The livestock sectors of the countries of the Asia-Pacific region have experienced phenomenal growth. This has created opportunities for farmers in the region to reap economic benefits, and it has also opened the way for people living in the region to improve their nutritional status through the consumption of livestock products. At the same time, the expansion of the livestock industries has created new challenges for policy makers because of the far-reaching and sometimes unexpected impact it is having on various parts of the economy. This report addresses a number of issues that have been associated with the expansion of the livestock industries.
Chapter 1 - Trends and convergence in the consumption of livestock products - describes the role played by the different livestock products in the diets of consumers in the Asia-Pacific region. The material presented in the first part of the chapter highlights the changes that have occurred in the consumption of livestock products. Protein consumption from livestock products more than doubled in Indonesia and in Thailand between 1961 and 1999. Over this same period, China's consumption of pigmeat increased from 2.3 kg per person to 32.3 kg per person, and Malaysia's consumption of poultry expanded from 3.5 kg per person to 36.5 kg per person. The second part of the chapter draws upon some of the methodologies used in growth theory to examine whether there is any evidence that consumption of livestock products is converging in the countries of the Asia-Pacific region. The test is based upon the idea that if there is convergence, then those countries where per person consumption at the start of a period is low should display high consumption growth in subsequent years. Conversely, countries where consumption is high initially should display little consumption growth. Using information for the period 1961 to 1999, it was found that for bovine meat, pigmeat, eggs and wholemilk there is evidence of convergence. This suggests that per person consumption of livestock products across countries will become increasingly similar over time.
The linkage between the growth in production of livestock products and the variability in the domestic production of livestock products for a group of countries in the Asia-Pacific region is investigated in chapter 2. It is fairly clear that livestock have an important part to play in improving the nutritional status of low-income households. However, it is not only the level of food availability that is important, but also the stability of supply, which is related in part to the variability of domestic production. This is particularly the case if the country does not have the financial resources to turn to international markets when it experiences a shortfall in domestic production. For the period 1961 to 2000, the results indicated that variability in production of a number of different livestock products including bovine meat and pigmeat was not associated with the growth in the livestock industries. There was an association between variability and production growth for chicken meat, goat meat and cow milk. For the first two, increased production variability was observed in those countries showing the smallest rate of production increase, while for the latter, the relationship was the opposite. Additional work on this question is warranted. Industry characteristics (such as the proportion of production that comes from traditional producers) should be a part of an extended analysis.
Vertical and horizontal integration of the livestock industries is examined in chapter 3. The chapter describes the nature of vertical and horizontal integration, outlining a number of reasons why these structures might have appeared in the livestock sectors. Transaction costs, product quality and the opportunity for firms to make profits from this form of market structure are among the reasons discussed. An extensive listing of examples of firms involved in the livestock industry is provided in the Appendix to chapter 3. It is clear from the activities of these firms that many have interests beyond livestock production, extending into food distribution and retailing and manufacturing.
The livestock industries in developing countries perform many functions besides providing food. Chapter 4 discusses a number of these using examples from across the countries of the Asia-Pacific region. It is clear that there is a complex web of interactions based upon social, cultural and religious factors surrounding the livestock industries. Moreover, it appears that social and cultural factors may be more important for livestock than for the cropping industries. The functions performed by livestock are often different across countries and can even differ within the same country. Many of these functions do not involve any form of formal market transaction, making it extremely difficult to place a value upon them. Knowledge of these functions on the part of policy makers is critical in the design of livestock programmes.
Policy makers and researchers involved in the livestock industries from a number of the developing countries of the Asia-Pacific region were asked through an informal survey to identify what they believed to be weaknesses in the livestock sector of the region. This material is presented in chapter 5. Production, marketing and infrastructure problems dominated the responses. Environmental issues and government intervention in global markets were matters that were raised rarely, if at all, by respondents. Both of these might be viewed as being more long-term issues. While it is certain that the respondents would regard them as important, it is not surprising their focus should be on the other areas. The countries where most of the respondents came from have limited resources available to them. Hence implementing a production measure that increased output in the short term is likely to be more appealing that introducing a policy that will provide results only in the long term.
