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Chapter 1: The framework

Livestock production systems and the main environmental challenges
The changing importance of different production systems
The conceptual models: Driving force state-response and induced innovation frameworks


LIVESTOCK RAISING is carried out in many forms, usually referred to as production systems or agro-ecosystems. Production systems evolve as a result of agro-ecological potential, the relative availability of land, labour and capital and the demand for livestock products. Many production systems are currently at a sustainable equilibrium, with livestock being produced in harmony with nature and in environmentally sound systems. However, over the last decades, several production systems have lost this equilibrium because of the pressure caused by growing human populations and increased demand for animal products. This chapter first provides an overview of the main production systems, the relative changes in the importance of these production systems and how these changes will affect the resource base in the future. It then presents the framework used to understand the nature and causes of livestock-natural resource interactions, and the policy changes and technology innovations which can be used to influence these interactions.

Livestock production systems and the main environmental challenges

Based on the degree of integration with crops and its relation to land, the world's livestock sector has been classified in this study into three broad livestock production systems (Sere and Steinfeld, 1996), i.e. grazing, mixed farming and industrial systems. For land-based production forms, i.e. grazing and mixed farming systems, a sub-division is then required to allow for differences caused by agro-ecological conditions and the ways in which livestock affect the natural resource base. The broad categories are:

Grazing systems. These are systems based almost exclusively on livestock production, with little or no integration with crops. They are mainly based on native grassland. In terms of total production, grazing systems are of lesser importance because they supply only 9 percent of global meat production. Of this, three-quarters comes from Central and South America and of the Organisation of Economic Cooperation and Development (OECD). Livestock interact in these systems with land, water and plant and animal biodiversity, especially wildlife. Agro-ecological conditions strongly define the nature and scope of livestock-environment interactions in grazing systems. The study therefore distinguishes between arid, semiarid and sub humid, humid and temperate grazing systems. In principle, grazing systems are closed systems, where the waste product (manure) is used within the system and does not present a burden on the environment. Resource degradation, especially of land and biodiversity, is now developing in many of the world's grazing areas. For the most part this is occurring where, as a result of external pressures, traditionally well-managed common lands are becoming open access areas. In such open access situations, the interests of individual users conflict with those of the community, causing what economists call "market failures". In these "free for all" situations, degradation is most severe. On the other hand, the grazing systems also offer potential for biodiversity enhancement. Identifying institutions and incentives to correct the market failures and enhance the livestock-environment synergies is thus one of the biggest challenges in this system.

Mixed farming systems. In mixed farming systems, crops and livestock production are integrated on the same farm. Globally, mixed farming systems produce the largest share of total meat (54 percent), and milk (90 percent). Regionally, the mixed farming systems of the OECD countries and Asia provide by far the largest share of these products, but also in sub-Saharan Africa, West Asia and North Africa (WANA) and Central and South America, mixed farming is the main system for smallholder farmers. Resource use in mixed farming is often highly self-reliant as nutrients and energy flow from crops to livestock and back. By definition, such a closed system offers positive incentives to compensate for environmental effects ("internalize the environmental costs"), making them less damaging or more beneficial to natural resource base. Because of the completely different approaches needed to address the environmental effects of mixed farming, this study distinguishes between mixed farming in the developing and in the industrial world. The main challenge is to identify those policies and technologies which allow these systems to grow while sustaining their environmental equilibrium.

Industrial systems. These systems cover industrial types of production and small-scale urban or pert-urban production in developing countries. Both monogastric (pig and poultry) and ruminant production systems exist. They provide 37 percent of the total global meat production. These systems are open both in physical and economic terms. They depend on outside supplies of feed, energy and other inputs. These systems are strongly market driven, making them less resilient to market upheavals than other systems. Because of their many interfaces with the outside world, these systems, if not properly controlled, offer many opportunities to neglect ("externalize") their environmental costs. The challenge is to identify the regulations and incentives which force the polluter to internalize the environmental costs, at a minimum cost to the consumer.

Global overlays. In addition to the site-specific and production system related impacts of livestock, such as land degradation in the arid zones, deforestation in the humid zones or livestock-wildlife interactions in the savannas, there are a number of effects which transcend the specificity of production systems. These are the global overlays, which include the environmental aspects of feed production, the emission of greenhouse gases, the erosion of wild and domestic genetic resources, and the management of waste. As in the industrial system, some of these impacts (for example, processing waste) can be traced to one polluter (called "point source pollution"), and can therefore be controlled with appropriate regulation at the source. The other impacts cannot easily be traced to one polluter ("non-source pollution"), and the challenge is then to find the incentives to encourage all producers to reduce these emissions.

The changing importance of different production systems

The rapid increase in demand for meat and milk over the next decades is likely to cause a dramatic shift in the relative importance of the main production systems in their contribution to global meat and milk supply:

• The growth potential for extensive grazing and roughage production is limited. In response to increased population pressure, good pasture land is being converted into cropland, leaving increasingly poorer land for grazing and mixed farming. Industrial production from pigs, poultry and beef is therefore likely to increase relative to production from grazing and mixed farming systems. Past trends and future projections (Table 1.3) clearly point in that direction. One relatively unknown factor in this discussion is the effect of global trade reform combined with a strongly growing demand for feed grains. The first projections of the effect of trade reforms (Alexandratos, 1995) show that cereal prices will increase more than milk and meat prices. This, combined with the increased demand for feed grains, will certainly lead to higher feed prices. Although this would seem to favour grass-based production, the limited growth potential of grazing and mixed farming systems, combined with significant potential for improvements in feed conversion efficiency, will probably result in continued strong growth of the industrial system;

• Pork and broiler (poultry) meat production will increase, relative to beef production (Table 1.3). This is a direct result of the better feed efficiency of pigs and poultry;

• Livestock production is therefore likely to become more crop-based. Furthermore, as it is generally less expensive to transport and store grain than the corresponding amount of meat, intensive livestock production will move nearer to urban centres;

• Growth will be mainly in Asia and Africa (Table 1.2). In Asia growth will be very fast as meat demand almost triples till the year 2020;

• For various reasons, including higher energy prices and less stringent pollution controls, livestock production in the industrial world is likely to move to warmer areas. For example, over the last decade, pig and poultry production has grown faster in Mediterranean countries than in northern Europe, and in the southern rather than the northern United States of America;

• In the developing world, aided by the recent availability of better disease control technologies, there has been a strong shift in production from the arid zones and the highlands to the more humid zones. For example, over the last two decades, millions of cattle were moved into the more humid savannas in Africa, Latin America and India.

Table 1.3: Past and expected growth of different types of meat.


World Annual Growth Rate (%) over 1983-1993

Developing World Total Growth (%) over 1990-2020

Developed World Total Growth (%) over 1990-2020









Poultry meat




Source: Sere and Steinfeld, 1996 and IFPRI, 1995

These changes will have a major effect on the nature and degree of the livestock-environment interactions. Implications are:

• a shift from relatively closed systems, in which its waste products are being used within the system, to a more open system in which its waste products are not returned; and

• a move from systems with good opportunities for synergies and win-win situations, such as the conservation and use of indigenous livestock breeds, nutrient recycling and livestock-wild life integration, to systems where the opportunities for such win-win situations are much more limited.

The conceptual models: Driving force state-response and induced innovation frameworks

Driving forces
Societal response: Technology and policy options
Induced innovation

Two interlinked frameworks are used as the central organizing concepts for this study. The Driving Force-State-Response (DSR) framework is based on the environmental impact assessment model developed by the OECD (1996). This model consists of three major components which are described below: Driving forces, state and societal response, as detailed below and in Annex 2.

The Induced Innovation model holds that, over time, technological innovations and institutional changes are guided so as to make the most of abundant resources and economize on scarce resources. The model is a logical sequence to DSR, as the societal response (through policy changes) changes the relative abundance of the resources. For example, the introduction of a grazing fee in communally-owned rangelands, will increase the price of land and feed, and will therefore lead to more efficient feed use (earlier off-take, greater use of byproducts). More examples will be given in the following chapters.

Driving forces

Driving forces cause changes to the natural resource base (OECD, 1996). In the case of livestock production, this can be a direct (or on-site) force such as increasing the number of grazing animals which may lead to trampling, depletion and pollution of water, the emission of greenhouse gases, and the loss of plant and animal genetic resources. Livestock production can also have an indirect (or off-site) force such as the expansion and intensification of cropland to satisfy the increasing demand for feed concentrates and this, in turn, may lead to erosion and pollution. A beneficial force may be the use of organic manure for fertilizer, or the use of livestock for traction, thereby reducing consumption of nonrenewable resources.

While it is important to measure the impact of these forces, it is even more important to understand the underlying causes or the 'driving forces' themselves. Some of the causes are fundamental and inherent in the structure of a society, and go beyond the traditional domain of livestock policy (Young, 1996). Demographic pressure and food consumption habits clearly fall into this category. Other forces are more directly related to livestock production and are easier to change. Incentive policies for inputs used in livestock production (feed, water, energy), pricing of meat and milk and infrastructure development for livestock, fall into this category. They are called amendable forces. For example, infrastructure investments, credit and land tenure policies are important forces causing livestock pressure on tropical forests, and the differential tariffs for cassava in the European Union (KU) are significantly contributing to nutrient loading of soil and water in the Netherlands and northern Germany through increased intensive pig production. An analysis of the underlying pressures is thus of critical importance in understanding changes in the natural resource base.


The state of the natural resource base refers to the changes in environmental conditions that may arise from various driving forces. It is, in essence, an inventory of the existing condition of land, water, air and biodiversity. Pressures described in the previous section affect the state. The substantial void in objective and precise assessments of the current state of the resource ecosystem in which it is set. It is essential that, as the livestock sector grows and develops, adequate base, as affected by livestock use, is one of the main reasons for the conjecture which surrounds the livestock-environment debate. This lack of accurate data has contributed to some costly investment blunders in international development aid. For example, the overestimation of the degree of land degradation in the arid areas, has led to excessive investments in "desertification control", at the expense of the much more serious, but under-estimated, land degradation in semi-arid and sub-humid areas.

Box 1.2 Impact assessment.

Much of the controversy about the impact of livestock on the environment is due to a lack of quantitative information to describe not only the livestock production system but also the ecosystem in which it is set. It is essential that, as the livestock sector grows and develops, adequate measurements are taken over time. Environmental impact assessments for livestock development can show if livestock are improving or degrading the environment. In this respect impact assessment should provide users not only with a picture of the current status but also a mechanism to project future trends. The economic cost of impact assessments are of concern to some decision makers. Although start-up costs may be high these costs reduce over time and costs will continue to decrease as more governments and research organizations develop and use impact assessment. Furthermore, as global databases are built, allowing a number of users to share data, the costs will reduce even further.

Selection of environmental impact indicators is an important and evolving process. It is essential that indicators have a certain universality in meaning and application. Furthermore, they must have the ability to be extrapolated directly or indirectly to larger geographic areas, rather than be specific to the site of data collection. Because indicator selection is an evolving process it will be some time before the most useful parameters are identified. In Annex 3 various indicators which can be used to measure the interaction between livestock and the environment are presented. At present they should be considered as a starting place from which a robust set of indicators can eventually be developed.

The aggregate environmental pressure of industrial production systems is probably over estimated in the public perception, especially if some of the positive indirect impacts (for example, reducing pressure on more fragile environments) are taken into account. However, the public perception of the excessive environmental pressure exerted by the industrial system has made this system the "scapegoat" of many environmentalists and has directed investment away from this system. Some of the issues related to the environmental assessment of livestock production systems are presented in Box 1.2 and Annex 3, while more detailed information is provided in Bauer et al., (1995).

Societal response: Technology and policy options

Response refers to the reaction to actual and perceived changes in the environment. This can be through changes in farmer behaviour, i.e., through changes in input use and farm management practices and changes in food consumption patterns by consumers (OECD, 1996). Above all, these changes can be brought about through government action with the following instruments (Young, 1996):

• Education and motivation are essential to any environmental package. They are most appropriate for mobilizing public opinion and bringing about pressure on degraders. For example, pressure for change is more likely to be applied if public opinion is informed of the health problems associated with the increased nitrate levels which result from excessive manure production;

• Financial policies are more effective when costs external to the production system have to be reduced. They include the appropriate pricing of inputs. For example, if subsidies on inorganic fertilizers are too generous, there is a risk of excessive nutrient loading while, at the same time, available organic manure may be wasted. They cover also environmental levies, which are charged to pay for services to prevent or control environmental pollution, for example, of water sources by slaughterhouses;

• Policies relating to property will provide resource users with a tangible interest in the future consequences (including environmental) of their actions. The current strategy to strengthen traditional users' rights of commonly owned rangeland, to improve the ecological sustainability of the pastoral system is an example;

• Zoning is one of the most commonly used tools for alleviating potentially adverse siting of production and processing. It can also be an effective means of limiting livestock densities; and

• Regulations normally establishing maximum emission standards of pollutants (nitrate, ammonia, organic material) are very effective when dealing with strong institutions and clearly identifiable polluters.

Throughout the document, these policy instruments will be demonstrated within particular production systems, following one of the central themes of this study, i.e. correcting the underlying causes is more effective than addressing the symptoms.

Induced innovation

Changes in policies and regulations lead to changes in prices which consequently promote certain technological interventions. Resource constraints and income levels then largely determine the scale and flexibility of these interventions. This leads to the second conceptual framework, the "induced innovation" framework of Hayami and Ruttan (1985). This model explains the evolution of production technologies in response to resource endowment and institutional factors. Runge (1987) added non-market forces such as environmental impacts and regulatory responses to these factors.

Technological options and institutional factors normally change with resource availability, income levels and regulations. The shift in production technology is being driven in part by institutional factors, specifically by responses to regulatory and financial instruments. For example, if feed, such as cassava chips, becomes less expensive because of special import arrangements, greater "feed intensity" will be favoured. On the other hand, if water becomes more expensive as environmental concerns result in a higher implicit price for water (through regulations on manure disposal), technologies that save water will be favoured. Thus outside forces will determine what is possible.

Where feed is scarce, water is under-priced and/or relatively abundant, and land is unregulated (as might be the case in developing countries), different opportunities exist for producers. Thus, in low income countries, the technology of production is largely determined by available natural resources. In higher income settings, an additional set of possibilities and constraints is introduced due to the existence of subsidies (e.g. on feed) and environmental regulation (e.g. restriction on water and land use).

Induced innovation

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