During the last 10 years, grain substitutes in animal feed rations have gained more importance for intensive animal production in the developing countries. In the EC and US corn, sorghum and soybean meal have traditionally been used to fatten poultry, pigs and cattle. However, government policy interventions have raised domestic prices of these crops, resulting in a search for cheaper feedstuff ingredients. Carbohydrate sources were found in (industrial) byproducts of other crops, i.e. cotton seed meal, citrus pulp, rice husks, etc. In addition, feed manufacturers started to experiment with imported “exotic” materials, like cassava. To supplement the relative low protein levels of these energyrich products, feeds were supplemented with soybean meal, fish meal, etc.
Besides developed countries, cassava can play a major role in animal rations grain substitution in developing countries. This potential is heavily constrained by existing direct and indirect government policies targeted to the principal grains. The indirect effects which generate severe adverse conditions for cassava demand and supply development.
This paper aims to assess the current situation, existing constraints and future potential for cassava as an animal feed ingredient. Most issues will be treated with a focus on Latin America. When possible, references are made to the Asian situation.The basic concepts are in general applicable to both continents.
The paper is organized as follows: The first section explains the changing trends in Latin American meat production and consumption, leading in the next section to a discussion on derived demands for animal feed stuffs. This is followed by a short technical note on least cost feed rations, and what role cassava can play for the animal feed industry. The CIAT experience is discussed, and the benefits from the Integrated Cassava Drying Projects. Finally the major constraints that cassava faces as a feed ingredient are summarized. The paper ends with conclusions and recommendations.
CURRENT SITUATION AND FUTURE GROWTH OF LATIN-AMERICAN MEATS
Resulting from population growth, improved standards of living and increasing urbanisation, the demand for animal proteins has increased during the last decades. In LDC, vegetable proteins are increasingly being substituted for animal proteins by the lower income classes. Additionally, this period has seen a dramatic increase in the consumption of poultry especially in Latin America.
Traditionally this continent has produced beef to take advantage of its natural native grasslands. Abundant low priced beef therefore have boosted average per capita beef consumption. Since the late 1960's beef production slowed down putting upward pressure on prices. During that time poultry production increased dramatically. The more efficient feed/meat conversion rate, coupled with a widespread and rapid adoption of cost reducing technology resulted in an annual production growth of 26% from 1960–1983 (Lynam, 1989). While real beef prices increased during the last two decades, poultry prices decreased. Consequently, the poultry share of the meat consumption basket has increased to over half of the beef share, while absolute meat consumption has increased significantly (Rivas, et al, 1989).
Rivas et al (1989) estimated the demand for beef, poultry and pork in Latin America, and found that although the income elasticity for poultry is higher than beef, total annual demand growth for 1970–1985 for beef is still higher. The estimates are 3.7%, 3.2% and 3.6% for beef, pork and poultry, respectively. Assuming that economic conditions do not worsen in Latin America, and that population and urbanisation growth continue in a similar fashion, these demand growth estimates may well be feasible until the year 2000 (Ceteris paribus). When assuming that production trends continue in a similar fashion, meat balances for 2000 can be calculated. Rivas et al (1989) show significant pork and poultry deficiencies under a conservative scenario, for Colombia, Venezuela, Brazil, and Mexico. Beef balances, on the other hand remain positive.
Thailand developed over the last decade into a major poultry producer and exporter and became a serious competitor for the US in the Asian market. A significant expansion of hog production is also foreseen. Projections by Schwartz and Brooks (1990), show that Thai per capita meat consumption will grow at an annual average rate of 4% until the year 2000, with more than half coming from pork production. When comparing developing and developed countries, it can be noted that during the last decade, poultry exports have decreased in the latter, while poultry imports have decreased in the former. This last phenomenon can be explained to a large extent by increased domestic poultry production and utilization.
THE WORLD ANIMAL FEED MARKET
Production and trade of traditional feed grains like sorghum and maize have experienced rather different developments during the last two decades. World production of maize has increased from 296 million MT in 1970, to 441 million MT in 1989. Production growth has been much stronger during the last decade in the developing countries than in the developed countries (FAO, 1990). World production of sorghum has seen only a slight (9%) increase over the last two decades and decreased during the eighties. It should be noted that the production decrease in developed countries has been almost fourfold compared to developing countries.
World cassava production has increased significantly over the last 20 years. In Latin America, however, production slowed down, especially during the seventies. During the eighties production has basically remained constant. It is hypothesized that increased product and market differentiation of cassava, have slowed down further production decreases during the eighties. While fresh cassava consumption has decreased, processed cassava utilization has gained a larger share.
Looking at feed-grain trade statistics in Table 1, it becomes obvious that developed countries changed from net importers to net exporters in the case of sorghum and maize. The reverse trend can be noted for developing countries. Traded volumes of sorghum and soybeans have hardly increased while the volumes of traded maize has increased fourfold. In the case of cassava it can be observed that the traded share of world production increased slightly (from 5.6 to 6.9%) over the last decade.
The major conclusion that can be drawn from this is that developing countries have spent increasing amounts of foreign currency on imports of grains like sorghum and maize. Given their serious problems of foreign debt, limited currency and the increasing demand for animal proteins, the current situation suggests a large potential for increased substitution of feed grains by for example cassava.
THE ROLE OF CASSAVA AS ANIMAL FEED
Cassava can be utilized for animal feed in two principal ways. Of most importance is dried cassava root (chips or pellets) used as partial raw material for commercial animal feed rations. Although the usage of cassava products for animal feed purposes has been established for more than a decade in Asia, this is only just starting to develop in Latin America. Thailand, Indonesia, Vietnam and China are the main cassava exporters in Asia, of which Thailand has 86% of the export. Only since the mid 1980's (when cassava export prices plummeted), did Thailand start to substitute feed grains (maize) for cassava in the domestic animal feed industry. Cassava chips or pellets in these countries have to serve a first priority as export commodity in order to generate hard currency. However, under current conditions of changing domestic government policies, non-increasing EC-export quotas, and growing domestic animal feed demand, a significant increase in domestic cassava usage for animal feeds is visualized for Asia.
Secondly, and of much lesser importance, is on-farm utilization of cassava root and/or leaves for cattle and hog feeding. In many Latin American countries cassava have traditionally been fed to farm animals. Either on a large scale i.e. hog and dairy operations in Southern Brazil, or small scale i.e. subsistence farms in Paraguay and Colombia. (Lynam, 1989). In Asia a similar tradition can be observed i.e. in the Vietnamese highlands, Southern China and the Philippines. In Mexico the cassava has been used as silage with added proteins and minerals for hog fattening.
Commercial animal feed rations either produced by small or large sophisticated feed companies are composed by using mathematical models for example linear programming. The principal objective of these models is to minimize costs of a variety of feed ingredients i.e. carbohydrates, proteins, vitamins, minerals, etc. each of which are constrained by maximum and/or minimum quantities and prices. The model will seek an optimum solution (the least expensive ration) subject to nutritional and price constraints. This is done through an iterative process based on simplex algorithms. Although this can be done by hand, nowadays the variety of ingredients and complexity of constraints require the use of computers.
Table 2 shows an example of a linear program solution of a broiler feed ration in Colombia, listing the different possible sources of energy, protein, fat etc. Additionally, it demonstrates how a slight price change effects the composition of the ration. In these two cases the price of cassava relative to sorghum is changed from 0.80 to 0.85. At the low cassava price, cassava enters the feed ration at 46.6%, while sorghum does not participate. When the cassava price increases to a level so that the cassava/sorghum price ratio becomes 0.85, cassava is excluded and sorghum enters the ration at 53.5%. The change of the cassava price will also effect the relative quantities of other ingredients i.e. sesame meal, vegetable fat, lysine, etc. These examples serves to demonstrate how a relatively small price change directly effects inclusion and relative participation of feed ingredients. This explains why feed ingredients like cassava may play an important role providing the price relative to major competing rawmaterials is low (See also Buitrago, 1990).
The potential for inclusion of dried cassava in animal feed rations has been recognized in several countries of Latin America. During the early 1980's in collaboration with several national institutions, the Cassava Program at CIAT instigated the first Cassava Drying Project at the north coast of Colombia (Ospina and Wheatly, 1991). The project has been based on an Integrated System Approach combining cassava production, processing and marketing research aspects in order to develop the proper technologies. Small-scale farmers and cooperatives produce, process and market sun-dried cassava chips for the commercial animal feed industry. Rapid adoption of this methodology has resulted that currently in Colombia, approximately 16,000 MT of dried cassava chips are being produced every year. The differentiation of the traditionally fresh cassava market has increased overall cassava demand, reduced price variability, increased yields and has created incentives for adoption of improved production technologies. Not only have the incomes of poor farmers improved, also the small-scale rural agro-industries producing dried cassava have generated employment opportunities for many landless labour with low opportunity costs.
|Wheat germ meal||10||10|
|Cotton seed meal||0||0|
|Blood meal, animal||3||3|
Scenario A: Ratio of Pcassava/Psorghum:.85
Scenario B: Ratio of Pcassava/Psorghum:.80
Besides Colombia, small-scale cassava-drying plants have been established in Ecuador, Paraguay, Panama, Mexico and Brazil. Figure 1 shows the rate of adoption and the estimated number of drying plants in Latin America. Once institution related cassava drying plants have initiated a dried cassava market in a country, it offers opportunities for individual farmers and non-affiliated commercial plants to produce dried cassava. As such, the technology of drying cassava is utilized by different user groups which accelerates its adoption.
LIMITATIONS TO DRY CASSAVA DEVELOPMENT
Although adoption of the dried cassava technology has been significant, several aspects have been limiting this process. The principal constraint is the complexity of government import, and pricing and marketing interventions. In general, one of the major objectives of government agricultural policies is to provide incentives for increased primary staple (food grains) production and subsequently improve farmer incomes. In addition, many policies are aimed to provide urban consumers with inexpensive basic staples. As such, different policies within a country may have contradicting effects, resulting in a highly ineffective allocation of scarce resources.
Three types of policies are relative to the current discussion. They are direct policies, indirect policies and exchange rate strategies. Direct policies include a wide variety of policy instruments as input/credit (production) subsidies, trade quotas, levies, tariffs, qualitative restrictions, etc. The well known policies of this kind are the ones applicable to EC cassava product imports under the Common Agriculture Policy (CAP). Annual quotas at administrated prices are set for cassava pellets and chips imported from Thailand, Indonesia, Vietnam, China, etc. These policies attempt to protect the interests of the EC's feed grain farmers. (For further discussion, see Bottema and Henry, 1990).
Indirect policies, most probably have the largest adverse effect on the potential for cassava as an animal feed ingredient. Indirect policies are targeted at a specific crop, but can have additional effect on non-targeted crops. For example, Colombian and Venezuelan sorghum farmers are protected from low-priced import competition through a system of regulations and high domestic support prices (Table 3). At the same time animal feed manufacturers can purchase a quota at the world market price. As cassava is not being subsidided it cannot complete against these “artificial”prices.
Fig. 1: Total expansion of cassava drying plants in selected countries in Latin America (1981-90)
Source: CIAT, Cassave Economics, 1990
a FOB. Rosario, Argentina
b Average semestral support price IDEMA
c Ratio of support price divided by import price
Source: IDEMA, Bogotá, Colombia, 1990
Brazil exercises a direct subsidy on feed and food grain transportation. Maize produced in the South and Central West can be moved at low cost to deficient areas in the North and North East. Hence, this subsidy can shift the comparative advantage away from locally produced feed stuffs like cassava. Cassava will thus face heavy competition with cheap “imported” maize from the South. Table 4 shows that in spite of subsidies on maize, cassava can still be cost competitive. However, with the absence of these subsidies cassava could play a much larger role in the animal feed industry of North East Brazil.
The third relevant type of government intervention are exchange rate manipulations. This does not only effect feed grains and its substitutes, but the whole range of industrial and agricultural trade. In the case of Mexico, Peru and Venezuela (and many others), overvalued exchange rates have pushed domestic feed grain prices above world market prices. Hence, allowing cheap feed grain imports to capture a significant market share of the feed grain industry.
There exist many more examples of adverse effects of government interventions on the development of cassava for the animal feed industry. For Latin America, Lynam (1989) and Peterson et al (1988). For Asia, Bottema and Henry (1990). It can be concluded that government policies severely constrain the potential role that cassava can play as an cost efficient substitute for commercial animal feed rations in LDC's.
Besides government intervention, the nature of price formation of existing (fresh) cassava markets has a negative effect on expansion into dried cassava markets (Lynam, 1989). Three inter-related aspects form the basis for this phenomenon. First, markets for fresh cassava are numerous and widely distributed. The bulkiness and perishability of the product and general high transport costs prevent a large spatial market. Secondly, the product characteristics translate into a high risk factor for the market agents and quality variability factors wll result in a high marketing margin. Thirdly, spatially fragmented markets with small volumes of product, often result in large annual price fluctuations, since there is no unified price structure.
Although suboptimal price formation can seriously impede the rapid development of an expanded market, the experiences of dried cassava in several Latin American countries have demonstrated that this constraint can be overcome.
|Item||Private Costs||Social Costs|
|(Cr$/metric ton)||(percent)||(Cr$/metric ton)||(percent)|
|Locally produced maize||1,517||86||1,405||88|
|Maize from south||1,616||81||1,468||84|
|Maize from central west||2,494||52||2,130||58|
|Locally produced cassava||1,306||1,231|
Source: Lynam, 1989
CONCLUSIONS AND RECOMMENDATIONS
In this paper it was demonstrated that a relatively strong demand for animal protein will continue until the end of the century in the developing world. Likewise, domestic intensive meat production will increase. It was also noted, that LDC's have significantly increased feed grain imports during the last decade. In addition to the serious foreign debt problem, large grain imports pose an additional burden on LDC's foreign exchange resources. Given this reasoning, one can conclude that there exists a large potential for domestic produced cassava to substitute socially “expensive” feed grains in animal feed rations. However, a large and complex variety of government policies seriously constrain this potential. The nature of price formation of the traditional (fresh) cassava has an adverse effect on the expansion into dried cassava markets.
Notwithstanding, dried cassava production for the animal feed industry has increased significantly in several Latin American countries during the last decade. A methodology developed by CIAT, has instigated smallscale rural agro-industries producing cost effective dried cassava. This method has already shown to have generated considerable benefits, which to a large extent are captured by poor cassava farmers and the land-less rural population with low opportunity costs.
The following recommendations are made in order to take full advantage of the existing potential for cassava as animal feed:
A better understanding of needs to be acquired about the full extent of the effects of government policies on feed stuffs production, processing, marketing and trade aspects.
Ex-ante analysis needs to be conducted on the future impact of the “apertura” philosophy that will attempt to bring LDC's (and developed countries) in line with world agricultural markets. Government intervention measures will continue to be the key constraints to the development of cassava for the animal feed market.
The methodology developed, tested and diffused by CIAT, based on the Integrated Cassava Drying Technology, has been significantly adopted and shown great impact in Latin America (Figure 1). Asian and African countries with similar limiting conditions could take advantage of this methodology to expand cassava into a animal feed resource. However, CIAT is not the appropriate organization nor has the resources to diffuse this technology across the globe. NGO's must be identified to take over this task.
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Buitrago, J. 1990. La Yuca en la Alimentacion Animal. CIAT, Cali, Colombia.
FAO. 1970–90. Production and Trade Statistics. Various Years.
Lynam, J. 1989. The Meat of the Matter; Cassava's Potential as a Feed Source in Tropical Latin America. In Proceedings of a Workshop on Trends and Prospects of Cassava in the Third World. Ed: J.S.Sarma, IFPRI
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