Enabling Poorer Communities To Engage In Cattle

Using farm-grown fodder, alongside a credit through traders scheme has helped farmers in Ea Kar, Daklak, Viet Nam to engage in a short-term cattle fattening system, according to the International Livestock Research Institute.
calendar icon 26 August 2011
clock icon 5 minute read

Due to the financial situation of many households, it is difficult to become involved in cattle fattening - due to the upfront investment needed in thin cattle.

Consultations have been carried out with community groups, local government, traders, banks and other key stakeholders - to find a way which would enable poorer households to benefit from cattle fattening.

Credit

Credit for short-term cattle fattening is a novel scheme which has great potential. Often, credit for cattle production has been provided for cow-calf production which requires many years of investment, entails considerable risk and only provides benefits to farmers after several years. Credit for cattle fattening, on the other hand, is a low-risk short-term investment with immediate financial benefits to poor farmers.

Several cattle traders have already developed contract farming arrangement for cattle fattening based on fodder production with farmers in Ea Kar. The traders ensured that farmers had sufficient areas of forages planted and supplied thin cattle for fattening. The trader provided the funds (fully or partially) for buying the thin animals.

The financial gain, i.e. the increase in value of the animal, was shared between the trader and farmers in different ways.

Some traders charged farmers 15 per cent interest (for the three month period) on the funds invested by the trader to cover the cost of capital, time and risk, while the farmers received the increased value of the animal; other traders paid farmers 30-50 per cent of the value increase achieved during fattening.

Test project: Providing credit for cattle fattening

The project selected a local trader who worked closely with the Chu Cuc farmer club (for cattle fattening) in Ea Kmut commune. Five poor households belonging to the indigenous E De ethnic group volunteered to participate in the test case.

With assistance and training from the extension service the five farmers established forages on their farms that were sufficiently large to fatten two cattle.

The Social Bank provided a loan of VN$ 75 million (US$ 3950) to the trader to purchase 10 thin cattle (2 animals / household) at an interest rate of 0.6 per cent per month. The trader entered into a contract with the five farmers detailing the agreement and responsibilities of each party.

The agreement stated that the farmers would receive 90 per cent of the benefit of the increased liveweight gain during the fattening period. The trader would benefit from trading and receive 10 per cent of the value of the weight gain generated to compensate him for his time and cost of loan. The trader was responsible for the health of the animals for the first two weeks after delivery, after this it the farmers were fully responsible and liable for the animals.

The project measured the liveweight of each animal at the start and end of the fattening period, and monitored expenses and labour inputs. The district extension office provided support for animal health and fodder production, and ensured that the five farmers were linked to more experienced farmers who had already fattened many cattle to ensure local backup and support.

Farmers fattened the animals for three months, then the trader collected the animals and sold them for slaughter, recording the buying and selling costs.

This was then repeated for a second fattening cycle before the trader returned the loan plus interest payment to the local government.

All five farmers successfully fattened the thin cattle supplied by the trader. The average weight gains of cattle fattened was high (775 g/day) and similar to weight gains achieved by experienced farmers in the district. This resulted in a high return for farmers. Following fattening for three months farmers received a gross return of US$ 107 for each animal fattened.

Production costs were relatively low as farmers were able to grow their own fodder (i.e. forage grasses) and mix their own concentrate feed using mostly farm-grown ingredients such as cassava and rice bran. On average, farmers fed 31kg of fresh forages and 1 kg of concentrate per animal per day. Other inputs were nitrogen fertiliser to stimulate forage growth, animal health inputs and labour to cut forages, weed and fertilise forages, feed and water animals, clean the pen and handle animals.

Farmers received income from the weight gain of cattle fattened (90 per cent to farmers; 10 per cent to trader) and from sale of manure. The net return for fattening two cattle for three months was US$ 98.70 and the return to labour was USD 1.08 per hour which was more than double the prevailing labour rate in the district.

The participating farmers were very pleased with the result of cattle fattening and three of the five farmers were able to continue cattle fattening by themselves after the end of the test case.

Similarly, the trader was very positive and wanted to continue the credit through a traders scheme.

He felt he benefitted from access to the loan with low interest, ability to control the quality of cattle, knowledge of cattle supply which enables future contracts with other traders, increased income.

Conclusion

The main challenge for the project was finding ways to arrange credit for the scheme, and this problem is still unresolved. While the Social Bank was able to provide the loan for the test case, it could not provide low-interest loans to traders on a larger scale. Its charter is clearly limited to providing loans directly to poor households and disadvantaged groups.

The local government felt that the test case showed that cattle fattening can enable farmers to escape poverty and is determined to find ways of expanding the credit through a traders scheme. One avenue explored by the local government is to engage with NGOs which may not be constrained by the same regulations as government institutions.

The test case showed that the credit through traders scheme enabled poor farm families to engage in and substantially benefit from cattle fattening. This was, however, implemented on a small scale and the test case was embedded within a research project that had already strengthened the capacity of local stakeholders to support smallholder cattle production.

There is a need to develop a larger development project which not only provides credit but also builds the capacity of key stakeholders such as traders and the extension and veterinary services to support successful cattle fattening and marketing.

August 2011
© 2000 - 2022 - Global Ag Media. All Rights Reserved | No part of this site may be reproduced without permission.