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Livestock grazing systems and the environment

BALANCING LIVESTOCK AND ENVIRONMENT; THE GRAZING SYSTEM1

CEES DE HAAN

Livestock Advisor, Agriculture and Natural Resource Department, World Bank

Introduction

While the contribution of grazing systems to the world's meat supply is limited (nine percent of the global beef and thirty percent of the global mutton production), grazing systems have the most direct interface between livestock and land, water and bio-diversity, and cover the majority of the usable surface of the earth. They thus merit considerable attention in the livestock-environment debate. This presentation will first highlight the vast differences between the different grazing systems in the various ecological zones, and then define, for each of these production systems, the main pressures it is subjected to, the main evolution of the world's grazing resources, and the key responses needed to arrive at their more sustainable use. As such, this presentation closely follows the Pressure State Response model, outlined in an earlier presentation.

The need to differentiate

Grazing livestock can provoke beautiful images of animals completely in harmony with nature, but is also often associated with overgrazing, clouds of dust and desertification. A good understanding of the nature of grazing systems, and their differences is therefore essential. In this study, we distinguish basically four production systems: the arid, the semi-arid and sub-humid, the humid and the temperate/highlands grazing systems.

The arid grazing system (less than 75 growing days) is the most extensive system in terms of areas it covers. It is probably also one of the most debated and “high profile” systems, as it is directly associated with desertification. Recently, a group of ecologists and sociologists from the US and the UK, i.e. Behnke et al (1994), building on earlier work of Ellis and Swift (1988) and Westoby et al (1989), have contributed significantly to a better understanding of the arid grazing system. These scientists argued that the key determinant of the arid grazing system is its variable climate, which causes the system to be in a continuous state of dis-equilibrium. Thus, for the annual vegetation, not the biotic pressures, such as caused by man and animals, but abiotic factors, and especially rainfall, determine the state of the vegetation and next year's state of the resources. As will be seen later, this dis-equilibrium theory leads to completely different policy and investment requirements.

1 This is a summary of Chapter II of De Haan C., H. Steinfeld and H. Blackburn (1997). Livestock and the Environment: Finding the Balance. Wrenmedia, U.K.

The semi-arid and sub-humid zones are defined as zones with a 75–270 days growing season. As precipitation increases, the dis-equilibrium characteristics of the arid areas turn into a more stable equilibrium environment, and progressively biotic factors, such as human pressure and the resulting land use, define the state of the natural resources. There is a continuum from the semi-arid zones, which are generally densely populated, to the sub-humid zone savannas, which have been rather empty until recently, as their access was impeded by human and livestock diseases, such as river blindness, African sleeping sickness in men and tick-born diseases in animals. This sub-humid zone is the area in which there are still opportunities for increased production, especially through mixed farming.

In the humid zones of the tropics, (a growing season of more than 270 days), rainforest becomes the climax vegetation, and livestock and grasslands mostly compete with that forest. Ranch encroachment in tropical rain forests has been the other “high profile” livestock-environment interaction, as it was exemplified as the case of conspicuous consumption of meat at the expense of bio-diversity.

The fourth and final system concerns the temperate and tropical highlands grazing system. Because of their high potential, the tropical highlands almost universally are dealing with a high population pressure, and that is why there are few real tropical grassland systems left, most having been converted to mixed farming systems. This group has to contend with extreme forms of nutrient imbalances: from the highly nutrient deficient grasslands in the East African Highlands, to the heavily nutrient surplus pastures of North Western Europe and the eastern US.

Pressures factors on the world's grazing resources

(a) Arid grazing systems

The overriding underlying pressure for the arid grazing system is population growth, compounded by poverty. The population growth mainly concerns exogenous (non-livestock or non-pastoral) ethnic groups, which grow at a substantial higher rate than the pastoral population. This causes the encroachment of these groups in so-called key resources, such as dry season grazing areas and water resources, and as such undermines the critical mobility, and therefore sustainability of the eco-system. These fundamental causes have often been worsened by policy interventions, most notably by:

Institutional deficiencies often affecting arid grazing systems are centralized planning (pastoral projects were often planned without active pastoral population) and the absence of drought preparedness capabilities. Drought is an integral part of dryland management, and the main resource degradation occurs especially during drought. Still, very little experience exists on how to prepare pastoral populations for these recurring droughts.

(b) Semi-arid and sub-humid grazing systems

Population growth and immigration, facilitated in the more humid areas by disease eradication (sleeping sickness, malaria and river blindness), also are the key pressure factors in the semi-arid and sub-humid areas. These are the areas of the Cerrados and Llanos in South America, and the Guinea savannas and Miombo woodlands in Sub Saharan Africa. Land degradation is the result of a combination of fuel wood collection, crop expansion and overgrazing, and is especially strong in the semi-arid areas. The key policy forces, promoting such practices, include perverse incentives, such as subsidies on fuel, machinery and fertilizer. Such incentives induce cropping in areas, which are marginal for arable use, but are crucial for grazing. Crop encroachment thus affects the sustainability of the entire eco-system. A case-study will be presented in this Conference on how these incentives affect resource degradation in North Africa and West Asia (Oram, 1997). The absence of a reliable banking system for reinvestment of savings, now still often invested in livestock, is one of the key institutional weaknesses causing overgrazing by livestock.

This is a grazing system which covers areas with great wildlife diversity. A key issue here is how this bio-diversity is priced and how the revenues are distributed. Often, communities do not get sufficient incentives for bio-diversity conservation, as revenues from tourism and eventual game cropping are often diverted to local or national government coffers. With no rewards, but considerable potential losses, because of crop damage or livestock predation, there is little incentive to preserve this bio-diversity. The control of the tsetse fly is a much debated issue. Reduction of the fly pressure, either as a result of human pressure or through chemical control methods opens up areas for crop and livestock production, and puts pressure on wildlife populations.

(c) Humid grazing systems.

Ranch induced deforestation in tropical rainforests has been extensively studied, and will be presented in a case-study (Faminov, 1997). In summary, the transformation from tropical forest to crop and pasture land brings about substantial losses of soil fertility and soil erosion, and in many tropical rainforest areas, pastures can only be sustained for rather short periods. Soil nutrients are rapidly depleted after clearing, and weeds rapidly displace the grasses.

Probably more than for any other livestock-environment interaction, inappropriate incentives, land tenure and institutional policies have played a major role in deforestation, land degradation and erosion of bio-diversity in the humid tropical areas. Many of the factors are exogenous, however. Road construction globally led to accelerated deforestation, and is possibly the single most important direct cause of deforestation. Arable farming, in the rainforest areas usually takes the form of “slash and burn” agriculture, especially in the forest areas of Africa and Asia. In those areas, livestock comes in rather late, if at all, in the land use system of the cleared areas. Forest over-exploitation is also an important factor in deforestation, especially in Asia and Africa, where about 20 percent of the areas are over-exploited. Livestock is a main force in deforestation in the Americas, but again mainly as a result of inappropriate policies. Especially in the seventies, the livestock sector in Brazil and Central America secured a disproportionate share of credit at subsidized rates and with lenient re-imbursement conditions and control. Most of these loans were invested in land which was cleared, and in turn increased land prices even more. Beef exports to the USA, frequently quoted as one of the main causes for ranch development in Latin America, (the “hamburger connection”) were important in Central America in the 1960s and early 1970s, when international prices were high. But the Amazon area never produced more than 5 percent of the total beef supply of Brazil, and not for export. Furthermore, declining global prices in the eighties, and increased protection in the US market, especially following NAFTA, have reduced exports from the other Latin American countries.

(d) Temperate grazing systems

The temperate and highland grasslands cover a wide variety of vegetations and uses. They range from the Central Asian and Central European areas, where changes in fuel prices and privatization of land are the driving forces causing overgrazing. Previously in these areas, the annual stock movements were made possible by low energy prices. After the transition to a market economy, the greatly increased prices have changed the traditional cycle of seasonal grazing and rest periods into year-round grazing. The phasing out of feed subsidies in Central Europe has been introduced recently to carry a measurable effect.

However they also include the grazing systems of Western Europe and the United States, where policies promoting intensification are the key driving forces behind the environmental effects of livestock on temperate grasslands. The Common Agricultural Policy (CAP) of the European Union(EU), which particularly subsidized dairy production heavily, led to intensive production, with high stocking levels and excessive use of fertilizer and concentrate. In contrast, the debate on grazing on public lands in the western United States is being driven by a large concern over how public lands should be utilized (ecotourism vs ranching, mining and/or timber). It now focuses in particular on stream sides and deterioration of water quality and the degradation of vegetation, because of overgrazing. In the past, the importance of these riparian areas was underestimated and they were largely viewed as sacrifice areas, while upland grazing (>95% of the area) was the focus of range improvements. The ensuing degradation of these riparian areas is exacerbated by the inappropriate conversion of sheep permits to cattle permits. Sheep use the entire area, but the areas are often too steep for cattle to utilize properly, and the shift to cattle causes a concentration of animals in the lower riparian areas. One important topic of debate in the US has been the costs associated with grazing public lands. Use of public grazing lands is now the centerpoint in conflicts between opposing national environmental and livestock interest groups, with active involvement of the federal Government, as both groups claim that some form of public administration is required.

Trends in the state of grazing resources

(a) Arid grazing systems

These systems can best be characterized by their resilience. This is demonstrated by:

(b) Semi-arid and sub-humid grazing systems.

Land degradation, loss of bio-diversity and water pollution is much more serious in the semi-arid and sub-humid grazing systems. For example, recent data on China (CAS, 1996) shows that in the arid areas, only five percent of the area is degraded, whereas in the semi-arid areas 52 percent and in the sub-humid areas 63 percent is degraded. The word desertification, which provokes images of advancing deserts, and degradation of arid lands, is therefore a misnomer; the real problem clearly lies in the semi-arid and sub-humid zones. As said before, a key component of livestock - environment interactions in this zone is the interaction with wildlife. Key results, which seem to emerge from the review are:

Case-studies on institutional issues concerning wildlife-livestock integration (Aveling, 1997) and disease will review these issues in more detail.

(c) Humid grazing systems

Although there is a lack of reliable land-use information, there seems to be declining ranch investments for land speculation in most rain forest areas. As already mentioned, ranching induced deforestation occurs only in the Americas, and even there, deforestation by large ranchers seems to be on the decline. Some investment in large scale ranching in South America remains, especially from illegal sources such as the drug trade, but most deforestation now seems to come from subsistence farmers, who first crop and, as soil fertility declines, start to graze some cattle.

(d) Temperate grazing systems

In the temperate and tropical highlands grazing systems, the natural resource trends are varied. Improving land quality and bio-diversity is reported by the General Accounting Office (1988). Moreover, the nutrient loading of some OECD countries is decreasing, but there is also serious degradation going on in the former planned economies of Russia, and Central Asia.

Response requirements for sustainable grazing systems use

Following the description, earlier in the Conference, of the different policy measures available, a summary overview of those measures to mitigate the negative effects and to enhance the positive effects is as follows:

(a) Property measures

For all grazing systems, security of access to grazing and water resources, and ownership of bio-diversity (wildlife) is extremely important. Without these securities there is less incentive to invest and conserve. The establishment of protected areas (parks) will be necessary in some areas, but the pressure on land will be so high, and the possibility of enforcing park boundaries so poor, that the opportunities for the establishment of new parks are extremely limited. Conservation of bio-diversity will thus have to be integrated in other forms of land use, including arable farming and livestock grazing.

Two specific aspects of tenure need to be mentioned:

(b) Financial measures

As seen before, the introduction of market pricing for all inputs and services generally saves resources, as it improves efficiency. For the grazing systems, this includes the introduction of grazing fees in communal areas. The main issue here is the method of collection. Grazing fee collection by government services (the cattle taxes from the colonial time could be seen as such) has just led to evasion by the producers and hindered communication between these services and the pastoralists. Hence the current emphasis on fee collection and use by the community. There is quite some experience with that approach in Asia, not very much yet in Africa. Proper pricing of grazing needs to be complemented with an equitable and complete distribution of the benefits of environmental services that grazing systems provide. This clearly does apply to wildlife conservation, but could also be expanded to other areas, such as carbon sequestration. New savanna technologies developed by CIAT in South America (Fisher et al, 1995) has shown the potential. Land taxation in, for example, the humid areas, might be another financial measure to promote intensification and eventually reduce the pressure on bio-diversity.

(c) Institutional measures

Decentralization and local empowerment, to a possible extent using traditional organizations, are central in sustainable grazing resource conservation. Sustainable resource management can not be dictated by a central service. However, this makes resource conservation very knowledge intensive, with multiple technological components. Still, most technology services (such as the research and extension services) are based on blanket coverage and single component technologies. Moreover, in few pastoral areas the framework and capacity exists to generate and disseminate such more knowledge-intensive technologies. Finally, drought preparedness, certainly needs to be part of resource conservation in the arid and semi-arid grazing systems.

(d) Information needs

There is clearly a need for more information on resource trends. Much of the debate on desertification and deforestation would have been more effective if a better database would have been available, and the linkages between livestock and these impacts would have been better understood. This Study was set out to provide more of such quantitative information, but as those responsible for the preparation of the background documents found out, the information simply was not available.

(e) Infrastructure needs

A varied approach is required here: In the arid grazing systems, road and market infrastructure is one of the most important tools in drought management. In that zone, however, water development should be handled carefully. In the humid areas, road development has shown to have a negative effect, and should therefore be handled with care.

The technology to follow.

If the appropriate policies are in place, some of the key technology thrusts which are most likely to follow are:

In all of those systems, it would hopefully lead to a shift in the use of grazing systems as a simple source of meat and milk to an eco-system with multiple functions (from a repository of animal and plant bio-diversity, to a tool in carbon sequestration, and an integral part of the landscape).

References.

Aveling, R., E. Barron, P. Bergin and M. Infield (1977). Livestock and wildlife in the environment-diversity in pastoral ecosystems of East Africa. Published in these proceedings.

Behnke, R.H., Scoones. I and Kerven C. (1993) Range Ecology in Disequilibrium. Overseas development Institute/International Institute for Environment and Development Commonwealth Secretariat London.

Breman H., and C.T. de Wit (1983) Rangeland Productivity in the Sahel Science, 221 (4618): 1341–47.

China Academy of Science (1996) The strategy to Control Desertification. Beijing

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

de Ridder N. and Wagenaar, K.T. (1984). A comparison between the productivity of traditional livestock systems and ranching in eastern Botswana. ILCA Newsletter 3(3):5–7. International Livestock Center for Africa, Addis Ababa.

Ellis J.E., and D.M. Swift (1988) Stability of African pastoral eco-systems. Alternate paradigms and implications for developments.J. Range Management 41: 450–459.

Faminow, M.D., (1997). Livestock-deforestation links: Policy issues in the Western Brazilian Amazone. Published in these proceedings.

Fisher M., Rao, I.M. Ayarza, M.A. Lascano, C.E. and Sanz, J.I., (1995) Carbon Storage by introduced deep-rooted grasses in the South American Savannas. Science September 15.

General Accounting Office (1988) Rangeland Management: More emphasis needed on declining and overstocked grazing allotments GAO Washington D.C.

Oram, P., (1997). The influence of Government Policies on livestock production and the environment in West Asia and North Africa (WANA). Published in these proceedings.

Lucker, C.J., Dregne, H.E., and Newcomb, W.W. (1991) Expansion and contraction of the Sahara desert from 1980–1990. Science 253;299.

Westoby, M., B. Walker and I Noy-Meir 1989. Opportunistic management for rangelands not at an equilibrium. J. of Range Management 42: 266–274.

PRICE ADJUSTMENTS AND THE CATTLE SUB-SECTOR IN CENTRAL WEST AFRICA1

HENK A.J. MOLL, NICO B.M. HEERINK

Department of Economics, Wageningen Agricultural University, the Netherlands

1. Introduction

Cattle produced in the Sahelian countries were traditionally supplied to domestic markets as well as to foreign markets in the more densely populated coastal areas of West Africa. In the so-called central West-African corridor, substantial cattle trade flows from Mali and Burkina Faso benefitted from the competitive advantages on the consumer markets in Côte d'Ivoire, Ghana and Togo in contrast to beef from world market sources. Since the mid 1970s, these advantages have gradually disappeared as a result of droughts in Sahelian countries, falling world market prices, and - since the mid 1980s - the increasing overvaluation of the CFA franc. Moreover, the European Union (EU) initiated an aggressive trade policy to deal with its meat surpluses in the early 1980s. When dairy quotas were introduced in 1984, European beef production peaked as a result of massive slaughter of dairy cows, and large quantities of beef receiving substantial export subsidies were dumped on the world market (Jadot and Rolland, 1996).

In 1994, the relative position of Sahelian livestock on the coastal West-African beef markets suddenly improved as a result of two major policy changes. Restitution payments (export subsidies) on beef to West Africa were reduced by 15 percent in June 1993 as a result of pressure from European non-governmental organizations (NGOs). More reductions followed and early 1994 the total reduction amounted to about 30 percent. In addition, the CFA franc was devalued by 50 percent on 12 January 1994: the fixed exchange rate changed from 50 CFA franc to 100 CFA franc per French franc. These two sudden policy changes resulted in price shocks that had a large impact on the competitiveness of Sahelian cattle on the coastal markets in West Africa, and as a result on cattle trade flows in the central West-African corridor. The effects on cattle production in the Sahel and on the utilization of rangelands are less directly observable.

The purpose of this paper is to examine in more detail the effects of the CFA franc devaluation and the reduction in EU restitution payments on cattle trade flows and coastal beef markets in central West Africa, and the implications for cattle production and rangelands utilization in the Sahel. Section 2 reviews the scattered evidence available on trade flows and on the coastal beef markets. The focus will be on Côte d'Ivoire and Ghana, the main destiny of EU beef exports to West Africa during the period 1980–95. The effects on the beef market are likely to differ considerably between Côte d'Ivoire, which belongs to the franc zone, and Ghana, which nowadays has a floating exchange rate. The effects on cattle production and rangelands utilization in the Sahel are examined in Section 3. Because of limited data, the analysis is confined to a theoretical exposition.

1 Comments by P.E.J. Quarles van Ufford (University of Amsterdam, The Netherlands) and A. Kuyvenhoven (Wageningen Agricultural University), and the provision of data by A. de Jager (Agricultural Economics Research Institute, The Hague, The Netherlands) and P.E.J. Quarles van Ufford are gratefully acknowledged.

The inferences drawn are of a tentative nature and need to be examined empirically. The paper concludes with a summary of major findings.

2. Price adjustments and the cattle and beef markets

Exchange rate adjustment and inflation rates

The common currency of the francophone countries in West and Central Africa, the CFA franc, is linked to the French franc through a fixed exchange rate. Full convertibility is guaranteed by the French treasury, and collective money and credit policy is exercised through two regional (West- and Central-African) monetary unions. Until the 1980s, inflation rates in the Franc Zone countries were low and the exchange rate was relatively constant (see Figure 1). In the mid 1980s, the performance of the Franc Zone countries began to deteriorate. The appreciation of the French franc with respect to the US dollar after 1985, and a series of primary-commodity world market price shocks, forced these countries to adjust (Azam and Devarajan, 1996). Since they were barred from using the exchange rate instrument, all of the adjustments had to come from reductions in expenditure, output and employment (see e.g. Corbo and Fisher, 1995 and Demery and Squire, 1996). The rationality of maintaining a fixed parity to the French franc was increasingly questioned, and on 12 January 1994 the CFA franc was devalued by 50 percent2.

Figure 1: Development of official exchange rates CFA franc and Cedi
(national currency units per $)

Figure 1

2 Devarajan (1996) estimates that prior to the devaluation, the real exchange rate was about 30 percent overvalued in the 12 CFA Franc Zone countries on average with sharp differences between the countries.

The devaluation increased the relative prices of tradable goods, and as a result caused substantial inflation. In the year of the devaluation, consumer prices increased by 20 to 25 percent in the francophone countries in central West Africa. In 1995 the main price shock was absorbed and inflation decreased substantially (see Table 1).

Table 1. Annual changes in consumer prices in central West Africa(%)
 Burkina FasoMaliCôte d'IvoireTogoGhana
1975–8411.0n.a.12.911.167.9
1985–890.5n.a.6.00.527.7
1990-0.80.6-0.81.037.2
19912.51.81.70.418.0
1992-2.0-6.33.51.410.1
19930.50.02.8-1.025.0
199425.222.925.9n.a.24.9
19957.412.414.3n.a.58.5
Source: International Financial Statistics, IMF, Washington D.C.

Economic developments in Ghana differed markedly from those in the neighbouring francophone countries. Inflation rates were very high in the 1970s, but a fixed exchange rate was maintained until the end of the 1970s. By 1983, the economy had virtually collapsed. Drastic policy reforms including major adjustments to the exchange rate were introduced. Fiscal discipline and tight monetary policy led to a reduction of inflation rates to less than 20 percent. In recent years, however, inflation rates have soared again, mainly as a result of high rates of monetary growth since 1992 (ISSER, 1996).

Export subsidies and beef imports from the European Union

Average nominal subsidies on frozen beef shipped from the EU to Africa increased substantially in the 1980s, from 125 CFA franc per kg in 1974 to 710 CFA franc per kg in 1991. Subsidies accounted for three-quarters of the price received by European exporters for the most popular type of frozen beef (Delgado and Lent, 1992: P.2). At the same time, beef exports from the EU to West Africa drastically increased, from 9,200 tonnes in 1980 to 54,000 in 1991 (see Figure 2 and Appendix Table). Exports were highest in the period 1991 to 1993, but subsequently dropped by more than two thirds as a result of the combined effects of the CFA franc devaluation and the reduction of export restitution payments by the EU.

Figure 2: EU beef exports to West Africa

Figure 2

The main proportion of EU beef export went to Ghana and Côte d'Ivoire, together absorbing between 60 and 85 percent of total EU beef exports (except for the years 1983 to 1985). Historical developments, however, differ considerably between these two countries. Export to Côte d'Ivoire grew rapidly in the second half of the 1980s, as a result of the combined effect of the appreciation of the CFA franc and EU export subsidies. By the end of the 1980s, around 70 percent of total EU beef exports to West Africa went to this country. In the beginning of the 1990s this picture changed drastically. Côte d'Ivoire introduced in 1991 a system of compensatory levies to protect its domestic market (Jadot and Rolland, 1996: p.26), while trade liberalization in Ghana enabled imports. As a result, the destination of EU beef exports shifted from Côte d'Ivoire to Ghana, but the total flow remained more or less unchanged between 1991 and 1993. Only after the major price adjustments in 1994, beef imports in both countries radically declined.

Consequences for domestic markets in coastal countries

Beef imports from the EU substantially distorted domestic meat markets in the coastal countries. Available estimates for Côte d'Ivoire indicate that retail prices of beef in Côte d'Ivoire decreased steadily during the 1980s, from around 1,200 CFA francs per kg3 in 1980–1982 to less than 900 CFA francs per kg in 1989–91 (Holtzman and Kulibaba, 1992). At the same time, the share of EU imports in total beef consumption increased from 10 percent in 1980 to 35 percent in 1990. Since then, it declined to 27 percent in 1992 and evidently has declined much further since 1994 (Ruben et al., 1994; Jadot and Rolland, 1996).

Subsidized beef imports from the EU consist mainly of frozen low-quality front quarter cuts with a high fat content (capa meat). It is consumed particularly by the lower income groups, who cannot afford to buy the more expensive higher-quality West-African beef. On the consumer markets, it competes with other cheap sources of animal proteins. In Côte d'Ivoire before the devaluation, about 50 percent of the market for animal proteins (meat, fish, eggs) consisted of fish products, of which a large proportion was imported.

The CIF price of imported beef doubled in 1994 as a result of the devaluation. Retail prices in Côte d'Ivoire, however, only went up by about 50 percent due to a decrease in import taxes and levies. At the same time, the price of local fresh meat went up by 15–20 percent, suggesting that a substitution in consumer demand towards higher quality meat occurred (Quarles van Ufford and Klaasse Bos, 1996).

In analyzing the combined effects of the CFA franc devaluation and reduced EU export subsidies on beef consumption, a distinction should be made between substitution and income effects. The higher relative prices of imported beef and fish evidently shifted consumption towards locally produced meat and fish. According to estimates derived from a simultaneous demand-supply model of animal protein products in Côte d'Ivoire in 1991 by Delgado and Lent (1992), a one percent price increase of imported EU beef led to a rise in imports of live Sahelian cattle of 0.26 percent, while a one percent price increase of frozen sea fish imports led to a rise in live cattle imports of 0.70 percent4. Higher import prices, however, also imply a decline in real incomes of consumers in the short run. The negative expenditure elasticity for imported low-quality beef estimated by Delgado and Lent suggests that consumption of this ‘inferior good’ will increase at the expense of higher-quality meat5. This income effect will counteract part of the consumption shift from imported sea fish and beef to Sahelian fresh meat.

3 In constant 1990 CFA francs

4 It should be noted, however, that the estimated price elasticity with respect to frozen beef imports does not differ significantly from zero (at a 10 percent testing level).

5 The estimated expenditure elasticity of frozen sea food imports is also negative, but it does not differ significantly from zero.

What about the beef market in Ghana, which did not experience such a major exchange rate shock? As can be seen from Figure 2, imports of EU beef have declined drastically since 1994 at a rate comparable to the decline in total West-African beef imports. This finding suggests that cattle exports from neighbouring countries into Ghana benefitted from the devaluation of the CFA franc with respect to the Cedi, and replaced beef imports from the EU. We will come back to this later. It should further be noted that, unlike the situation in Côte d'Ivoire, real incomes of consumers in Ghana have increased rather than declined as a result of the devaluation of the CFA franc. Imports of consumer goods from neighbouring countries declined considerably in price and replaced both more expensive imports and domestic production6. As a consequence, beef consumption in Ghana was probably boosted by a positive income effect.

Consequences for cattle trade within the region

Consequences for cattle trade within the region are difficult to assess, since no systematic efforts to record these flows exist. The little evidence available indicates that, during the 1980s, livestock trade from the Sahel to the coastal countries declined substantially. Total cattle exports from Niger, Burkina Faso and Mali are estimated to have fallen from 430,000 to 250,000 head (approx. 40 percent) between 1980 and 1988 (Jadot and Rolland, 1996). According to Ruben et al. (1994), exports of live cattle from Mali to Côte d'Ivoire almost halved during the 1980s, while data collected by Holtzman and Kulibaba (1992) indicate that the Sahelian share of total beef supply in Côte d'Ivoire decreased from 65 to 28% during the 1980s. Besides the availability of cheap world market imports at the coastal markets, the decline in cattle imports may also (partly) be explained from the droughts in the Sahel in 1984–85, which reduced herd sizes and forced pastoralists to migrate to the South. Internal trade within the coastal countries has probably increased as a result of this drought.

In the beginning of the 1990s, cattle exports from Burkina Faso to Côte d'Ivoire revived as a result of the countervailing tariffs on EU beef imports in Côte d'Ivoire (and the gradual production recovery in the Sahel). The number of cattle imported from Burkina Faso increased from 22,000 in 1988 to 90,000 in 1993 (Van Helden and Quarles van Ufford, 1994 and Van Helden et al., 1995).

The destination of most cattle trade flows in the 1980s and the beginning of the 1990s was Côte d'Ivoire. In the 1990–93 period, Abidjan accounted for 80–90 percent of all central corridor exports. Unrealistically high import tax rates and various formalities in Ghana deterred livestock traders in Mali and Burkina Faso from using the official channels. Official statistics in Ghana do not mention any cattle imports from Burkina Faso or Mali in Ghana until 1993. An estimated 13,000 animals were imported illegally from Burkina Faso in 1993 (Quarles van Ufford and Klaasse Bos, 1996).

Since 1994, trade flows in the region have recovered from the various distortions. Data collected by Quarles van Ufford and Klaasse Bos (1996: Table 5) on regional exports of cattle from Burkina Faso to the coastal countries show that the absolute increase in cattle trade between 1993 and 1994 was largest in Ghana, followed by Côte d'Ivoire and Togo (see Figure 3). During the first six months of 1995, exports from Burkina Faso to the coastal countries only slightly declined (source: Ministère de l'Agriculture et des Ressources Animales, Burkina Faso). Since EU beef exports to West Africa declined drastically after 1993 (Figure 2), these data confirm that the devaluation of the CFA franc and the reduction of EU export subsidies on beef have resulted in a substitution of beef imports from the EU for imports of cattle from Sahelian countries.

6 Notice that despite the cheap imports from neighbouring countries, inflation in Ghana did not decrease in 1994 and increased from about 25 to 60 percent in 1995. In 1994, these price increases were more than offset by the 47 percent depreciation of the Cedi. In 1995, however, domestic inflation was much higher than the 25 percent exchange rate devaluation.

Figure 3: Cattle exports from Burkina Faso

Figure 3

It can be concluded that the relative price increase of imported world market beef to Sahelian cattle has caused similar substitution effects in the francophone coastal countries and in Ghana. The income effect, however, differs as the devaluation of the CFA franc decreased real incomes of consumers in francophone West Africa, but raised real incomes in Ghana, and this resulted in a higher increase in the demand for Sahelian cattle in Ghana.

Consequences for Sahelian countries

As a result of the growing demand for Sahelian cattle at the coastal markets, prices for exported cattle increased considerably at the Sahelian markets. Data collected by the Ministère de l'Agriculture et des Ressources Animales (MARA) at the largest cattle export/wholesale market in Burkina Faso, Pouytenga, show that the average price of bulls for export (which was relatively stable in the period 1991–93) increased by 48 percent in 1994 and by 19 percent in 1995. During the first six months of 1996, the average price of bulls for export was 9 percent higher than during the same period in 1995. Prices in Burkina Faso appear to stabilize at a level almost twice as high as pre-1994 levels. A recent study on the CFA franc devaluation, livestock production and trade in Mali, reports an average cattle price increase of 55 percent from 1992–93 to 1994–95 (Koné et al., 1996). Assuming that the pattern of price increases in 1994–95 resembles the pattern in Burkina Faso, this result means that the total price increase in Mali will be only slightly lower than the price increase observed in Burkina Faso.

The supply of cattle to local markets has increased as a result of these price increases. As can be seen from Figure 4, until 1994 the supply of cattle in Pouytenga varied inversely with its price as a result of seasonal factors. After the devaluation, however, the number of cattle supplied increased from 101,000 in 1993 to 126,000 in 1994 (+25%) and to 136,000 in 1995 (+8%). But during the last six months of 1995 the supply of cattle was 6,000 less than during the same period in 1994 (-9%), and in the first six months of 1996 supply declined by 13,000 compared with the preceding year (-17%) (source: MARA). These data suggest that the supply response to the sudden price shock has come to an end, and available stocks are no longer sufficient to meet prevailing demand. The price increases in 1995 and 1996 are probably mainly a result of the short term ‘capacity limits’ to cattle supply7

Figure 4: Cattle supply at Pouytenga (Burkina Faso) and cattle slaugthered in Burkina Faso

Figure 4

Part of the increase in exports after 1994 may also be the result of reduced domestic consumption in the producing countries (Quarles van Ufford and Klaasse Bos, 1996). Lower real incomes and higher real beef prices after the devaluation have probably reduced meat consumption, and hence the number of cattle slaughtered, in Burkina Faso and other Sahelian countries. Available data collected by the MARA, which indicate that the number of cattle slaughtered in Burkina Faso has decreased from 161,000 in 19993 to 132,000 in 1994 (-18%) and to 112,000 in 1995 (-15%), support this hypothesis.

Since the first half of 1995, the decline in number of cattle slaughtered stopped suggesting that domestic consumption stabilizes at a lower level (see Figure 4).

7 The lower supply of cattle may also partly be explained from the fact that cattle markets in the Northern part of the country gain in importance - although Pouytenga still remains the largest cattle market in Burkina Faso (P.E.J. Quarles van Ufford, personal communication).

Combining the data presented above on cattle supply, cattle prices and inflation in Burkina Faso, it can be concluded that the real value of cattle supplied by farmers increased by around 1.25*1.48/1.25=48% in 1994 and by 1.08*1.19/1.07=20% in 1995. Evidently, the effect on incomes is smaller, because costs of imported inputs (veterinary products, feed) doubled and labour costs probably increased as a result of inflation.

A similar pattern of supply response was observed in Mali (Koné et al., 1996: Table 11). Supply of cattle at four major markets (Ségou, Mopti, Sikasso, Bamako) increased from an average of 220,000 in 1992–93 to 258,000 in 1995 (+17 %) and to 261,000 in 1995 (+1%). The same study also provides information on the destination of the cattle sold at these four markets (Koné et al. 1996: Annex 3)8. The share of exports increased from 21 % in 1992–93 to 45 % in 1994 and 37 % in 1995. Till 1994 the number of cattle sold for domestic consumption hardly changed, but in 1995 it dropped from around 140,000 to 106,000 (-25 %), implying that the continued large exports in 1995 could only be maintained by a reduction of domestic meat consumption.

3. Effects on cattle production and the environment

Analytical framework

The probe into the effects of changed market conditions on cattle production and the environment starts with a brief overview of the various roles and outputs of cattle kept under the conditions prevalent in West Africa (Moll, 1997).

Firstly, keeping cattle results in two types of physical production.

  1. Recurrent production, with outputs in the form of manure, milk and draught power. The outputs depend on types and age of animals; they become available throughout the lifetime of the animals.

  2. Embodied production, defined as meat production that is stored either in the form of an increase in herd size, or through a gain in liveweight of individual animals, or through a combination of both. This embodied production becomes available for consumption or investment purposes9 when animals are disposed of.

    Secondly, cattle keeping provides a number of services: financing, insurance against contingencies, and display of status. The importance of these respective roles is dependent on access to, and the functioning of markets for saving and credit services, insurance, and (luxury) consumer goods for displaying wealth. The absence or ill-functioning of markets for finance and insurance in West Africa, and in developing countries in general, is widely documented, see for example Binswanger and Rosenzweig, 1986; Von Pischke et al., 1983; and, Bosman and Moll, 1995, for South-Western Nigeria.

  3. The role of cattle in financing has become apparent as a result of studies on investment and sales behaviour of people in situations where few other means of storing wealth are available. Substantial revenues obtained from the sale of the cotton crop for example, are converted into cattle by farm households in Mali as cattle is considered as a near-liquid asset (Kersbergen, 1997). Urban employees or businessmen with excess cash may also buy cattle and entrust the daily management to herdsmen (Ruben et al., 1994). Cattle are eventually sold or disposed of when substantial consumption or investment needs have to be met. Conversion of excess income into cattle and the reconversion into cash at the moment of actual requirements has a number of advantages over keeping cash: no need for safe-keeping of cash which is difficult in rural circumstances; inflation is avoided as the value of cattle remains fairly stable; and, the avoidance of claims to smaller or larger amounts of cash by relatives etc. which are difficult to turn down because of social resons. Saving in the form of cattle also involves disadvantages such as the risk of loss through death or theft, and the expenditures for herding etc. However, in communities with a cattle keeping tradition these disadvantages can often be minimized through personal relationships and through arrangements for sharing the physical production which form incentives for proper caretaking.

  4. The role of cattle in insurance results from the potential capability to sell animals in case of emergencies. Having cattle in situations where markets for insurance are absent thus substitutes for paying insurance premiums.

  5. The role of prestige is related to the presence or absence of other means to display wealth than cattle, such as durable consumer goods, building materials, and other spending possibilities.

8 Since the sum of cattle slaughtered and cattle exported amounts to 120% for 1994, it is assumed that cattle exported in 1994 equals 116,777 instead of the 167,177 mentioned by Noné et al, (1996).

9 Investment in enterprises other than cattle.

The relative importance of the roles of cattle is affected by a devaluation of the domestic currency that results in changes in domestic prices. An increase in meat prices may lead to more emphasis on embodied production and the subsequent sale of animals. An increase in crop prices would increase the value of the outputs manure and draught power, as the respective alternatives, fertilizer and mechanization, will become more expensive. A price increase in imported luxury goods will reinforce the role of cattle in the display of wealth. To tackle the contradictory effects of price changes we use relative meat prices in the analysis below.

The five roles outlined above cannot simply be added together because access to the respective outputs is partly mutually exclusive: one can either keep animals and reap a flow of outputs (recurrent physical production, the security that emergencies can be met, and social prestige), or one can reduce the herd by disposing of one or more animals and use the physical production built up for important purposes at the desired moment.

The balance between keeping cattle and disposing of cattle is maintained by the cattle owner, and he or she will do so according to the relative importance attached to the various roles with their respective outputs and to expectations of future requirements.

The combined individual decisions by cattle owners of whether to keep or dispose of cattle affect the rangelands: a shift in the relative preference for recurrent outputs and services derived from keeping cattle leads to increased stocking rates, whereas an increased relative preference for income from meat production leads towards higher offtake rates. Increased stocking rates and higher offtake cannot be directly linked with a negative and a positive impact on rangelands respectively, as is argued by Behnke and Kerven (1994). The overview of the effects of price adjustments on rangelands presented below is therefore based on changes in the relative importance of the five roles of cattle with their respective effects on the utilization of rangelands.

Overview of effects

The changes in market conditions which lead to higher prices for West African meat on the domestic markets resulted in a short-term, positive supply response as discussed in Section 2. Meat and cattle prices increased by 50% over a short period which was greater than the overall price increase; thus both nominal and relative prices of meat increased. The long term effects of higher relative meat prices on the supply of cattle are subject to debate: some analysts maintain the view that higher prices lead to a reduced supply because the supposedly fixed requirements for cash of cattle owners can be met by disposing of fewer animals; others see no reason for an atypical position just for cattle owners, and they maintain that a price increase is an inducement to increased supply, as is the case for economic agents in general. In a recent study on the supply response of cattle in relation to relative cattle prices in Sahelian countries, Motel-Combes (1996) supports the latter view. His analysis of the period from 1966 to 1989 resulted in the conclusion that an increase in the cattle/millet price ratio resulted in a positive supply response. Other studies with a similar coverage are not available and, following the conclusion of Motel-Combes, we may expect that the higher relative cattle prices resulting from devaluation and a reduction of European export subsidies have a positive long term effect on the supply of cattle.

Higher relative meat prices resulting in an increased supply of cattle means that one of the roles of cattle, the production of meat, gains importance relative to the roles in crop production and services provision. In the long run an increase in supply can be met through two different production strategies:

  1. Keeping more animals with no change in production technology. This strategy will intensify the use of rangelands, eventually leading to degradation and reduced production in areas where the limits of sustainable utilization are exceeded.
  2. Using improved production technology, which is defined as an improvement in the ratio of meat output per scarce resource. This ratio (the productivity) can be expressed as meat production per animal, per herd, or per unit of land, all measured over a certain period. In the situation of the Sahelian countries optimizing any scarce resource goes together with paying attention to the use of rangelands, as close to the limits of rangelands' capacity optimal production situations are unlikely to be found.

In principle, the improved market conditions for cattle and meat offer a conducive environment for increased productivity through improvements in technology in combination with a positive impact on the use of rangelands. Realization of this potential, however, requires complementary institutional changes that provide farm households with access to the inputs and knowledge required for effective adoption of improved technology (Hayami and Ruttan, 1985).

The devaluation of the CFA franc resulted in substantial inflation in the francophone West African countries where inflation had previously played a minor role (Table 1). For the cattle producing and exporting countries, the price increases have had different effects on the respective roles of cattle in the provision of services.

The confirmation of the roles of cattle in financing and insurance, forms an inducement to at least maintain and preferably to increase the herd. Farm households keep their herds near their villages in order to make use of the additional outputs: manure and draught power. Cattle owned by urban dwellers are herded over much larger distances in search of fodder and water. The result is thus increased and widespread pressure on rangelands. A reduction of this pressure would require a decline in the relative importance of the roles of cattle in the provision of services. This can only be achieved through a long term and continuous process that would include the restoration of confidence in money, access to trustworthy financial institutions providing financing and insurance services for the rural population, and access to attractive alternative consumption and investment opportunities for the urban and/or richer segments of the population.

The changes in the relative importance of the roles of cattle as the result of the price adjustments are brought together in Table 2 together with the respective objectives of cattle owners.

Table 2. The change in importance of the roles of cattle resulting from price adjustments.
Roles of cattleObjectives cattle owner for each roleChange in importance per role
Recurrent production
output: milk, manure, draught power(related to crop production)
maintain or increase herdnegative
Embodied production
output: meat (increase in herd size and/or liveweight)
productivity: output/animalpositive
Financing
output: services
maintain herd, with inflow and outflow of animalspositive
Insurance
output: services
maintain or increase herdpositive
Status
output: services
maintain or increase herdneutral

4. Conclusion

The devaluation of the CFA franc and the reduction of the European Union export subsidies on meat have improved the market position of the West-African cattle sub-sector. Cattle trade from the Sahel to the coastal countries increased substantially, particularly exports to Ghana. The higher prices of imported beef from the EU relative to imports from the Sahel led to a shift in consumers' demand towards the latter in francophone coastal countries as well as in Ghana. In addition, consumer demand in Ghana was boosted by an increase in real incomes resulting from the devaluation of the CFA franc. In the francophone countries, on the other hand, higher import prices resulting from the devaluation caused a (short-term) decline of real incomes which partly neutralized the positive demand effect on fresh meat from the Sahel.

The Sahelian countries were faced with rapid price increases for cattle as a result of increased export demand. Recently, prices seem to stabilize at a level almost twice as high as pre-1994 levels. The supply of cattle on (export) markets in Burkina Faso and Mali increased by 20–25 % in 1994. Despite the continued increase in prices, supply of cattle declined in 1995–96 as compared to 1994. These findings suggest that the supply response to the sudden price shock has come to an end, and prevailing stocks are no longer sufficient to meet prevailing demand. Part of the increased cattle export from the Sahel since 1994 probably takes place at the expense of reduced domestic meat consumption.

The effects of devaluation and reduced meat subsidies on cattle production and on the relationship between cattle production and the environment are difficult to trace as many factors obscure a direct relationship. On the one hand, the higher relative meat and cattle prices enforce in principle the role of meat production in cattle keeping, and such is supportive towards the adoption of production technology that takes the optimal utilization and sustainability of rangelands into account. Other factors such as actual access to more productive technology and the management of common rangelands are, however, decisive in achieving these possibilities for more sustained utilization of rangelands. On the other hand, the devaluation resulted in serious inflation which reinforced the role of cattle in financing, insurance and the display of status, all stimulating keeping cattle with survival as the primary objective, and not production.

The total effect of the recent changes in the macro-economic situation on cattle production and the environment in the Sahelian countries remains an unsolved matter. This is due in the first place to the fact that the price adjustments gave contradictory signals to the cattle owners, and in the second place to the fact that the relationships between macro policies, cattle production and rangelands utilization are embedded within the complex multitude of relationships which form the society as a whole.

This probe into these relationships gives some indications, however. Higher relative meat and cattle prices provide incentives for emphasis on meat production, which may lead to more sustainable use of rangelands. Policies that encourage acceptable, institutional opportunities in financing and insurance will enable the cattle sector to concentrate increasingly on directly productive roles, and thereby provide indirect support to the more sustainable use of rangelands.

References

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Appendix Table. European Union beef exports to West Africa, 1980–1995
 Total Exports to West AfricaExports to Côte d'Ivoire proportion of total EU exports (%)Export to Ghana proportion of total EU exports (%)
Quantity (1000 tonnes)Index (1991=100)
19809.2176421
19819.718782
198211.722679
198313.725450
198416.731460
198521.139500
198632.861591
198733.161620
198833.262680
198926.950723
199031.4586819
199154.01004343
199251.0943543
199344.7832253
199418.334854
199513.525951
Source: EUROSTAT data

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