Regional Office for Asia and the Pacific

Hiroyuki Konuma

FAO Regional Representative for Asia-Pacific

WELCOME REMARKS
by
He Changchui
Assistant Director-General and Regional Representative for Asia and the Pacific
delivered at the

STRUCTURAL CHANGE IN THE LIVESTOCK SECTOR

Amari Watergate Hotel, Bangkok
27 January 2004




Distinguished Guests and Delegates.
Ladies and gentlemen,
Dear participants,


Food Security:

Agriculture plays a prominent role in the economy of most countries, particularly developing countries. Growth in agricultural production has, in general, increased dramatically in most countries in the last twenty years. As a result, the world produces enough food to feed everyone. Nevertheless, some 800 million people go to bed hungry every night. Hunger and poverty persist in many countries. FAO therefore stresses the need and works for global food security, now and in the future, as well as at domestic, regional and national levels.

FAO’s latest poverty data indicate both good and bad news: while 19 countries managed to reduce the number of chronically hungry people since the 1996 World Food Summit, most other countries across the developing world have not achieved a substantial reduction in the hunger figures or – worse yet – are facing climbing numbers.

Several factors differentiate the successful countries from those that suffered setbacks. In general, countries that succeeded in reducing hunger are characterized by more rapid economic growth and specifically by more rapid growth in their agricultural sectors. They also exhibited slower population growth, lower levels of HIV infection and higher ranking in the UNDP’s human development index.

These recent conclusions confirm our understanding of factors that contribute to food security: the problem is not so much a lack of food as a lack of political will. Indeed, the vast majority of the world’s hungry people live in rural areas of the developing world, far from the levers of political power and beyond the range of vision of the media and the public. Little is said and done to put an end to the suffering of a ‘continent of the hungry’ whose 800 million people – 505 million of them living in Asia and the Pacific.

The role of livestock

It is within the global context of food insecurity that I should like to emphasize the role of the livestock sector, not only as a source of nutrition and income and thus a primary means of survival for many people still in poverty, but also as a vehicle on the road out of poverty. Livestock provide draught power and fertilizer for cash crops such as rice and maize; and the sale of meat, skins, and milk provide household incomes. This income sustains households that are economically moving out of poverty, but that are also at high risk of sliding back into poverty during times of crisis, such as drought or flooding. In fact, as a source of nutrition and possibly cash income, there may in many cases be no other obvious options to smallholders and the landless poor other than livestock. Of the 70 percent of the rural poor who own livestock, 70 percent again rely on their livestock as a primary means of income. These producers are characterized as lacking in basic levels of necessities such as food and shelter for their well-being. The rural poor have access to few resources including little or no land access, limited access to water and feed resources, and limited to no access to established services such as health care, education, and credit.

Livestock for these producers are not seen solely as a source of income or nutrition, but also as an integral component to an agricultural system that contributes significantly to the social capital of communities. Cattle and small ruminants figure prominently in the complex social anthropologies of communities in countries on many continents, positioned as instruments of social wealth and prestige in a variety of activities including marriage ceremonies, land transfer, coming of age rituals, and conflict resolution. The use of livestock for such activities in other cultures that rely on cultivated crops is also not uncommon.

Besides its role in poverty alleviation, there are a few production systems in developing countries in which livestock are intensively managed and for which regional commercial livestock production is a critical activity that generates wealth, Thailand being one example of such a country. The further expansion of regional livestock trade opportunities is of high interest to these producers. These systems rely on the intensive use of inputs such as concentrate feeds, extra-household labour, and veterinary supplies. The objective of the producer is profit motivated, and the livestock products of such systems benefit large numbers of consumers in urban and export markets, within and beyond the region of production, providing primarily food products but also non-food products.

THE LIVESTOCK REVOLUTION, TRADE OPPORTUNITIES, AND ANIMAL DISEASE

From the early 1970s to the early 1990s, there was a growth of about 50 percent in the combined per capita demand and consumption of meat, eggs, and milk in developing countries, leading to large increases in animal production. The fastest annual production growth of animal commodities in developing countries in the last 25 years has been in the poultry and pig sectors. The poultry sector has grown by 8 percent annually and the pig sector by 6 percent annually. This remarkable increase in per capita consumption of food from livestock in developing countries is predicted to continue to 2020, though at a slightly slower rate. The shift in developing countries demand for food of animal origin and the resulting increased production of livestock has been termed the Livestock Revolution. The increased production of livestock has occurred in both the developing and developed countries, and is expected to continue.

By 2020, 60 percent of the world’s meat and 52 percent of the world’s milk will be produced in developing countries, contributing to the alleviation of poverty and malnutrition and providing sustainable opportunities for small-scale farmers. The majority of livestock production and consumption will be in developing countries. Meat demand in developing countries will nearly double, led by China and the rest of Asia, although per capita consumption in developing countries (predicted to be about 25 kg/caput) will still be dwarfed by consumption in developed countries (predicted to be about 80 kg/capita).

Numerous factors led to this increased demand including population growth, urbanization and rising incomes, particularly in growing urban centres in developing countries. Relatively wealthier consumers demand a more diversified diet, consuming higher volumes of meat, eggs, and dairy products, reducing their consumption of starchy staples, and increasing their consumption of more processed and value-added foods. The demand stimulus coming from expanding urban centres will continue, as will the development of intensifying peri-urban agro-industrialization.

As the demand for livestock products was increasing, a rapid expansion of meat trade was occurring, led by exports from developed countries. In 1997, the net meat trade for developing countries resulted in an import of 0.6 million metric tons of meat, while developed countries had a net export of 2.5 million metric tons. This divergence is predicted to continue to 2020; developed countries will be the main export leaders while developing countries will be import leaders. Developing nations in some regions will expand their export markets; for example, Southeast Asia will become a net exporter of pork and chicken, and Latin America a net exporter of beef.

The dramatic increase in demand for livestock products has brought with it heightened risks and opportunities, complete with controversy over the benefits and costs. One of the more contentious issues has been the question of the increasing incidence of disease, both animal and zoonotic. Food safety concerns parallel the livestock revolution. In Asia, the Nipah virus epidemic that began in 1998 resulted in the death of 105 people and the slaughter of one million pigs in Malaysia, one half of the entire national herd. The ongoing Avian Flu epidemic has expanded to most countries in Southeast Asia and resulted in human deaths and the slaughter of poultry to control the disease. Food safety experts are increasingly concerned with the contamination of livestock products by not only bacterial and viral agents, but also heavy metals and antibiotics. As trade opportunities have expanded, we have also become increasingly aware of the need for effective regional control of transboundary animal diseases such as Foot-and-Mouth Disease, classical swine fever, Newcastle Disease and the emerging Avian Flu epidemic.

To address these issues, we must pay close attention to the importance of international agreements and the harmonization of standards that are set and imposed through equitable procedures. But even perfectly fair standards will leave open the question, what is the impact on the small-scale producer? We must bear in mind that decisions pertaining to animal disease control strategies, public health policy, rural investment strategies, export standard regulation and enforcement, and agricultural extension also need to be directed to help remove the poor from poverty.

For the Livestock Revolution in general, small-scale resource poor farmers risk being marginalized by this process, as small numbers of large-scale operations contribute to the concentration of specific livestock product export industries. The likelihood that small-scale farmers will in the short term remove themselves from this predicament and have the ability to participate in larger international markets, for example through vertical integration, is unlikely.

STRUCTURAL CHANGE IN THE ASIAN LIVESTOCK SECTOR

The Livestock Revolution has had a strong impact on the structure of the livestock industry. Asia has been a fore-runner in this area as rapid industrial and urban growth, particularly during the last decades, has led to remarkable expansion of the peri-urban pig and poultry industries. In general, livestock farms have become larger or at least more concentrated in terms of their use of inputs.

In China, where a decade of per caput income growth of 7 to 8 percent per annum has resulted in a huge growth in meat demand, pig farms have grown to a massive scale. Poultry farms are also making rapid change to keep pace with increasing demand. In the Philippines, over the last 20 years, the value-added share contributed by livestock to the agriculture sector nearly doubled. Small scale egg producers have virtually disappeared.

Similarly, in India the poultry industry has rapidly expanded and specialized in the last 20 years. Broiler production has increased at the remarkable rate of 18 percent per annum. This growth in production has been accompanied by the development of the poultry health industry, feed and animal health services, and farm management extension and training.

In India, total milk production has increased more than 240 percent in the last 25 years. Pakistan, the regions’ second largest milk producer and largest consumer per caput, stands poised to expand production to meet the growing demand of dairy products.

Higher feed efficiencies have been realized through genetic and animal nutrition; animal health has improved through developments in vaccines and information delivery to producers. Livestock housing and marketing is more efficient; and in many countries in Asia the backyard commercial chicken farm is becoming a thing of the past.

Small and medium scale farms have declined in numbers and share of total farms in Asia. In Thailand, during the last 10 years there has been a reduction in the number of animals on small and medium sized farms of more than four percent per annum. At the same time, while large scale pig farms reduced in number between 1993 and 1998, the number of pigs produced per farm increased by 73 percent per annum. So, fewer farms, but more pigs!

Contracting between producers and private industry, particularly feed companies, is now an extremely important element of the broiler and the swine industries. Thailand and Malaysia are leaders in this area, and trends indicate increased interest in contracting in Cambodia and Indonesia.

The Livestock Revolution has also had impact on the supply chain. The urban Asian consumer is rapidly becoming used to the convenience of buying meat and dairy products in a supermarket. Clearly, the nature of demand for livestock products has changed, and so too has the response to this demand.

Specialization has become key to these changes. In the case of Thailand, broiler and layer farms have differentiated into breeding farms, hatcheries, broiler operations, and egg producing farms, all with specific methods of input and output management. Scaling up has also occurred; there are at least a dozen poultry farms in Thailand with more than one million birds per farm.

At the same time there is a concern for market concentration. Vertical integration of hatcheries, feed mills, and growing farms is rapidly increasing, with a few competitors dominating the market.

Our current concern addresses the implications of these structural changes in the Asian livestock sector. FAO’s overall aim for food security is translated into a few multi-disciplinary areas for priority action. The need for good agricultural practices – from the farm to the table – and building up healthy farming systems are embedded with issues dealing with improvements for the consumer and the producer, such as food safety. They question what these changes will mean in terms of the environment and public health, and how these changes will impact on the displacement of small livestock farms, or the social impact.

Over the next three days you will be addressing these challenges and the five main issues of high importance:

  • the potential displacement of the small scale livestock producer;
  • implications for poverty reduction and economic development;
  • animal and human health concerns;
  • environmental externalities, and;
  • changing demands of stakeholders.

I urge you to think about these issues and the role you and your respective institutions can play in shaping appropriate policy responses to structural change in the livestock sector.

Mr. Director General, ladies and gentlemen, thank you for your kind attention. I wish you every success with this international meeting and workshop.

Thank you.