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Response: Technology and policy options

In the developed world, stagnating demand and increasing human health concerns have, to some extent, alleviated the pressure. For example, growth of industrial beef feedlots in North America, is still only driven by population growth, because per capita consumption of beef has remained constant. The importance of feedlots in the European Community is likely to decline as production becomes more extensive in response to policies that reduce support to agriculture and promote environmentally friendlier production systems. With the shift to a market economy in Eastern Europe and the former Soviet Union, the importance of industrial ruminant production is declining and ruminant production is moving back to the land base and to smaller scales of operation.

In addition, and more importantly, the pollution of land, water and air has raised acute awareness in the developed world of the environmental problems associated with industrial production systems. This has, in many cases, triggered the establishment of policies and regulatory measures, removing many of the favouring factors, and inducing a series of technologies that are increasingly applied, wherever regulations are enforced. They are detailed below.

Policies and regulations. Regulatory instruments are imposed to control the distribution and concentration of livestock production and introduce technical control systems. Some of these regulations are relatively easy to enforce whereas others, for example the maximum permitted amount of manure per unit area, are more difficult. The regulatory approach is most efficient in situations of point source pollution (Box 4.3) and where there are strong enforcement institutions. In countries with weak institutions, the enforcement of regulations at reasonable social cost remains a major challenge and limits the validity of this approach. Compliance with regulations affects cost of production and may therefore influence regional distribution. Specific examples of regulations are given in Table 3.4. They include the limits on the number of animals in the KU, and most of the member states, taxes on surplus animals as in Belgium (Manale, 1991), taxes on surplus P (most EU countries), a ban on direct discharge of manure into surface waters (USA, Malaysia), and the establishment of nutrient management plans (Indonesia, the USA and a number of European countries). Guidelines on manure storage and application methods, timing, crops and quantities are available in practically all countries with high animal densities.

Box 4.3 Point versus non-point source pollution.

POINT SOURCE pollution originates from a specific location and it is usually possible to determine how much of the pollution is entering the environment. Discharge of manure into surface waters, for example, is point source pollution. Non' point source pollution results from seepage of surface discharges, precipitation or atmospheric deposition. It spans a wide area of land, often depending on weather conditions, making both the occurrence and extent of pollution difficult to predict. Environmental damage through excess manure application to land is non-point source pollution.

Box 4.4 Livestock waste in Singapore.

BETWEEN 1967 and 1987, the densely populated island state: of Singapore went through a series of policy + changes and technology adaptation and developments. Initially food security policies and consumer preference for fresh meat resulted in an upgrading of technologies, including least cost feed formulations, improved animal husbandry and veterinary health. in the 1970s, Singapore achieved self-sufficiency in eggs, poultry meat and pork. Starting in the late '70s Singapore started to establish a network of waste discharge measures including a 95 percent reduction of Biological Oxygen Demand, BOD (see Chapter 5) and a sludge of at least 20 percent total solids content (Taiganides, 1992). Technologies for waste disposal were mainly imported from western developed countries and adapted to the specific conditions. In spite of having to incorporate a large part of the environmental costs in their prices, Singapore producers remained competitive vis--vis live animal imports. In 1984, environmental standards were raised, particularly with regard to odour control. In the same year, Singapore abandoned the national objective of self-sufficiency in monogastric products and pig farming was phased out in 1987.

Zoning can regulate regional distribution. Zoning is, and will remain, an important policy for controlling animal manure storage and processing, not only for environmental reasons but also for concerns of human health and rational regional development. Zoning has been important both in environmental and in regional development policies, as well as in successfully moving industrial production units away from urban centres in OECD countries. An important prerequisite for successful zoning is good infrastructure because animal products will have to be transported over larger distances. Marketing and processing infrastructure must therefore be taken into account when defining zones in order to make the best use of investment. The creation of confined "industrial parks", with prescribed and sometimes shared facilities for waste collection and treatment, offers opportunities to fully charge industrial production systems with environmental costs while still maintaining advantages of market access and economies of scale. Governments have frequently established guidelines for the siting of production units, particularly to protect urban settlements from obnoxious smells. Zoning, when done within a comprehensive area development plan, also allows for common waste collection and treatment facilities to be shared by a number of producers. The ultimate zoning strategy has been introduced by Singapore, which completely prohibits animal production (Box 4.4).

A trend to rational zoning is not only fostered through environmental concerns but also by changes in overall policies, often triggered by the removal of government interventions and trade liberalization. In the Near East, for example, industrial small ruminant systems have been kept viable through subsidies on grains and are increasingly under pressure because of the financial requirements to maintain these subsidies.

Box 4.5 The effects of internalizing environmental costs on production costs and income.

NO SYSTEMATIC evaluation exists and data are scarce. Cost; are very site-specific and rarely are full environmental costs actually covered. However, regulations for intensive production systems in some countries are so strict that practically all environmental costs, at least for waste, are absorbed by the producer. Here are some examples

• In Malaysia, for cultural reasons swine production is kept out of sight and no pig manure can be applied to land. In certain prescribed areas, Industrial pig producers have to reduce BOD to less than 50 mg/l (95 percent reduction), through screening and aerobic treatment. For a 500 animal pig unit, investment costs are around 10 000 Ringgit Malaysia (RM) and operating costs are 24 RM per production place (Hassan, pers. com.) This implies an incremental production cost of 0.23 RM (approx. 9 US cents) per kilogram of live-weight produced, equivalent to a cost increase of around 6 percent.

•In Singapore, in 1986, the large-scale Ponggol Pigwaste plant turned wastewater into recycled water (7 mg/l BOD5), essentially removing all waste-related environmental effects. Total average annual costs were calculated at US$ 14.39 (Taiganides, 1992) per porker marketed or between 8 and 9 percent of total production costs.

• Australian beef feedlot regulations are the strictest in the world and contribute to construction costs of new feedlots being much higher than in the United States. Most feedlots am in the vicinity of grain producing areas. The regulatory frameworks differ between the States and costs of compliance with environmental regulations have been given at A$ 27 per head for feedlots in Queensland and A$ 41 for New South Wales (Ridley et al., 1994) or approximately 4 and 6 percent respectively of total production costs. Investment costs related to compliance with environmental regulations are 6 percent of total investment costs.

• While it appears that overall impact on production costs, even in extreme cases, do not exceed 10 percent incremental costs, investment requirements and effect on income can be prohibitive if such measures are applied unilaterally. Furthermore, unit costs for establishing and operating waste treatment facilities decrease with increasing size, so small producers are disadvantaged. However, the latter often face less severe regulations, such as dairies in the USA' or are exempted altogether.

The most efficient and direct financial instrument would be to internalize all environmental costs into the consumer price. This should certainly be the policy over the medium term. However, implementation of such policies is not easy. First, there is a lack of accurate economic evaluation of these costs, for example for biodiversity and some gaseous emissions and some indirect costs (soil erosion because of feed production, for example). Initial calculations point to an increase of 10-15 percent in cost price (Box 4.5). Second, unequal application of the inclusion of environmental costs in the product price puts some producers at a comparative disadvantage. A more global approach will therefore be required.

Current financial instruments therefore focus on reducing the emission of nitrogen and phosphates and other potential pollutants, particularly in susceptible and already burdened areas. The levies and taxes currently imposed on the intensive mixed and industrial systems in practically all developed countries fall into this category. This includes many of the measures listed above, such as levies on waste discharge, taxes on excess animals or phosphate-loads. Others are:

• removal of subsidies, or imposition of taxes on imported concentrates, to increase the cost of feed concentrate-intensive production and to favour land-based systems over the industrial system. This is the main cause that large-scale feedlots can no longer compete in the contracting market of the former centrally planned economies. Here, the general trend points to a more land-based livestock production, removing a large part of the waste problem in the medium term. In a more indirect way, removal of subsidies or taxes on fossil fuel may have a similar effect by raising the cost of feed. Government income from such sources could be used to alleviate environmental problems;

• removal of import restrictions on materials and equipment that improve feed efficiency, such as amino-acids to improve protein, enzymes to improve phosphate digestion and feeding equipment that restricts intake. These technologies lead, indirectly, to lower waste loads through better feed conversion;

• subsidies for investment or running costs to improve the adoption of emission control technologies. For example, subsidies for constructing manure storage facilities are given in many EU countries. In the USA, cost-sharing and state revolving funds have been established for manure storage sheds and dead bird composters; and

• a system of tradable manure emission quota to limit waste production and still create incentives for efficient resource use. Marketable permits and pollution trading would be based on the establishment of payment per unit of pollution or the use of pollution reduction credits.

Technologies. As can be expected according to the theory of induced technology (Chapter 1), these measures have led to the introduction of a wide range of new techniques. Because of the commercial and demand-driven nature of the industrial system, development and transfer of technologies are usually not a problem, although their impact can be expected to level off as high levels of technology are reached.

A whole range of technologies exists that could alleviate the environmental burden created by this system. The effectiveness of these technologies with regard to manure disposal can be measured with parameters as described in Boxes 4.6 & 3.8. These technologies seek improvement in two areas:

Reduction of nitrogen and phosphate excretion by improving feed utilization can be achieved through:

• introduction of multi-phase feeding in order to match feed composition to the needs of the individual animal classes. By better adjusting the nutrient supply to the needs of animals, less waste is produced and therefore less nitrogen and phosphates are released in waste and into the environment;

• improving the accuracy of determining nitrogen and phosphate requirements, followed by better balancing of feeds with these essential nutrients. In this respect, important gains have already been obtained in better balancing pig and poultry rations with essential amino-acids, the building blocks of feed proteins. For example, a combination of better balanced feed improved digestibility and the inclusion of synthetic amino acids, allows for a substantial reduction of the protein content in feed and, hence, a reduction of nitrogen excretion by 20 to 40 percent (Van der Zijpp, 1992). Concentrate conversion rates range between 2.5 to 3 kg feed dry matter/kg liveweight gain in pigs, 2.0 to 2.5 kg feed /kg of liveweight gain in broilers, and even less for eggs. They have been reduced by at least 30-50 percent since the '60s; for example, the average feed conversion of pigs in the Netherlands in 1957 was 3.5 kg feed per kg liveweight gain (Grashuis, 1958). Through selection and better feed formulation, there is considerable potential for further improvement (Chapter 5). For ruminants, key production efficiency parameters are daily weight gains and feed conversion, which reflect the profitability of the use of capital for feed, lean animals and investments. Cattle weight gains are usually in the range of 1 to 1.5 kg/day and feed conversion rates are of about 8 to 10 kg of grains per kg of weight gain during their period in the feedlot. A more detailed discussion of concentrate to animal conversion is given in Chapter 5. Other options include the use of growth hormones (somatropine) or other stimulants (clenbuterol), frequently used in the USA, but banned in most of Europe;

• increasing diet digestibility. Spectacular improvements have been obtained with the addition of an enzyme (phytase) for catalysing the digesting of phosphates in feed. The same enzyme might also increase the availability of zinc in feed, reducing the need for feed additives; and

• promoting feeding systems which reduce intake and stop the buffet-style, ad libitum feeding which was popular in the 1980s.

Box 4.6 Indicators for manure management.

• distribution of manure over available land.
• exposure to air and contact with soil.
• time lapse between application and planting.
• time lapse between application and working-in.
• use of water with liquid manure.
• nitrogen losses.
• organic matter losses.

Source: Brandjes et al., 1996.

Reduction of the emission from manure storage and during application. Possible technologies are:

• a reduction of nutrient losses from manure in stables and during storage through improved collection and storage techniques. In animal buildings, manure is stored either under a solid floor, under a slatted floor, or within a housing system with litter. A large part of ammonia emissions comes from the manure surface in storage, either under the slatted floor or in open tanks. The main focus has to be on reducing nitrogen losses, most of which are in the form of ammonia from the manure surface. Possibilities are:

Solid storage systems, which collect the faeces only for storage in bulk (often for extended periods), and have low gaseous emissions;

Liquid or slurry systems where animals are kept on slatted floors and the manure and urine are collected and stored in large tanks. This system is particularly common in pig production, and part of the energy may be recovered through the use of anaerobic digesters;

Lagoon systems consist of flushing systems using large amounts water. Nitrogen losses and methane emissions are high;

Covered tanks and manure kept under solid floors in stables. Minimal amounts of ammonia are emitted when manure is stored under solid floors. Reductions in emissions of 80 to 90 percent can be achieved by covering storage tanks (Voorburg, 1994); and

Reducing odour and ammonia after emission from the source. In addition to natural or forced ventilation systems the air can be cleaned through big-filters or bio-washers that absorb odours and ammonia from polluted air. This is done by oxidizing ammonia into NO2 and NO3. Up to half of the ammonia can be eliminated through such air washing systems. However they are costly in investment and operation. (Chiumenti et al., 1994).

• methods that efficiently re-use energy and nutrients in manure in cases where manure is not used directly for agriculture. Biogas plants of all sizes and different levels of sophistication exist. They not only recover the energy contained in manure but also eliminate most of the animal and human health problems associated with micro-biological contamination of waste by microorganisms. Other methods of controlling the waste load are purifying and drying the manure;

• reducing nutrient losses during and after application of manure on soils (Chapter 3). Injection or sward application of manure into the subsoil and appropriate timing significantly reduces nitrogen losses as shown by the Netherlands' experience since 1995. Nitrification inhibitors can be added to slurry to decrease leaching from the soil under wet conditions;

• large-scale manure processing is possible where intensive production is concentrated in certain zones but that is often not viable economically. The efficient use of manure for feed and energy production requires high capital investment which often cannot be borne by individual farmers (Box 4.7); and

• recycling manure by feeding it back to livestock, including fish (Muller, 1980) is practiced only on a limited scale. In addition to widespread reluctance to use manure as feed, mainly originating from fear of health hazards, most types of manure have a low nutritive value with the exception of poultry manure which is of reasonable quality, i.e. 55-60 percent Total Digestible Nutrients (TDN) and 20-30 percent Crude Protein (CP). Consequently, in intensive production systems with large amounts of collectable manure, cheaper feeds are also available, while in production systems where utilization of low quality feeds is common, high collection and opportunity costs (manure as fertilizer or fuel) prohibit the use of manure as feed. A recent overview of the possibilities is given by Sanchez (1995).

Box 4.7 Joint biogas plants in Denmark.

FOR THE: protection oft water resources, Denmark has established regulations that allow manure to be applied only during the growing season. Consequently, the manure has to be stored for up to nine months, creating immense storage problems and costs. This induced an initiative in 1988 by which a number of farmers are served by Joint Biogas Plants which are large common storage facilities. This overcomes the problem of economies of scale which individual farmers would be unable to overcome. In 1994 nine plants delivered more than 2 million m3 monthly to public utilities. (Johansen, 1995)


The key policy challenge is to charge the industrial system with the environmental costs it creates, i.e. to fully apply the "polluter-pays" principle. Besides the difficulty of accurately measuring the costs, such a policy would raise consumer prices for livestock products, particularly affecting urban consumers who are an important policy group in many countries. Furthermore, a high degree of self-sufficiency in livestock products through the development of a modern livestock industry is a primary policy objective in many developing countries and this would most likely not be achieved, if the principle is strictly applied. By incorporating all environmental costs, many countries would lose their comparative advantage.

On the other hand, stricter environmental standards and corresponding incentives to better balance land and animal distribution could be a powerful tool to promote rural and agricultural development: prices for animal products would increase, providing land-based production incentives to intensify; and development would be more decentralised, creating employment and marketing opportunities outside the large urban centres. Such a process will have to be monitored carefully in order not to lose the technological edge by removing economies of scale and functioning infrastructure and needs to be seen in a regional development context. As has been shown, the industrial system obtains its advantage in efficiency through a combination of factors:

• the use of capital intensive and advanced technologies and resultant economies of scale;
• the exploitation of market opportunities, both at input and product level; and
• a shift to pigs and poultry as better feed converters.

This has important implications for the future. The analysis shows that most expansion and productivity growth in the livestock sector will have to be sustained through the provision of concentrate feed, which normally would require additional land. The establishment of proper controls for the industrial system would then lead to intensifying livestock production through better feed conversions, and intensifying crop production aiming at higher yields. Both will reduce the land requirements for given volumes of final product and alleviate pressures on habitats and biodiversity.

Following this line of argument, measures to foster biodiversity and protection of natural resources would encourage improvements in feed conversion by removing obstacles and providing incentives for more efficient feed use. Large opportunities lie in astute pricing of concentrate feed and in providing access to related technologies. A practical difficulty lies in the cross-country nature of measures and effects when feed is imported, traded and international agreements will need to be found.

In conclusion, the industrial system poses most of the environmental problems and offers most of the possible solutions. The world's human population will increase from today's 5.5 billion to around 10 billion by the year 2030, i.e. almost double. With increasing incomes, urbanization and ageing populations, the world demand for livestock products is likely to triple, perhaps quadruple. Neither the grazing system nor the mixed farming system, as we know it, will be able to satisfy this increase in demand. The greatest part of the additional demand will have to be supplied by the industrial type of production. For this to happen, two requirements must be met:

• Industrial systems and high potential cropping must be integrated in an area-wide crop-livestock integration. Mixed farming needs to be practiced in a wider land use concept, where crop and livestock production are specialized but maintain their big-physical links. This would allow for environmentally beneficial interaction, while giving enterprises the opportunity to specialize and to fully exploit economies of scale. It entails a new type of regional planning that takes into account nutrient balances and input and product markets, infrastructure and services. Ultimately, such concepts will find application, not only at the regional or watershed level, but also at country and international scales. Livestock production will increasingly need to be relocated to the resource base and, with a combination of efficient infrastructure, appropriate incentives and enforced regulations, this will be the mainstream "animal agriculture" on the horizon.

• The striving for increasing efficiencies must continue in order to alleviate the resource requirements for livestock production. Already, there could be a massive reduction of resource requirements, if appropriate technologies were applied, and if policies were conducive to higher efficiencies. New technologies, which promise continuous advances in efficiency are on the horizon.

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