percent in the recent years, is a suitable place for investigating the possibility to establish private extension in emerging economies. On the contrary to the resourcebased system of pastoral animal husbandry, which still shapes the livestock sector of the country, the semi-intensive dairy farming around the Ulaanbaatar city promises both more demand on and a better ability to pay for extension. This book reviews the development of dairy farming in Ulaanbaatar, and analyses the current conditions in the dairy sector and the business environment of dairy farms. A sample analysis reveals the strengths and weaknesses in the dairy management and the economic performance of the farms. The knowledge of the situation and of farmer’s problems is used for defining the role and functions of dairy extension as well as elaborating extension contents and methods. The consideration of organizational and fiscal issues from the perspectives of both the farmers and the proposed extension service leads to the suggestion of an integrated structure of core extension activities and complementary income-generating services. The vision is then turned into a draft of a pilot project. The final analysis of the study is an investment appraisal, in which the profitability of a dairy extension service in the suggested form is examined.
ISBN 978-3-8236-1510-1 ISSN 0947-0352
D 100
