Traditional business model

Sheep farming provides its producers with almost half of their income, they obtain the rest from agricultural or livestock activities, however, this flow of income is not continuous, as indicated by Hernández et al⁴, since they only sell their animals when they need money. Producers have a basic level of schooling, so it is normal the existence of deficiencies in the main productivity parameters, such as in the weight at weaning, similar data was reported by Vázquez et al² in the cluster of subsistence family production units, where the age at weaning is greater than three months, with a weight of 17.6 kg. Based on this characteristic, decisions are made in a simple way and are based on the experience of the producer, as pointed out by some authors in the northwestern Tlaxcala, where technical decisions are based on experience, and this can determine the level of technology adoption²⁵.

These companies do not see the activity as a profitable business, but as a way to use their resources (family labor and arable area) in order to generate economic stability in the family. In this sense, the results are the reflection of the disinterest in incurring additional expenses, since they only maintain the production unit by uses and customs.

The flock is cared for by the family, women and children mainly, considering their labor as a key resource that is used while they get another activity that generates greater benefit or sell the land. Even though production generates profits, since they do not incur infrastructure, labor, or food expenses, thus preserving the 102,520 pesos they obtain for the sale of finished animals.

These companies are engaged in the production of sheep for meat by tradition of the region and because they inherited the activity from their parents or grandparents; competing with other local producers regarding the price because they do not have another attribute that differentiates them. Their customers are occasional buyers, who arrive at the production unit without the need to establish a formal relationship beforehand, who use the animal for self-consumption.

Due to the type of customer and the value proposition offered, the price received is lower than that of the other models, 44 pesos per live kg, a figure equal to that reported in Mexico City⁵, because the customer is not loyal and seeks the best prices for negotiation; in addition, they do not show willingness to pay for characteristics related to animal welfare (which include the conditions under which the sheep lives and dies) or the breed, but they do lower the price for an age greater than a year or for discarded females. A study carried out in the south of the State of Mexico indicates that this price can be explained in part because the producer does not know the needs of the client, as well as the appropriate times to produce and market¹⁹.

In relation to government support, this BM receives advice from institutions, such as the CFPPEM and SEDAGRO; however, they are used to solve existing health problems, instead of being used for preventive management that maximizes productivity. The above due to the level of schooling and disinterest in incurring additional expenses.

This same disinterest is visualized in the fact that none of the companies has received support for the acquisition of animals that genetically improve their flock, which can be justified by the disinterest in incurring additional expenses, since, in the case of receiving them, they would be forced to make investments due to the feeding and the specific management they require.

Derived from these characteristics, the BM finds limitations for its continuity in the following generations, because, although the producers inherited this activity, they do not visualize it as a profitable business, but as a way to use their patrimony, while they sell the land or give it another use. Additionally, they present uncertainty in the business succession and the successor does not know the role they will play, this influences the low investment.

At the same time, due to population growth and the change from rural to peri-urban areas, producers face problems that reduce incentives to continue, either because of opportunity cost or insecurity.

Intermediate business model

In this BM, producers obtain less than a third of their income from the activity and the rest is obtained from agriculture, livestock and trade, which differs from what was found in the municipality of Villa Victoria in the State of Mexico, where they indicate that they obtain 40 %²⁶. They have unfinished high-school education, and despite being the group with the lowest flock, they show interest in intensifying their production, investing in the nutrition of their lactating ewes and lambs, differentiating the feed they supply, because they recognize that these are crucial stages.

It should be noted that this BM coincides with the traditional one, where the smaller the number of animals, the greater the participation of the family, and both women and children provide their labor. Of the total number of permanent workers, 65 % are members of the family, a situation that is favored by the easy management of animals and the valorization of labor; these results are consistent with what was published in the Mexican Sheep Production, where the producers registered in PROGAN in Mexico were analyzed, the authors conclude that the care of the flock is in charge of children, women and the elderly, especially in those units with smaller flock, because these family members are the ones who remain in rural areas²⁰. This participation reduces the costs that would be generated by hiring labor, thus increasing the profit that is obtained.

Despite the family participation, these companies not only see sheep farming as an option to value their labor and make use of the arable area, but as a business, because they invest in improving their productive management, which is an indicator of competitiveness, through one of the activities that gives quick results, as indicated in the study of the problems and opportunities of sheep farmers in New Zealand²⁷. These producers invest in the nutrition of lambs and lactating ewes to improve their weight. This is due to the educational level of their owners, which allows them to be more receptive and incorporate new practices. However, they still do not develop business strategies to improve their sales process or add value.

They are engaged in the production of sheep for meat because they inherited this activity. The sheep are marketed locally, delivered at the farm gate and their customers are occasional buyers, regional collectors, restaurateurs or barbacoyeros, who buy at 46.7 pesos per live kilo, on average, a price higher than that obtained by the traditional ones, since they relate to other actors.

Regarding government support, these companies receive advice from government agencies (CFPPEM and SEDAGRO) and have been beneficiaries of subsidies to improve the genetics and productivity of their flock, at least once in the last five years, through certified ewes and rams, thus accessing better profits.

However, even though this BM shows a better use of the environment, like the traditional BM, it presents the uncertainty generated by business succession, where only 27 % have plans for retirement and in 36 % of cases, the successor is aware of the role they will play in the future, inheriting the production unit; facts that limit investments. However, they show good development prospects, since most visualize their company growing in the next five years, so with proactive actions that improve their competitiveness, such as genetic improvement, nutrition according to the productive stage and the search for customers who offer better prices, existence and viability is possible. Although to achieve this, it is necessary to change the paradigm of the producer, as suggested by Michalk et al, for developing countries that want to improve their productivity; directing their company to meet the needs of the market²⁸.

Specialized business model

Producers obtain more than a third of their income from production and the rest is obtained from the tertiary sector of the economy, providing professional services, since they have an academic level higher than that of the other groups, which allows them to improve their productivity and impacts on the structure of their BM, facilitating the incorporation of good livestock practices.

According to Camacho Ronquillo et al²⁹, these companies have now increased and show good prospects, as they adopt new technologies in order to contribute to the national supply and improve their profitability. This group is likely to follow the behavior of the main exporters of sheep meat, providing greater production through the efficient use of their resources and not through the increase of the flock, incorporating technical and managerial knowledge that allow to do the same with fewer resources. The above accompanied by technologies that increase prolificacy, combining genetic and nutritional factors in the gestation and growth of lambs, increasing weight and productivity^27,28,30,31.

As in the study on the contribution of sheep farming in Mexico¹⁸, it was found that more and more producers stop seeing sheep farming as a backyard activity and visualize it as a business with high potential, this is how they have on average more than 100 ewes and carry out the activity taking advantage of the tradition of consumption and production.

These companies are not family-owned, but they own a brand that allows them to create a reputation. They offer two types of products, animals for meat and for reproduction, high-value products that differ within the market, taking advantage of their genetic value. However, competition for soil and a lack of promotion of meat consumption hinder their growth.

These companies recognize the importance of genetic improvement in their level of competitiveness and follow the global trend on the use of genetic technologies, which improve the growth and quality of the carcass, which aim to revolutionize production, which is threatened by the scarcity of resources, as indicated by some authors who investigated the preferences and trends of sheep production, in recent years, research has been carried out on sheep improvement, through genomic selection, in order to obtain better weights and quality in the carcass³².

On the demand side, there are two customers, those who seek animals for meat and those who request them for reproduction. The former buys the animal at 48 pesos per live kg, on average. These clients are collectors, barbacoyeros and restaurateurs, with whom they communicate by telephone, because they have dealt with them with before. However, they also sell to occasional customers, delivering at the pen. On the other hand, animals for reproduction are sold with purity records, directing their offer mainly to the State government.

The sheep are in adequate facilities, reducing some health problems that occur in rustic production units, which were built with their own resources. They incorporate productive, reproductive, genetic and nutritional techniques that improve their productivity. In order to make their activities efficient and not only receive technical advice from government agencies, but also hire advice that instructs them in the preventive management of the flock, at least three times a year. They have also been beneficiaries of subsidized animals in the last five years. These animals have been provided by the government of the State of Mexico.

The BM has allowed them to face the problems that afflict the value chain, as they have ventured into commercial, genetic and organizational aspects, since they are affiliated to an association of sheep farmers and carry out an intensive search for customers, through social networks and events. It should be noted that this group has incentives to improve its profitability, since they incur higher costs (labor, feeding, productive management, genetics, promotion and certification in some cases) and need to recover their investment.

It is expected that this BM will remain in the long term, incorporating productive, commercial and managerial techniques, addressed in a comprehensive manner, since this type of companies shows interest in knowing the factors that affect their activity, continuously seeking to take advantage of the opportunities offered by the environment and the growing demand for sheep meat.