11.0 GOAT BUSINESS MANAGEMENT

Objectives:

By the end of the session farmers should be able to: Understand the practice of goat marketing Understand the different market structures and marketing options available. § Understand the key areas they have to manage for effective goat marketing. Understand the requirements for effecting negotiation and bargaining power. Understand how to plan for their business. Understand how to keep records. Understand how to budget and finance the business.

GOAT MARKETING

Introduction

When one takes goat farming as a business, the major objective is to make a profit. One can make a profit by providing a quality product that meets the market requirements. Therefore in simple terms, marketing is identifying the needs of the customers/ buyers and then supply a product (goats) that meets the required needs in the right quantities at the right time and place.

11.1 Understanding goat marketing

Identifying needs: Buyers require goats of different ages, size, breeds, etc. Some buyers such as the local traders are much concerned about the size while some buyers from the urban, high value markets emphasize on quality.
Specific group of customers: Some of the specific goat markets are individual traders, abattoirs, NGOs, ethnic groups and export market.
Product: In the goat business the products that we can sell to the market are live goats, goat meat, skins, milk, mohair and manure.
Right quantities: It is also important for farmers to be able to plan their production so that they consistently supply the required quantities at specified time intervals (e.g. 250 slaughter goats every month). This is key in business as this helps towards building longstanding and mutually beneficial (win-win) relationships with your buyers.
Right time and place: When we start our goats to organized high value markets, we need to plan our production and logistics to meet the market requirements.

11.2 Goat markets

Currently, the market for goats is highly informal and middlemen dominate transactions.
Sales are predominantly at farm gate level.
There is lack of market information.

There following are some of the market options available to goat farmers.

Individual traders

 This market comprises individual buyers who buy goats for resell in high value urban markets.

Private sector companies (Abattoirs, butcheries and others

These normally require huge volumes of goats to serve both the local market and the export market. .
This market emphasizes on quality, consistency and timely supply.
There is high transport costs involved when accessing this market.

Ethnic groups:

The Moslem community provides a market during their religious events.
The goats are slaughtered according to Halaal tradition.
There are specific butcheries and abattoirs that service the Moslem community.

Non-Governmental Organizations:

NGOs involved in restocking programmes provide a market for breeding stock.
They pay competitive prices.

Export market:

The export demand is found in Asian countries and other African countries.
The market is more demanding in terms of requirements.

Why are the buyers offering low prices for your goats?

…………………………………………………………………………………………….

What do you think should be done to address the problems?

……………………………………………………………………………………………. …………………………………………………………………………………………….

Marketing Tips

Goat farmers should be able to negotiate for prices that are commensurate with the quality of the animal.
Farmers can come together as a group to strengthen their bargaining power.
Farmers should gather up to date information about market trends.
Produce good quality goats in the right quantities (optimum production).
.Farmers should avoid desperate/ distress selling.
The farmer can sell directly or sell at an auction.

Financing the Goat Business

Most farmers lack knowledge of how much they need for their goat businesses. Farmers should have an estimate of how much they require for start up costs and operating expenses.

They must produce a financial plan/budget. This will help the farmer to source for funding. The plan should state how much money is needed for the following items:

Infrastructure
Breeding stock
Feeds
labour
Veterinary supplies
Transport

It should also estimate income from the business.

Sources of finance are:

Own savings: which is normally cheap but not easy to raise.

Loans from commercial banks: These are very expensive and not readily available to most rural goat farmers. The requirements for these loans are normally stringent and rigorous. The requirements include among other things:  Track record
Formal registration of entity or enterprise.  Financial information  Collateral.



Institutions that provide short term facilities include commercial banks like Agribank, ZABG, Premier Banking Corporation, Commercial Bank of Zimbabwe, development institutions like the SEDCO and the Infrastructural Development Bank and a range of lower level financial institutions such as microfinance institutions and village banks or savings and credit cooperatives. Issues financed through short term facilities are of a working capital nature such as feeds, veterinary medicine, breeding stock etc.

Group lending: A scheme whereby groups comprising approximately five to fifteen smallholder farmers or rural entrepreneurs come together to borrow money from the bank. These should be staying within the same locality. They are bound by a group constitution and operate a group savings account. They should have similar project interests for them to qualify for the loan. The group will have joint liability on the group loan granted

Credit schemes: There are traditional schemes where communities loan each other animals. These are rare. There are schemes that are government driven on agricultural inputs. However most of them concentrate on crop farming.

Donors: available only for poor farmers for restocking exercises. These are cheap funds. They are available for group projects. However, these funds are not usually enough to run viable enterprises.

Contract farming or out grower schemes: are relationships in which buyers of agricultural products lend funds (either in-kind or in cash) to producers. The loan is generally tied to a purchasing agreement. This scheme is not yet available in the goat sub sector. The out grower scheme is operational in the cattle, pigs, poultry and ostrich sub sectors. The processors provide farmers with inputs and deduct the equivalent amount plus interest from the farmer on delivering the products. Contract farming and out grower schemes allow producers to gain access to high-value markets, as well as to increase their productivity by offering them credit with embedded services such as technical and marketing assistance.

COSTING AND PRICING

	When you are running any business venture it is very important for any businessperson to understand how much it costs to source or produce their products. The cost of the product (goat) will assist you calculate a good selling price for it.
	Many people do not know the cost of their products and sometimes the selling price of their products is too low, so that they do not make money from their businesses. This is bad news!
	If it costs you $400 000 to raise your livestock, it is no good selling that animal for $300 000. You should try to sell it for more that the cost of raising it.

To make money in a business you must make sure that the selling price of your product is more than the cost of producing it!

Assumptions:

50 breeding does

2 bucks required

Kidding once a year

Kidding: 150%

Kid mortality: 10%

Replacement of breeding stock: 20 %

Young male goats to be sold at an average age of 2 years

Budget of Raising Goats:

Herd Composition		Biological Parameters
Number of Does	50	Kids born	75 (40 males and 35 females)
Number of Bucks	2	Kid mortality	8 (4males and 4 females)
Adult Death Rate	5%	Kids raised	67(36males and 31 females)
Kids to be sold	34 males	Young bucks	2
Income	Number	KG	Price	Unit	Total
Market Kids	34	35	60000	Kg live	71400000
Market Does	10	40	40000	kg	16000000
Cull Bucks	1	50	40000	kg	20000000
Milk sales	10	450 litres	10000	litre	4500000

Capital Costs	Number	Costs	Unit	Total	Per
Does	50	2m		50m
Bucks	2	3		6m
Fencing		3m		3m
Housing		5m		5m
Watering System		5m		5m
Supplies and Equipment
Working pens
Start Costs

Cash Flow Statement



This statement lists the inflows (revenue generated by the business) and the outflows (expenses incurred by the business). The difference between the inflows and outflows give the net cash flow. This net cash flow can be positive or negative. If it is positive that means the project is making money but if it is negative it means the business is not generating enough income. It should be noted that this net cash flow could initially be negative but increase gradually to become a positive cash flow.

MONTH	1	2	3	4	5	6	7	8	8	9	10	11	12	Total
Sales: Does
Buck
Kids
TOTAL INFLOWS
Capital Expenditure
Feed Costs:
Salt
Health program
Deworming Adults
Deworming kids
Transport
Supplies
Labour
Opening Balance
Closing Balance

Business Management