Livestock value chain structures

In this investigation literature is analysed towards (methods for) profitability analysis in animal production chains. The investigation should lead to a) understanding on used methods and parameters for profitability analysis in animal production chains, b) understanding of possibilities and impossibilities of available data and methods, c) an approach towards a system for profitability analyse for other countries and other supply chains, d) give more understanding into the level of profit margins in different stages of the animal production supply chains.

Background and problem definition:
Several investigations have been performed towards profitability of agricultural production chains. In all those and comparable investigations towards profitability of (groups of) companies different problems occur:

  • Much data is not publicly available or has become obsolete;
  • Companies have different activities and are active in different branches; therefore company information cannot be specified towards a particular product or product group;
  • Specific costs on company level cannot be attributed to specific products;
  • The representativey of the available data of a complete branch (part of the supply chain) is not a priori clear;
  • The interpretation of results is not unambiguous. Determining of the average profit margin in a part of the supply chain is one step; however to conclude of whether such a margin is to be considered high or low in the specific situation would require a more thorough analysis and a priori theory on the expected level of a common margin under specific circumstances;
  • All in all, a comparison of profit margins between different supply chains, between parts of a supply chain, and between countries without thorough analysis cannot be performed. As an example, it cannot be expected that profit margins in animal breeding, with high investments in R&D and related risks, would be equally high than in  the primary production sector or the wholesale.

Intended results and output
A concise report will be delivered in English language, in which methods and results are described. In 2015 the literature review has been performed. Over 50 papers have been analysed. This confirmed that problem definition. It has further become clear that not many useful sources are available on this topic. The activities have to be completed in the beginning of 2016.