Livestock production in the Asia and Pacific region - current status, issues and trends

H. Steinfeld

The author is Senior Officer (Livestock Development Planning), Animal Production and Health Division, FAO, Rome. Tel.: +39 6 570 54751; fax: +39 6 570 55749; e-mail: [email protected]

PRODUCTION ANIMALE DANS LA R�GION ASIE ET PACIFIQUE - SITUATION ACTUELLE, PROBL�MES ET TENDANCES

La r�gion Asie est celle dont le secteur de l'�levage se d�veloppe le plus rapidement dans le monde. La croissance des revenus, l'expansion de l'urbanisation, le vieillissement des populations qui sont n�anmoins en progression, alimentent la demande en rapide croissance des produits animaux, de la viande en particulier. On a assist� � un changement spectaculaire des r�gimes alimentaires � pr�dominance de prot�ines v�g�tales vers des r�gimes � base de prot�ines animales. Cette �volution a donn� lieu � la modification progressive des secteurs de l'�levage dans la r�gion, avec des incidences sur les ressources fourrag�res et autres intrants. Ces transformations soul�vent des inqui�tudes nouvelles et �volutives en particulier en ce qui concerne les probl�mes li�s � l'environnement, les possibilit�s de commercialisation et la n�cessit� d'�quilibrer la production et la demande fourrag�res.

PRODUCCI�N PECUARIA EN LA REGI�N DE ASIA Y EL PAC�FICO: SITUACI�N ACTUAL, PROBLEMAS Y TENDENCIAS

De todas las regiones del mundo, Asia tiene el sector pecuario con la evoluci�n m�s r�pida. El aumento de los ingresos, el crecimiento de la urbanizaci�n y el envejecimiento de la poblaci�n, a pesar de todo en aumento, impulsan una demanda en r�pido crecimiento de productos pecuarios, en particular carne. Se ha producido un desplazamiento espectacular de la alimentaci�n predominantemente a base de vegetales hacia la basada en el consumo de prote�nas animales. Este desplazamiento ha dado lugar a una transformaci�n de los sectores pecuarios de la regi�n, con las consiguientes repercusiones para los recursos de piensos y otros insumos. Como consecuencia, est�n surgiendo varios motivos de preocupaci�n, particularmente con respecto a los temas del medio ambiente, la obtenci�n de oportunidades de comercializaci�n y la necesidad de alcanzar un equilibrio entre la producci�n y la demanda de piensos.

Among the regions of the world, Asia has the fastest developing livestock sector. Growing incomes, expanding urbanization and ageing - but nevertheless expanding - populations fuel the rapidly growing demand for livestock products, particularly meat. There has been a dramatic shift from diets which were formerly predominantly vegetable-based towards those of animal protein. This shift has resulted in an ongoing transformation of the livestock sectors in the region, with subsequent implications for the feed resource and other inputs.

These shifts raise a number of new and evolving concerns, particularly regarding environmental issues, the provision of marketing opportunities and the need to balance feed production with demand.

PATTERNS OF CONSUMPTION AND PRODUCTION IN THE REGION

Consumption

Asia and the Pacific is not only by far the biggest region (in terms of human population) but it is also extremely diverse. This diversity has important implications for eating habits (Table 1) and hence the feed livestock sector. Total annual meat consumption varies between more than 50 and 5 kg per caput, depending on the level of development and affluence. Beef is mainly consumed in the most developed countries, such as Australia and Japan, while mutton and goat meat are generally less important, with the exception of countries in the Pacific region. Pork is the predominant meat consumed in East Asia, 30 kg per caput per annum. Poultry meat is particularly important in the developed countries, and to a lesser extent in East Asia.

1
Consumption of animal products in Asia and the Pacific, 1995
Consommation de produits animaux dans la r�gion Asie et Pacifique en 1995
Consumo de productos animales en la regi�n de Asia y el Pac�fico, 1995

Source: WAICENT (1997 data).

This picture is contrasted by that of milk consumption which, per caput, is very high in the developed countries of the region and in South Asia, where consumption is 107 and 73 kg per caput, respectively. Milk forms a relatively unimportant part of the diet in East and Southeast Asia. The regional demand for eggs broadly follows that of poultry meat.
These consumption patterns have undergone a rapid and continuing change. Table 2 gives the growth figures for the ten years from 1985 to 1995. For all livestock products, with the exception of milk, annual growth rates of per caput consumption have exceeded 4 percent. The Pacific countries more than doubled their small ruminant meat consumption and even the developed countries of the region have shown annual growth rates of around 3 percent for beef, pork and poultry meat.

2
Growth in consumption of animal products in Asia and the Pacific, 1985-1995
Croissance de la consommation de produits animaux dans la r�gion Asie et Pacifique entre 1985 et 1995
Crecimiento del consumo de productos animales en la regi�n de Asia y el Pac�fico, 1985-1995

Source: WAICENT (1997 data).

Poultry meat consumption has grown the fastest; however, there are important differences within the region. For example, China has shown staggering growth in beef consumption, which has more than quintupled in the last ten years, as has its demand for poultry and small ruminant meat and eggs. However, in Southeast Asia, growth in consumption has been more moderate and balanced. In South Asia, on the other hand, the consumption of poultry meat has grown significantly, while that of beef, mutton and goat meat has shown only modest increases by Asian standards.
Table 3 shows the vast nutritional improvements that have been made throughout Asia, but particularly in East and Southeast Asia, where animal protein now accounts for 33 and 25 percent of total protein consumption, respectively, up from 14 and 22 percent in 1985. Changes have been less dramatic, although still substantial, in South Asia and the Pacific where 17 and 40 percent, respectively, of protein consumption is now of animal origin. This has important implications for the livestock sector and resulting resource and other requirements.

3
Origin of protein consumption in Asia and the Pacific
Origine de la consommation de prot�ines dans la r�gion Asie et Pacifique
Origen del consumo de prote�nas en la regi�n de Asia y el Pac�fico

¹ Including fish.
Source: WAICENT (1997 data).

Production

A systems approach is increasingly being applied to the analysis of production patterns and used in the formulation of development strategies. Livestock production systems are evolutionary responses to population pressure, resource endowment and marketing opportunities. There are three main production systems: grazing, mixed farming and industrial.

• Grazing systems are mainly based on native grassland and have little or no integration with crops. They rarely involve imported inputs and generally have a low calorific output per hectare.
• In mixed farming systems, livestock and crop activities are integrated and thus offer the opportunity for intensification. By-products (crop residues, manure) of one activity often serve as inputs for another. Mixed farming systems are further distinguished as rainfed or irrigated.
• Industrial production systems are land-detached in terms of feed supply and waste disposal. When the demand for animal products increases rapidly, land-based systems fail to respond, resulting in animal concentrations that are beyond the land's capacity for waste absorption and feed supply.

Table 4 highlights the predominance of mixed farming systems in the region. Unreliable data preclude the inclusion of pigs and poultry. One hundred percent of the buffaloes and more than 90 percent of the cattle are found in mixed farming systems, whereas the percentage for small ruminants is 74. Irrigated mixed farming systems host the majority of cattle and buffaloes, while comparatively more sheep and goats are found in rainfed areas.

4
Livestock population by livestock production system in Asia, 1991-1993
Population animale par syst�me de production animale en Asie en 1991-1993
Poblaci�n ganadera por sistemas de producci�n pecuaria en Asia, 1991-1993

Source: Ser� and Steinfeld in FAO (1996).

Grazing systems are important for beef and small ruminant meat production, contributing 16 and 22 percent, respectively. Because these systems do not usually contain draught animals, beef output per head of stock is also higher. Rainfed mixed farming systems produce between 3 (pork) and 33 percent (beef and veal) of the various meat types and are the main producers of milk (47 percent). Irrigated mixed production systems make the following contribution to commodity production: beef and veal, 51 percent; small ruminant meat, 58 percent; pork, 69 percent; poultry meat, 40 percent; eggs, 39 percent; and milk, 53 percent. Industrial production systems, which hardly existed a few decades ago, contribute an increasing share to production.
Table 5 gives livestock populations for each agro-ecological zone. Again, poultry and pig stocks are not included. Large ruminants are mainly found in the tropics and subtropics, and are growing fastest in the humid and subhumid zone. Sheep and goats are more equally distributed, with the majority found in the arid and semi-arid zones. The humid and subhumid zones predominate in the production of beef, pork, poultry meat and eggs, whereas the arid and semi-arid zones provide the majority of buffalo, sheep and goat meat and milk.

5
Livestock population by agro-ecological zone in Asia, 1991-1993
Population animale par zone agro�cologique en Asie en 1991-1993
Poblaci�n ganadera por zonas agroecol�gicas en Asia, 1991-1993

Source: Ser� and Steinfeld in FAO (1996).

DRIVING FORCES

Changes in demand

The impetus behind the surge in demand for livestock products is a combination of population and income growth, combined with urbanization. Asia's population is currently increasing at 1.7 percent annually. Growth rates are highest in South Asia and the Pacific, with 2.1 percent, while in the developed countries the growth rate is only 0.6 percent.

The rate of urbanization is highest in East and Southeast Asia and is less pronounced in areas of only moderate economic growth. Urbanization rates tend to flatten off at around 70 to 80 percent as economies reach maturity. Table 6 shows the wide differences in the region's per caput income rates, a factor which determines to a large extent the increasing demand for meat and livestock products.

6
Per caput income and growth rates in Asia
Revenus et taux de croissance des revenus par habitant en Asie
Ingresos y tasas de crecimiento por habitante en Asia

Source: World Bank (1997).

Changes in international trade have been favoured by three different developments:

• The conclusion of the Uruguay Round Agreement, which led to a gradual lowering or removal of tariff barriers and the harmonization of non-tariff trade barriers.
• The formation of free trade zones, such as the Association of Southeast Asian Nations (ASEAN) region.
• The development of infrastructure, such as roads, ports, cold chains, etc., and market information that greatly facilitate the exchange of products and information both within countries and across borders.
• The Uruguay Round Agreement has brought about an important, if gradual, liberalization of international trade, with important ramifications for the livestock sector, the impact of which is now becoming evident in the Asia and the Pacific region. Strong income growth will stimulate demand, particularly in countries such as China, Indonesia, the Republic of Korea and Pakistan. Relatively fast expansion has been projected for the production of poultry and bovine meat in the region, as diets - often based on pork - diversify. The multiplication of fast food outlets could also become an important influence, underpinning the demand for poultry and bovine meat (FAO, 1995). Import markets for bovine meat are expected to expand by more than 4 percent in developing countries, and this would be reflected in the region, especially in China, Indonesia, the Republic of Korea, the Philippines and Malaysia.
• Reductions in export subsidies and tariffs under the Uruguay Round Agreement have contributed to a substantial rise of between 8 and 10 percent in meat prices. Oceania is expected to benefit as these higher international prices stimulate production and depress domestic consumption. The reduction of subsidized sales is a major reason for reduced exports from the European Community and, to a lesser extent, from China. On the import side, the improved access resulting from the reduction in tariffs will stimulate purchases by developed countries, particularly Japan.
• Another trend is that towards the formation of trade associations and common markets or free trade zones. This is a global trend and, in Asia, such zones are being formed to foster economic cooperation and integration; for example ASEAN now embraces nine countries in Southeast Asia. These countries have decided to set up the ASEAN Free Trade Area (AFTA) within 15 years. Member countries have also signed the Common Effective Preferential Tariff (CEPT) Agreement which is the main instrument for establishing AFTA. Under the CEPT scheme, member countries are committed to reducing tariffs for all commodities to between 0 and 5 percent within 15 years.
• Other examples of regional integration are the South Asian Association for Regional Cooperation (SAARC), which is concerned with trade and economic cooperation; the South Pacific Forum (FORUM), which includes the Southern Pacific island states as well as Australia and New Zealand; the Economic Co-operation Organization (ECO) of Central Asia, within which ten member countries have initiated liberalized trade with each other; and, more important, the Asia-Pacific Economic Cooperation Council (APEC), which includes 18 member countries on both sides of the Pacific and which was initiated in 1989 as a forum to promote trade liberalization in the Uruguay Round of negotiations. The net effect of the formation of free trade zones is that they foster trade in livestock products and animal feed as levels of domestic protection are being reduced.
• In past decades, large investments were made in physical infrastructure development, including facilities for the processing of livestock products, such as slaughterhouses, cold storage rooms and retail services. These have greatly reduced the transaction costs and have, in numerous places, enabled trade in livestock products, particularly perishable commodities. This has had an extremely stimulating effect on production. It should also be noted, however, that this development is far from complete and is resulting in the emergence of intensive and industrial types of livestock production near urban markets, a fact which presents environmental problems and deprives smallholders of important development opportunities.
• Recent changes in national policies, affecting the feed/livestock sector, have been characterized by market deregulation, reduced government spending and structural reforms, which include privatization of services and devolution of authority. This has resulted in a reduction of public services support but has also stimulated private sector activities. In most countries, there is more reliance on market forces as national economies are increasingly deregulated. Thus, there has been a trend away from national self-sufficiency to a greater reliance on international trade. Price supports and subsidies are being progressively removed and producers are being forced to compete, even if the process is often very slow. Changes in national policies have been most accentuated in countries that exclusively adhered to central planning principles up to the 1980s, for example China, Viet Nam and the Lao People's Democratic Republic.
• Partly as a result of pressures emanating from the Uruguay Round negotiation process, there has been a tendency towards further deregulation and commercially based prices that reflect real costs. Important steps have been undertaken by many governments to lower the level of protection for local livestock products, thus improving opportunities for exporters from within and outside the region.
• As economies are liberalized, the role of governments is reduced. Public services have been trimmed, forced by the need to reduce budgets and to compete internationally. This trend started in the late 1980s and has since accelerated. While the roles of public and private services are being redefined, governments need to focus on their essential function as guardians of public goods.

7
Self-sufficiency in livestock products in Asia and the Pacific, 1995
Autosuffisance en produits animaux dans la r�gion Asie et Pacifique en 1995
Autosuficiencia de productos pecuarios en la regi�n de Asia y el Pac�fico, 1995

Source: WAICENT (1997 data).

THE LIVESTOCK SECTOR'S RESPONSE

With the rapidly increasing demand for livestock products, together with the changes in international trade outlined above, the sector is under pressure both to expand and adapt. Basically, this adaptation takes the form of two major shifts which are currently under way in most of the region:

• a shift in livestock functions and species;
• a shift in agro-ecological and geographical zones, involving:
• structural changes;
• technological changes.

Shift in functions and species

As the world economy develops and many countries industrialize, people seek different uses of livestock. Today, non-food functions are generally in decline and are being replaced by cheaper and more convenient substitutes.

The asset, petty cash and insurance functions of livestock are being replaced by financial institutions as even remote rural areas enter the monetary economy. Except for in some parts of South Asia, animal draught power is declining as more farmers mechanize, partly attracted by government subsidies. Manure continues to be important in mixed farming but its role in overall nutrient supply is diminishing because of the competitive price and ease of inorganic fertilizer management. The same applies to animal fibres: although the demand for natural fibres is still high, and in many places even increasing, there are a growing number of synthetic substitutes for wool and leather.
Connected with this is an increasing selectivity as to the parts of the animal used for food. Traditionally, virtually all of the animal was utilized. Now the trend is towards lean meat, with products such as offal, blood and bones being increasingly used industrially and often recycled as feed. We are thus observing a trend from multipurpose to single-purpose animals, with animal protein as the overriding objective. This is also reflected in the choice and manipulation of genotypes that favour specialization over product diversity. Another trend is the growing importance of monogastrics as economic converters of concentrate feed.

Shift in agro-ecological and geographical zones

Two basic patterns can be observed: i) livestock production is growing faster in the moister parts of the region; and ii) it is moving closer to urban settlements.

In Asia, as in the rest of the world, it is the humid and subhumid zones that still offer a large potential for agricultural production - not without problems, since these zones are the richest in natural resources and biodiversity. Human populations are increasing overproportionally in these areas while other zones, such as arid and highland areas, have reached a level of population density above which significant increases can no longer be sustained.
From FAO's work on livestock geography there is clear evidence that livestock populations are increasing faster in the moister areas than in other zones. This implies that growth in livestock coincides with increases in human population. To some extent, this can be explained by a continued close integration of animals in mixed systems. More important, however, this phenomenon has to do with the increasing "urbanization" of livestock production, influenced by urban demand, good market access and adequate infrastructure. This type of livestock production is largely independent of agro-ecological conditions and by far outpaces other land-based systems, as shown in Figure 2. This trend is in line with the observed shift to monogastric species and poultry. A lack of infrastructure, economies of scale and insufficient marketing facilities in some rural areas mean that they face heavy competition from urban production, and livestock production is consequently limited to subsistence levels. This trend towards urbanization is clearly not sustainable in the long term, mainly because of waste disposal and environmental problems as well as the public health implications.

Structural changes

Two important structural changes apply across production systems: i) a general growth in scale; and ii) a trend away from horizontal to vertical integration.

Levels of livestock production and processing are increasing in response to technological development, market requirements and insufficient returns to labour in traditional systems. Where alternative employment opportunities exist, such as in the rapidly industrialized countries of the region, traditional subsistence-oriented livestock farming is often abandoned, thereby opening up market and expansion opportunities for other farmers or commercial entrepreneurs.
In particular, poultry production has often developed from a simple farm operation to a complex vertical operation of related industries and enterprises, including grain production for animal feeds, feed mills, slaughterhouses and processing plants, food chain stores and wholesale enterprises (Chantalakhana, 1996).
Further structural changes relate to the changing importance of different production systems. The growth potential for extensive grazing and roughage production is limited. In response to increased population pressure, the good pasture land is being converted into cropland, leaving increasingly poorer land for grazing and mixed farming. Industrial production of pigs and poultry is therefore going to increase relative to production from grazing and mixed farming systems, as depicted in Figure 3.
Pork and broiler production will increase relative to ruminant meat production. This is a direct result of the better conversion efficiencies of concentrate feed in pigs and poultry. The expansion in production of different meat types is presented in Figures 1 to 3.

1
Relationship between income and meat consumption
Relation entre le revenu et la consommation de viande
Relaci�n entre los ingresos y el consumo de carne

2
Growth in total meat production by agro-ecological zone, 1985-1995
Taux de croissance annuelle de la production totale de viande par zone agro�cologique (1985-1995)
Tasas de crecimiento anuales de la producci�n total de carne por zonas agroecol�gicas,1985-1995

3
Growth of different livestock production systems in terms of total meat production, 1985-1995
Taux de croissance annuelle des diff�rents syst�mes de production animale en termes de production totale de viande (1985 � 1995)
Tasas de crecimiento anuales de los distintos sistemas de producci�n pecuaria como producci�n total de carne, 1985-1995

Faced with increasing resource constraints that stem from a small land base, countries resort to importing meat and other livestock products to satisfy the growing demand. This is evidenced by a growing trade deficit in these products. In 1997 the developing countries of Asia had a net trade deficit of 313 000 tonnes of ruminant meat and a net trade surplus of 409 000 tonnes of monogastric meat. While the region as a whole is self-sufficient in all livestock products, there are important differences between the subregions. Australia and New Zealand make up for the deficit of the other subregions, particularly for beef and milk.
Many countries of the region can be expected to become permanent importers of livestock products. Indonesia, for example, imported 30 000 tonnes of red meat in 1997, and the country's Meat Importers Association estimates that imports of red meat will rise to 196 000 tonnes in 1999, and reach 346 000 tonnes in 2003. This situation is even more pronounced on the feed side. Taiwan Province of China, for example, imports more than 10 million tonnes of coarse grains and soybeans, equivalent to 95 percent of its concentrate feed utilization.

Technological changes

In line with the structural changes outlined above, the development, transfer and adaptation of technologies will focus on improving efficiency of feed utilization and increasing animal productivity. Feed requires land for production and this continues to be the limiting factor to the sector's expansion even if countries resort to feed imports. Continuing industrial development in the region will also make traditional livestock-raising practices less competitive because of diminishing returns to labour, even though this process will be very slow and gradual.

We are therefore witnessing a dualistic mode of development, with two conflicting components:

• A modern, demand-driven and capital-intensive sector, producing poultry meat, eggs, pork and sometimes milk and which increasingly uses state-of-the-art technologies. This sector utilizes resources, particularly concentrate feed, efficiently - with the notable exception of fossil fuel. It is rapidly expanding and meeting urban demand but is also susceptible to market upheavals; it generates little employment, poses great environmental risks because it tends to be concentrated in areas with good market access, and it creates a number of novel challenges for public human and veterinary health services. Technology uptake has been fast and driven by commercial interests.
• A traditional, resource-driven and labour-intensive sector providing a multitude of services to subsistence-oriented farms. While not efficient in terms of introduced inputs, this sector uses resources of little or no alternative uses and, for the same reason, its potential to expand beyond moderate growth rates is constrained by a low technology uptake, insufficient market facilities and infrastructure and small economies of scale. Often, these systems are closed cycles of nutrients, farm labour, energy, etc. Unless these cycles are broken, technology uptake will remain constrained.

Production system pathways

As we have seen above, livestock systems develop in response to resource endowment and market opportunities. Schematically, the process can be described as follows:

Grazing systems have limited scope for expansion. In countries such as the Lao People's Democratic Republic and less densely populated areas of Indonesia, the Philippines and China, these systems can be intensified to some extent with the incorporation of new technologies, especially in the higher-potential areas. Usually, this effort needs to be facilitated by stronger institutions, local empowerment and regulation of access to resources. Where this does not happen, and where population pressure persists, grazing systems are threatened with resource degradation through overgrazing.

Historically, where the agro-ecological conditions were favourable, grazing systems have developed into mixed farming systems, now commonly found throughout Asia. Mixed farming systems will undergo continued intensification and achieve major growth, with livestock raised on crop by-products and surpluses. Some productivity gains can be achieved by further enhancing nutrient and energy flows between the crop and livestock components. Involution of the mixed farming system may occur, such as in the Himalayan Hills and Hindukush area, where the stability and sometimes very existence of mixed farming is endangered by the possible disappearance of livestock, a development triggered by population pressure, fragmentation of arable land, poverty and lack of market access.
Under more favourable agro-ecological and market conditions, industrial systems have emerged in parallel with, and sometimes supplanting, mixed farming systems. Because of generally poor infrastructure and institutions, these systems are usually established close to centres of demand, resulting in excessive animal densities, nutrient surpluses and other environmental and human health problems that highlight an "urban trap": while profitable in the short term, these systems cannot be sustained in urban or peri-urban environments. Such considerations caused Singapore, for example, to abandon livestock production altogether (Taiganides, 1992). The answer is to allow specialized commercial production to operate in an area-wide concept where nutrient balances are to be maintained and the land's capacity to absorb animal waste is respected. The concept is developed in more detail in de Haan, Steinfeld and Blackburn (1997).

CONCLUSION

The evolutionary and significant trends described above must, if they are to be sustainable and progressive, take into account their impact on the public domain or public goods. These face four main challenges: the contribution of livestock to food security and food production; the protection of the environment in the face of increasingly intensive farming methods; the maintenance and generation of social equity which may be jeopardized by industrialization and job losses; and the protection of human health and welfare.

It is therefore essential for the policy-makers and planners responsible for livestock development to define future strategies in the broader context of human development and the sustainable utilization of our limited natural resources.

Bibliography

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