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The delivery of services in animal health and production is considered a main factor for successful livestock development. These services include a number of functions and activities in the areas of input supply and quality control, preventive and curative veterinary medicine, technical assistance and extension, research, commercialisation, marketing of products, and others. Livestock services are usually delivered through a system composed of governmental institutions and, to a greater or lesser extent, organisations and individuals belonging to the private sector. The efficiency and quality of service delivery is closely related to the business management skills of the individual service supplier as well as to the proper co-ordination and balance between the actors of the service system.
Since the beginning of the 1990s, the efficient delivery of livestock services has become a subject of rising concern to many organisations dedicated to development co-operation, including the World Bank, FAO, the International Fund for Agricultural Development, the European Commission, the Inter-American Institute for Co-operation in Agriculture (IICA) and the Deutsche Gesellschaft für Technische Zusammenarbeit GTZ GmbH, to name but a few. Together with a series of national organisations they support projects and activities related to such things as the privatisation of veterinary services, the development of service structures based on paraprofessionals and self-help, and the definition of a new role for the public sector in the changing service system.
During the same period, and in response to the growing economic importance of the service sector in national economies, service management has developed as new subject-matter in business management. The customer or client was rediscovered and recognised as the principal motor of efficient service companies. In the agricultural sector of countries with a traditionally strong public-sector involvement, the modern theories, principles and experiences of business and service management did not always receive adequate attention in the past. The recent policies of structural changes that included the agricultural sector, associated with the liberalisation of markets, programmes of modernisation of the state and privatisation of services, drove decision-makers to focus their attention on a properly balanced and efficient management of public and private services provided to farmers and consumers of agricultural products.
The European crisis: who foots the bills?
The Asian economic crisis has not been able to hold public attention in Europe for long. As soon as the political and economic signs of overheating passed, people's interest switched back again to the situation in Europe and the growing number of unsolved crises there:
the high rates of unemployment;
the Balkan war;
the financial and social problems resulting from German unification;
the growing financial burden and risks in the process of European unification;
the future of European agriculture and its policy of subsidies;
the voluminous budgetary restrictions and cuttings at all levels;
the presence of “fires in the neighbourhood”; and
the crisis of values.
The large number of unsolved crises at the end of the millennium has diverted funds and attention away from global and targets back to local, national and regional development within Europe. At the same time there are many doubts about the capacity to keep on paying the rising bills of European development. This situation is summarised briefly here because it has direct and indirect effects on technical co-operation and projects of rural and livestock development in Asia that need to be brought to the attention of decision-makers and experts gathered at this meeting.
The crisis of livestock production in Europe
Traditionally animal husbandry has played an important role in Europe in economic and cultural terms. However, the application of science through market economy capitalism has changed farming from a way of life into a business for food and fibre production, where farmers have become businessmen, and animals and the environment are viewed as disposable (Hodges, 1999). During the last decades the intensification of livestock and food production systems has led to a serious market failure (McInerney, 1999) accompanied by alarming symptoms, which has resulted in substantial damage to their image in people's minds. The market failure and resulting crisis of livestock production in Europe relates to the following five problem areas:
animal health (outbreaks of notifiable diseases, BSE, emergency slaughters, etc);
food safety (BSE, salmonella, dioxin, antibiotics, hormones, drug residues, etc);
animal welfare (animal transport, cages for laying hens, keeping of calves, strict confinement, laboratory animal tests, etc);
the environment (use of manure, gaseous losses of N-compounds, ammonia emissions, acidification, leaching losses of nitrate, phosphate losses, eutrophication, water and soil pollution, waste disposal, odours, effluents, loss of bio-diversity, etc); and
technology (genetic manipulation, cloning, housing systems, slotted floors, etc).
Not only in the eyes of most consumers but also in those of a growing number of experts, profit-oriented mass food animal production in Europe has passed its rational and ethical limits. So it is not surprising that livestock production as a whole has lost public support dramatically. The above-mentioned problems, their causes and management so far have undermined the confidence of the consumers and also created confusion among producers and experts. The term “livestock development” is losing its positive connotation and instead acquiring a negative, almost dirty image. The author agrees with Hodges (1999) that the crisis of livestock production in Europe is a reflection of the crisis of current unsustainable values of western societies, whose only goal is material prosperity.
The ‘co-operation in livestock development’ crisis
The above-mentioned crises have affected and will continue to affect the delivery of development services in technical co-operation, both in quantity and in quality. The present situation of reduced financial resources has led to an increase in competition for available project funds. The shortage of funds has also induced new rules and procedures for setting priorities in technical co-operation. There are many signs indicating that the influence of donors on project selection has increased. Within the donor structures the formerly strong technical departments have been transformed into advisory units for the decision-making regional structures and projects.
As a result, agriculture and livestock matters in technical co-operation have to compete increasingly for resources with emerging new issues (disciplines) such as good governance, prevention of crises, environmental management, and others. In addition there are rising doubts about the impact of sectoral approaches and investments in rural development. The general impression and opinion is that the experts in livestock development have not produced enough new convincing ideas and approaches that could support the strategic marketing of their proposals.
As public opinion has a strong influence on policy-making on all levels, it is not surprising that decision-makers in technical co-operation are more and more hesitant to promote projects in livestock development. In the case of Asia, there seems to be an additional (justified) fear that the promotion of livestock activities could soon lead to situations and problems of mass production as the ones described above. For a number of reasons, German technical co-operation has been reluctant to support projects dedicated to commercial production of monogastric animals in recent years.
In general terms and as a result of the process described so far, less donor money is being invested in projects of livestock development each year. The limited funds available are used to ensure the completion of ongoing projects rather than to start new ones.
Critical trends in livestock service delivery in Asia
Development phases of livestock services
The historic forces which have shaped the contemporary state of veterinary services in developing countries of Asia and Africa are described in detail by Holden et al. (1996). According to FAO (1994), veterinary services in developing countries initially often centred around rinderpest control, which was a focus of governments, particularly in traditional livestock economies. As control was gained, veterinary departments broadened their horizons to cover other serious diseases, and even husbandry and breeding services with artificial insemination. In their early stages, public veterinary services could show certain achievements, for instance in developing technologies for the control of epizootic diseases like rinderpest (Holden et al., 1996).
Later on, more thought was given to the owners' needs for clinical services. Increased contact between veterinarians and stockowners gradually led to provision of clinical services, often either free of charge or at a nominal fee. The rapid increase in staff numbers and the failure of governments to recover operating costs from an over-ambitious range of activities combined to put veterinary budgets under strain and thus reduce the service to the farmers.
As a response to the world-wide crisis of public sector finances in developing countries during the last two decades, international agencies (IMF, IBRD) started pressuring for a reform of state institutions and the introduction of structural adjustment programmes to reduce state expenditure. The impact of budget reductions left many public livestock services, and especially veterinary services, with insufficient operating budgets to fulfil their obligations. According to Holden et al. (1996), this funding crisis during the recession years of the 1970s and 1980s, with its symptomatic drug shortages, lack of transport and failure to maintain equipment, was caused by the reduction of operational funds in favour of staffing. In the opinion of Ashley et al. (1996), this encouraged the view that the services had become ineffective and inefficient and provoked calls for privatisation of many of their roles. As a result, many countries started to restructure their official livestock (mostly veterinary) services.
Since the beginning of the 1990s, a series of expert consultations, roundtable meetings, workshops and studies have been organised by the international community in order to review the progress and experiences of privatisation of agricultural and veterinary services in different regions and countries (FAO, 1990; FAO, 1992; FAO, 1994; IICA et al., 1993; Putt et al., 1993; Vétérinaires Sans Frontières, 1994; AITVM, 1995; IICA-GTZ, 1995; FAO-GTZ, 1997). Among other results, they came to important conclusions on services and corresponding activities that cannot be delegated by the government and on those that can very well be handed over to the private sector.
Recently there have been claims that for several reasons some of the reform programmes have failed. Ashley et al. (1996) found that the processes of change often were not sufficiently taken into account by state veterinary services and as a result the objectives and opinions of key stakeholders in the public service had not been considered adequately. Changes have been motivated more by the need to reduce budget deficits than by the need to improve the quality of services. A detailed literature overview on the quality of public services is given by Holden et al. (1996), looking at aspects such as impact, cost, financial sustainability and coverage.
When measured in terms of financial sustainability, the performance and future of public livestock services in many countries do not look very bright, as they have become increasingly dependent on donor funding. Pitt (1995) presents a series of critical statements and observations concerning the sustainability of investments made by the World Bank and Asian Development Bank in veterinary services. He mentions among other deficiencies that few projects had provisions for any form of cost recovery to adequately cover the costs of maintaining the new facilities and financing the increased activities of better trained manpower. The prediction of Winrock (1992) that most governments will not be able to afford the number of extension, animal health and other support service workers currently employed is gaining in substance. The preponderant phases and elements in the development of livestock service systems are summarised in Box 1.
Box 1. Phases and elements in the development of livestock service systems
|Phase 1: Public dominance|
|Phase 2: Experiencing shortcomings|
|Phase 3: Strengthening private service delivery|
|Phase 4: Privatisation as a public policy and task|
Source: Kleemann, 1999
The situation in Asia
The situation of public and private livestock service delivery in Asia shortly before the outbreak of the Asian economic crisis was discussed in a workshop in Bangkok in 1996 (FAO-GTZ, 1997). The special situation of livestock services related to genetic improvement was discussed in another workshop in Sri Lanka (MLD&RI-GTZ, 1997). In Asian countries, the direct involvement of the public sector in the delivery of livestock services is apparently melting away. Privatisation, deregulation and decentralisation policies constitute the underlying process of structural reforms. Services like the production and supply of inputs, disease control, veterinary diagnostics and artificial insemination are already managed by the private sector in a number of countries. Projects increasingly focus on the strengthening of non-governmental organisations, producer organisations, private veterinary practice and the use of para-veterinarians in basic animal health programmes. Large national and multinational companies of the food industry compete with dairy co-operatives in the delivery of services offered to dairy smallholders. Their economic power and influence could lead to monopolistic situations in certain areas. In many cases these companies offer some livestock services (e.g. extension, diagnostic service) seemingly free of charge, but recover their costs by paying low milk prices. They compete with small service enterprises and individual entrepreneurs like private veterinary practitioners. In the process of privatisation, governments try to maintain regulatory control.
Under the pressure of the economic crisis, public livestock service delivery tends to concentrate efforts and remaining resources on the delivery of services directed toward the production and health of (large) ruminants and seems willing to forego its involvement in the traditional and commercial poultry and pig sectors. The delivery of services to the pig and poultry (broiler and breeding) sectors is managed in great part already by large vertically integrated private animal food companies, notably in Thailand and the Philippines. Maybe professional backgrounds and preferences of livestock officials play a certain role in this trend.
Already before the economic crisis, many services had come to an apparent standstill (e.g. breeding), and a freeze on investments in the public service structure was reported in several countries. The traditional public livestock service system and its capacities cannot cope any longer with the needs and demand for livestock services in quantity and quality. The inefficiency of the present public delivery system is recognised by most governments.
The shrinking degree of service coverage is another critical trend. As one of the consequences of privatisation and the economic crisis, small and marginal farmers, women and the landless are rapidly losing access to the remaining public and emerging private service structures (social, financial, agricultural). The social impact of the crisis - decline in income, increase in malnutrition, rise of absolute poverty, decline in social services, etc - has changed priorities and needs in the affected households. Such a situation reduces the present and potential demand for (commercialised) livestock service delivery. All services that depend to a large extent on the supply and trading of (imported) inputs, such as drugs, fertiliser, feed, seed, genetic material, equipment and so on, are specially affected. This includes organisations involved in genetic improvement (for example, through artificial insemination), companies that produce and distribute inputs, as well as private veterinary practitioners and para-veterinarians whose income depends to a certain extent on the sale of inputs. In addition, many farmers are obliged to sell their animals in order to pay for basic needs. The concomitant reduction in livestock numbers further reduces expenditures on inputs and service demand.
The reduced levels of physical and financial inputs will also have negative effects on production levels. This will harm the business of organisations delivering services related to meat and milk marketing, such as dairy co-operatives, producer associations, private milk collectors, butchers, etc.
Deficiencies in livestock service management will probably remain a common feature of many public as well as small and medium-sized private-sector organisations in coming years. The problems and possible responses are described in detail in the next two sections. Unless the current lack of opportunities and funds for training of students, professionals, managers and service personnel on agricultural and livestock service management is not tackled effectively, a significant change in this trend is difficult to imagine.
In countries that lack coherent national policies and strategies for the improvement of public sector management and the strengthening of livestock service delivery systems, the negative impact of the above-mentioned trends on suppliers and clients of livestock services will increase further. Delays and problems in the implementation of new strategies will have the same effect.
Problems in livestock service management and their consequences
The precise identification of the principal problems in livestock service management and their consequences is the key to success for their subsequent solution. A selection of the main problems in livestock service management, as identified in several countries and organisations in Asia and other parts of the world, is presented in Box 2.
Box 2. Main problems in livestock service management
Box 3 gives examples of the most common consequences of the problems found in the management of animal health and production services. For the manager and management adviser it is important to recognise that these symptoms do not necessarily constitute the management problem per se.
Box 3. Consequences of problems in livestock service management
The concept of service efficiency
For public and private service suppliers in animal health and production, the increase of service efficiency should become the main objective and task of modern management. Basic concepts and elements of service efficiency in relation to public and private livestock services and their significance have been presented by Putt et al. (1993) and Kleemann (1995) in the framework of international events organised by AITVM (1995), IICA-GTZ (1995) and FAO-GTZ (1997). To define and measure the efficiency of a service in general is not an easy task. Exercises in workshops which include an “analysis of understanding” regarding the term “efficiency” in relation to service delivery usually come up with an often surprising variety of choices (Kleemann, 1998).
Looking at the variety of animal production and health services, the task of defining and measuring efficiency becomes even more difficult. As a pragmatic approach toward a satisfactory definition of service efficiency, it is useful to describe the characteristics of deficient or inefficient services (Box 4).
Box 4. Characteristics of deficient or inefficient services
Source: Kleemann, 1999
A single characteristic out of the ones mentioned here is not necessarily a definite sign of low efficiency or inefficiency. According to Kleemann (1997), it is possible to clearly determine three components of efficiency which have to be considered in livestock service management:
In this sense service efficiency can be defined as follows: “An efficient service makes the best use of its resources in order to satisfy the needs and demands of clients and beneficiaries, strengthening at the same time its own unit and members.”
Responses of livestock service managers to the crisis
Apply the basic concepts of service management
The concepts of service management are based on the general concepts of management. Giles and Stansfield (1995) define management as “a comprehensive activity, involving the combination and co-ordination of human, physical and financial resources, in [such] a way [that] it produces a commodity or a service which is both wanted and … offered at a price which will be paid, while making the working environment for those involved agreeable and acceptable”. Management, according to the same authors, consists of four basic functions: setting objectives, planning, decision-making and control.
The application of the principles of strategic management, management by objectives and participatory planning in service management is very helpful. The initial formulation of a vision is useful in determining common goals and expectations. The setting of objectives involves not only a thorough examination of the internal and external environment, but also a certain amount of self-examination.
Transferring the concepts of Schwarz (1992) to service management, the tasks of a manager are related to the areas of marketing, organising, steering and leading personnel. Service managers are in charge of processes such as recognising problems, elaborating solutions and inducing their implementation, forming opinions, making decisions, supporting their acceptance, reaching agreements and realising innovations. Like other managers, a livestock service manager has to deal with the profile and image of the organisation, service-orientation, the design of the individual service or service packages, service marketing, service sales and the respective pricing policy, finances, developing and leading service staff and, of course, maintaining relations with the principal clients.
Many authors agree on the outstanding importance of client-orientation for the successful management of service suppliers. According to Benölken and Greipel (1994), service is everything that motivates, attracts and maintains clients. Client-orientation as a primary business management dimension to them requires that the client with his individual problem be the focus of the company's advisory and assistance schemes, that products take second place whenever clients want a solution to their problems, and that the supply of solutions to the various problems that may emerge be at the centre of the service organisation. They call attention to the strategic importance of client-orientation, also called target-group orientation. Sooner or later this will lead to the focusing of management plans and activities on certain client segments. It implies the need for a corresponding differentiation of the service offer. Albrecht (1992) too is convinced that the utility of the service for the client has to be the main force driving all service suppliers. Specialists in service management also agree that customers want value for money, which means that they are willing to pay provided it is worth their while.
In some cases, livestock service decision-makers are more familiar with technical terms used in technical co-operation and project management than with the language of business management. Semantics influence managerial and entrepreneurial attitudes. One should be aware that the term “client-orientation” used in service management does not differ very much in its meaning from the term “participation” used in the language of development and co-operation.
Management plays an important role in assuring service quality. Service quality management has become an important area of activity and specialisation in recent years. Chapter 5.2 of ISO 9004-2 (Din, 1995) describes precisely and succinctly the role and responsibility of management as a key factor in a service quality system. Management is responsible for developing a quality policy, quality goals, objectives and activities, and a system for the control, evaluation and improvement of service quality.
The customer being the focal point of the quality system, the highest levels of management are responsible for establishing a policy for service quality and customer satisfaction, which requires a strong commitment to the development and effective operation of a quality system. Management should also assure the effective control, evaluation and improvement of service quality throughout all stages of service provision. For managers of livestock services all over the world, it is becoming increasingly important to know, observe and apply ISO guidelines and standards for service quality management and assurance, in order to obtain the respective certification by the national standard body, as a proof of professional service management to their customers.
Focus on selected strategic responses
The economic crisis forces livestock service providers to increase their efficiency. The professional management of public and private livestock service organisations becomes more and more important as a support for farmers who are also facing the crisis. With regard to the situation and critical trends of livestock service delivery in Asia as described earlier, the strategic responses to the economic crisis as listed in Box 5 should be given a high priority by managers of public and private livestock services.
Box 5. Strategic responses of livestock service suppliers to the economic crisis
Determine performance indicators and targets
An important managerial tool to measure service efficiency is the use of appropriate performance indicators. The selected indicators should be monitored and evaluated constantly by the service organisation. In order to serve their desired purpose the indicators should be:
As an example, a checklist of possible performance indicators for services delivered by a veterinary diagnostic laboratory is presented in Box 6. From such a checklist, a limited number of appropriate indicators should be selected to monitor service efficiency (quality, external effects, internal effects). The difficulties associated with the determination of appropriate performance indicators arise from two general aspects: a) the decision as to which indicators are best suited to one's special purpose and b) how to monitor (collect) and evaluate (interpret) the respective data.
Box 6. Checklist of performance indicators for a veterinary diagnostic laboratory
Adapted from Kleemann, 1999
It is important to stress the fact that many of the indicators listed above are not only influenced by the service or service organisation but also by other external factors. This situation usually complicates the interpretation of results, especially if these external factors are not included in the monitoring system as well. Therefore it is advisable to initially select efficiency indicators which are to a high degree or even completely under the influence of the respective service or service organisation and which are affected mainly by its performance.
Box 7. Selected efficiency indicators for management systems of service units
|Qualification of the management|
|Management makes use of appropriate planning techniques|
|Managers take quick and appropriate decisions|
|Decisions are quickly transferred into action|
|State of actualisation of accounting and other books|
|Criteria related to clients/membership|
Source: Kleemann, 1999 - adapted from Reichard and Wissler, 1989
1 Some agencies, like associations, require a membership for the right to receive services. Other agencies deliver services to any client. Each member is a client but not each client a member.
Management systems of service organisations themselves and their efficiency can and should also be measured, analysed and monitored. A selection of criteria from which efficiency indicators are derived is proposed by Reichard and Wissler (1989) and presented in Box 7. By using such an instrument,q management shows its willingness and ability to lead and steer processes aimed at improving efficiency and strengthening the organisation.
How to deal with external and internal factors
The management and efficiency of livestock service units and organisations are influenced by a wide range of factors, which are usually classified into external factors or frame conditions, and internal factors. The Asian economic crisis is considered in this context as an external factor.
External factors influence the management and efficiency of livestock services directly or indirectly in positive or negative ways. Whenever experts, managers and clients of livestock services meet, it is one of their main tasks to identify these factors, especially those that are limiting their business performance. Whatever the country or the region, usually the same common external factors are mentioned as influencing strongly the livestock service sector (Box 8).
Box 8. External factors affecting the management and efficiency of livestock services
Adapted from Kleemann, 1999
Case studies show that, in reality, there are many more external factors with influence on the performance of a livestock service supplier. For a competitive service management, it is important to know about these factors, the underlying policy trends, the persons and groups supporting certain policies and their particular interests. The respective knowledge can be built up and maintained only by continuous access to the relevant information.
A good way to protect oneself in a critical situation and to act against negative external factors is to join forces by forming an interest group, such as an association or union, and lobby for changes. Lobbying itself is a special task which includes a wide range of activities at different levels and requires special skills by the persons in charge. Generally considered as dubious, lobbying has become a standard tool within the common business world. In agricultural business and service management, it is being used frequently by larger national or international enterprises and farmers associations. In recent years, smaller interest groups have found ways to strengthen their influence and compete in the market as lobbyists to defend their interests.
Sooner or later advisory efforts directed toward the improvement of livestock service management will reach the point of analysing the influence of external effects and looking for ways to overcome them. The external factors can be seen as conditions imposed from above for a certain period of time. Usually they have been created by policymakers and other powerful forces of the public and private sector and willy-nilly have to be accepted as such. Unfortunately many decision-makers at medium and lower levels, project managers and livestock service managers are using imposed external factors as standard excuses for low service performance rates. Such a unilateral view draws attention away from internal factors, which are more directly under the control of a service manager.
The management and efficiency of livestock services are influenced also to a large extent by a set of so-called internal factors, which are much easier for a livestock service manager to control. These factors are related to the area of influence of an organisation and thus directly to its management. Box 9 gives an overview of the main internal factors that influence the efficiency of public and private livestock service suppliers.
Box 9. Internal factors affecting the management and efficiency of livestock services
Source: Kleemann, 1999
The managers and controlling bodies of non-public service organisations should be able to steer these factors toward an optimum and guarantee their adequate combination in order to achieve maximum performance. This is indeed the precise task of management, it is what management is paid for and evaluated against. Public service organisations and units should be guided by the same principles and goals. In the public sector, case-specific organisational and administrative rules, regulations and interventions create numerous obstacles even for a good service manager. A very useful book on quality management in the public sector in this context is the one written by Morgan and Murgatroyd (1994).
The clients' responses
According to the available information, the losers of the economic crisis among the clients have been the households of small and marginal farmers, women, children (malnutrition), the landless, small rural entrepreneurs but also many urban consumers of livestock products, due to a decline of income. Their response depends on the degree of impact. The alternatives to confront the crisis are often limited. The different response options are listed in Box 10.
Box 10. Response options of clients (farmers, consumers) to the economic crisis
The nature of the response may be positive (+) or negative (-). In some cases, a response can be valued as positive and negative. A reduction of demand for an input that may be harmful to the environment (e.g. pesticides, fertiliser) might ruin a local agricultural service centre but could help recover bio-diversity and protect human health.
Responses of policy makers to the crisis of livestock service delivery
The trends in livestock service delivery described above and the way farmers, consumers and service managers are likely to respond or have responded to the Asian economic crisis inform the responses of policymakers to the crisis of livestock service delivery. The responses listed in Box 11 can also be understood as recommendations. They are based in part on recommendations formulated by FAO-GTZ (1997) and Kleemann (1999).
Box 11. Responses of policymakers to the crisis of livestock service delivery
Only socially and technically competent livestock service organisations will be able to adapt to and survive in times of crisis.
Only efficient and economically sound client-oriented service suppliers are able to transform farmers into socially and technically competent entrepreneurs in sustainable livestock farming.
Decision-makers should focus more on strengthening the management capacities of all stakeholders involved in the delivery of livestock services.
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International Livestock Research Institute
PO Box 30709, Nairobi
The currency crisis that began in Asia in 1997 has had a dramatic effect on the livestock sector of many countries in the region. The industries relying on the price of imported inputs such as feeds in the case of the pig and poultry industries, and live cattle in the beef feedlot industry, were hardest hit. Governments have responded by dramatically changing their agricultural policies - notably on the import of beef and live cattle. Before the Asian currency crisis, structural changes in diet in Asia resulting from economic development were leading to significant increases in the demand for animal protein - particularly ruminant and non-ruminant meat and milk. This growth in demand placed increasing pressure on the existing, predominately mixed crop-livestock smallholding production systems in the region and encouraged the growth of the commercial production of pigs and poultry and, to a lesser extent, of beef. Each of these issues is presented in more detail for further discussion on the nature of future livestock production in the region.
Animal protein consumption patterns and trends in Asia
The consumption of livestock products in South and Southeast Asia - particularly meat and milk - has generally increased and has strong potential for growth in the next century. This results from economic development and associated changes in diet coupled with usually large populations, sizeable population growth rates and accelerated urbanisation. (Chantalakhana, 1996; Mubyarto et al., 1973; Cornell and Sorenson, 1986). Structural changes in dietary habits following increases in income result in the substitution of animal protein for cereal starch and protein (Yuize, 1978; Garnaut and Ma, 1992; Longworth, 1983). The transition from a diet dominated by starch staples to one including substantial amounts of animal products is a general feature referred to as Bennett's Law.
Traditionally, in Southeast Asia, per capita consumption of non-ruminant meat (i.e. meat from pigs and chickens) is generally higher than that of ruminant meat (i.e. meat from cattle, buffaloes, sheep and goats), whereas the reverse is true in South Asia - a feature which is generally understood to be a reflection of the greater availability and lower prices of the dominant type of meat consumed there (Table 1). For example, ruminant livestock species (particularly cattle and buffalo) are the largest contributors to meat production in South Asia - unlike in Southeast Asia (Table 2). Consumption trends also reflect historical changes in relative world import prices for ruminant and non-ruminant meat, which in turn reflect structural changes and related productivity increases, especially in the non-ruminant sector (Zhao and Williams, 1996).
Table 1. Annual meat consumption per person by type for selected Asian countries, 1994
|Country||Total ruminant and non-ruminant meat|
Table 2. Livestock species contribution to meat production in selected Asian countries, 1993
|Country||Beef & veal|
|Mutton & lamb|
Source: FAO, 1994
Production patterns and trends in Asia
Meat production systems in Asia can be divided into two categories - commercial production systems (including highly intensive, confined feeding operations such as feedlots and more extensive ranching systems) and backyard or small landholding production systems. Meat production in the region is dominated by the latter - particularly in the lower income East Asian countries. However, beef productivity in the smallholder meat sector is typically low as a result of a lack of animal husbandry skills, which translates into inadequate nutrition (leading to slow growth rates and low rates of fertility), greater disease problems and low use of production technology (Manzo and Tanguin, 1992; Jayawardhana, 1993). Although cattle raising is part of the rural culture, cattle breeding is not, and this puts long-term constraints on the quality of cattle (Piggot et al., 1993). The relatively long production time lags in beef production normally mean that the producer must rely on alternative sources of income, and this reflects the mixed nature of smallholder farming. Structural changes are also occurring in livestock production systems because of attempts to increase production via the adoption of non-traditional production systems. The backyard production system still dominates the ruminant meat sector, where changes such as intensification and commercialisation of meat production systems have been slower than in the more intensive pig and poultry industries, which are more apt to adapt technology (Longmire and Gardiner, 1984). For example, as a result of structural changes in Indonesia's livestock and poultry industries between 1969 and 1993 (particularly the introduction of large-scale commercial production in the broiler industry in the early 1980s), the composition of the country's total meat production changed rapidly: the contribution of beef dropped from 53 to 13 percent and that of buffalo meat from 16 to 3.5 percent, while poultry meat increased from 13 to 37.2 percent (Directorate General of Livestock Services, 1992; FAO, 1996) (Table 2).
Table 3. Domestic milk as a percentage of total domestic milk consumption per capita, 1982–1992
|Country||Domestic milk contribution to consumption, 1992 (%)||Change in domestic milk contribution, 1982–1992 (%)|
Source: FAO, 1994
The nature of milk production, too, is varied in the region. Overall, milk production per capita comes from a wide range of sources (cattle, buffaloes, goats and sheep) (Table 3). For countries in which pasture and grazing land is scarce, the dairy industry is an important source of beef and veal in addition to milk (Reeves and Hayman, 1975). However, dairy processing is not a major industry in most developing Southeast and South Asian countries and, therefore, it is unable to offer much in terms of milk (or ruminant meat) self-sufficiency. Maintaining and increasing meat self-sufficiency rates in a number of Asian countries may only occur at the expense of feed grain self-sufficiency - one of the main industries supporting the meat production industry in South and Southeast Asia (Longmire and Gardiner, 1984; Unnevehr, 1991). Wherever the necessary expansion of domestic feed grain production is constrained, as is the case in much of Asia, the reliance on imported feed grain increases (Hayami et al., 1976; Hooke 1989). For example, in the Philippines, the value of imports of feed for animals (excluding non-milled cereals) quadrupled between 1985 and 1989, reaching US$180 million in 1989- or 13.5 percent of the total value of agricultural imports (Costales, 1990). The dependence on feed grains for further increases in ruminant livestock production has been reduced in parts of Southeast Asia owing to the availability of agro-industrial by-products - supplementary feed grains, forage, pasture grasses and legumes, tree fodder and crop residues.
Consumption and production forecasts for meat and milk in Asia
Before the currency crisis, ruminant meat, non-ruminant meat and milk production and consumption (using high and low income elasticity of demand coefficients for ruminant and non-ruminant meat) in selected South and Southeast Asian countries was projected for the year 2000, using the methodology described in Rutherford (1999).
Table 4. World agricultural price changes resulting from partial and global multi-sectoral trade reform scenarios (percent increase in reference to world prices from base simulation in 2002)
|Commodity||GATT trade reform||Global trade reform|
|Beef, veal & sheep meat||2.8||17.8|
Source: Goldin, Knudsen & van der Mensbrugghe, 1993
The forecast for ruminant meat indicated that countries such as China, the Philippines, Pakistan and Bangladesh would consolidate their self-sufficiency. However, the other countries under survey would become less self-sufficient in ruminant meat - in particular Malaysia and Indonesia, despite significant increases in average annual production growth rates since the early 1980s reflecting effects from other factors such as population and income increases. On the other hand, non-ruminant production in most of the selected countries was forecast to meet consumption requirements - particularly in Malaysia, Indonesia, the Philippines and Cambodia. The notable exception to non-ruminant self-sufficiency was Pakistan. India, Pakistan and the Lao PDR were forecast to be self-sufficient in milk in the year 2000. However, based on present trends, domestic consumption requirements are likely to be greater than domestic production in the other countries under survey-particularly Malaysia, the Philippines and Thailand, Sri Lanka and Vietnam.
Table 5. Average of elasticity estimates from some major empirical studies of the demand for ruminant meat and beef
|Country||Income elasticity of demand||Own-price elasticity of demand for beef||Cross-price elasticity of demand for pork|
Sources: Widjaja, 1978; Tomek & Robinson, 1981; Simpson & Farris, 1982; Longworth, 1983; Goddard, 1988; Costales, 1990; Harris et al., 1990; Gunasekera et al., 1991; Tyers & Anderson, 1992; Piggot et al., 1993; Trewin et al., 1995
Main points for further discussion
With recovery forecast in most of the livestock industries in the region, just how severe have the effects of the currency crisis been on the commercial and smallholder production sectors of the livestock industry?
What are the changes in production, processing and marketing of meat types and qualities likely to accrue from the effects of the currency crisis on input prices?
The above self-sufficiency forecasts were based on positive long-term growth rates in GDP per capita. What is likely to change now, given the negative rates recorded in 1997–1998 and even in 1999 in some countries?
What future policy directions will Asian governments take, particularly in relation to the growing reliance on imported feed, as well as regarding extension, investment, credit and interest rates, animal health and marketing?
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