1. Center for International Agricultural Research
Smallholder Inclusive Business Models: Case Study in Cattle/Beef Industry of China
Nie Fengying
Center for International Agricultural Research
(CIAR, CAAS)
June,2016. Bali

2. Cattle/beef industry and Inner Mongolia case in China
Tongliao city
Chifeng city

3. Overview Inner Mongolia case-Kerchin
Why Kerchin, leading enterprises, top 3 in beef processor;
To examine the relationship between the company, cooperatives, traders and smallholders;
To find if the model is inclusive.

4. Inner Mongolia Kerchin Cattle Industry Co., Ltd.
Traders
Live cattle market
Supermarket
Cooperatives
Slaughter and processing enterprises
Restaurant
Retail market
Own base (farm)
Farmers
Planting cooperatives
Farmers
Value chain diagram

5. Inner Mongolia Kerchin Cattle Industry Co., Ltd.
Cooperation mode with farmers
Own farms（Four）
Ensure the quality of cattle
Control food safety
Guarantee relatively stable supply
Cooperation with farmers in planting
50%
20%
30%
Farmers
No contract
Provide technical guidance and
disease prevention.
Acquisition cattle by market price
Contract farmers
More than 3000 farmers
Cooperate with the financial sector providing
subsidized loans for farmers, company provide security
Acquisition cattle by contract

6. The success of Inner Mongolia model
Competiveness
Big slaughter, brand reputation, Olympic supplier;
Certification, HACCP,ISO14001, Halal, Organic (part);
Advanced technology and equipment;
Efficiency, diversified products, minimized waste, market segmentation (meat bar).
Success
Kerchin
Company
Inclusive
50% from own production;
30% contract farmers , sell, loan, technical services;
20% others, selling, service;
Jog creation, animal, feed, marketing, other services;
Social benefit, not migrate to urban

7. The success of Inner Mongolia model
Fresh frozen
meat
Four product lines
Large shopping malls and supermarkets
Quick frozen,
deep processing
Industrial customers, restaurants
Cooked
meat
By-product
deep processing
Electronic commerce

8. Environment Management Official certificated
The success of Inner Mongolia model
HACCP certification
Environment Management
System ISO14001
Certification A B
Official certificated
by Malaysia D
Organic beef cattle
Organic beef product
certification C
December, 2007
August, 2003
Recovered in 2013
August,2003
August,2010

9. The roles and contributions of key players
Farmer cooperatives:
Increase the “power” to negotiate with input suppliers , traders and beef processor;
Increase the economics of scale of “individual” farmer into group;
As a place for training, tech, share information about price, disease control, market shares.
Business Entities, provide with:
Market access and differentiation of products;
Loan to contract farmers;
Services to cattle farmers technician from the company;
Job opportunity for locals; and
Develop and strengthen the beef sector in China.

10. The roles and contributions of key players
Other Gov’t, provides
Information and extension, public services, infrastructure;
Subsidy to cow, scaled farms, cooperatives, credt recycling use of manure; and
Develop the standards and regulation.
Bank, provides
Loan from public, cooperative and private. Feed company:
Work together with extension company, officers or themselves in providing technical assistances for cattle farmers.
Traders (middle man),
Market access; and
Information sharing.
Producers
Provide cattle: quantity and quality.

11. Challenges for this model in the future
Continue to adapt the market change, such as demand innovation, competiveness from local and exporter;
Continue to adapt the change in supply chain (regulation, public services, technology innovation );
Improve payment system;
Strengthen the relationship with farmers.

12. Discussion
New industry, high demand potential Capital intensive sector, and business potential.
Long way to go in term of small holder inclusive.
what we can learn from other cases?
Dissemination.

13. Thank you for your attention!