Assessment of Cooperatives in the Poultry Industry - 2013.pdf - Seda

Research Report: Addressing the Needs, Opportunities and Challenges of Cooperatives
and Collectively Owned Enterprises in the Poultry and Related Industries
through distribution from producer laying farms.
The large-scale egg cooperative interviewed was formed with the goal of bringing small-scale egg
producers together in order to access the formal retail market in a co-ordinated way. The
cooperative conducts the packaging and selling of eggs, while a network of over 40 farms provide
eggs to this cooperative. While the cooperative does expand membership over time, there are many
standards in place. Thus, more than an opportunity to partner, this cooperative is representative of a
successful business model. In many areas where poultry cooperatives are dense, there may be
opportunity for a similar initiative in order to gain access to bulk discounts and larger markets.
Egg Producer 2 in Table 4-10 is a private family business. While they are one of the dominant players
in the industry, this business remains very inwardly oriented and ensures that all functions along the
value chain are owned by their business. Thus, there is not scope for small-scale farmers to interact
in the production process. Due to the entire value chain being internal, there is not even scope for
cooperatives to sell support services such as manure removal and sale or the selling of spent hens;
everything is done by the business itself.
When asked whether broiler farming or egg laying would be
superior business options for a new cooperative, a member of the
DPFO stated that egg laying may offer better opportunity. The
reason behind this being that egg laying is a less risky process and is
likely to produce returns more easily. The equipment required is
not as specialised and the time to market is not as vital as it is in the
A member of the DPFO
stated that egg laying
may offer better
opportunity
broiler farming industry. Thus, although more cooperatives operate in the broiler market, there may
be scope for egg laying cooperatives to develop further. Interaction with willing suppliers would
provide an easy point of sale and with less advanced equipment and a less delicate process; there is
a higher likelihood of success even if profit margins are lower.
4.2.2.3. Retailers
Every large-scale retailer supplies a number of different brands of broiler meat and eggs. A number
of large retailers were approached and interviewed on their buying process and potential
involvement of developing poultry farmers. Based on the responses, there appear to be greater
barriers to entry in obtaining contracts with large retailers than there are to obtaining contracts with
large producers. Additionally, there are more opportunities available along the value chain
concerning large producers. With large suppliers the product must be ready to go to market and the
supplier must provide transport for their saleable product.
The table below indicates whether or not retailers see potential to work with developing farmers. It
also highlights constraints identified by the retailers.
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