Newsletter No 33 - Part 1, December, 2005

Part 1

1. Introduction
2. Report on 2005 International Ostrich Industrialization Congress, the World Ostrich Development Congress XII and International Ostrich Industry Development Situation

1. Introduction
Mr. Yang Haomin, president of IKO Ostrich Company in China and host and organiser of the conference held in China in March 2003 has recently visited a number of countries and attended several International conferences. Mr. Yang Haomin's aim was to gain a clearer understanding of our industry and he has submitted a report to summarise his findings. This report will form the basis of this months newsletter. As we are using email format, the newsletter will be in two parts.

Part 1: The Report

Part 2: Discussion on Mr.Yang Haomin's findings
Please thank Mr.Yang Haomin for producing the report and ensuring it was translated so all members can read it. 

2. Report on 2005 International Ostrich Industrialization Congress, the World Ostrich Development Congress XII and International Ostrich Industry Development Situation

July 30- June 3, 2005 general manager of Shaan Xi Land Reclamation Group, president of IKO Ostrich Limited Company and vice leader of China Ostrich Breeding and Developing Association Yang Haomin attended 2005 International Ostrich Industrialization Congress. Later following the team of China Economy Trade Committee Mr. Yang Haomin inspected ostrich industry and market in Russia, South Africa and Brazil etc. October 10 -17, 2005 Mr. Yang Haomin attended the World Ostrich Development Congress XII in Spain, and inspected ostrich industry and market in Spain and Italy.

This report is a summarization of the two congresses, inspections and situation of world ostrich industry. 

i. Brief of 2005 International Industrialization Congress
International Industrialization Conference was held in Ukraine July 30 – June 3, 2005. There were 119 delegates from 13 countries and regions.

The subjects of the congress were development of ostrich products, market, ostrich breeding technologies, strategy of developing ostrich industry as well as establishment of North European new ostrich producing area etc.

Mr. Yang Haomin gave a special report named “Endeavour to Inaugurate a New International Ostrich Producing Area”. He impelled on the basis of mutual benefit all the world’s ostrich breeding enterprises to be united, exchanging techniques, developing market and making full use of advantages.

This congress stressed market, trade, cooperation, the union as well as mutual benefits; prospected development of world ostrich industry; analyzed regional advantages of developing ostrich industry and emphasized information communication and importance of the union. The conference with strategy significance was a distinguished one in the history of Asian and East European ostrich industry.

ii. Brief of the World Ostrich Development Congress XII
The World Ostrich Development Congress XII took place in Madrid Spain, October 14-16, 2005. There were 30 countries attended the congress. They were delegates to ostrich breeding, processing and marketing; senior technological experts dealing with ostrich breeding and processing as well as chairmen of ostrich associations from the United States, Brazil, Belgium, Canada etc.

The subjects of the congress were international market for ostriches and strategic pattern, construction of ostrich producing bases, analysis of competition power of ostrich breeding enterprises, study of ostrich breeding technology, the way to produce high quality ostrich products and study of ostrich processing technology.

President Yang Haomin, on behalf of China Ostrich Breeding and Developing Association, gave the report named “China Will Become a New World Ostrich Producing Area” and Mr. Zhang Lao had an exchange of views on the matter of technology.

This congress displayed comprehensively the last word of the world ostrich industry, summarized the experience and lessons in the process of developing ostrich industry, studied, discussed and forecasted the trend of ostrich industry. This congress was a landmark with profound historic significance and important realistic meaning.

iii. Matter of market for ostrich products
When ostrich meat was introduced into European market, few people knew it. Ostrich meat held the market gradually depending on its high quality, and has showed huge market potential.

In Russia, ostrich meat is top grade delicacy to entertain guests. Previous Russian prime minister entertained the guests with ostrich meat on his son’s wedding banquet. Several inspected supermarket in Italy all had sold ostrich meat previously. Now they stop because of lack supply and high price. Another main reason is that few people understand ostrich meat so the consumption rate is low. In Italy due to the BSE, price of ostrich meat had increased to Euro 40-50/kg. Current prices of ostrich meat on international market: the factory price of ostrich meat in South Africa is 14USD/kg. The price increases to 17USD/kg air-ferried to Europe. In Britain, good ostrich fillet is Euro 25/kg. In Span, ostrich fillet is Euro 15-25/kg, and the factory price of the packed ostrich fillet is Euro 8.5-15/kg. In German, consumptive group of ostrich meat is middle aged women. All the delegates in this congress believe ostrich industry has a great prospect.

Ostrich skin products in Italy are sold directly by factories. Few products can be found on the market. Only in one walking street, skin products, one kind is handbag, the other is female shoes, which are found in two stores. In South Africa, the price of finished skin is 17USD/square feet, top grade which is mainly marketed towards Europe. In Spain, ostrich skin shoes have 3 grades. One is ordinary shoes made from common skin in China with characteristic of comfort. They are sold at the price of Euro 100-200/pair. One is middle grade, produced in Spain with characteristics of brand, good skin and fine make. Another is top grade world famous brand with wonderful skin, splendid make as well as high attached brand value, which can also be found in emporiums in big cities of Beijing, Xian etc.

Russia has many special stores selling ostrich products. Moscow Second International airport has a middle sized special store for ostrich products. The products are mainly imported from South Africa. Prices of the shoes are Euro700-1250. And one of Gallo famous ostrich skin bags is sold at the price of over Euro 1000. It was observed that1/3 products in the stores had been sold up in one week and supplemented by new ones. All the travel sites in Brazil and South Africa sell middle grade ostrich products. Grade 4-1 are sold at the prices of Euro100-105/sheet in European and US markets, and California is the main market for producing and consuming ostrich skins. Compared to that of meat, skins have great profit space because of attached value of brand.

From the above, it can be concluded that currently, two main markets for skin and meat have opened up, which are in urgent need of large supply of goods. For example one of France enterprises demands 30 tons of meat, but it is hard to find supply.

iv. Distribution Patterns of ostrich breeding in the world
Since the 1990s, ostrich industry has been developing steadily and appeared five patterns:

Firstly: European ostrich breeding area
Advantages: 
1. Being near and low doorsill to market. The dominant problem of marketing meat in the area is disease prevention.
2. Strong ability to process. Two slaughtering plants in Span can provide 10,000 ostriches.
Disadvantages: high cost of production
1. High labour cost at the price of Euro 100-600/person.
2. High price of feedstuff. For example, alfalfa is Euro 160/ton, corn is Euro 180/ton, and soya bean is more expensive.

Secondly: African ostrich breeding bases represented by South Africa.
Advantages:
Mature technology scale and market and Europe is the main market for the meat and the skin.
Disadvantages: high cost of production
1. Technicians are paid USD 300-400/month. Ordinary workers are paid USD 160-200/month.
2. High cost of feedstuff. Corn is USD 130-140/ton, and alfalfa is USD/ton. In recent years, due to Bird Flu and high cost of breeding, ostrich production is decreasing. In 2003 South Africa produced 280,000 commercial ostriches, 250,000 ostriches in 2004, and 230,000 ostriches is estimated in 2005.

Thirdly, South America ostrich breeding areas represented by Brazil
Advantages:
Huge potential, good policy, strong economic base and favourable natural conditions and climate.

Brazil first introduced breeders from South Africa and European countries in 1995. Currently Brazil possesses 200,000 breeders with an annual production capacity of 200,000-300,000 commercial ostriches. Most ostrich breeding farms in Brazil are middle sized, with 100-500 breeders and the largest one plans to reach 3,600 breeders. Ostrich industry is developing rapidly in South American countries. 

Fourthly: Eastern European ostrich breeding areas represented by Poland and Russia
Advantages:
Large land area, abundant feedstuff, low price of land, low cost labour force, and being near to EU market.
Disadvantages:
1. Long winter which is unfavourable to exert ostrich breeding ability.
2. Large investment of infrastructure.

Fifthly: Asian ostrich breeding areas represented by China
Advantages:
Favourable climate for ostrich to live, abundant land and low cost of feedstuff and labour force.

Making a comprehensive view of the five patterns, it can be concluded:

In terms of market: EU market is NO.1, South America NO.2, Eastern Europe NO.3, then Asia.

In terms of competition: Asia, represented by China is the strongest, then Eastern Europe, then South America, then South Africa and then EU.

China has done a lot in respects of developing by-products, producing high quality ostrich products, decreasing the cost, increasing the profit of ostrich industry, and exerting the advantages of ostriches.

v. Matter of processing ostrich products
According to the Madrid Congress and from personal visits, it can be said that every country dealing with ostrich breeding has mature technology. China’s breeding and processing technologies have also reached international level. The current problem exists in Chinese market is high demand and low supply. In addition, the way to decrease the cost of managing, breeding, processing and marketing combined with improvement in the quality of products need to be tackled as matter of urgency.

vi. Matter of uniting ostrich industry
Union of ostrich industry is a necessity. Ostrich industry should be impelled in different way at different levels, which includes union of every ostrich association, union of every ostrich country, union of regions and union of enterprises. Only by union can ostrich industry realize the unification of breed, management, process, and brand and achieve intensivism, industrialism, standardization and commercialization. 

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