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Welcome and keynote address

WELCOME AND CONFERENCE OBJECTIVES.

AREND JAN NELL,

Conference Organizing Committee, International Agricultural Centre, Wageningen, the Netherlands.

Ladies and gentlemen,

On behalf of the organizing committee I wish to welcome you to this International Conference on Livestock and the Environment.

I especially would like to welcome the special guests for today and the keynote speakers: Lousise Fresco of FAO, who was prepared to come on very short notice; Alex McCalla of the World Bank and Ger de Peuter who represents Mr J. de Leeuw, the Director General of the Netherlands Ministry of Agriculture, Nature Management and Fisheries. We are very fortunate to have you here and we are looking forward to hearing your contributions in the keynote addresses. Furthermore, I want to welcome Jan Jaap Hooft, the Director of the International Agricultural Centre, one of the Organizing Institutes of the Conference. But my word of welcome is especially aimed at all participants present here today. Many of you have come from far away. I am glad you have all arrived safely, we are happy to have you with us and we are looking forward to your input into the conference. I hope you have had time to adjust to the time difference and to the long evenings, unusual for many of you. It is a great pleasure and an honour to have you here as participants in the conference and as our guests in the Netherlands.

Originally, we envisaged to have around 80 participants for the conference, and with that number in mind, we made reservations for the hotel accommodation. However, the response from the sponsoring donors and from the participants invited was such that we now have 110 registered participants from over 40 countries and International Organizations, which is why some of you are staying in hotels at some distance. We even had to turn down several requests for participation. I want to apologize for the inconvenience this may cause and I ask your cooperation to help us overcome these problems.

I want to take this opportunity to tell you something about the history of this conference. For the origins of this conference we have to go back to the UNCED (United Nations Conference on Environment and Development) Meeting in Rio de Janeiro in 1991 which placed environmentally sustainable agriculture high on the international Agenda. Livestock is in many instances an integral part of sustainable agriculture. In many livestock production systems man can manage livestock to either strengthen or weaken efforts towards a sustainable environment and development.

It was against the background of the challenges and the targets formulated in Agenda 21 that a meeting of livestock specialists of different donor agencies was organized by USAID and the World Bank in Paris in December 1992. At this meeting, it was proposed to prepare a major study on livestock and the environment. This study would, as a follow-up to UNCED, address the issues of livestock-environment interaction, and arrive at a more objective assessment of the role of livestock in environmentally sustainable agriculture. The group of donors requested FAO, the World Bank and the USAID to collaborate on the preparation of the study proposal. The study has been implemented with financial support from the Commission of the European Union, DANIDA of Denmark, the Food and Agriculture Organization, the Ministère de La Coopération of France, BMZ trough GTZ in Germany, the Directorate General of International Cooperation in the Netherlands, the Overseas Development Administration of the United Kingdom, United States Agency for International Development (USAID) and the World Bank. Representatives of these donor organizations formed the Steering Committee to oversee the implementation of what was called the “multi-donor study on livestock-environment interactions”.

The study was implemented from 1994 to 1996 by a number of institutes in Europe and the United States. Subsequently Cees de Haan of the World Bank, Henning Steinfeld of FAO and Harvey Blackburn of USAID made the tremendous effort to compile the final report for this study based on over 20 study reports into the beautiful documents we have in front of us and which will be the subject of our discussions during this conference.

A preliminary electronic conference on the results of the multi-donor study was organized by IDRC, ILRI and FAO from March to the end of May of this year. More than 800 people participated in this electronic conference and its results will be presented here.

This is as far as the background of this conference is concerned. During this current conference we will only devote part of our time to the discussion on the multi-donor study. With what we have learned from this study we want to move another step forward and formulate future policies and actions during this conference; that means formulate concrete steps to be taken as a follow-up.

We have formulated the objectives of the conference as follows:

I will briefly outline the programme for this week's conference to explain how we want to achieve the objectives. I want to apologize for the fact that our programme is in English only. Due to last minute changes it was impossible for the organizers to prepare a translation into French and Spanish in time.

Today our programme will start with three keynote addresses: Mrs Louise Fresco will present the first keynote address and brief us on the views of FAO on the relations between food security and livestock-environment interactions. In the second keynote address Alex McCalla of the World Bank will present his views on the changes in international trade and the effects on livestock and the environment. In the third keynote address Mr Ger the Peuter who represents the Director General of the Ministry of Agriculture of the Netherlands, will enlighten us on the lessons learned from the livestock-environmental problems in the Netherlands.

After the keynote addresses, we will proceed with the presentation of the results of the study. Henning Steinfeld will discuss some of the global changes and the challenges they create for the livestock sector. Cees de Haan will elaborate on the frame-work of the study and give a short overview of the main results and conclusions. This is followed by the presentation of the results of the electronic conference held prior to this International Conference.

This afternoon and tomorrow, the results of the study will be presented during three main plenary sessions, one for each of the main production systems: the grazing systems, the mixed farming systems and the industrial systems. In each of the sessions, we will hear the main results and conclusions followed by 3 presentations of experiences with livestock and environment interactions especially relevant for that particular livestock production system.

The day after tomorrow we will have a few presentations of either special issues related to the main theme of the conference, or to topics which did not receive enough attention during the study and which we consider important for our discussions. The plenary presentations will be followed by sets of five workshops: the first set of workshops will be based on the production systems, and the second set is organized according to region. In the workshops the discussions should centre around the following key-questions: are the results and the conclusions of the study realistic and applicable; how can they be translated into action at national and regional level; what are the right policies to encourage desirable livestock-environment interactions? A plenary presentation of the results of the workshops will be organized. On the last day of the conference representative of the donor organizations will hold a panel discussion on their future plans and proposed actions.

The conference will close on Friday with a wrap-up and a closing address concerning the role of livestock in poverty alleviation and natural resource management.

We specifically requested each of the speakers to present clearly what lessons were learned from the experience and what is the follow-up action recommended. I sincerely hope that all speakers will address these questions in their presentation. However, not only the speakers have a chance to speak freely of the lessons learned and the follow-up action recommended. In the workshops all participants will get ample opportunity to talk about their experiences, about the lessons they learned and about their recommendations for follow-up action. Furthermore, many of the participants took this opportunity to prepare and present posters on the topic “Livestock and the Environment”. These posters are on display during the entire conference.

In addition, we invite every participant to submit one or more brief one-page proposals to the Steering Committee or to the Organizing Committee of the conference for follow-up action. All ideas and proposals on this subject are welcome. The proposals will be given to the Steering Committee and will be discussed during the panel discussion.

This will very much be a working conference in which we want to draw on your knowledge and experience to make concrete steps forward towards a more sustainable livestock production which meets the needs of the consumers as well as of the producers, the farmers, of whom many depend entirely on livestock for their livelihood. Concrete proposals for action should be the final outcome of this conference.

With this short outline of the objectives and the programme of the conference I formally open this conference and I wish all of you a successful and fruitful conference, and a pleasant stay in the Netherlands.

Thank you very much.

A FOOD SECURITY PERSPECTIVE TO LIVESTOCK AND THE ENVIRONMENT

LOUISE O.FRESCOa, HENNING STEINFELDb

a Director, Research, Extension and Training Division, FAO, Rome, Italy

b Senior Officer (Livestock Development Planning), Animal Production and Health Division, FAO, Rome, Italy

1. Introduction

Today, 850 million people go hungry or suffer from malnutrition. In order to meet the minimum requirements of a growing population, food production will need to double over the next 30 years. Yet the natural resources required to produce this additional food - such as soil, water and bio-diversity - are finite and vulnerable to degradation.

The Plan of Action, endorsed by the Heads of State and their governments at the World Food Summit in November 1996, assigned a guiding role to FAO in addressing food security worldwide. The Rome declaration identifies poverty and environmental degradation as the main causes of food insecurity. The Heads of State and their governments also recognized the need for urgent action to combat natural resource degradation, including desertification and erosion of biological diversity. Poverty eradication and food security must be achieved without putting additional stress on natural resources. In many situation, therefore, food security and natural resource protection go together. The issue is to what extent may the resource and environmental constraints impinge on the prospects for increasing food supplies and assuring access to food for all, the very essence of food security? And further: Can the potential for further gains towards global food security be maintained for future generations, the very essence of sustainability?

Within this broad context, this paper addresses the interactions, both positive and negative, between livestock and the environment from a food security perspective, i.e. that of rural and urban poor in low-income food-deficit countries (LIFDC). Concern for the state of the environment and the degradation and dwindling of natural resources raises the questions: What is the role of livestock in enhancing or compromising food security, now and in future? What are the trade-offs between livestock production and environmental objectives?

2. The role of livestock in food security

Food security embraces food production, stability of supply and access to food. Livestock play a role in all three aspects: they make a significant contribution to food production through the provision of high value protein-rich animal products; they indirectly support crop production through draught power and manure; they stabilize supply; and finally, they are the most significant source of income and store of wealth for smallholders, thereby providing access to food.

Livestock for food

Over the past 20 years, meat and egg production have risen by 127 and 331 percent respectively in the developing countries (WAICENT, 1997). Yet, most people in these countries cannot afford adequate animal protein; the per caput consumption of meat is only 17.7 kg/year, compared to 81.6 kg/year in developed countries. In the latter, about 60 percent of dietary protein comes from animal products, compared to only 22 percent in developing countries. There is, therefore, substantial room for the expansion of livestock production. This can however raise problems but it is also true that animal products offer several advantages over crops. For example:

However, the role of livestock in developing countries is not confined to the provision of food. On the contrary, their non-food functions, even if in gradual decline in LIFDCs, are still very prominent.

Livestock for crop production

The yield-stabilizing and yield-enhancing role of livestock is a main contribution to crop agriculture in LIFDCs. It also hosts the promise for future intensification of the mixed farming system. In developing countries, more than half of the arable area (52 percent) is cultivated with the help of draught animal power and more than half of the total fertilizer applied is provided in the form of manure. This proportion can be estimated to exceed 70 percent in LIFDCs. This indicates that intensification cannot take place without fully acknowledging the resource-enhancing and stabilizing role of livestock. It follows that development programmes addressing food security must explicity take this function into account.

Livestock as a buffer

Livestock play an important role in the economy, both at the rural and national level. A very important factor is that of added security to food supply and production. For the farmer, livestock provide liquid assets, a hedge against inflation and a means of reducing the risks associated with crops when used in mixed farming systems.

A remarkable characteristic, important for global food security, is the capacity of the livestock sector to draw on many different types of feed resources, and to contract and expand with resources availability and market demand (FAO, 1996). During the two recent global food crises, in 1974/75 and 1982/83, reductions in total cereal supply were almost entirely absorbed by the livestock sector adjusting to higher prices with reduced output, higher productivity and use of alternative non-food feed items.

Livestock and income

Sales of livestock products provide purchasing power and thus, access to food. In fact, the value added through livestock production and processing is often the only outlet of smallholders in rural communities to the monetary economy. It forms an entry point for development - an entry point that has been neglected because the image of livestock has been clouded with negative environmental and social effects. These negative effects, however, are hardly relevent to farmers and livestock holders in LIFDCs and the development community continues to miss opportunities that arise from the strong market drive associated with the surge in demand for animal products. The link between this explosion in demand and agricultural development is income.

3. Environment and livestock production: trade-offs and synergies

Let us now turn to the possible trade-offs between food security, and the role of livestock to food security on the one hand, and the environment on the other. Some of these trade-offs are avoidable and the study that preceded this conference has identified a number of these win-win situations, where improvements only depend on political will. Others are more difficult. The Brundtland Commission brought into prominence the dilemma of reconciling the short-term imperative of increasing food and agricultural production as well as incomes for the current generation with the need of conserving natural resources for meeting the requirements of future generations. The trade-offs between meeting short-term food security and the environmental requirements clearly have a time dimension. Quite obviously, there are trade-offs between immediate food needs and environmental objectives. Poor people will trade off immediate food production even though it may involve some resource degradation, against a less tangible but “sustainable future”. Trade-offs will be reduced once food security is achieved. In practical terms, poverty alleviation is a necessary condition for environmental protection.

The reverse, that environmental degradation brings poverty, is also true. Developing countries find it difficult to cope with the costs associated with measures to address environmental objectives. The same observations hold true when comparing the value attached to environmental objectives within a country: there is a close and clear relationship between the importance attached to environmental objectives and income. A sound environment, in some aspects at least, is a luxury good which richer societies can now afford, but which in their earlier history had been largely ignored. Still, the majority of developing countries recognizes the importance of shifting to a more environment-conscious growth path.

The world food problem is now recognized as being largely a failure of effective demand on the part of people with inadequate nutrition. In other words, it is not a problem of production but one of demand and of distribution. However, in developing countries, there is no clear separation between demand and supply of food, as inadequate growth of demand reflects that of incomes of most of the populations whose very incomes depend on the growth of agriculture itself. Given that the food security problem is concentrated in rural-based and poor countries, it is also appropriate to speak of it as being a problem of production.

4. Minimizing the trade-offs

Given the high incidence of food insecurity and undernutrition precisely in countries with low per caput food supplies and high dependence on agriculture, policy responses must incorporate measures of agricultural and rural development to increase both the demand and the supply of food. What is the role of livestock in this process? And how can the trade-offs between livestock for food security and possible environmental effects be minimized?

The chances of minimizing the trade-offs grow if we consider available technologies and development pathways without prejudice. Trade-offs are being reduced by:

FAO seeks to develop a comprehensive strategy to minimize the trade-offs between food production and the environment for the purpose of long-term food security and human development. This strategy contains four elements:

  1. Emphasis must be put on shifting from input-intensive technologies to knowledge-intensive technologies with the aim of maximizing the efficiency of scarce natural resources. For livestock production this mainly means to optimize the use of feed, in particular feed that has alternative food use (grains). These grains and other feed concentrates have a high natural resource component as their production not only involves land but inputs such as fossil energy for fuel and fertilizer.

  2. Greater importance must be given to establishing well-defined property or user rights for public, community and private resources. Without such changes users of open access resources such as drylands or rainforests will have little or no incentives to exploit them in a responsible fashion.

  3. Another critical element is people's participation and decentralized resource management. In the main, it is small farmers and herders who make the key decisions about resource use. The public sector of developing countries cannot afford the cost of enforcing the requirements of responsible resource use, and it lacks the vested interest of owners and users.

  4. As far as possible market signals must embody proper valuation of environmental goods, land, water, air and bio-diversity and their services. Where these are compromised, this must be included in the commodity prices as direct and indirect environmental costs.

These thrusts, although necessary to varying degrees, are not sufficient in themselves. They must be amplified and adapted to national circumstances and to the specific problems or different agro-ecosystems.

A key issue in future food security will be the use of scarce land and water resources. One inevitable conclusion is that food production will intensify further. Historically, livestock's role in the process of agricultural intensification has been essential. Livestock have allowed for sustained intensification through nutrient balancing and the provision of energy, in buffering labour needs and supply, and in capital requirements. In that, it allowed for important productivity gains of land and it helped to spare land that otherwise would have been cultivated. In many aspects, the role of livestock in the intensification process can still be amplified and, in some cases, it has not even started. Large parts of sub-humid Africa are moving into mixed farming as important disease constraints are removed with increasing population densities. In other parts of the world, such as Asia, high cropping and land use intensities have been sustained over centuries by closed integration of crop and livestock activities. In these situations, it is still the input function of livestock that is predominant but market production is becoming ever more prominent with increasing commercialization. Where mixed farming systems can no longer be maintained as household systems because of economic pressures to specialize and up-scale activities, the same bio-physical interactions can be obtained by the integration of specialized cropping and livestock farming in a watershed context.

Grazing systems, too, are intensifying, notably in Latin America and in extensive grazing zones of Africa and the Near East. This intensification of grazing lands yields both economic benefits to producers, in particular smallholders, and environmental benefits in that it offers an alternative to expanding the agricultural frontier into the forests. Only through intensification can the land requirements to meet both a sustained livelihood for producers, supplying the demand, as well as objectives of natural resource protection be satisfied. This overall principle applies both to livestock providing inputs to crop agriculture in the process of agricultural intensification and to livestock providing animal protein more efficiently. The latter may be exemplified by intensive industrial-type production systems that cater for the demand for cheap, high quality animal feeds for which there is a surging demand. Not only in industrial production, but also in mixed and pastoral systems, is efficiency of resource conversion ever more critical, especially in the light of dwindling resources. Animal breeding, nutrition and health, together with improvements in general animal husbandry have resulted in impressive productivity gains, such as expressed in feed conversion, animal offtake and animal growth rates.

A second major issue in food security is income generation, in particular of the rural and food-insecure people. It follows that further commercialization of food production is required for future food security. As a general rule, the degree of commercialization in livestock products is higher than in crops. In all developing countries, livestock add value to resources that have no alternative use or to on-farm produce. In areas of extended poverty and food insecurity, such as the central highlands of Ethiopia, the sale of dung cakes is the most important source of cash income. In 1998, India will become the world's largest dairy producer, surpassing the United States, and at the base of this success are millions of smallholders supplying a few litres of their surplus production. In almost every eco-system, poultry and small ruminants are kept with little external input but yet contributing significantly to cash income of those who have little else to offer to the market. These small-scale livestock producers are, more and more, entering the market economy, stimulated by surging urban demand. However, the inescapable trend towards rapidly increasing commercialization is not without social and environmental risks. The commercial drive may marginalize small-scale farmers where large-scale producers are favoured by urban-biased policies. The same drive may also lead to a concentration of animals and production units near urban centres, creating environmental and human health hazards.

Another key issue is sustaining the livelihood of people in areas where there are neither intensification nor big commercialization opportunities, and where people are threatened by vicious circles of population growth, natural resources degradation and poverty. In areas with “involution of the mixed farming system”, such as central and eastern African highlands, the Andean countries and the region of the Himalayan hills and Hindukush, the stability and sometimes the very existence of the farming systems are threatened by disappearance of livestock. The Sahel, and other arid and semi-arid grazing areas with insufficient commercial outlets, are waiting rooms of development of a different agro-ecological nature. In extensive pastoral systems, livestock provide the livelihood for some 250 million people from land for which there is no ready alternative use. A whole life support system comprising subsistence food needs, income and stability of life support, is provided by livestock. In such situations, technology and policies can be designed to prevent a collapse, and perhaps achieve some modest improvements, while employment and growth opportunities are being developed elsewhere. Livestock help diversify the farming systems, adding stability to precarious situations, and sustain a much larger population than would be the case in the absence of livestock. While the focus in the fragile areas under massive population pressure is on poverty alleviation and disaster prevention, livestock assist in buying precious time.

5. Operationalizing a livestock in food security strategy

But how to operationalize these elements of a food-security strategy that has livestock at its centre and that minimizes degradation of natural resources? The role of domesticated animals is drastically changing, even in remote areas of the world. It follows that livestock's role needs to be redefined in a global food security context. Two different types of situations can be distinguished by considering whether livestock production is predominantly driven by available resources or by effective market demand. In doing so, we are aware of a continuum that exists between the two poles.

Resource-driven livestock production is mainly based on roughages (natural pasture, crop residues) but also household and other wastes. It provides the exclusive livelihood of 250 million pastoral people and it enhances the livelihood of some 2 billion people in smallholder mixed farming systems around the world. Because of its resource-driven nature, it has difficulties in responding quickly to changing market demands and to changing technology, and as a result the consumer benefits little. Often, mixed farming systems are closed cycles of nutrients, energy, and farm labour. Because resource-driven livestock production does not usually revert to the market for additional inputs, the main environmental problems consist of resource overuse, mainly as a result of poverty and change in rights of access to the same resources. To avoid overuse of immediate natural resources, mixed farmers and pastoral people alike need to substitute them with external inputs. At the same time, property rights need to be defined to grant site access to key resources. Infrastructure and market development to provide commercial outlets are important prerequisites.

Although sustaining many people, resource-driven livestock production will see only modest growth in the next decades. Resources and their productivity have limited growth potential. Some scope exists, particularly in peri-urban livestock production, because of growing volumes of waste from households, mass kitchens and agro-food processing. In these systems, animal health and food hygiene become primary concerns for food security.

Demand-driven livestock production resorts for its resources to products such as grains, and therefore many important environmental effects are upstream. Production benefits are uneven where animal production units are large and in the hands of few. Consumers, however, benefit from cheap and high-value animal products. Because of its market orientation, the main environmental problems consist of concentration of animal production and processing in limited areas. This concentration burdens the environment with excessive waste loads while it limits the social benefits in terms of employment and rural income generation.

The trend of further intensification and specialization of demand-driven production is inescapable. Attempts to change the direction are doomed to fail. Rather it should be attempted to accelerate this development and to divert to regions which offer the concomitant set of conditions for such development. Efficient resource use must be encouraged, and related policy distortions, such as subsidies on feed or on animal products, should be abolished for the benefit of both food security and the environment.

6. Lessons learnt and follow-up actions required

In order to tap the potential fully that livestock offer for achieving the dual objectives of food security and protection of natural resources, international organizations and all stakeholders are called upon to change the approach of discrimination against livestock. We have seen that livestock production bears a number of social and environmental risks. But we are confident that we have identified the right set of policies and technologies to deal with these hazards and to use livestock to maximize benefits to society. For that, we are suggesting broader partnerships.

Clearly, FAO's action alone cannot have the impact sought. To complement national resources and FAO's own inputs, the organization must obtain the cooperation of all its exisiting and potential partners, i.e.:

Trade-offs between livestock and the environment, the principles of Sustainbable Agriculture and Rural Development and the objectives embodied in Agenda 21 will only be realized if technology and policy are accompanied by participation, equity and dialogue, enabling mechanisms, empowerment and incentives. These will be the pathways towards environmentally sound livestock production and food security. Without them, the important technology and policy tools available will not have lasting effects.

Towards this end, the livestock-environment initiative, sponsored by 12 different agencies until now, has taken the first step. Many more must follow. Livestock production, not only the number-one land use worldwide, but in the next decade is likely to be the number-one subsector in economic importance. The issue is too important to allow our efforts to stop here. Let us work jointly towards food security and the safeguarding of the world's natural resources, and in that, assist livestock to find its right place.

References

WAICENT (World Agricultural Information Centre, FAO): Agricultural Production and Food Consumption Data, Rome, Italy (1997).

FAO (1996): World Food Summit: Food for all. Feed grain versus food grain (Technical background document).

AN INTERNATIONAL TRADE PERSPECTIVE ON LIVESTOCK AND THE ENVIRONMENT

ALEXANDER MCCALLA, CEES DE HAAN

Director and Livestock Adviser, respectively, Agriculture and Natural Resource Department, World Bank

Introduction

About 150 million tons, or about one third of internationally traded agricultural commodities are livestock products or livestock feed. This international trade flow contains over 3 million tons plant nutrients, which are often shipped from nutrient deficit areas to already nutrient surplus areas, and have therefore potentially strong environmental effects. Depletion of soil fertility on one side of the globe, and nutrient loading at the other, both affecting land, water and bio-diversity, can be the results. The projected strong growth in the demand for livestock products (de Haan, et al., 1997), as a result of growing populations, rising incomes and rapid urbanization, as well as the increasing global trade liberalization under the recent World Trade Agreement, will affect the direction and scope of these environmental effects.

This paper will review this livestock-global trade-environment interaction. It will first provide an overview of the role of feed and livestock products in international trade, then provide indications, how the recent World Trade Agreement might affect international trade patterns, and infer, how, in turn, the changing trade regimes and patterns might affect the impact of livestock on the environment, and what needs to be done next. Finally, the paper will make some suggestions on what could be the outcome of this Conference.

The role of livestock in international trade.

Every year, about 15 million tons meat and 10 million tons milk and milk products, or about 9–10 percent of the global production of each of these commodities, are internationally traded. For meat, the main exporters are in the developed world, with Oceania, N. America and W. Europe all showing a positive trade balance of about 2 million tons in 1995. The main importers are in Asia, which doubled its net meat imports to 3.2 million tons since 1985 and in East and Central Europe, which changed from a small surplus situation in 1989 to a net importer of about 2 million tons in 1995. For milk and milk products the situation is quite similar, with the main streams from W. Europe, Australia and New Zealand to Asia and Latin America. Especially the meat trade is booming, as meat exports grew over the last ten years at the rate of about 6 percent per year. International milk trade is less ebullient, as it grew at about 3 percent per year over that period.

The trade in feeds is even more important. Over 80 million tons course grains (mainly for livestock feed), 40 million tons oilseed meal and 10 million tons cassava chips are internationally traded every year. Table 1 provides trends regarding the exports of the key feed ingredients, meat and milk and demonstrates the increase in export from the developed to the developing world.

Table 1. Export volumes of key livestock feed ingredients and products
EXPORTS
(`000 metric tons)
DevelopingDeveloped
1985199519851995
Coarse grains21,1948,48162,28276,563
Soybean8,3797,96817,77223,936
Meat1,9023,4598,91115,621
Milk30551,2871,335
IMPORTS
(`000 metric tons)
DevelopingDeveloped
1985199519851995
Coarse grains25,63047,59957,71235,327
Soybean5,26110,10020,57423,128
Meat2,4384,2968,23313,612
Milk4823901,038952

The changing trade regimes and their effects on global livestock trade.

The Agreement under the Uruguay Round of Multilateral Trade Negotiations (UR), concluded on April 15, 1994, is the beginning of agricultural liberalization, establishing a new set of trade rules for the sector. Earlier trade negotiations under the General Agreement of Tariffs and Trade (GATT) provided protection through ordinary tariffs, variable levies and non-transparent quantitative restrictions. The UR is probably the most sweeping effort at trade liberalization, as it seeks (Valdes and McCalla, 1996):

  1. the liberalization of market access through the conversion of all non-tariff barriers (quantitative restrictions) to tariffs and binding of all those tariffs. The UR Agreement also stipulates the reduction of tariffs on average by 36 percent for developed countries and 24 percent for the developed countries, with a minimum of 15 percent for developed countries and 10 percent for developing countries. This will probably produce the most significant impact of UR;

  2. the reduction of domestic support (input subsidies and price support) by 20 percent for the developed countries, and 13 percent for the developed countries, with the exception of the so-called “green box” policies (i.e. support for environmental beneficial technologies)

  3. the reduction of outlays for export subsidies (“dumping”) by again 36 and 24 percent for respectively the developed and developing countries and the reduction of the volume of subsidized exports by respectively 21 and 14 percent.

Developed countries have a period of 6 years (till 2000), developing countries have four years more to fulfill these commitments.

In parallel, a special agreement on Sanitary and Phytosanitary measures (SPS) was concluded, which reaffirms the right for countries to set their own health standards, although to be based on “sound scientific evidence” and not to be used as disguised trade restrictions.

While this might look not overly drastic in terms of real reduction of protection levels, FAO (1997) has calculated that for the agricultural sector, this means that at the end of the Round, the aggregate domestic support will be reduced from US $ 198 billion per year to US $ 162 billion, and export promotion will be cut from US $ 21 billion to US $ 14 billion. However, viewed against a past history of both increasing protection and growing export subsidies, it is still a highly significant change.

The expected impacts of the Uruguay Round.

Prices and volumes.

The effects of the Uruguay Round will probably be rather modest. While decreasing protection and dumping will change some trade patterns, all projections show that it would not significantly affect the overall volume of trade in feed and livestock products, and indeed of most other agricultural commodities. Also, the effect on prices will be rather small. While initially it was thought that price increases would be stronger for livestock feed (coarse grains), than for livestock products, and that UR would therefore encourage grass based production, FAO (1997) now estimates that during the nineties, the increase in world market prices because of UR would be in the order of 4–7 percent for feed, 8–9 percent for bovine and poultry meat and 10–12 percent for pork and mutton, and would therefore have little effect on the type of production system.

In addition, local production in the developing countries would be less hampered by the dumping of frozen meat, milk powder and butter oil, as has affected local production in Africa and South Asia. For example, from the mid-eighties till the mid nineties, Sahelian producers have been hurt by imports into the West African coastal areas of frozen meat from the EU, subsidized at the rate of about US $ 2,000 per ton. This caused in Cote d'Ivoire, that the import of low-quality beef increased from about 5,000 tons per year in the eighties to over 25,000 tons in the early nineties, causing the market share of the Sahelian producers to drop from 86 to 73 percent (Chartier et al, 1996). A reduction of export subsidies, as agreed under UR, would reduce such dumping.

Geographical distribution

The main effect might be a certain redirection of the geographical pattern of global feed and livestock products flows, and especially between the developed and developing world. Western Europe would export less milk and meat, whereas Asia would, because of its massive increase in demand as a result of population, income and urban growth on the one hand, and the removal of import restrictions on the other, import more feed, meat and milk. It is not completely clear, which regions would benefit most from the UR changes and be in the position to satisfy the increased demand. Some of the more obvious possible trends are as follows. For milk, which can best be produced in regions with high quality pasture, temperate climates and significant capital investments, the obvious first candidates for increasing production will be New Zealand and Australia, as the world's most efficient producers. However, all grazing areas in New Zealand are already used, and water constraints will seriously affect the expansion possibilities for intensive dairying in Australia. The temperate zones of the Americas, i.e., the US, and southern cone of South America with long pasture growing periods could well be the main sources of future growth in milk. There are also possibilities for expansion in some Central European countries, if and when they can muster the necessary capital and skills for the required processing capacity. This growth will be supplemented by pockets of opportunities for temperate highlands, such as in East Africa and in areas, where dairy production is completely integrated in the cultural fabric of the society, such as India and Pakistan. For beef and small ruminant meat, the more extensive grazing areas of the Americas, i.e., the United States, Latin America, and Oceania would supply most of the deficits, but increased “niche” opportunities might arise for regions such as the Sahel, which would be in a better competitive position for the West African Coastal markets, and East Africa, which might improve its competitiveness in the Middle Eastern markets.

While milk, beef and mutton come from mainly land-based production, intensive pork and poultry production is less land dependent, and can be expected to locate near the consumer. A relocation of intensive production to the developing world can therefore be expected. This move of intensive pig and poultry production to the developing world is facilitated by much lower shipping costs of grain compared to frozen meat. Maritime grain transport costs is only about 10 percent of the cost of shipping frozen meat, and, with feed conversions of 3– 4 kg feed per kg gain for poultry and pigs, it is more economical to transport grain than frozen broilers or pork (Table 2).

Table 2. Transport Costs for meat and grain from US ports (US dollars per ton1)
 US (Gulf ports) to
ItemRotterdamJapanMiddle East
Grain102633
Frozen meat in cartons200300340

Source: Cunningham (1992)

It can therefore be expected that intensive production would grow in regions with increasing demand, i.e. that the fast past growth in Latin America (Brazil) and East Asia (Thailand, Indonesia, China) would continue. Production in the latter areas, would also be less hindered by competition from the European Union. For feedlot production of beef, with a feed conversion of 8, there is little geographic advantage, and differential application of environmental regulation might be the key factor deciding where future growth will be.

The harmonization and standardization of the sanitary and phytosanitary regulations under UR is also becoming increasingly important. The recent development of Foot and Mouth disease free zones in South America, which already has opened export markets in the US for Uruguay is one of the main examples. Many of the recent trade discussions on livestock products, for example between the US and the EU, have focused also on sanitary regulations. While the UR specifically stipulates the contrary, sanitary regulations may also increasingly be used as a non-tariff barrier, as disease threats are used as pre-texts to protect local industries from global competition.

1 Data from 1984, but the ratio between grain and frozen meat most likely has not significantly changed since then.

The effects of the UR on livestock-environment interactions.

General principles

First of all, because of regional differences in resource endowments, it is difficult to generalize. Regional differences in land quality and water availability might completely change the impact of, for example, intensification of the pig sector, from a positive contribution to improve soil fertility in nutrient deficit areas to nutrient loading in already saturated soils. In addition, livestock-environment linkages are still poorly understood, and therefore difficult to predict, even within a specific eco-system. Some likely positive and negative impacts of UR on livestock-environment interactions are provided below.

Positive effects of UR on livestock-environment interactions

In general, the removal of trade distortions can be expected to increase the efficiency of resource use, and therefore have a positive effect on the environment. It will stimulate production in those areas, which ecologically and economically are the best suited for that type of production, and therefore lead to a more efficient resource use. More specifically:

Some negative effects of UR

Increased globalization of livestock trade would also have negative effects. For example:

Differences in valuation

This brings us to a final, and key point in the discussion on international trade and environmental issues. Because income levels determine to a large extent the values that society places on environmental goods, there are differences between the developing and the developed world in the stringency with which environmental regulations are applied and enforced. The degree of enforcement of the “polluter pays” principle differs therefore significantly between nations, and hence the competitiveness of their producers in the world market. This in turn, leads to increased demands for “a level playing field” from developed country producers.

The introduction of international standards could address these competitive differences, but is greatly hindered, again, by the differences between countries and regions in resource endowment and valuation of the environment. Furthermore, harmonization of environmental regulations can give countries a pretext to deny access, just as in the case of sanitary regulations, especially by raising arbitrarily regulatory access to entry. Moreover, an international drive to achieve consensus on environmental standards could also lead to the lowest common standard to be adopted as the applicable one. A multi-pronged approach, differentiating between developing and developed countries in the enforcement of standards, but at the same time promoting market incentives in raising them (for example by introducing also for developing countries eco-labeling of meat), seems to be the most appropriate strategy.

Follow-up actions

Thus, much remains to be done. First, we need to establish much clearer and better quantified linkages between economic policy changes and resource use, to improve decision making. To be able to do so, we need to improve the quality of our data bases on livestock-environment interactions. Second, we need to create a much greater awareness among policy makers of these interactions, and alert them to the many instruments, which are available to induce environmentally friendlier technologies. And last, but not least, we must start with the implementation of those policies and technologies, which we already know. This conference will provide quite an inventory of such instruments, and they should be translated in on-the ground action.

The role of this Conference in sustainable livestock production

This conference on livestock and the environment has a number of exciting aspects, of which two merit especial mentioning. First, because the focus of the meeting, livestock production has often been made the scapegoat for several negative environmental effects. Desertification, deforestation, ground and surface water pollution, and global warming have all been heavily attributed to livestock production and processing. As a result, international support for livestock development has declined. However, by the year 2020 livestock production might be the most important agricultural sector in terms of value of production and the sector can therefore not be neglected. A concerted effort in identifying the policies, which induce technologies mitigating the negative and enhancing the positive effects, is therefore critical. It is not livestock per se, but human behavior through demand for the goods and services that livestock provide, and through socio-economic policies, that define the effect of livestock on the natural resource base. Livestock-environment interactions fall in the domain of national and international externalities, and a renewed impulse is therefore warranted, to ensure that this significant increase in production does not irreparably damage the global resource base.

Second, by being sponsored by 12 bilateral or multi-lateral institutions, and by being attended by a good blend of livestock technicians and environmentalists, by project implementors and policy makers, and by representatives of the developing and the developed worlds, you have some excellent opportunities for rapid adoption of the concepts. And this mix is necessary. If the above-mentioned demand projections are correct, there is a strong need for a shift in paradigm, on the one hand by the livestock technicians, who will have to shift from a production perspective to a resource conservation outlook, and by the environmentalists, who have to accept that livestock development will be an expanding force in global land use, and will have to be integrated in resource conservation strategies. Let this conference be an important step in that direction.

References.

Chartier, P. (1996). La relance du Secteur Elevage dans les pays de la zone Franc après la dévaluation. Rapport d'étude. Ministère de la Coopération, Paris.

Cunningham, E.P. (1992). Selected Issues in Livestock Industry Development, EDI Technical Materials. World Bank, Washington D.C.

de Haan, C., Steinfeld, H. and Blackburn, H. (1997). Livestock & the Environment: Finding a Balance. WRENmedia, Suffolk, U.K.

English, J., Tiffen, M. and Mortimore, M. (1993). Land Resource Management in the Machakos District, Kenya 1930–1990. World Bank Environment Paper 5. World Bank, Washington D.C.

FAO (1997). Impact of the Uruguay Trade Round on Agriculture. Commodities and Trade Division. Rome. http:/faofsOa.fao.org/waicent/faoinfo/economic/uround.htm

Kaimonitz, D. (1995). Livestock and Deforestation in Central America. EPTD Discussion Paper no.9. IFPRI, Washington D.C. and IICA Coronado, Costa Rica.

Moll, H.A.J. and N.B.M. Heerink (1997). Price adjustments and the cattle sector in central West Africa. Paper presented at the International Conference on Livestock and the Environment. Wageningen, June 16–20. Wageningen, International Agricultural Center, the Netherlands.

OECD (1996): Agri-environmental Indicators. Stocktaking Report. Joint Working Party of the Committee for Agriculture and the Environment Committee.Paris.

Valdes, A. and A.F. McCalla (1996). The Uruguay Round and agricultural policies in developing countries and economies in transistion. Food Policy Vol 21 pp. 419–431.

NETHERLANDS AGRICULTURAL ENVIRONMENTAL POLICY; LESSONS TO BE LEARNED1

JOHAN DE LEEUW,

Director General of the Ministry of Agriculture, Nature Management and Fisheries of the Netherlands

Introduction

The Ministry of Agriculture, Nature Management and Fisheries is very pleased that the Conference Livestock and the Environment takes place in the Netherlands and that the International Agricultural Centre, which is part of the Ministry, has an important task in the organisation of the Conference and in the preparation of the study.

Dutch agriculture is characterised by a high productivity and intensiveness. A negative result of this is an output of polluting substances. With regard to livestock, this has the form of a mineral surplus which results in water and groundwater pollution.

On the other hand, livestock production also has positive environmental effects. It contributes to the closure of mineral cycles and it is a way to add value to by-products of agribusiness. In addition, it is a way to make good use of marshy areas, of which we have a lot in the Netherlands.

The first policy effort to control the mineral surplus in Dutch livestock production is more than ten years old. We started to curb the rapid growth of manure production. Now, the policy aim is to arrive at a sustainable situation in the year 2010 in which mineral output in agriculture is geared to the carrying capacity of the environment. We have had to conclude that it is far from easy to control a mineral surplus caused by livestock production once it exists, in particular in areas in which intensive livestock production is subject to rapid growth. Maybe the Dutch experience can provide some clues for the development of general policy recommendations. It is for this reason that I entitled my speech ‘Lessons To Be Learned’

First, I will outline the development of environmental policy in the Netherlands. Then, I will look at the environmental problems caused by livestock production and the policies developed to abate it, and to conclude, I will sum up the lessons that can be learned from the Dutch situation.

Environmental policy in the Netherlands

As in most countries, environmental policy is relatively new in the Netherlands. It started in 1971 with the creation of a separate environmental ministerial department. Since then, environmental policy has become an important policy item.

In the first ten years, the emphasis was on the development of legislation and a system of environmental permits. At that stage, the legislation targeted pollution in the environmental compartments water, air and soil. Laws were drawn up and standards for environmental management were laid down. On the basis of these, environmental permits were granted. Enforcement is largely devolved to the provinces and municipalities.

1 The paper was delivered by Mr Ger de Peuter, Livestock Officer of the Department for Agriculture

With this legal approach of air, water and soil pollution, significant results have been achieved. However, drawbacks became apparent, too. By targeting air, water and soil separately, there is not only a multitude of rules, but they can also be inconsistent. Combined with the fact that different organisations are involved in the enforcement of the rules, this caused lengthy procedures and delays. The complicacy of the legislation led to enforcement problems, too.

These drawbacks necessitated a turn-around in environmental policy. A start was made with simplification and co-ordination of rules and procedures, and new policy lines were initiated, aimed at target groups, areas and products. The two basic preconditions for a successful long-term environmental policy were considered to be internalisation and integration.

Internalisation is the process where environmentally friendly behaviour becomes second nature. For this to happen, two things are required - a change in attitude and methods which integrate environmental considerations in management. To accomplish this, the main thing is to ensure involvement of groups in society in the development and implementation of policies.

Integration is understood as aiming at the realisation of cohesion and consistency between elements of the environmental policy and between the environmental policy and other policy areas, such as spatial planning, agriculture, traffic and transportation. Integration also implies a greater involvement of specialist ministries in environmental policy development. This means that responsibility for the mineral policy and crop protection policy is primarily with the Ministry of Agriculture.

In the new approach to environmental policy, the policy aiming at specific target groups in society has reached the highest level of sophistication. The government consults representatives of industries, such as the chemical industry, power companies, the food processing industry, agriculture, etc. In these consultations the parties act as equal discussion partners, and they conclude voluntary agreements on the contribution of that sector to a cleaner environment now and in the future, and on conditions and facilities that need to be provided by government. Such an agreement is laid down in a covenant. These covenants always include the following elements:

Subsequently, the covenant functions as a guideline for the issuing of permits to companies within the industry. In this way, the target group approach results in a feasible environmental action plan which is geared to the specific situation in the industry. It is not meant to replace the legal approach, but to supplement and support it. In agriculture, there are covenants on crop protection and energy use in glasshouse horticulture. A new covenant is expected to be concluded for the long-term development of glasshouse horticulture.

The target group approach has produced some important successes. It has notably increased the involvement of industries and it has promoted the development of a large number of technological innovations.

The other two new policies are aimed at areas and production chains. Here too, the emphasis is on consultation with groups in society and the conclusion of agreements. The area policy is aimed at specific regional environmental problems or resources such as drinking water or nature reserves. The production chain policy aims to draw up a customised plan for the problems in a specific production chain. This production chain policy is still under development - in livestock production the chains targeted could be the pig production chain and the dairy chain. The policies for areas and production chains are really part of the target group approach.

In the years to come, these policies will be supplemented by a further inclusion of environmental cost in production cost. The strategies we think of include tax measures and systems of emission rights.

To conclude my review of Dutch environmental policy, I want to mention the importance of international environmental policy. A large number of environmental problems have an international scope, such as the greenhouse effect, acidification, and water quality. To solve these, the Netherlands is dependent on the progress of international initiatives. On the other hand, international agreements and EU directives are becoming more and more important for the development of the national policy. In short, for policy development the international aspects of the environment take on an increasing importance.

Agricultural environmental policy

Now that I have given you an impression of the Dutch environmental policy in general, I would like to go into environmental policy for agriculture. Dutch agriculture is characterised by a high intensity and productivity. For a large number of products, total production is far more than the national consumption. The intensiveness of production brings on a variety of environmental problems, for instance due to pesticides, mineral pollution due to livestock production and greenhouse gas emissions from greenhouse horticulture. One of the priorities of Dutch agricultural policy is reducing the burden on the environment. We have identified two strategies to effect this: a step-by-step introduction of environmental management and environmentally friendly technology on farms, and the development and stimulation of sustainable production systems.

Research and practice show that agriculture can at the same time be both highly productive and environmentally benign, provided environmentally friendly technology is combined with good management.

Environmental policy in livestock production

And now the policies for livestock production. Too high levels of nitrogen and phosphate emission are the main problem here. The pollution caused by these minerals partly results from the high livestock density in the Netherlands. In this country, the pig population is just as large as the human population, i.e. 15 million. In addition, there are a little less than 5 million cattle, of which 1.7 million dairy cows, and 90 million poultry. In the 1980s, it became clear that the growing livestock numbers led to a continual increase in the mineral surplus and the concomitant adverse environmental effects. In particular, water quality suffered as a result of nitrogen and phosphate leaching. The growth in animal numbers took place particularly in pig and poultry farms in the south and east, with little or no land. A quick and simple remedy was hard to find, so that a phased approach was opted for. The ultimate aim is an agricultural sector of roughly the same production level which allows for a clean environment.

The policy up to now

In the first policy phase, from 1985 to 1990, the aim was to achieve a stabilisation of manure production. The following instruments were used: a no-expansion policy for farms with a manure production that was too high in relation to their land; gradually stricter regulations for the use of manure; a stimulation of the distribution of manure from areas with too much to areas with too little manure; and extensive research efforts into manure processing and the use of manure, and into concentrates with a lower mineral content.

In the second phase, from 1990 to 1998, this policy was pursued, including a gradual tightening of the manure application regulations. Application during the autumn and winter months was forbidden and application with low-emission machines became obligatory. In addition, housing systems were developed with low ammonia emissions. Unfortunately, the research into manure processing has so far not resulted in a practicable large-scale technique. The first two policy phases have resulted in a reduction of mineral output by livestock by about 30%, a more efficient use of manure and improvements in the distribution of manure over the Netherlands. The reduction in mineral production was largely accomplished through feed improvements, improvements in the use of inorganic fertiliser and a reduction in herd size as a result of the milk quota system.

The future

In 1998 a new policy phase starts which will end in 2010. The objective is to have the mineral surplus at farm level halved in 2010 compared to 1985. The core of this policy is an obligatory minerals accounting system, which reveals the mineral surplus on each farm. The surplus is the difference between the volume of nitrogen and phosphate that is supplied to the farm in the form of fertiliser and feed and disposed of by a farm in the form of products and manure. Allowable surplus levels have been set. If the surplus exceeds this allowable level, a levy has to be paid. The height of the levy is designed to deter farmers from exceeding the set level. The allowable surplus level is high at the start and will be reduced in steps. To give an impression, the allowable surplus level for grassland will be 300kg of nitrogen per hectare in 1998 and 180kg in 2008. The obligatory minerals accounting system will be introduced in phases, too, starting with intensive livestock farms.

The advantage of the obligatory minerals accounting system is that it sets a clear objective on the farm level, while the farmer is free in the way he wants to implement this objective. This stimulates integration of environmental considerations in management methods and promotes innovation.

Experience has shown that the first steps taken to control a mineral surplus tend to save money. Often a more efficient use of concentrate, manure and fertiliser leads to both lower mineral losses and less cost. Further steps require the use of new technology, in particular in intensive livestock production.

The disadvantage of the obligatory minerals accounting system is that it is rather complicated and that it causes a heavy administrative burden - manure that is disposed of must be sampled and weighed.

In the policy phase to come, low-emission housing will become obligatory for intensive farms.

An extensive package of supportive measures has been put in place, which among other things intend to stimulate a restructuring of pig production. The aim of this restructuring is to promote modernisation and scale enlargement, combined with the introduction of environmentally friendly housing systems.

In case the envisaged policy does not have the effect desired, a reduction of the livestock herd may have to be considered.

As you will have understood from what I have said so far, going back from a mineral surplus to a situation in which the burden on the environment is less heavy will be a real effort.

Lessons to be learned

I would like to draw some conclusions now and see what lessons can be learned from the Dutch environmental policy and the policy on livestock production in particular.

I hope that this picture of Dutch environmental policy and the lessons that can be learned from it will be useful in your discussions of the days ahead.

I would like to end with stressing that livestock production can contribute a great deal to the development of a sustainable society. It produces quality food, it provides a lot of employment and it is beneficial to a sound environment, especially in regions with mixed farming. The challenge is to make use of and strengthen the positive effects, while minimising the negative effects. It is with this challenge in mind, that the Ministry of Agriculture, Nature Management and Fisheries is sure, also because of its own experience, that the Conference on Livestock and the Environment is a highly valuable endeavour. I hope that you will be able to draw conclusions at the end for the purpose of policy development on livestock and the environment. We are interested in the outcome and we are prepared to contribute our knowledge and expertise to the development of a sustainable livestock production also on an international level.

I wish you a very successful conference. Thank you.


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