FAO Headquaters, Vialle delle Terme di Caracalla, 00100 Rome, Italy.
Driven by rising incomes and rapid urbanisation, Asia experienced over the last decade an annual growth of 9% in industrial pig and poultry production. This has resulted in a shift from a predominantly vegetable-based diet to one that includes a greater amount of animal protein. Over the past 10 years in Asia, consumption of poultry, eggs and pork grew by 140%, 90% and 71%, respectively.
Industrial livestock production systems1 hardly existed a few decades ago in Asia, but they now provide the majority of poultry, egg and 29% of pork production. Rapid expansion of industrial livestock production has, however, made the general public and policy makers become increasingly concerned with the associated waste or environmental problems, public health issues, and increasing disparities in income distribution.
The industrial system, especially for pigs and poultry, is characterised by a significant, and often exclusive use of feeds of high energy content (mainly cereals, oilseeds and their by-products). This high energy density allows movement of feeds over longer distances than perishable animal products, even though the quantities are larger. These relative costs encourage production, slaughter and meat processing facilities to be located near urban centres. In net grain importing developed countries, with abundant road and cooling infrastructure, large-scale industrial operations are also located close to ports.
In the past, industrial and intensive mixed farming systems have benefited from policy distortions and the absence of regulations or their enforcement, which in many cases has given these systems a competitive edge over land-based systems. Some policies have also misdirected resource use and encouraged the development of technologies that are inefficient. In many developing countries, there are not only direct subsidies on feed but also on energy. As energy is a major direct and indirect cost item in industrial production systems, economy-wide policies often tend to favour industrial production over grazing systems and mixed farming.
In practically no country in the world, is the industrial system charged with the full external costs. Most societies prefer the cheap supply of animal products and are less concerned with the various benefits to the environment that could arise from less intensive livestock production systems. Self-sufficiency in animal products and supply of high-value food commodities to urban populations seem to be overriding policy objectives, particularly in developing countries.
In the developed world, the pollution of land, water and air has raised acute awareness of the environmental problems associated with industrial livestock production. This has, in many cases, triggered the establishment of policies and regulatory measures that address these problems. On the contrary, the absence of regulations and their enforcement, together with a surge in demand and a continued indifference about growing environmental and public health hazards in developing countries call for immediate action.
The Uruguay Round Agreement has led to a gradual lowering or removal of tariff barriers and the harmonisation of non-tariff trade barriers; the formation of free-trade zones, such as the ASEAN-region; and the development of infrastructure such as roads, ports and cold chains plus the development of a market information infrastructure that greatly facilitates the exchange of products and information both from within and across borders.
Recent changes in national feed/livestock policies have led to market deregulation, reduced government spending, structural reforms, privatisation of services and devolution of authority. Partly as a result of pressures emanating from the GATT-process, there has been a tendency towards further deregulation and commercially based prices that reflect real costs. Many governments have had to lower the level of protection for domestic livestock products, thus improving opportunities for market access by exporters from within and outside the region.
Another important factor is the increasing "urbanisation" of livestock production, where animal production units are located close to urban consumption centres because of good market access and infrastructure. Such a system is, to a large extent, independent of agro-ecological conditions because production is heavily mechanised and operates under controlled conditions. This trend is prominent in poultry production.
Scales of livestock production and processing are growing in response to technological developments, market requirements and insufficient returns to labour in traditional systems. Where alternative employment opportunities exists, such as in the rapidly industrialised countries of the Region, traditional subsistence oriented livestock farming is often abandoned, opening up market and expansion opportunities for other farmers or commercial entrepreneurs.
Production mechanisms that ensure quality are achieved through contract farming/livestock production where the actual fattening/production process is contracted out by a company that supplies inputs such as feeder stocks, feed and veterinary supplies. The same company then buys back the final product at a pre-established price. In particular, poultry production has often developed from a simple farm operation to a complex vertical operation of related industries and enterprises, that includes grain production for animal feed, feed mills, slaughterhouses and processing plants, food chain stores and wholesale enterprises.
Further structural changes relate to the changing importance of different production systems. The growth potential for extensive grazing and roughage production is limited. In response to increased population pressure, remaining pasture land is being converted into cropland, leaving increasingly poorer land for grazing and mixed farming. Industrial production of pigs and poultry is therefore expected to increase relative to production from grazing and mixed farming systems (Figure 1).
Figure 1. Annual growth rates of different livestock production systems in terms of total meat production (1985 to 1995) |
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Source: own calculations, based on Sére and Steinfeld 1996 | |
High concentrations of animals create large amounts of waste that pollute water bodies and soils, and pose a danger to human populations. The same principles apply to processing plants, in particular slaughterhouses, which generate large amounts of waste if not properly equipped with waste recovery and control facilities.
Institutions and policies, until now, have largely failed to address these issues effectively. Concerns about the long-term productivity of natural resources, including land, water, air and bio-diversity, will not be reflected in market prices unless governments and international organisations define and establish mechanisms to correctly reflect the present and future value of natural resources, for the livelihood of present and future generations.
Currently, there is a lack of informed decision-making and analytical skills regarding livestock resource use. Policies are often inconsistent, and social and economic objectives are in conflict with environmental objectives or may have different time scales. Institutions need to be developed to provide a regulatory framework, local groups need to be empowered, and the establishment or reinforcement of a legal authority for the implementation of environmental policies is required. Prices need to be corrected for market failures (i.e. embody environmental costs) and to encourage efficient resource use. Technological change is also the key to solving environmental problems, and needs to be facilitated by government support to technology adoption and generation.
Antibiotics used in intensive animal production, in particular poultry, have led to the emergence of antibiotic-resistant strains of Salmonella, Listeria and E. coli. Copper and zinc, both of which are essential minerals, are deliberately added to animal feed concentrates while other heavy metals like cadmium are introduced involuntarily via feed phosphates
Disease risks need to be constantly monitored and assessed within a comprehensive disease risk management scheme, focusing on animal as well as human diseases related to food-safety. Emerging diseases, both in humans and animals, have to be viewed in the context of concentration of both human and animal populations, changes in movements, reduction of public services and the need for novel approaches to survey and manage related risks.
The emergence of large-scale livestock operations, often protected by direct and indirect government subsidies, has led to a series of social concerns. It has also deterred donors from providing assistance to livestock projects because large-scale intensive livestock production is likely to benefit wealthy commercial producers, and the increase in consumption of meat, milk and eggs takes place mainly in the higher-income groups. Large-scale commercial livestock farming generates little employment, even if upstream and downstream activities are included.
Many Asian countries have favoured intensive livestock production through a combination of economy-wide and sector policies, as described above. However, even without distorting policy effects, the overall trend towards growth in scale, specialisation and horizontal integration of livestock production implies that a large number of smallholders, mainly mixed crop-livestock farmers, are likely to lose their livelihood in the future. This may lead to social upheavals and increasing marginalisation of large segments of the society, if the issues are not properly managed.
Policy measures to promote Area-Wide Integration (AWI) need to gradually reduce animal production and processing in areas with high animal concentrations and waste loads, as well as to attract specialised livestock production into rural areas. Policies that can help correct the negative effects of livestock production include pricing, regulations and institutional development. The collective purpose of these instruments is to establish feedback mechanisms that ensure the impact of livestock production is consistent with overall social objectives.
Government institutions are critical in establishing and enforcing a regulatory framework for the protection of susceptible areas and for waste control. Within such a regulatory framework, incentive policies work well with intensive production systems that are susceptible to price changes. Intensive production depends on inputs that contain a high component of natural resources, often not reflected in their market price. These should be priced higher by abolishing subsidies or, in some situations, by increased taxation. Examples include concentrate feed, fossil fuel, inorganic fertiliser, livestock products, land, mechanisation and genetic material. This, in addition to a quantitative effect of reduced consumption, will induce a more efficient use of natural resources, with both economic and environmental gains. It will also favour a more even spatial distribution of livestock production and promote land-based systems. Incentives should also be provided though a levy on waste discharge or tradable manure quota schemes, both of which have been established in many developed countries.
Regulatory instruments are imposed to control the distribution and concentration of livestock production and introduce technical control systems. Some of these regulations are relatively easy to enforce whereas others are more difficult. The regulatory approach is most efficient in situations of point source pollution, i.e. where the polluter can be unmistakably identified and where there are strong institutions. In countries with weak institutions, the enforcement of regulations at a reasonable social cost remains a major challenge and limits the validity of this approach. Compliance with regulations affects cost of production and may therefore influence regional distribution. Examples include limits on the number of animals in the EU and most of the member states, taxes on surplus animals as in Belgium, taxes on surplus P (most EU countries), a ban on direct discharge of manure into surface waters (USA, Malaysia), and the establishment of nutrient management plans (Indonesia, USA, Europe). Guidelines on manure storage and application methods, timing, crops and quantities are available in practically all countries with high animal densities.
Zoning is an important policy for controlling animal manure storage and processing, not only for environmental reasons but also for safeguarding human health and rational regional development. Zoning has been important both in environmental and in regional development policies, as well as in successfully moving industrial production units away from urban centres in OECD countries. An important prerequisite for successful zoning is good infrastructure because animal products will have to be transported over larger distances. Marketing and processing infrastructure must, therefore, be taken into account when defining zones in order to make the best use of investment. The creation of confined "industrial parks", with prescribed and sometimes shared facilities for waste collection and treatment, offers opportunities to fully charge industrial production systems with environmental and other related costs while maintaining advantages of market access and economies of scale. Governments have frequently established guidelines for the siting of production units, particularly to protect urban settlements from obnoxious odours. Zoning, when done within a comprehensive area development plan, also allows for common waste collection, and treatment and sanitary facilities to be shared by a number of producers.
The most efficient and direct financial instrument would be to internalise all environmental costs into the consumer price. However, implementation of such policies is not easy. First, there is a lack of accurate economic evaluation of these costs. Second, unequal application of the inclusion of environmental costs in the product price puts some producers at a disadvantage.
Current financial instruments, therefore, focus on reducing emission of nitrogen and phosphates and other potential pollutants, particularly in susceptible and already burdened areas. The levies and taxes currently imposed on the intensive mixed and industrial systems in practically all developed countries fall into this category. Others are:
Removal of subsidies on concentrates to increase the cost of feed concentrate-intensive production and to favour land-based systems over the industrial system. In a more indirect way, removal of subsidies or taxes on fossil fuel may have a similar effect by raising the cost of feed. Government income from such sources could be used to alleviate problems of high animal concentrations.
Subsidies for investment or running costs to improve the adoption of emission control technologies.
A system of tradable manure emission quota would limit waste production and still create incentives for efficient resource use. Market permits and pollution trading are based on the establishment of payment per unit of pollution or the use of pollution reduction credits.
Stricter environmental standards and corresponding incentives to better balance land and animal distribution could be powerful tools to promote rural and agricultural development. As a consequence, prices for animal products would increase, providing land-based production incentives to intensify, and development would become more decentralised, creating employment and marketing opportunities outside the large urban centres. Such a process will have to be monitored carefully in order to not lose the technological edge by removing economies of scale and functioning infrastructure, and needs to be seen in the context of regional development.
Regional Workshop on Area-Wide Integration of Crop-Livestock Activities, 18-20 June, 1998, FAO Regional Office, Bangkok Thailand.
