ivestockمقالات براي ترجمه دانشجويان گرامي

10/11/1388

Effects of Globalisation and
Economic Development
on the Asian Livestock Sector
Derek Quirke, Matthew Harding,
David Vincent and David Garrett
Effects of Globalisation
and Economic
Development on the
Asian Livestock Sector
Derek Quirke, Matthew Harding, David Vincent and David Garrett
ii Effects of Globalisation and Economic Development on the Asian Livestock Sector
ACIAR Monograph Series 97e
The Australian Centre for International Agricultural Research (ACIAR)
was established in June 1982 by an Act of the Australian Parliament. Its
mandate is to help identify agricultural problems in developing countries
and to commission collaborative research between Australian and
developing country researchers in fields where Australia has a special
research competence.
Where trade names are used this does not constitute endorsement of, nor
discrimination against any product by the Centre.
ACIAR Monograph Series 97e
This peer-reviewed series contains the results of original research
supported by ACIAR, or material deemed relevant to ACIAR’s research
objectives. The series is distributed internationally, with an emphasis on
developing countries.
© Australian Centre for International Agricultural Research, GPO Box
1571, Canberra, ACT, Australia, 2601
D. Quirke, M. Harding, D. Vincent and D. Garrett. 2003. Effects of
globalisation and economic development on the Asian livestock sector.
ISSN 1447-090X
ISBN 1 863 20 361 3
The authors
This report was prepared by a team from the Centre for International
Economics.
Editing and production management:
Sue Mathews, Biotext, Canberra, Australia
Design: Bluebox Graphix, Canberra, Australia
Effects of Globalisation and Economic Development on the Asian Livestock Sector
ACIAR Monograph Series 97e iii
Table of contents
Summary and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2. The Projection Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
3. China: Recent Performance and Baseline Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
4. India: Recent Performance and Baseline Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
5. Indonesia: Recent Performance and Baseline Projections . . . . . . . . . . . . . . . . . . . . . . . . .49
6. Vietnam: Recent Performance and Baseline Projections . . . . . . . . . . . . . . . . . . . . . . . . . .65
7. Philippines: Recent Performance and Baseline Projections . . . . . . . . . . . . . . . . . . . . . . . .79
8. Thailand: Recent Performance and Baseline Projections . . . . . . . . . . . . . . . . . . . . . . . . .93
9. Some Broad Trends and Comparisons with Other Studies . . . . . . . . . . . . . . . . . . . . . . .107
10. Effects of Trade Liberalisation on Livestock Production and Meat Consumption . . . . .115
Appendix A Structure of the GMI model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .131
Appendix B Country Projections: GDP Growth Reduced by One-third Relative to Baseline . .137
Appendix C Country Projections: Trade Liberalisation in Livestock Products and Grains . . .143
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .149
Effects of Globalisation and Economic Development on the Asian Livestock Sector
ACIAR Monograph Series 97e iv
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Summary and Conclusions 1
The livestock production systems in Asian developing countries comprise a mix of capitalintensive
large-scale commercial operations and labour-intensive smallholder peri-urban and
crop–livestock operations. Over the next few years, growth in demand for livestock products and
trade liberalisation mandated by the World Trade Organisation (WTO) will impact significantly on
these systems.
Our report analyses the impacts of these likely developments on the performance of the beef, pig
meat, poultry and dairy systems in China, India, Indonesia, Vietnam, the Philippines and
Thailand. The analysis begins with an appraisal of the recent performance of each livestock
industry in each country, highlighting recent trends in production, consumption and trade. We
evaluate key drivers (population growth, economic growth, productivity improvements in
livestock production, and cultural and religious attitudes toward certain meats), policy settings
(particularly barriers to trade) and constraints on performance (environmental constraints,
breeding constraints and other factors which limit the flexibility of livestock production systems
to respond to changes in their incentives environment).
Global economic models of livestock production and trade incorporating these drivers, policy
settings and constraints are used to project outcomes for each livestock sector and country. Key
findings are as follows.
Performance Over the Past Decade
• For China, a decade of per capita income growth averaging 6–7 per cent annually has resulted
in massive growth in per capita meat and seafood consumption — 16 per cent annually for beef,
12 per cent for poultry, 26 per cent for pork and 13 per cent for seafood. Production growth for
all meats has matched consumption growth – in the case of beef aided by heavy support
through government policies – with no import dependence to date.
• For India, meat consumption growth has been much lower, as has per capita income growth,
and meat consumption remains at an extremely low level (5 kg per person per year). By
contrast, consumption of dairy products is massive (82 kg per person per year) and continues
to grow steadily. Imports of meat and dairy are virtually zero.
• For Indonesia, per capita incomes fell sharply in 1998 with the financial crisis. Per capita meat
consumption has only recently recovered to the levels seen before the financial crisis. Meat
production was also hit heavily by the crisis because of the reliance on imported live cattle (beef)
and imported grains (poultry) and the collapse of the exchange rate. Signs of increasing
dependence on imports are emerging in the case of beef and dairy.
Summary and
Conclusions
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Summary and Conclusions 2
• For Vietnam, steady growth in per capita incomes has led to steady growth in per capita
consumption of poultry, pork, seafood and dairy. Production of pork and poultry has kept pace
with consumption growth. Seafood production growth has greatly exceeded consumption,
leading to significant export growth. Dairy consumption growth is exceeding production
growth, leading to increased imports.
• For the Philippines, per capita income growth over the past decade has been mixed. Per capita
consumption of poultry has grown strongly; per capita consumption of pork has grown
moderately; seafood consumption (which dominates meat consumption) has stagnated.
• Thailand, like Indonesia, was hit hard by the financial crisis. As a result, per capita meat
consumption turned down in 1998 and has yet to recover to its pre-crisis level. Beef
consumption and production has remained static over the period and pork consumption has
grown only marginally as consumers have switched toward poultry. Poultry production has
grown rapidly in excess of consumption, leading to significant growth in exports. Per capita
consumption of dairy products has grown rapidly, as has dairy production.
Impact of Growth in Per Capita Incomes
Per capita consumption growth is the key factor contributing to meat consumption growth in
developing countries. The situation for each of the six countries is as follows.
• For China, per person meat consumption is projected to increase by 68 per cent over the next 20
years. Beef consumption is projected to grow more slowly than consumption of competing
meats. Production growth will fail to match consumption growth in the case of poultry and pig
meat, leading to increased import dependency.
• For India, per person meat and seafood consumption is projected to increase by 157 per cent
over the next 20 years, to reach 13 kg per head. But this remains extremely low compared with
meat consumption in other countries. For all meats, production growth will be sufficient to
satisfy consumption growth, with no need for imports. Consumption of dairy products will
grow at a faster rate than production, leading to a substantial import dependency by 2020.
• For Indonesia, per person meat consumption is likely to increase by 130 per cent over the next
20 years, reaching 37 kg, nearly 60 per cent of which will be seafood. Domestic production
growth will be strong for pig meat and poultry but lower for beef (constrained by the very low
productivity of native cattle breeder farms). Dependency on imported beef and dairy products is
projected to increase substantially; dependency on pig meat and poultry meat is expected to
increase more modestly.
• For Vietnam, per person meat consumption is projected to more than double over the next 20
years, with seafood continuing to account for more than half this consumption. Production
growth will also be rapid, with Vietnam likely to remain self-sufficient in meat over the period.
Strong growth in demand for dairy products will lead to an increase in imports, with over 60 per
cent of dairy production imported by 2020.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Summary and Conclusions 3
• For the Philippines, per person meat consumption is projected to increase by 87 per cent over
the next 20 years. Production growth will lag behind consumption growth, leading to growing
import dependency for all meats. For dairy, strong growth in consumption, with zero
production expansion prospects, will lead to a virtual total dependency on imports by 2020.
• For Thailand, per person meat consumption is projected to increase by 167 per cent over the
next 20 years, with seafood accounting for half this consumption. Poultry consumption will
grow fastest, and be greater than production, so exports will need to be diverted back onto the
domestic market. Production growth in pig meat will be sufficient to avoid imports until toward
the end of the period. Per person consumption of dairy products is projected to double, resulting
in steady growth in imports.
The great unknown in these projections is how per capita consumption of each type of meat will
change as per capita income grows. As countries get richer, increases in per capita income bring
about smaller and smaller increases in per capita consumption. Eventually, the market becomes
fully mature, at which point per capita consumption remains constant or even starts to decline. In
the major industrial countries, the demand for meat has been static or falling for many years.
The level of per capita income at which per capita consumption fails to increase differs
significantly between countries and between types of meat. These differences reflect historical,
cultural, lifestyle and religious factors and are extremely difficult to predict. Relative to industrial
countries, per capita incomes in each of the Asian countries studied have a long way to grow. But
already, some countries (such as China) have extremely high per capita meat consumption when
their per capita income levels are taken into account.
Our results demonstrate extreme diversity in meat protein consumption patterns across countries.
Three characteristics stand out:
• There is a very low per capita consumption of meat and seafood in India, and also in Indonesia.
This reflects the large population segments in these countries with very low per capita incomes.
• Seafood is the dominant protein in the meat protein diets of China, Vietnam, Philippines,
Thailand and Indonesia. This is a longstanding feature of the diets of many Asian communities.
• Dairy products play a huge role in India’s meat protein consumption. This reflects both religious
and cultural beliefs and practices and the success of some major initiatives to develop milk
production and processing.
Impact of Agricultural Trade Liberalisation
A number of developing countries consider their livestock production sectors to be particularly
vulnerable to global trade liberalisation, especially because of the dominance of smallholder
systems. Smallholder production is considered to be less internationally competitive than largescale
operations. The way in which livestock industries are likely to be affected by trade
liberalisation is likely to be determined by the interplay of many factors, including their reliance
on feed grains in production, existing barriers to trade and the capacity of each system to respond
to changes in the price–cost situation. Trade liberalisation will result in higher world prices for
grain and meat. But meat prices in developing countries that currently have high barriers against
meat imports will fall relative to world prices. For each of the six countries, the situation is as
follows.
• For China, production is projected to be lower for all meats. China’s barriers to meat imports are
currently large, and its dependency on feed grains high. This means that producer prices fall
significantly relative to producer prices in the major exporting countries, and production costs
increase. Imports of meat and dairy also increase.
• For India, there is expected to be little impact on meat production. Existing trade barriers are
not providing much assistance to domestic producers. With the removal of barriers, dairy
production is expected to be slightly lower and imports higher. There will be little change in
meat consumption.
• For Indonesia, effects on production, consumption and net trade are expected to be negligible.
This reflects the low trade barriers already in place and the very low reliance on feed grains in
livestock production.
• For Vietnam, effects on production, consumption and net trade are also expected to be
negligible.
• For the Philippines, production of all meats and dairy are expected to fall with trade
liberalisation, reflecting relatively high trade barriers, especially for poultry.
• For Thailand, production is expected to decline relative to baseline as high barriers are removed
and producer prices are reduced from current levels. Consumption of beef, in particular, is
expected to increase significantly in response to the reduction in consumer prices when the
present very high tariff is removed.
Differential impact between smallholder and large-scale commercial producers
Smallholders and commercial producers use very different technologies, so trade liberalisation is
likely to affect them differently. In particular, feed grains and feed concentrates are much more
intensively used by commercial producers than by smallholders. Other things being equal, higher
grain prices from trade liberalisation are likely to increase the competitive position of smallholders
relative to commercial producers.
Smallholder producers use large amounts of labour relative to capital. By contrast, commercial
production systems are capital intensive. There is some evidence that trade liberalisation may
increase real wages by more than the increase in returns to capital. Other things being equal, this
would favour commercial systems.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Summary and Conclusions 4
It is inevitable that the process of economic growth will continue to impose adjustment pressures
on smallholder livestock producers. Agricultural trade liberalisation will not reverse this process,
but there is no strong evidence that it will accelerate it.
The Future for Livestock Production Systems in Developing Countries
Our projections suggest significant growth prospects for livestock production systems in
developing countries even if barriers to global trade in livestock and grains are removed. That
said, the results do not support the stated intentions of some countries to become significant
exporters of some livestock products over the next decade. In all cases, livestock product demand
growth is projected to exceed production growth. Export surpluses, where they exist, will be
quickly eroded, and there will be an increasing reliance on imports from industrial country
producers.
For developing countries to become significant exporters of livestock products, they would need
to achieve productivity gains in livestock production that were considerably higher than those in
our productivity scenario and that lasted for a sustained period. This might be enough to generate
exports to other developing countries. But for them to develop markets in other industrial
countries, they would also need to put in place much higher food safety and quality standards,
together with trace-back facilities and information systems about livestock diseases and control
mechanisms, to satisfy the very high consumer standards in industrial country markets. Over the
medium term, exports of livestock products will continue to come overwhelmingly from high
income, developed economies.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Summary and Conclusions 5
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Summary and Conclusions 6
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 1 — Introduction 7
Over the next 20 years the livestock production systems in some Asian developing countries are
likely to face significant adjustment pressures from two sources:
• a rapid strengthening of domestic demand for livestock products; and
• World Trade Organisation (WTO)-mandated liberalisation of global trade in grains and
livestock products.
These two events are likely to lead to profound changes in the structure and performance of
livestock industries in these countries, providing both opportunities and threats.
Growth in the Demand for Meat Protein
Per capita consumption of meat in developing countries is low, because meat protein is expensive
relative to protein from cereals. But meat consumption is highly responsive to purchasing power.
As economic development proceeds, an expected rapid growth in per capita incomes will lead to a
big increase in demand for meat. Local producers will have the opportunity to supply at least some
of this demand growth. How much they supply will depend on their ability to compete with
imported meats, which in turn will be influenced by domestic policy settings and the global
agricultural trade regime in place.
The anticipated big increase in meat protein consumption in developing countries over the next
two decades represents a continuation of a well-established trend. Delgado et al. (2001) report
that from the beginning of the 1970s to the mid-1990s consumption of meat in developing
countries increased by almost triple the increase in developed countries. Consumption of milk
increased by more than twice the increase in developed countries. While per capita income
growth has continued steadily in developed countries, per capita consumption of meat and dairy
products is close to saturation level; increases in incomes do not lead to significant increases in
per capita consumption of these products.
Further Multilateral Trade Liberalisation
A major achievement of the last multilateral round of trade negotiations (Uruguay Round) was
to bring agricultural products under the same trade and protection rules and disciplines as for
manufactures. Under the Agreement on Agriculture negotiated for the round, there was also
slight progress in reducing agricultural trade barriers through reductions in tariffs, export
subsidies and domestic support policies. Developing countries have until the end of 2004 to
implement agreed changes.
1 Introduction
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 1 — Introduction 8
At the conclusion of the Uruguay Round, it was widely recognised that much needed to be done
to achieve further liberalisation of global agricultural markets and that this should be a priority
for a future round. While the Uruguay Round was successful in getting agriculture onto the
agenda and within WTO rules, significant reductions in agricultural protection would have to
await the next trade round.
Under the so-called ‘built-in agenda’ of the Uruguay Round, the Agreement on Agriculture
mandated further negotiations on agricultural trade liberalisation to commence by the end of
1999. A new round of agricultural negotiations was launched in March 2000 through a special
session of the WTO Agriculture Committee. But the political impetus for progress has been
hampered by delays to the start of a new round of trade negotiations, incorporating all sectors,
not just agriculture.
Agreement for a new broad round of negotiations was finally achieved at the Doha ministerial
trade meeting in November 2001. The Doha Round is to be treated as a ‘single undertaking’. This
means that all areas of negotiations (not just agriculture) must be agreed for any negotiated
outcomes to be binding. The decision of the United States to impose tariffs on steel imports and
imports of lumber from Canada, threats to impose restrictions on imports of textiles from
Vietnam, and retaliatory action by some countries have soured the negotiating environment for
global trade liberalisation. The United States, in particular, continues to push regional rather than
multilateral trade agreements, and each regional agreement introduces its own set of distortions
into trading arrangements.
Despite these immediate problems, some experts (e.g. Anderson 2001) consider that the
forthcoming millennium round will offer the best prospects ever for developing countries in
general, and for their rural communities in particular, to secure growth-enhancing reforms.
Agricultural trade reforms are expected to play a big part in this outcome.
Our Report
We first analyse the potential impact of economic growth on the demand for livestock products
and smallholder and commercial sector production for pig meat, poultry meat, beef and dairy in
China, India, Indonesia, the Philippines, Thailand and Vietnam. Our starting point for each
country is an information ‘basebook’. This summarises the recent performance of each meat
industry and provides a brief commentary on the policy settings, production system and likely
future developments.
We use a global model to take account of the key drivers influencing livestock production
outcomes in each country. The focus is to 2020. Our base case scenario and projections assume
no change in existing trade barriers.
We next analyse the impact of WTO-mandated global liberalisation of grain and livestock
markets. The results provide a picture of development prospects for livestock producers in these
countries and the potential for agricultural trade liberalisation to influence these prospects.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 2 — The Projection Framework 9
The centrepiece of our projection framework is the global meat industries (GMI) model. This
model provides detailed projections for production, consumption, prices, exports and imports of
grass-fed beef, grain-fed beef, lamb, mutton, pig meat and poultry meat, and the corresponding
livestock numbers behind these projections. We use a less formal framework to project milk
production and consumption for the selected countries.
The GMI Model
The GMI model is a multicountry, multicommodity, Armington style model of world meat
production, consumption and trade. Commodities are distinguished by source. Commodities from
different sources are imperfect substitutes (for example, Australian beef is a different product from
Indonesian beef).
For each of 26 regions and 10 meat types the model provides annual projections of:
• domestic production of each type of meat;
• consumption of each type of meat;
• price outcomes for each type of meat; and
• exports and imports by region for each type of meat.
The model incorporates the major policies affecting world meat trade – tariffs, variable levies,
quotas, voluntary restraint agreements, foot-and-mouth disease trade bans and export subsidies.
Appendix A describes the theoretical structure of the GMI model and settings for key model
elasticities.
The Scenario Behind the Projections
GMI model projections are conditional on the scenario developed for a range of variables not
explained by the model (Figure 2.1). These variables include macroeconomic developments such
as population and income growth, and changes in exchange rates. They also include
microeconomic developments such as productivity growth rates in meat production; non-price
factors affecting demand and supply, including changes in tastes and known or anticipated
episodic events (such as the bovine spongiform encephalopathy scare in Japan and the Asian
financial crisis); and changes in trade policy.
2 The Projection Framework
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 2 — The Projection Framework 10
Productivity improvements in meat production
Productivity growth in the production of meat is a key determinant of meat price and hence
production outcomes. Higher productivity puts downward pressure on production costs and
hence prices. Changes in relative productivity growth between meats change relative prices and
consumption patterns. Productivity gains in the Australian poultry industry are a good example.
The industry claims to have achieved an annual average reduction in unit costs of around 7 per
cent since 1990, which greatly exceeds that achieved in beef and sheep meat production. Lower
costs, which are passed on to consumers, are the main reason for the switch to poultry products
away from other meats.
Typical indicators of productivity improvements are falls in break-even margins, higher slaughter
weights and better feed conversion efficiency. But productivity developments apply throughout
the chain, from the live animal through transport to slaughter and processing.
It is generally accepted that the US pig and poultry industries set the benchmark for productivity
growth in the global meat industries. The trend to larger-scale production units, especially in the
US pig sector, has led to significant reductions in the per unit cost of production. In the US poultry
industry, better genetics have led to birds with higher feed conversion ratios and shorter turn-off
times. These factors, in addition to large-scale production units, have made the US industry the
leader in the export market for poultry products.
Trading relationships Income growth and
exchange rates
Population growth
Productivity
improvements in
meat production
Other supply and
demand side factors
not explained by the
model
GMI model behavioural relationships for meat production,
consumption and trade
GMI model projections
Figure 2.1. The GMI model projection framework.
GMI = global meat industries
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 2 — The Projection Framework 11
Industrial-type production systems that are highly dependent on imported technology are
increasingly being employed in the poultry sector of developing countries. The result is lower
production costs and product prices, increased consumption and greater production flexibility
with changes in market conditions. Productivity growth in the cattle sector is lower than in the
more intensive livestock industries.
Table 2.1 lists the assumptions for productivity growth in global meat markets. The assumptions
reflect judgments based on the results of the few published studies in this area.
Population growth
Population growth is a primary driver of demand for meat protein. The population projections
shown in Table 2.2 are drawn from United Nations demographic models. Although population
growth rates are slowing in most developing countries, they are still well above the rates projected
for industrial countries, especially in India, Vietnam and the Philippines.
Income growth
Income growth is the key factor contributing to meat consumption growth in developing
countries. Income growth depends on labour force growth, growth in the stock of capital and
growth in total factor productivity. Total factor productivity becomes increasingly important as a
source of growth as countries develop, due to diminishing returns to capital and labour. Total
factor productivity growth accounts for around half the growth in developed countries but less
than one-third in developing countries.
Grass-fed beef Grain-fed beef Lamb Sheep meat Pig meat Poultry
China 0.44 0.00 0.33 0.17 2.00 2.00
India 0.5 0.00 0.33 0.17 2.00 2.00
Indonesia 0.44 0.00 0.33 0.17 2.00 2.00
Thailand 0.44 0.00 0.33 0.17 2.00 2.00
Philippines 0.44 0.00 0.33 0.17 2.00 2.00
Vietnam 0.44 0.00 0.33 0.17 2.00 2.00
Australia 1.50 2.00 2.36 2.03 2.00 3.00
New Zealand 1.56 0.00 1.67 1.01 2.00 2.00
United States 0.75 1.00 0.50 0.50 4.00 3.00
Canada 0.75 1.00 1.34 1.01 3.00 3.00
Japan 0.00 0.66 0.33 0.17 0.00 2.00
South Korea 0.00 1.50 0.33 0.17 2.00 3.00
Taiwan 0.66 0.00 0.33 0.17 0.00 2.00
Singapore 0.44 0.00 0.33 0.17 2.00 2.00
Malaysia 0.44 0.00 0.33 0.17 2.00 2.00
European Union 0.88 0.00 0.33 0.17 2.00 2.00
Mexico 0.50 0.00 0.50 0.50 1.00 2.00
Argentina 1.22 0.00 1.00 0.67 2.00 2.00
Uruguay 1.22 1.44 1.00 0.67 2.00 4.00
Paraguay 1.22 1.44 1.00 0.67 2.00 3.00
Brazil 1.22 1.44 1.00 0.67 2.00 3.00
Source: CIE estimates
Table 2.1. Assumed productivity growth by country and commodity (per cent per year).
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 2 — The Projection Framework 12
The contribution of growth in the labour force slows as the level of development improves. Labour
force growth accounts for around one-third of income growth in developing countries but less
than 20 per cent in developed countries.
Capital growth accounts for around one-third of growth in the developed countries and up to onehalf
of growth in developing countries. Capital growth incorporates both improvements in capital
productivity through embodied technological progress and accumulation of physical capital
stock. For developed countries, at least 50 per cent of the contribution of capital comes from
embodied technical progress. This contribution is much lower for developing countries. The rate
of capital accumulation will depend on expected changes in openness for trade and capital,
government policy, infrastructure investment and domestic saving.
Figure 2.2 illustrates the components behind our assessment of country income growth
prospects.
Table 2.3 shows the projections for the six Asian countries. For China and India, the very high
rates of growth reflect strong rates of labour force growth (though rapidly decelerating in the case
of China) and high rates of total factor productivity growth. For Indonesia, total factor
productivity growth is projected to be considerably lower. For Thailand, total factor productivity
growth is projected to be high (though decelerating); for the Philippines, total factor productivity
growth is low but is projected to accelerate. For Vietnam, high growth is underpinned by high
rates of labour force growth and total factor productivity growth.
2000 2001 2002 2003 2004 2005 2010 2015 2020
China 1266.7 1277.2 1287.3 1297.3 1307.2 1317.1 1367.3 1418.1 1462.2
India 1022.0 1039.2 1056.3 1073.4 1090.4 1107.2 1189.1 1263.7 1327.1
Indonesia 212.3 215.2 218.2 221.1 223.9 226.7 239.1 251.5 263.5
Thailand 62.4 63.0 63.6 64.1 64.7 65.2 67.7 69.9 72.1
Philippines 76.2 77.6 79.0 80.4 81.8 83.2 90.1 96.3 101.5
Vietnam 77.7 79.2 80.7 82.3 83.8 85.3 92.5 99.2 105.0
Australia 19.2 19.3 19.5 19.7 19.8 20.0 20.8 21.5 22.2
New Zealand 3.8 3.8 3.8 3.9 3.9 3.9 4.1 4.2 4.3
United States 274.8 277.0 279.3 281.5 283.7 285.9 297.1 308.7 320.1
Canada 30.8 31.1 31.4 31.7 32.0 32.3 33.7 35.2 36.6
Japan 126.5 126.7 126.9 127.0 127.2 127.3 127.2 125.9 124.0
South Korea 47.3 47.7 48.1 48.5 48.9 49.3 50.9 52.2 53.4
Taiwan 22.2 22.4 22.6 22.8 23.0 23.2 24.2 25.2 26.3
Hong Kong 6.9 6.9 6.9 6.9 6.9 6.9 6.9 6.9 6.9
Singapore 3.1 3.1 3.2 3.2 3.2 3.2 3.3 3.4 3.5
Malaysia 22.3 22.7 23.1 23.5 23.9 24.3 26.2 28.0 29.8
European Union 376.2 377.8 379.3 380.7 382.1 383.3 388.2 390.4 391.1
Mexico 99.0 100.6 102.2 103.7 105.2 106.7 113.7 120.1 126.3
Argentina 37.0 37.4 37.8 38.3 38.7 39.1 41.1 43.1 44.8
Uruguay 3.3 3.4 3.4 3.4 3.4 3.4 3.5 3.6 3.7
Paraguay 5.5 5.6 5.7 5.9 6.0 6.1 6.8 7.5 8.1
Brazil 166.4 168.8 171.3 173.7 176.0 178.4 189.7 200.3 209.9
Source: UN population projections
Table 2.2. Population projections (millions).
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 2 — The Projection Framework 13
Demographic
Change in:
• population size and age
• participation rates
• unemployment and
underemployment
Change in labour
force
Total factor
productivity
Change in total
factor productivity
Change in:
• new technology
– R&D
– education
• phase of development
– catch-up
– environment
• openness
– competition
– FDI
• institutions
– regulation
– financial
– stability
Change in income
Change in capital
Government policy
• trade policy
• other
Change in:
• size of government
• government spending
– infrastructure
– environment
• trade policy
• capital market openness
Change in:
• global income
• external debt
• world interest rates
World economy
Figure 2.2. Components of country income growth prospects.
FDI = foreign direct investment
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 2 — The Projection Framework 14
A country’s economic growth generally slows with rising per capita incomes, because the
potential to grow through technological catch-up diminishes. However, for the six countries we
focus on, the level of development is too far below the most technologically advanced countries for
catch-up to lead to significant reductions in growth rate.
Income growth rates for advanced industrial countries range from around 2.5 to 3.0 per cent per
year.
Exchange rates
Exchange rates affect the competitiveness of meats from domestic and imported sources. They are
important determinants of the prospects for a country’s domestic meat production industries to
gain a share of the growing domestic market for meat against foreign suppliers. A number of
industrial countries (for example the United States in the case of pig meat, poultry and beef,
Canada in the case of pig meat, and Australia in the case of beef and sheep meat) are wellestablished,
highly efficient, large-scale exporters of meat. Projected exchange rates between the
currencies of developing countries and the currencies of key livestock product exporters and
importers are shown in Table 2.4. These projections take into account the expected relative growth
rates between countries.
Trading relationships
Trade policy assumptions are critical to the projections. The baseline (‘business-as-usual’ scenario)
includes all meat trade restrictions (tariffs, quotas, import bans etc.) currently in place and takes
account of any phasing out of such restrictions that has been agreed to in previous multilateral
and bilateral negotiations.
2000 2001 2002 2003 2004 2005 2010 2015 2020
China 8.0 7.6 7.8 6.5 6.0 5.5 5.0 5.0 5.0
India 7.0 7.0 6.0 6.0 6.0 5.5 5.5 5.5 5.5
Indonesia 3.7 5.0 6.1 6.1 5.0 5.0 5.0 5.0 5.0
Thailand 5.6 5.8 7.0 6.0 5.5 5.5 5.5 5.5 5.5
Philippines 3.5 3.0 3.5 4.0 4.5 5.0 5.0 5.0 5.0
Vietnam 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0
a Real income is defined to be the same as real GDP
Source: OECD, IMF and CIE estimates
Table 2.3. Real income growtha projections by region (per cent per year).
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 2 — The Projection Framework 15
Other Assumptions
Supply and demand influences of a short-term, transient nature are incorporated directly into the
model’s baseline. For example, the baseline incorporates considerably reduced demand by
Japanese consumers for beef over 2002 and 2003, because of adverse consumer reaction to the
discovery of bovine spongiform encephalopathy in Japanese cattle. It also incorporates a large and
sustained fall in US beef production between 2001 and 2005, before a resumption of growth,
reflecting the expected influence of the US cattle cycle. These short-term factors have a negligible
impact on longer-term meat demands and supplies around the world.
Unit 2000 2001 2002 2003 2004 2005 2010 2015 2020
China Renminbi/A$ 4.82 4.28 4.30 4.43 4.18 3.95 3.72 3.72 3.72
India Rupee/A$ 48.54 47.01 44.38 41.90 39.56 37.35 35.26 35.26 35.26
Philippines Peso/A$ 25.6 26.3 26.3 27.1 25.5 24.0 24.0 24.0 24.0
Indonesia Rupiah/A$ 4845.6 5242.8 5602.3 6066.0 5400.0 5400.0 5400.0 5400.0 5400.0
Thailand Baht/A$ 23.3 23.0 23.1 23.7 22.3 21.0 21.0 21.0 21.0
Vietnam Dong/A$ 7 804 7 780 8 525 9 300 9 300 9 600 9 600 9 600 9 600
New Zealand NZ$/A$ 1.27 1.23 1.17 1.24 1.24 1.24 1.24 1.24 1.24
United States US$/A$ 0.54 0.52 0.55 0.60 0.60 0.60 0.60 0.60 0.60
Canada C$/A$ 0.86 0.80 0.85 0.92 0.92 0.92 0.92 0.92 0.92
Japan Yen/A$ 62.7 62.5 68.8 75.0 75.0 75.0 75.0 75.0 75.0
South Korea Won/A$ 657 668 660 660 660 660 660 660 660
Source: OECD, IMF and CIE
Table 2.4. Exchange rate projections relative to the Australian dollar.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 3 — China: Recent Performance and Baseline Projections 17
Chapter outline
This chapter provides the following information:
• data on China’s economy-wide performance (summary indicators)
• meat industry data for beef, dairy, poultry, pork and seafood
• Engel curves showing the relationship between per capita meat protein consumption and per capita income
for beef, dairy, poultry, pork and seafood
• information on production systems, policy settings and future developments for beef, pig meat, poultry and
dairy
• data on the size distribution of producers for beef, pigs, poultry and dairy cows
• import tariffs
• baseline projections to 2020 for production, imports, exports, import dependency, consumption and per
person consumption
Where relevant, each section of data concludes with a set of key points, which appear in a shaded box.
China: Recent Performance
3 and Baseline Projections
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 3 — China: Recent Performance and Baseline Projections 18
Economy-wide Performance
Meat Industry Data
Year GDP(real) per capita Population
Renminbi/capita Growth rate (%) Millions Growth rate (%)
1990 1633.9 1153.3
1991 1760.0 7.72 1170.1 1.46
1992 1982.2 12.63 1183.6 1.15
1993 2218.7 11.93 1196.4 1.08
1994 2472.7 11.45 1208.8 1.04
1995 2706.1 9.44 1220.5 0.97
1996 2937.1 8.54 1232.5 0.98
1997 3165.4 7.77 1244.2 0.95
1998 3381.1 6.81 1255.7 0.92
1999 3589.3 6.16 1266.8 0.88
2000 3844.9 7.12 1278.6 0.94
Source: http://www.imf.org/external/pubs/ft/weo/2002/02/data/index.htm
Table 3.1. Summary indicators, 1990–2000.
Import
Productiona Consumptiona Exportsa Importsa dependencyb
(kt) (kt) (kg/capita) (kt) (kt) (%)
Beef
1990 1256 778 0.67 96.6 0.4 0
1991 1535 936 0.80 132.0 0.5 0
1992 1803 1237 1.05 24.5 1.0 0
1993 2336 1614 1.35 22.0 2.1 0
1994 3270 2268 1.88 22.6 2.7 0
1995 4154 2890 2.37 20.1 3.1 0
1996 3557 3053 2.48 28.7 2.9 0
1997 4409 3260 2.62 31.5 2.6 0
1998 4799 3318 2.64 43.0 3.5 0
1999 5054 3522 2.78 19.2 4.6 0
2000 5328 3687 2.88 47.0 6.4 0
2001 5600 3877 3.00 45.0 3.8 0
Growth (%)c 14.85 15.85 16.32 –5.01 23.65
Dairy
1990 7106 7195 6.24 20.8 109.4 1.23
1991 7676 7774 6.64 23.1 120.5 1.25
1992 8148 8236 6.96 28.1 116.1 1.07
1993 8229 8318 6.95 33.3 122.5 1.07
1994 8766 8889 7.35 29.6 152.2 1.38
Table 3.2. Meat industry data, 1990–2001.
Key points
• Per capita income growth has been 6–7 per cent per year in recent years.
• The trend rate of increase in the population is slowing.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 3 — China: Recent Performance and Baseline Projections 19
Import
Productiona Consumptiona Exportsa Importsa dependencyb
(kt) (kt) (kg/capita) (kt) (kt) (%)
1995 9541 9647 7.90 30.4 135.7 1.09
1996 10,276 10,360 8.41 31.2 114.7 0.81
1997 10,183 10,274 8.26 37.6 129.0 0.89
1998 10,556 10,643 8.48 35.6 122.1 0.81
1999 11,188 11,304 8.92 40.8 157.0 1.03
2000 12,272 12,384 9.69 47.0 159.3 0.91
2001 13,272 13,382 10.37 54.1 164.1 0.82
Growth (%)c 5.41 5.37 4.33 7.48 2.98
Poultry
1990 3229 2808 2.43 37.8 67.6 1.06
1991 3950 3436 2.94 45.4 85.7 1.17
1992 4542 3916 3.31 92.0 77.9 0
1993 5736 4953 4.14 107.4 99.7 0
1994 7552 6483 5.36 184.5 136.3 0
1995 9347 7977 6.54 282.1 260.7 0
1996 8701 8776 7.12 326.8 312.3 0
1997 10,308 9594 7.71 324.2 209.7 0
1998 11,410 9769 7.78 309.2 194.5 0
1999 12,069 10,321 8.15 340.2 799.3 4.45
2000 12,380 10,450 8.17 505.0 870.0 3.49
2001 12,310 10,366 8.03 530.0 765.0 2.27
Growth (%)c 13.64 13.35 12.22 26.40 27.14
Pork
1990 22,808 17,645 15.30 124.2 0.01 0
1991 24,523 18,992 16.23 116.6 0.02 0
1992 26,350 20,494 17.32 50.4 0.04 0
1993 28,544 22,194 18.55 60.5 0.12 0
1994 32,048 24,876 20.58 104.3 0.33 0
1995 36,484 28,276 23.17 157.5 2.74 0
1996 31,580 28,318 22.98 132.0 1.79 0
1997 35,963 28,740 23.10 105.1 2.76 0
1998 38,837 30,004 23.89 105.0 15.83 0
1999 40,056 31,249 24.67 53.7 58.44 0.02
2000 40,314 31,463 24.61 121.0 136.14 0.05
2001 42,400 33,024 25.59 135.0 94.27 0
Growth (%)c 5.82 5.88 4.83
Seafood
1990 14,667 7622 6.61 370 365 0
1991 16,520 8994 7.69 380 784 4.49
1992 19,738 10,826 9.15 470 1032 5.19
1993 23,638 12,727 10.64 501 936 3.42
1994 28,116 15,220 12.59 666 1266 3.94
1995 32,731 17,641 14.45 721 1342 3.52
1996 36,542 19,601 15.90 787 1386 3.05
1997 39,937 21,366 17.17 910 1509 2.80
1998 44,472 23,272 18.53 991 1137 0.63
1999 47,500 24,776 19.56 1229 1305 0.31
2000 49,636 25,784 20.16 1524 1497 0
2001 56,408 29,212 22.62 1753 1646 0
Growth (%)c 13.64 13.30 12.16 15.00 9.94
kt = kilotonnes
a Production, exports and imports measured in kt carcass weight equivalent; consumption and consumption per capita measured in kt retail weight
b Calculated as the ratio of net imports to total consumption, all measured in carcass weight equivalent
c Average logarithmic growth rate, 1990–2001
Source: GMI database
Table 3.2. Meat industry data, 1990-2001 (cont’d).
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 3 — China: Recent Performance and Baseline Projections 20
Key points
• Meat production growth is extremely high for beef (from a low base) and poultry.
• Seafood production growth is also extremely high.
• Production growth for all meats has matched demand growth, so there is no import
dependence.
0
10
20
30
40
50
60
70
80
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
0
10
20
30
40
50
60
70
80
1990 1995 2000
Beef
Poultry
Pork
Sheep/goat
Seafood
Dairy
Beef
Poultry
Pork
Sheep/goat
Seafood
Dairy
Consumption per person (kg)
Consumption per person (kg)
Data source: GMI database
Figure 3.1. Trends in per capita consumption of meat and dairy, 1990–2000.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 3 — China: Recent Performance and Baseline Projections 21
Relationship Between Per Capita Meat Protein Consumption and Per Capita
Income (Engel Curves)
Key points
• There has been a rapid increase in per capita meat consumption and also seafood
consumption.
• Pork still dominates the meat diet, but beef and poultry are making rapid inroads.
• Seafood is a major source of protein.
Figure 3.2. Beef.
0
5
10
15
20
25
30
0 500 1000 1500 2000 2500 3000 3500 4000 4500
Consumption per person (kg)
Data source: GMI database
GDP per person (renmimbi)
0
5
10
15
20
25
30
0 500 1000 1500 2000 2500 3000 3500 4000 4500
Consumption per person (kg)
Data source: GMI database
GDP per person (renmimbi)
0
2
4
6
8
10
12
0 500 1000 1500 2000 2500 3000 3500 4000 4500
Consumption per person (kg)
Data source: GMI database
GDP per person (renmimbi)
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 3 — China: Recent Performance and Baseline Projections 22
Figure 3.3. Dairy.
Figure 3.4. Poultry.
0
5
10
15
20
25
30
0 500 1000 1500 2000 2500 3000 3500 4000 4500
Consumption per person (kg)
Data source: GMI database
GDP per person (renmimbi)
0
5
10
15
20
25
30
0 500 1000 1500 2000 2500 3000 3500 4000 4500
Consumption per person (kg)
Data source: GMI database
GDP per person (renmimbi)
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 3 — China: Recent Performance and Baseline Projections 23
Figure 3.5. Pork.
Figure 3.6. Seafood.
Key points
• The rate of increase in consumption of the dominant meat (pork) is slowing considerably.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 3 — China: Recent Performance and Baseline Projections 24
Production Systems, Policy Settings and Future Developments
Beef
Recent performance • There has been spectacular growth over the past two decades
following the government’s ‘straw for beef’ project (cattle numbers
increased from 72 million in 1980 to 125 million now).
• There has been a rapid increase in beef production, but quality
remains low (China is now the second largest beef producer in the
world).
Policy settings • There has been a free market since 1985.
• The ‘straw for beef’ program started in 1992; it aims to encourage
production by utilising potential waste resources and relieving
pressure on the feed grain industry.
• Grain self-sufficiency is an important government policy issue. The
‘straw for beef’ program aims to utilise the 60 million tonnes of crop
residue produced annually to save feed grain and promote beef
(treating straw with ammonia increases its digestibility and feed
intake by 20 per cent and doubles its protein content).
• The ‘straw for beef’ program has resulted in the relocation of cattle
from pastoral to agricultural regions.
• Aid projects have assisted beef cattle production. For example, a
World Bank smallholder cattle development project of US$180
million, which runs from December 1999 to the end of 2005, aims
to improve breeds, feed efficiency, veterinary services and
slaughter/processing facilities. In Heilongjiang, a World Bank project
running from 1997 to 2003 and costing $240 million aims to expand
livestock raising and agro-processing.
Socioeconomic and • Production is dominated by smallholders.
institutional framework • Some 95 per cent of beef is based on household slaughtering, sold
through wet markets and eaten within 6–8 hours of slaughter.
• There are big problems in moving to a more sophisticated system
based on large-scale abattoirs and a marketing chain for meat to
pass through.
• A lot of infrastructure development is needed to move from a system
based on household slaughtering.
Environmental issues • Grassland degradation through unsustainable grazing has required
relocation from pastoral regions.
• Burning of straw caused significant air pollution, but recycling has
decreased pollution and returned organic fertiliser to the soil as
manure.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 3 — China: Recent Performance and Baseline Projections 25
• Recycling has forced the closure of small crop mills based on straw,
which was a major source of pollution.
• Where there are 1–3 head per farm, the land is able to absorb
manure (87 per cent of manure is utilised by smallholders), but
larger feedlots do not have the facilities to dispose of waste water.
Production system • There are three systems (pastoral, household and commercial).
• The pastoral system (breeding stock and feeding cattle) accounts
for 14 per cent of cattle but is in decline because of degradation of
grazing land and winter feed shortages.
• The household system (with 2–3 head) is a nonspecialised activity,
where animals are fed for slaughter, to supply feedlots or supply
milk; animals are fed on a wide range of waste materials, but
valuable feed is kept for pigs and poultry.
• Specialist beef households have their own straw ammoniation pits
and generally do not purchase feed.
• Contracted household producers (farmers plus companies) are
specialised houses raising cattle according to the strict care and
feed specifications of the contracting company (usually a large
state or private abattoir) and use more grain-intensive practices
than other household producers.
• Commercial feedlots are a small part of the industry (only 5 per
cent) and source 80 per cent of their cattle from the pastoral
region.
• Over 90 per cent of cattle are still slaughtered by households
through low-cost operations which service local villages.
• In 1998 a law was introduced to restrict slaughtering to a small
number of locations where animal hygiene and health regulations
can be enforced; if this law is enforced, it will force the industry to
commercialisation.
Product demand and • Export potential is questionable because of low product quality and
market opportunities artificial supply stimulus.
• Beef is still an unfamiliar product, and tradition and frugality
hamper the development of recent consumers. Beef is traditionally
seen as a winter food (around 80 per cent of the population
consume beef only in winter).
• The consumption of beef in the service sector is increasing rapidly.
• The rural beef market is about low-grade cheap beef from wet
markets, whereas there are some higher-grade cuts in urban areas.
Wet market demand will continue to dominate into the medium
term.
Future developments • Significant barriers to large-scale commercialisation are likely to
persist for some time because of the fragmented, dispersed nature
of the sector, with most cattle raised, slaughtered and consumed in
the same local area.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 3 — China: Recent Performance and Baseline Projections 26
• The lack of significant profitability of non-specialised producers
should constrain growth prospects (the present situation is
driven by supply rather than demand).
• There will be a gradual expansion of feeding grain to cattle, but
change will be slow. For beef production to expand significantly,
intensive systems will be needed. The grassland degradation
issue will prevent grazing expansion.
Pig meat
Recent performance • Pig meat production has expanded steadily. China is the world’s
largest pig meat producer, accounting for more than half of world
pig meat production. Pig meat represents more than 80 per cent of
China’s meat consumption.
Policy settings • There is a strong concern with food security and self-sufficiency.
• There is increased concern about food quality and safety issues.
• There is growing concern about environmental issues, particularly
problems associated with intensive pig farms in urban areas.
• Foreign investment in the livestock sector is encouraged by tax
exemptions.
• Access to cheap credit has provided a policy bias toward
large-scale development.
Socioeconomic and • The pig industry is still characterised by a small-scale structure.
institutional framework Some 70 per cent of rural households (135 million farmers) have
pigs, with an average of 2–3 head per household (see Table 3.4).
There has been very little change over the last decade.
• Small-scale production has proved to be cost-efficient because of
the use of residues as feed; these would have no other value. Green
roughage is a specialty; there is a low ratio of grain to meat.
• Over 80 per cent of pigs are slaughtered and marketed by small
village operators; backyard farms produce heavier animals than
larger producers.
• Foreign investment and foreign ventures have played an important
role in the development of the Chinese feed grain industry. These
companies have made a big contribution to livestock development,
especially in animal nutrition.
• Livestock production plays a significant role in poverty alleviation
for small farmers, who are recognised by the World Bank for this
contribution.
• The industry offers work opportunities for rural women and
children.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 3 — China: Recent Performance and Baseline Projections 27
Environmental issues • The high population density makes it difficult to absorb nutrients
from pig manure, which is the hardest effluent to treat.
• Canada and the United States have a major competitive advantage
on environmental grounds because of their large land areas and
lower population densities.
Production system • Backyard pig meat production is still 80 per cent of total
production, but is falling steadily, with a move towards specialised
household production and specialised commercial production.
• Feeding practices of small household producers are poor, as is
meat quality.
• Specialised farms depend completely on purchased feeds,
especially grain.
• Traditional farmers grow their own feed (with a dominance of green
roughage).
Product demand and • Per capita consumption of pig meat is registering the lowest growth
market opportunities of all meats.
• Urban residents have higher incomes and consume 50 per cent
more meat than rural residents. There is a dramatic urbanisation
process under way: the urban population is increasing by 4 per cent
per year; it is now 31 per cent of the total population and may
reach 50 per cent by 2030.
• There is a general belief that China’s WTO entry will benefit China’s
livestock sector because it is labour intensive. Import tariffs will be
reduced as shown in Table 3.7.
Future developments • Feed grain used for pigs will increase more than meat production
over the longer term as the traditional household share of pig meat
production falls.
• Imports of grain for livestock feed and meat imports will increase
substantially.
• Animal disease-free zones are being set up with quarantine and
monitoring to agreed standards with a view to exporting. But the
economics of exports remain questionable because of the need to
buy feed grain to replace scraps which are currently cheap. China
lacks the health standards and the ability to control pollution for
strong export growth. China does not have an open flow of
information about diseases. Until it adopts such a policy its export
opportunities will be highly restricted.
• Chinese officials anticipate a pig meat production growth rate of
around 3 per cent per year, compared with 5 per cent for poultry.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 3 — China: Recent Performance and Baseline Projections 28
Poultry
Recent performance • There is rapidly growing production with a very low dependence on
imports. Ducks are a very significant part of production, especially
in the south.
Policy settings • There is some protection against imports, but tariffs will be lowered
upon WTO entry (the current tariff of 20 per cent is to fall to 12 per
cent by 2004).
• Technical extension is needed via nationwide breeding farms
(poultry, pigs and cattle) to improve local breeds.
• In the past, the policy of food self-sufficiency has curtailed imports.
Socioeconomic and • Intensive production systems have developed fastest with poultry,
institutional framework where over 50 per cent of production is now on farms with more
than 1000 birds (Table 3.5). Most people purchase their feed from
large, integrated poultry enterprises.
• High feed and economic efficiency and high consumer preference
have led to rapid intensification of production.
• Poultry waste in the form of manure is used for horticultural crops
and as feed for fish and other livestock, providing a significant part
of poultry returns.
Environmental issues • Minor compared with those on pig-producing farms. Waste is easy
to deal with. Some big commercial layer farms have established
affiliated plants to produce organic fertiliser.
• There is also heat drying of manure for fish and cattle feeds. The
unpleasant smell of large poultry farms near urban centres is the
major environmental problem.
Production system • There is a substantial commercial sector which takes nearly half of
China’s industrial feed grain production.
• Foreign investors in feed mills have also started chicken farms.
• The switch from state-owned to privately owned feed mills has
increased efficiency (40 per cent of production is now in intensive
systems).
• The meat conversion ratio has improved significantly and is now
1.9:1, compared with 1.5:1 in industrial countries.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 3 — China: Recent Performance and Baseline Projections 29
Product demand and • Production will continue to expand rapidly with a big increase in
market opportunities intensive production. For broilers, the share of intensive production
will reach 60 per cent by 2005.
• The production growth rate is 5 per cent per year.
Future developments • The per capita consumption of poultry increased rapidly over the
past decade and further significant growth is likely.
• Income elasticity for poultry is very high (higher than for pig meat
and beef). A study by the International Food Policy Research
Institute (IFPRI) estimates income elasticity for poultry ranging from
0.99 to 1.06 for 2000–10.
• Over the past 20 years chicken has become the cheapest meat,
with the industrialisation of production systems.
• There has been a rapid growth in imports in recent years (mainly
wings, claws and giblets, which are low priced in Western countries
but highly sought after in China).
Dairy
Recent performance • There has been steady growth, due to technical progress and fast
growing demand.
• Market development, with milk processing and expansion of
refrigerated facilities, is expanding the demand for milk.
Policy settings • There are very high barriers to imported dairy products (e.g. tariffs
at 65 to 90 per cent for butter and cheese).
Socioeconomic and • There are more than 40 joint ventures or wholly foreign-owned
institutional framework enterprises, including Nestle and Parmalat.
• Dairy is a relatively new industry in China; there were only a few
dairy cattle in China prior to the 1980s.
• Milk production for large cities is from highly intensive production
systems.
Environmental issues • Minor compared with those on pig-producing farms. Waste is easy
to deal with. Some big commercial layer farms have established
affiliated plants to produce organic fertiliser.
• Heat drying of manure for fish and cattle feeds results in an
unpleasant smell from large poultry farms near urban centres; this
is the major environmental problem.
Production system • Some 25 per cent is on state farms (the average herd size is 300
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 3 — China: Recent Performance and Baseline Projections 30
per farm).
• Over 60 per cent of dairy cows are on small household farms each
with 2–3 cows, with low productivity and poor quality products
(Table 3.6).
• Some 15 per cent of production is owned by collectives, with herds
of 200 per farm.
• Small farms are increasingly working together with large state
farms and collectives to improve milk quality and distribution.
Product demand and • The industry is characterised by low productivity, poor quality
market opportunities product and weak demand. Some 30–40 per cent of urban Chinese
do not consume dairy products at all, and only 20 per cent are
regular consumers.
• More foreign technology will be needed to significantly increase
production.
• Growth in imports will exceed growth in production as demand
expands. In particular, China’s WTO entry will significantly lower
tariffs on dairy products.
Future developments • Current consumption per capita is very low, though it is expected to
expand significantly by 2015.
• The demand for high-quality imports can be expected to grow
rapidly as per capita incomes grow and WTO entry dramatically
cuts tariff barriers.
• The IFPRI study shows very high income elasticities of demand for
milk, from 1.64 in rural areas to 1.91 in urban areas.
• The Ministry of Agriculture projects per capita consumption growth
of 2.5 per cent per year to 2030; most of this is likely to be met by
imports.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 3 — China: Recent Performance and Baseline Projections 31
Range Percentage of holders Percentage of cattle slaughtered
1–5 head 97.0 72
6–10 head 1.8 8
11–100 head 1.0 12
101–1000 head 0.3 5
> 1000 head 0.002 3
Source: China 1997 Agricultural census
Table 3.3. Size distribution of beef producers skewed to smallholders.
Range Percentage of holders Percentage of pigs slaughtered
1–5 92.6 59.4
6–10 4.6 11.8
11–30 2.5 13.0
31–50 0.2 2.0
51–200 0.1 3.8
201–1000 0.02 2.7
> 1000 0.01 7.3
Source: China 1997 Agricultural census
Table 3.4. Size distribution of pig producers.
Range Percentage of holders Slaughtering percentage
1–50 96.8 27.0
51–200 2.3 7.1
201–1000 0.6 9.1
1001–10,00 0.3 31.3
> 10,000 0.03 25.5
Source: China 1997 Agricultural census
Table 3.5. Size distribution of poultry producers.
Range Percentage of holders Cow inventory
1–5 86.7 41.6
6–10 8.5 15.5
11–100 4.7 23
> 100 0.2 19.9
Source: China 1997 Agricultural census
Table 3.6. Size distribution of dairy cow holders.
Size Distributions and Import Tariffs
Baseline Projections
These are shown in Table 3.8. Appendix B shows projections assuming the GDP growth rates of
the six countries are reduced by one-third in each year of the projection period.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 3 — China: Recent Performance and Baseline Projections 32
Meat Current tariff Tariff in 2004 due to WTO entry
Beef 45 12
Pork/poultry 20 12
Cheese 50 12
Ice-cream 45 19
Source: China 1997 Agricultural census
Table 3.7. Import tariffs (per cent).
Annual
growth
2001–20
2001 2002 2003 2004 2005 2010 2015 2020 (%)
Production (kt cwe)
Beef 5600 5814 6021 6209 6378 7323 8096 8721 2.2
Pig meat 42,400 44,703 46,907 48,876 50,623 61,153 70,546 78,902 3.2
Poultry meat 12,310 12,623 12,897 13,045 13,092 14,886 16,628 17,951 1.9
Dairy 12,913 13,429 13,966 14,525 15,106 18,379 22,361 27,205 3.8
Imports (kt cwe)
Beef 4 5 6 7 8 11 14 16 7.5
Pig meat 94 177 293 464 681 1874 3077 4250 21.0
Poultry meat 765 1046 1368 1739 2149 3655 4734 5639 10.5
Dairy 164 319 447 539 590 636 646 847 8.6
Exports (kt cwe)
Beef 45 24 15 10 7 2 1 1 –18.8
Pig meat 135 82 56 38 27 13 9 8 –13.1
Poultry meat 530 368 285 226 182 121 107 105 –7.8
Dairy 50 54 57 61 66 92 98 105 3.8
Import dependency (%)
Beef 0.0 0.0 0.0 0.0 0.0 0.2 0.2 0.2
Pig meat 0.0 0.3 0.6 1.1 1.6 5.3 6.5
Poultry meat 2.1 5.1 7.7 10.4 13.1 19.2 21.8 23.6
Dairy 0.9 1.9 2.7 3.2 3.4 2.9 2.4 2.7
Consumption (kt rw)
Beef 3891 4056 4208 4344 4465 5133 5676 6115 2.3
Pig meat 33,040 34,942 36,773 38,455 39,996 49,151 57,419 64,852 3.4
Poultry meat 11,040 13,302 13,980 14,558 15,059 18,419 21,256 23,486 3.8
Dairy 13,028 13,695 14,356 15,003 15,630 18,923 22,908 27,947 3.9
Per person consumption (kg rw/person)
Total meat 54.9 58.8 61.3 63.6 65.5 77.0 85.8 92.5 2.6
Beef 3.0 3.1 3.2 3.3 3.4 3.7 4.0 4.1 1.6
Sheep and goat meat 1.7 1.7 1.8 1.9 1.9 2.3 2.5 2.6 2.3
Pig meat 25.6 26.9 28.1 29.1 30.0 35.6 40.0 43.8 2.7
Poultry meat 8.6 10.2 10.7 11.0 11.3 13.3 14.8 15.9 3.1
Seafood 16.0 16.8 17.6 18.3 18.8 22.2 24.5 26.1 2.5
Dairy 10.1 10.4 10.8 11.1 11.4 12.8 14.6 17.0 2.6
kt = kilotonnes; cwe = carcass weight equivalent; rw = retail weight
Source: GMI model and CIE calculations
Table 3.8. Baseline projections for China.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 3 — China: Recent Performance and Baseline Projections 33
Key points
• Per person meat consumption will increase by 68 per cent over the next 20 years.
• There will be little change in composition between meats, except that beef consumption will
grow more slowly than other meats.
• There will be a rapid increase in dependency on poultry imports and a moderate increase in
dependency on pig meat imports.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 4 — India: Recent Performance and Baseline Projections 35
Chapter outline
This chapter provides the following information:
• data on India’s economy-wide performance (summary indicators)
• meat industry data for beef, dairy, poultry, pork and seafood
• trends in per capita consumption
• Engel curves showing the relationship between per capita meat protein consumption and per capita income
for beef, dairy, poultry, pork and seafood
• information on production systems, policy settings and future developments
• baseline projections to 2020 for production, imports, exports, import dependency, consumption and per
person consumption.
Where relevant, each section of data concludes with a set of key points, which appear in a shaded box.
India: Recent Performance
4 and Baseline Projections
Economy-wide Performance
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 4 — India: Recent Performance and Baseline Projections 36
Meat Industry Data
Year GDP(real) per capita Population
Rupees/capita Growth rate (%) Millions Growth rate (%)
1990 9195.7 834.7
1991 9135.8 –0.65 851.7 2.03
1992 9340.9 2.25 867.8 1.90
1993 9622.0 3.01 883.9 1.85
1994 10,088.0 4.84 918.6 3.92
1995 10,648.0 5.55 935.7 1.87
1996 11,215.9 5.33 953.0 1.84
1997 11,574.4 3.20 970.2 1.81
1998 12,049.3 4.10 987.5 1.78
1999 12,666.0 5.12 1004.8 1.75
2000 13,218.4 4.36 1022.0 1.72
Source: http://www.imf.org/external/pubs/ft/weo/2002/02/data/index.htm
Table 4.1. Summary indicators, 1990–2000.
Key points
• Per capita income growth was solid following the economic reforms of the early 1990s.
• The population growth rate remains high.
Import
Productiona Consumptiona Exportsa Importsa dependencyb
(kt) (kt) (kg/capita) (kt) (kt) (%)
Beef
1990 887 576 0.69 63.4 0.007 0
1991 905 576 0.68 81.5 0.001 0
1992 935 597 0.69 81.6 0.000 0
1993 945 590 0.67 101.7 0.000 0
1994 1025 636 0.69 116.1 0.000 0
1995 1100 658 0.70 159.7 0.000 0
1996 1370 793 0.83 157.6 0.000 0
1997 1430 878 0.90 176.3 0.000 0
1998 1593 1007 1.02 154.0 0.000 0
1999 1660 1045 1.04 161.0 0.000 0
2000 1750 1015 0.99 300.4 0.000 0
2001 1770 1 001 0.96 340.6 0.000 0
Growth (%)c 7.74 6.83 4.68 13.38 NA
Dairy
1990 53,678 53,679 64.31 0.338 1.059 0.001
1991 54,061 54,061 63.48 2.295 1.978 0
1992 56,406 56,415 65.01 0.592 9.429 0.016
1993 58,860 58,861 66.59 1.522 2.559 0.002
1994 61,398 61,391 66.83 8.202 0.947 0
Table 4.2. Meat industry data, 1990–2001.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 4 — India: Recent Performance and Baseline Projections 37
Import
Productiona Consumptiona Exportsa Importsa dependencyb
(kt) (kt) (kg/capita) (kt) (kt) (%)
1995 64,619 64,620 69.06 3.593 4.977 0.002
1996 67,258 67,258 70.58 0.793 0.388 0
1997 71,097 71,096 73.28 1.607 0.771 0
1998 75,500 75,501 76.46 0.866 1.873 0.001
1999 78,920 78,934 78.56 4.597 18.396 0.017
2000 81,790 81,782 80.02 9.406 1.102 0
2001 85,564 85,554 82.30 11.111 1.112 0
Growth (%)c 4.61 4.61 2.46 18.12 0.89
Poultry
1990 342.0 301.0 0.36 0.000 0.000 0
1991 360.0 316.7 0.37 0.125 0.000 0
1992 405.0 356.4 0.41 0.014 0.000 0
1993 453.6 399.1 0.45 0.102 0.000 0
1994 467.7 411.6 0.45 0.054 0.000 0
1995 478.8 421.3 0.45 0.013 0.000 0
1996 478.8 421.3 0.44 0.002 0.001 0
1997 526.5 463.3 0.48 0.019 0.000 0
1998 540.0 475.2 0.48 0.007 0.000 0
1999 558.9 491.8 0.49 0.026 0.000 0
2000 575.1 506.1 0.50 NA NA NA
2001 595.4 523.9 0.50 NA NA NA
Growth (%)c 4.94 4.94 2.83 NA NA
Pork
1990 416.5 324.9 0.39 0.000 0.000 0
1991 434.0 338.5 0.40 0.000 0.000 0
1992 444.5 346.7 0.40 0.007 0.000 0
1993 469.0 365.8 0.41 0.056 0.000 0
1994 477.1 371.6 0.40 0.741 0.000 0
1995 495.2 385.5 0.41 0.934 0.000 0
1996 514.0 400.6 0.42 0.353 0.001 0
1997 533.4 415.9 0.43 0.242 0.000 0
1998 542.5 423.1 0.43 0.108 0.000 0
1999 560.0 436.5 0.43 0.341 0.000 0
2000 560.0 450.5 0.44 NA NA NA
2001 595.0 463.7 0.45 NA NA NA
Growth (%)c 3.27 3.27 1.19 NA NA
Seafood
1990 3875 1880 2.25 134.9 0.5 0
1991 4128 1956 2.30 191.7 1.4 0
1992 4318 2036 2.35 210.8 1.6 0
1993 4694 2187 2.47 258.3 4.1 0
1994 4875 2221 2.42 322.0 7.9 0
1995 5044 2327 2.49 307.8 12.0 0
1996 5326 2386 2.50 394.5 10.8 0
1997 5483 2470 2.55 397.6 15.9 0
1998 5376 2517 2.55 311.1 32.5 0
1999 5693 2750 2.74 229.0 19.4 0
2000 5790 2852 2.79 180.5 22.1 0
2001 6023 2968 2.86 187.8 32.4 0
Growth (%)c 4.03 4.08 1.94 4.08 46.42
kt = kilotonnes; NA = not available or not applicable
a Production, exports and imports measured in kt carcass weight equivalent; consumption and consumption per capita measured in kt retail weight
b Calculated as the ratio of net imports to total consumption, all measured in carcass weight equivalent
c Average logarithmic growth rate, 1990–2001
Source: GMI database
Table 4.2. Meat industry data, 1990-2001 (cont’d).
0
1
2
3
4
5
6
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
0
1
2
3
4
5
6
1990 1995 2000
Beef
Poultry
Pork
Sheep/goat
Seafood
Beef
Poultry
Pork
Sheep/goat
Seafood
Consumption per person (kg) Consumption per person (kg)
Data source: GMI database
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 4 — India: Recent Performance and Baseline Projections 38
Key points
• There has been a steady increase in production of the major meats.
• Growth in meat production matches growth in consumption but per capita consumption is
very low.
• There has been a steady increase in dairy production and per capita consumption from a
high level.
Figure 4.1. Trends in per capita consumption of meat, 1990–2000.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
8000 9000 10,000 11,000 12,000 13,000 14,000
Consumption per person (kg)
GDP per person (rupees)
Data source: GMI database
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 4 — India: Recent Performance and Baseline Projections 39
Key points
• Per capita meat consumption is expanding steadily but from a very low base.
• Beef (includes buffalo), sheep and goat meat dominate, but consumption is very low for all
meats.
Figure 4.2. Beef.
Relationship Between Per Capita Meat Protein Consumption and Per Capita
Income (Engel Curves)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
8000 9000 10,000 11,000 12,000 13,000 14,000
Consumption per person (kg)
GDP per person (rupees)
Data source: GMI database
0
10
20
30
40
50
60
70
80
90
8000 9000 10,000 11,000 12,000 13,000 14,000
Consumption per person (kg)
GDP per person (rupees)
Data source: GMI database
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 4 — India: Recent Performance and Baseline Projections 40
Figure 4.3. Dairy.
Figure 4.4. Poultry.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
8000 9000 10,000 11,000 12,000 13,000 14,000
Consumption per person (kg)
GDP per person (rupees)
Data source: GMI database
0.0
0.5
1.0
1.5
2.0
2.5
3.0
8000 9000 10,000 11,000 12,000 13,000 14,000
Consumption per person (kg)
GDP per person (rupees)
Data source: GMI database
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 4 — India: Recent Performance and Baseline Projections 41
Figure 4.5. Pork.
Figure 4.6. Seafood.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 4 — India: Recent Performance and Baseline Projections 42
Beef
Recent performance • Some 24 million cattle and buffalo are slaughtered each year for
meat production.
• There has been annual production growth of 7.7 per cent over the
last decade, but from a very low base.
Policy settings • The livestock sector gets no support (by contrast, the food grain
sector gets significant subsidies).
• Extensive R&D programs to improve milk and meat productivity are
under way.
Socioeconomic and • Abattoirs are appalling (very few are modernised).
institutional framework • Most slaughter occurs in the unorganised sector, using clandestine
and unhygienic methods.
• The slaughtering of cows is outlawed except in west Bengal and
Karala.
Environmental issues • Abattoir/slaughter waste is dumped in open spaces.
• Slaughtering facilities need to be moved out of urban and village
areas to help waste disposal.
• Overgrazing is a significant problem.
Production system • There is no organised industry (beef production is largely a
by-product).
• Meat yield from cattle and buffalos is very low, as is productivity of
the entire production system.
Product demand and • India’s Muslims eat beef, but Hindus (80 per cent of the population)
market opportunities do not.
• With the laws surrounding slaughtering and the huge supply of
unproductive dairy cows and draft cattle and buffalo, there is more
than enough meat to supply the beef-eating population. This excess
supply provides no incentives for the development of an efficient
producing industry.
• Surveys shows that three-quarters of Hindus will eat meat (but not
beef) when they can afford it. Religious rules are a major problem
for the Indian beef industry.
Future developments • Hindu beliefs about the sacredness of cows is likely to prevent
development of an efficient industry.
Production Systems, Policy Settings and Future Developments
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 4 — India: Recent Performance and Baseline Projections 43
Poultry
Recent performance • There has been a 5 per cent annual growth rate in production over
the last decade.
• The industry uses 12 million tonnes per year of compounded poultry
feed.
• Poultry are by far the most advanced of India’s meat industries.
• There are negligible exports because of poor quality and hygiene
standards.
Policy settings • Tariffs of 100 per cent block imports. Tariffs are expected to fall
significantly in the next WTO round.
Socioeconomic and • Some 50 per cent of the poultry sector is now commercialised
institutional framework (following a big shift towards commercialisation in the 1990s).
• There are big economies of scale in commercialisation.
• Integrators are fast taking over from independent growers. Live
broilers are marketed at 1.75 kg per bird, with a feed conversion
ratio of 1:8.
Environmental issues • None of any consequence.
Production system • Integrators are rapidly signing up chicken farmers to become broiler
growers (contract farming). They exchange production and supply
contracts with inputs and technical advice.
• Smaller, independent farmers are struggling to survive with fixed
meat prices but highly variable input costs.
• Large-scale broiler groups have associated processing facilities.
• India is a big exporter of soyabean cake, which, together with
maize, is a key ingredient of poultry food. This gives India some
prospect for competitive exports of poultry meat.
Product demand and • A big growth in demand is expected, driven by population and per
market opportunities capita income growth.
• India is traditionally a market for live birds (96 per cent in total) but
its processing share is increasing rapidly.
Future developments • Some observers expect the number of birds to increase from 700
million now to 4000 million in 2020.
• There is some export potential because of low labour costs and feed
costs.
• Some observers expect consumption to increase to 3.1 kg per
person in 2020.
• Poultry consumes 30 per cent of India’s maize crop. There are
doubts about whether India can expand its maize production
sufficiently to support the anticipated increase in production to meet
projected demands.
• The large vegetarian population will constrain total meat
consumption.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 4 — India: Recent Performance and Baseline Projections 44
Pig meat
Recent performance • There has been annual production growth of 3 per cent over the last
decade.
Policy settings • The livestock sector gets no support (by contrast, the food grain
sector gets significant subsidies).
Environmental issues • Disposal of manure is a big difficulty.
Dairy
Recent performance • India is the world’s largest producer of dairy products. There are 90
million farmers with 1–2 buffalo producing 82 million tonnes of milk
per year; and there are 57 million cows, 31 million of which are
dairy cows, plus 39 million buffalo, 25 million of which are for milk.
• Milk production is growing at 4.6 per cent per year compared with
1 per cent for the world as a whole.
Policy settings • There are no subsidies, so there are expectations that WTO
liberalisation will advantage Indian industry provided product quality
can be improved.
• There are some significant tariffs on imported dairy products. The
average tariff is around 27 per cent.
• Operation Flood (launched in 1970 and ending in 1996) has played a
key role in rapid industry development, through establishing milk
cooperatives, improving their technology and linking milk supplies
with demands.
• The Milk and Milk Product Order of 1992 aimed at ensuring a stable
supply of milk through control of its processing and distribution.
Socioeconomic and • Some 210 million Indians are lacto-vegetarians who rely heavily on
institutional framework milk protein. Some 200 million Indians below the poverty line rely on
milk protein because they cannot afford meat protein.
• Milk is an important part of social and religious life.
• There are 75,000 dairy cooperatives, with over 10 million members.
They focus on liquid milk sales, with some larger cooperatives
establishing processing and marketing facilities.
• Cow manure is an important organic fertiliser and raw fuel.
• Hindus are 80 per cent of the population. Attitude to cows is a highly
significant factor.
Environmental issues • Not significant as most production is in rural areas where manure is
easily disposed of. A national milk grid moves milk out and
concentrates in.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 4 — India: Recent Performance and Baseline Projections 45
Production system • Semi-intensive system with some feed concentrate plus grazing.
• Very low productivity, with only 10 per cent of milk production
commercialised using high-yielding milk cows and buffalos.
• High costs of compound feed limit its use and production per cow.
• Buffalo comprise 40 per cent of milk production (1250 kg per
lactation), which is very low by world standards, though steadily
improving.
• Breeding programs and use of concentrate feed still have a long
way to go.
• Private investment allowed since the 1990s has doubled the
country’s milk processing capacity.
Product demand and • Some 50 per cent of milk is produced and consumed in urban areas
market opportunities inhabited by 25 per cent of the country's population. Rapid
urbanisation will lead to a rapid demand increase.
• Indians love to drink milk.
• Buffalo milk has 30 per cent higher total solids than cow milk.
Higher fat content is an advantage with some products.
Future developments • There has been a recent surge in investment, with new processing
and manufacturing capacity.
• Demand for milk will increase rapidly (at least 5 per cent per year by
some estimates).
• Production expansion will be curtailed because of limited room for
growth in cattle herds, limited grazing, and perhaps a feed grain
shortage. But incentives will be strong to improve dairy productivity
and help reduce growing dependency on imports.
• Religious attitudes to cows will continue to make the industry
inefficient because people cannot harm unproductive cows; this
should prevent extensive commercialisation.
Baseline Projections
These are shown in Table 4.3. Appendix B shows projections assuming the GDP growth rates of
the six countries are reduced by one-third in each year of the projection period.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 4 — India: Recent Performance and Baseline Projections 46
Annual
growth
2001–20
2001 2002 2003 2004 2005 2010 2015 2020 (%)
Production (kt cwe)
Beef 1890 1947 2021 2100 2182 2710 3364 4224 4.1
Pig meat 578 602 630 660 690 871 1095 1379 4.4
Poultry meat 605 644 691 742 793 1134 1616 2313 6.9
Dairy 85,564 87,276 89,021 90,802 92,618 102,257 110,160 118,674 1.6
Imports (kt cwe)
Beef 0 0 0 0 0 0 0 0 NA
Pig meat 0 0 0 0 0 0 0 0 NA
Poultry meat 0 0 0 0 0 0 0 0 NA
Dairy 1 1737 3513 5326 6975 15,174 29,710 49,818 70.8
Exports (kt cwe)
Beef 341 253 201 149 113 98 23 3 –20.6
Pig meat 0 0 0 0 0 0 0 0 0
Poultry meat 0 0 0 0 0 0 0 0 0
Dairy 11 13 16 18 22 50 59 69 9.6
Import dependency (%)
Beef 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Pig meat 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Poultry meat 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Dairy 0.0 1.9 3.8 5.5 7.0 12.9 21.2 29.5
Consumption (kt rw)
Beef 1084 1186 1274 1365 1448 1828 2339 2954 5.1
Pig meat 451 470 492 515 538 679 854 1076 4.4
Poultry meat 532 644 691 742 793 1134 1616 2313 7.6
Dairy 85,554 89,000 92,519 96,109 99,571 117,382 139,812 168,423 3.4
Per person consumption (kg rw/person)
Total meat 5.1 5.4 5.7 6.0 6.2 7.9 10.1 13.1 4.8
Beef 1.0 1.1 1.2 1.3 1.3 1.5 1.9 2.2 3.9
Sheep and goat meat 0.6 0.6 0.7 0.7 0.8 1.0 1.3 1.8 5.4
Pig meat 0.4 0.4 0.5 0.5 0.5 0.6 0.7 0.8 3.2
Poultry meat 0.5 0.6 0.6 0.7 0.7 1.0 1.3 1.7 6.3
Seafood 2.5 2.6 2.7 2.8 3.0 3.8 5.0 6.6 5.0
Dairy 82.3 84.2 86.2 88.1 89.9 98.7 110.6 126.9 2.2
kt = kilotonnes; cwe = carcass weight equivalent; rw = retail weight
Source: GMI model and CIE calculations
Table 4.3. Baseline projections for India.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 4 — India: Recent Performance and Baseline Projections 47
Key points
• Per person meat and seafood consumption will more than double over the next 20 years, but
is extremely low in comparison to other countries (reaching only 13 kg per person).
• In all meats, production growth is sufficient to satisfy demand growth (with no imports).
• There will be a rapid demand growth for dairy products which is likely to be satisfied by
import growth (import dependency is expected to increase to 30 per cent by 2020).
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 5 — Indonesia: Recent Performance and Baseline Projections 49
Chapter outline
This chapter provides the following information:
• data on Indonesia’s economy-wide performance (summary indicators)
• meat industry data for beef, dairy, poultry, pork and seafood
• trends in per capita consumption of meat and dairy products
• Engel curves showing the relationship between per capita meat protein consumption and
per capita income for beef, dairy, poultry, pork and seafood
• information on production systems, policy settings and future developments for beef, pig
meat, poultry and dairy
• baseline projections to 2020 for production, imports, exports, import dependency,
consumption and per person consumption.
Where relevant, each section of data concludes with a set of key points, which appear in a
shaded box.
Indonesia: Recent
Performance and Baseline
Projections
5
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 5 — Indonesia: Recent Performance and Baseline Projections 50
Economy-wide Performance
Meat Industry Data
Year GDP(real) per capita Population
Rupiah/capita Growth rate (%) Millions Growth rate (%)
1990 1,466,803 179.5
1991 1,580,933 7.78 181.4 1.06
1992 1,666,604 5.42 184.5 1.71
1993 1,757,962 5.48 187.6 1.69
1994 1,859,873 5.80 190.7 1.64
1995 1,970,686 5.96 194.8 2.13
1996 2,105,679 6.85 196.8 1.06
1997 2,167,639 2.94 199.9 1.55
1998 1,841,184 –15.06 204.4 2.28
1999 1,813,809 –1.49 209.3 2.37
2000 1,875,216 3.39 212.3 1.44
Source: http://www.imf.org/external/pubs/ft/weo/2002/02/data/index.htm
Table 5.1. Summary indicators, 1990–2000.
Key points
• Growth in per capita income has been hit hard by the economic crisis.
• The population growth rate remains high.
Import
Productiona Consumptiona Exportsa Importsa dependencyb
(kt) (kt) (kg/capita) (kt) (kt) (%)
Beef
1990 259.0 182.2 1.02 0.065 1.422 0.74
1991 262.0 184.7 1.02 0.000 1.867 1.01
1992 301.0 212.9 1.15 0.000 3.149 1.48
1993 346.3 244.5 1.30 0.021 3.051 1.24
1994 336.5 238.9 1.25 0.004 4.782 2.00
1995 312.0 223.4 1.15 0.021 7.259 3.24
1996 347.2 254.1 1.29 0.004 15.773 6.21
1997 353.7 263.9 1.32 0.005 23.316 8.83
1998 342.6 246.0 1.20 0.000 8.812 3.58
1999 308.8 223.5 1.07 0.015 10.550 4.71
2000 350.7 264.3 1.25 0.022 26.936 10.18
2001 350.0 233.6 1.08 0.175 16.438 6.96
Growth (%)c 2.23 2.39 0.66 NA 27.84
Dairy
1990 605.7 619.8 3.45 15.287 29.445 2.28
1991 624.7 652.6 3.60 16.221 44.104 4.27
1992 643.0 677.4 3.67 9.901 44.395 5.09
1993 655.5 691.9 3.69 5.466 41.847 5.26
1994 721.6 765.9 4.02 4.426 48.730 5.78
Table 5.2. Meat industry data, 1990–2001.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 5 — Indonesia: Recent Performance and Baseline Projections 51
Import
Productiona Consumptiona Exportsa Importsa dependencyb
(kt) (kt) (kg/capita) (kt) (kt) (%)
1995 741.0 803.4 4.13 3.101 65.551 7.77
1996 764.5 811.2 4.12 4.993 51.788 5.77
1997 758.5 805.6 4.03 1.931 48.993 5.84
1998 701.8 740.4 3.62 2.433 40.991 5.21
1999 768.7 884.5 4.23 2.416 118.181 13.09
2000 832.0 917.6 4.32 31.769 117.349 9.33
2001 855.3 956.0 4.44 28.974 129.682 10.53
Growth (%)c 2.79 3.52 1.77 –8.80 10.51
Poultry
1990 484.5 426.3 2.38 0.141 0.089 0
1991 561.9 494.4 2.73 0.213 0.116 0
1992 631.9 556.1 3.01 0.001 0.027 0.005
1993 699.6 615.7 3.28 0.632 0.687 0.009
1994 815.6 718.8 3.77 1.103 2.297 0.166
1995 889.0 783.3 4.02 1.000 2.068 0.136
1996 940.0 837.0 4.25 0.006 11.163 1.333
1997 899.5 792.2 3.96 0.077 0.806 0.092
1998 621.2 545.7 2.67 1.864 0.751 0
1999 620.2 547.2 2.61 2.859 4.462 0.293
2000 731.6 655.9 3.09 0.704 14.501 2.103
2001 870.0 765.3 3.55 1.740 1.455 0
Growth (%)c 2.99 3.06 1.32 NA 46.36
Pork
1990 124.0 96.7 0.54 0.007 0.023 0.017
1991 110.0 86.0 0.47 0.038 0.327 0.336
1992 136.0 106.1 0.58 0.002 0.017 0.014
1993 169.3 132.1 0.70 0.001 0.047 0.035
1994 183.6 143.4 0.75 0.010 0.164 0.107
1995 177.8 138.7 0.71 0.010 0.091 0.058
1996 189.5 147.9 0.75 0.041 0.096 0.037
1997 146.8 114.3 0.57 0.379 0.126 0
1998 139.0 108.3 0.53 0.189 0.066 0
1999 166.7 129.9 0.62 0.223 0.105 0
2000 179.5 139.7 0.66 0.690 0.319 0
2001 166.7 129.9 0.60 0.461 0.213 0
Growth (%)c 2.66 2.63 0.89 NA NA
Seafood
1990 3165 1413 7.87 304.9 72.2 0
1991 3452 1486 8.19 387.0 70.7 0
1992 3543 1523 8.25 397.6 77.6 0
1993 3806 1650 8.80 497.1 172.6 0
1994 4029 1843 9.67 522.7 268.5 0
1995 4258 1843 9.47 526.2 159.8 0
1996 4454 1918 9.74 551.5 153.4 0
1997 4581 1972 9.87 554.0 143.9 0
1998 4773 1909 9.34 629.1 56.1 0
1999 4902 2075 9.91 609.2 134.6 0
2000 5163 2324 10.95 589.9 229.0 0
2001 5414 2431 11.29 627.3 242.8 0
Growth (%)c 4.85 4.55 2.78 6.34 6.0
kt = kilotonnes; NA = not available or not applicable
a Production, exports and imports measured in kt carcass weight equivalent; consumption and consumption per capita measured in kt retail weight
b Calculated as the ratio of net imports to total consumption, all measured in carcass weight equivalent
c Average logarithmic growth rate, 1990–2001
Source: GMI database
Table 5.2. Meat industry data, 1990-2001 (cont’d).
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 5 — Indonesia: Recent Performance and Baseline Projections 52
Key points
• Production growth is modest for all meats.
• Per capita consumption growth is also modest.
• There is a growing dependence on dairy and beef imports.
0
5
10
15
20
25
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
0
5
10
15
20
25
1990 1995 2000
Beef
Poultry
Pork
Sheep/goat
Seafood
Dairy
Beef
Poultry
Pork
Sheep/goat
Seafood
Dairy
Consumption per person (kg) Consumption per person (kg)
Data source: GMI database
Figure 5.1. Trends in per capita consumption of meat and dairy, 1990–2000
0
2
4
6
8
10
12
1200 1400 1600 1800 2000 2200 2400
Consumption per person (kg)
Data source: GMI database
GDP per person (rupiah '000)
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 5 — Indonesia: Recent Performance and Baseline Projections 53
Relationship Between Per Capita Meat Protein Consumption and Per Capita
Income (Engel Curves)
Key points
• Consumption per person has only recently recovered to the levels seen before the financial
crisis.
• Seafood is by far the most important component (67 per cent) of meat consumption.
Figure 5.2. Beef.
0
2
4
6
8
10
12
1200 1400 1600 1800 2000 2200 2400
Consumption per person (kg)
Data source: GMI database
GDP per person (rupiah '000)
0
2
4
6
8
10
12
1200 1400 1600 1800 2000 2200 2400
Consumption per person (kg)
Data source: GMI database
GDP per person (rupiah '000)
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 5 — Indonesia: Recent Performance and Baseline Projections 54
Figure 5.3. Dairy.
Figure 5.4. Poultry.
0
2
4
6
8
10
12
1200 1400 1600 1800 2000 2200 2400
Consumption per person (kg)
Data source: GMI database
GDP per person (rupiah '000)
0
2
4
6
8
10
12
1200 1400 1600 1800 2000 2200 2400
Consumption per person (kg)
Data source: GMI database
GDP per person (rupiah '000)
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 5 — Indonesia: Recent Performance and Baseline Projections 55
Figure 5.5. Pork.
Figure 5.6. Seafood.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 5 — Indonesia: Recent Performance and Baseline Projections 56
Beef
Recent performance • There has been a steady growth in beef production over the past
decade. It declined slightly in the late 1990s during the financial
crisis, but has recovered. The production growth has been around
2.4 per cent per year.
• Imports have risen significantly, with a high proportion of these from
Australia (in particular, a large rise in the number of imported live
cattle from Australia).
• The 1998 Asian currency crisis caused a drop in production because
of the rupiah devaluation and feedlot dependence on imported live
cattle. The increased rupiah price encouraged smallholders to
slaughter scarce breeding cattle. Breeder cattle depletion is still
occurring.
Policy settings • A government-initiated program aims to reach 95 per cent
self-sufficiency in meat production by 2005. This includes increasing
the productivity of farming units through an artificial insemination
program, restricting the slaughter of productive female cows and
decreasing the risk of disease infection in young cattle.
• The government has set development paths for beef production
based on private company feedlot operations and improving
smallholder efficiency.
• The government provides artificial insemination services to improve
the genetics of native cattle (this initiative is now being privatised).
• The industry is characterised by a beef nucleus estate scheme (NES)
with a private company nucleus and smallholders as ‘plasma’
(fattening NES, breeding NES, forage NES). In each scheme, the
company provides principal inputs and technical assistance and
purchases the cattle; the smallholder provides land, labour etc.
Companies are required to participate in the NES to get approval to
import live cattle, but the NES has dropped off since the currency
crisis.
• There is a tariff of 5 per cent on imported beef, but no tariff on
imported feeder cattle.
• The government provides assistance to smallholders through a
revolving breeder cattle scheme and feeder cattle for fattening.
• There is zero interest credit for holding breeder cattle.
• The slaughter of productive females is prohibited (but hard to
police).
• The government promotes business partnerships between private
financial institutions and small growers.
Production Systems, Policy Settings and Future Developments
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 5 — Indonesia: Recent Performance and Baseline Projections 57
Socioeconomic and • Smallholders engage mainly in hand-feeding by gathering rice straw
institutional framework and green grass. Family labour shortages to do this are limiting
cattle herd size.
• Intensification of cropping on rice land and expansion in cropping
areas has also affected the capacity to expand native cattle herds.
• There is some free-range grazing in eastern Indonesia (larger herds
of 10–50 animals), but security is a problem.
Environmental issues • Not environmentally unfriendly.
• Larger feedlots with heavy
concentrations of cattle are designed and managed to minimise
adverse environmental impacts.
• Smallholder farmers have few problems in disposing of manure.
Production system • Dominated by smallholders (around 80 per cent of production).
• There is increased reliance on imported live cattle (mainly sourced
from Australia). This has contributed to an increase in slaughter
weights from grass-fed Australian cattle.
• Smallholder herds (generally with 1–3 head per household) have low
technical productivity, especially with low fertility of breeding cattle
and low quality feeds.
• Some 25 per cent of production from commercial feedlots is based
heavily on live cattle imports. A high level of technical efficiency with
efficiency of feed utilisation is a critical profit driver).
• Includes partnership smallholders (who fatten cattle from feedlots)
and non-partnership smallholders (who breed and graze native
cattle and feed them on locally available roughage).
Product demand and • There is a very strong and growing demand. The preference of most
market opportunities households is for beef from native cattle.
• Supermarket shoppers (a small segment) are indifferent to the
source of cattle/beef. Supermarkets, hotels and restaurants are
increasingly demanding imported beef or beef from imported cattle.
Future developments • The commercial sector based on live cattle to feedlots is heavily
dependent on the value of the rupiah versus the Australian dollar.
• Smallholder development is constrained by lack of capital and
access to credit, local insecurity due to cattle stealing, unstable
economic conditions and pressures from industrialisation. Poor
reproductive efficiency of native breeder cattle restricts the cattle
population.
• Steady economic recovery would greatly increase demand for beef
and enhance the ability of the commercial feedlot sector to purchase
live feeder cattle from Australia.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 5 — Indonesia: Recent Performance and Baseline Projections 58
Pig meat
Recent performance • There are 10 million pigs in Indonesia. Some are exported to
Singapore (260,000 in 1998, valued at US$17.5 million). Singapore
closed pig farming in 1984.
• Production is growing at around 3 per cent per year.
Policy settings • The main emphasis is on the prevention of endemic diseases,
government-funded R&D, the supply of improved breeding stock to
smallholder farmers, support for the development of cooperatives
and provision of extension services to farmers at provincial, district
and subdistrict levels.
• There is encouragement to agribusiness to develop large-scale
commercial production.
• The government encourages the private sector to invest in pig
production for export.
Socioeconomic and • Smallholder farming in rural areas is regarded as a sideline
institutional framework enterprise utilising cheap locally available feeds and requiring little
capital. There is little consideration of the whole production system.
Environmental issues • Availability of suitable land is a problem for peri-urban production,
with continued urban expansion.
• Pig-raising is seen as culturally and environmentally offensive in
peri-urban areas and is under pressure to move to rural areas where
small-scale production (often by housewives) fits into local culture
and society.
• The high nitrogen and phosphorus content of pig effluent is a
serious problem with semicommercial and commercial operations
(smallholders in rural areas often handle waste more efficiently).
Production system • Dominated by smallholders (368,000 households, mostly located on
Java).
• The industry is small and poorly developed. There is some
development of input-supplying industries (premixed feeds,
medicines) but these mainly service the large commercial breeders.
• The industry is characterised by the use of indigenous pig breeds
(with lower genetic potential) but there is increased interest in
crossing with exotic breeds.
• There have been substantial imports of superior breeding stock in
recent years (mainly for commercial operators).
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 5 — Indonesia: Recent Performance and Baseline Projections 59
Product demand and • Some 80 per cent of Indonesians are Muslim and not allowed to
market opportunities consume pig meat. The demand for pig meat is becoming much
more sophisticated (with strong demand and price premiums for
lean meat).
• The change in consumer preferences toward lean meat will have a
major impact, particularly on smallholders, who will need access to
suitable genetic stock and feed.
• The Chinese minority dominates pig meat consumption. If social
tensions were to reassert themselves, there could be an exodus of
Chinese.
Future developments • The productivity of smallholders in rural areas (the dominant supply
base) is very low because of poor genetics, nutrition and
management. But expansion of commercial, high technology
operators is constrained by problems with suitable sites and effluent
disposal.
Poultry
Recent performance • There has been a steady growth in production (nearly 3 per cent per
year). The poultry sector took a buffeting during the financial crisis.
Production fell by 30 per cent in 1998, but has since recovered.
Policy settings • There have been large reductions in the general tariff rate on poultry
meat to 5 per cent under the IMF agreement.
• A total ban on chicken parts was introduced in September 2000. It
was aimed at protecting domestic producers from imports of
cheaper chicken parts.
Socioeconomic and • Production is divided between a limited number of slaughtering and
institutional framework processing facilities and smallholder farming.
• Slaughter and processing facilities are often situated a long way
from the centre of distribution. They tend to supply supermarkets,
restaurants and hotels rather than traditional markets, where they
cannot compete in price.
• Around 80 per cent of slaughtered chickens go directly to the wet
markets, most of these from smallholder facilities.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 5 — Indonesia: Recent Performance and Baseline Projections 60
Production system • There is a large dependence on imported feed. Fifty per cent of
poultry feed is imported. Feed costs are greatly affected by the
fluctuating value of the rupiah. With feed costs comprising around
80 per cent of total production costs, the financial crisis had a huge
impact on the poultry industry.
• Logistical constraints such as the spatial distribution of production,
processing and consumption and transportation costs limit
expansion.
• Cold storage deficiencies create distribution and marketing
problems.
Product demand and • Chicken meat is the most popular meat product in Indonesia.
market opportunities • Consumers tend to prefer small birds, with many low income
earners preferring to purchase a live bird at the wet markets for
slaughter.
• In the past, consumers preferred whole chickens to parts. This is
moving towards a more demand-responsive market where parts
may be chosen if they are cheaper.
Future developments • Production can expand by better utilising existing production
capacity. Further investment in new infrastructure is unlikely in the
near future.
• Provided economic recovery continues, consumption is likely to
grow and move back towards pre-crisis levels.
Dairy
Recent performance • There has been a modest growth in milk production of just under
3 per cent per year.
• Consumption has grown faster than production; there is higher
reliance on imports to meet demand. The proportion of consumption
met by imports has risen from around 5 per cent to 13 per cent
over the past decade.
Policy settings • There was a very large reduction in tariff rates (from as high as
200 per cent in 1995 to 5 per cent following agreement with the
IMF) in response to the financial crisis.
Socioeconomic and • Production is dominated by small-scale producers, typically farmers
institutional framework who own 2–3 dairy cows.
• Some small productivity gains have occurred within these
production units.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 5 — Indonesia: Recent Performance and Baseline Projections 61
• Limited access to improved genetics and limited resources to
improve herds, combined with unfavourable weather and high feed
costs, are preventing production from keeping pace with domestic
demand and leading to an increasing reliance on imports.
Production system • Largely dominated by small farm operations, with a small number of
large, intensive operations.
• Typically, in a small system in Indonesia, one cow produces
10–12 litres per day; in modern systems, one cow can produce up
to 20 litres per day.
• In recent times, milk processors have increased cooperation with
private smallholder farmers, supplying them with equipment and
other inputs in an attempt to improve productivity.
Product demand and • Dairy products are still regarded as something of a luxury. Demand
market opportunities growth has been strong, but much still hinges on continued
economic recovery.
• Difficulties in increasing domestic production mean that there will
be opportunities for exporters as demand increases.
Future developments • Low productivity in smallholder farms is likely to continue. Resource
and logistical constraints combined with other natural factors limit
growth in production. Surplus domestic demand is likely to be met
by increased import reliance.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 5 — Indonesia: Recent Performance and Baseline Projections 62
Baseline Projections
These are shown in Table 5.3. Appendix B shows the projections assuming the GDP growth rates
of the six countries are reduced by one-third in each year of the projection period.
Annual
growth
2001–20
2001 2002 2003 2004 2005 2010 2015 2020 (%)
Production (kt cwe)
Beef 355 369 383 392 406 477 554 636 3.0
Pig meat 185 199 215 223 237 313 396 488 5.0
Poultry meat 753 807 865 911 965 1281 1671 2145 5.4
Dairy 855 881 907 935 963 1116 1294 1500 2.8
Imports (kt cwe)
Beef 27 41 56 80 93 196 362 614 17.0
Pig meat 0 0 1 1 2 8 28 70 34.4
Poultry meat 4 6 9 17 18 38 81 169 20.3
Dairy 117 170 226 273 321 598 940 1377 13.1
Exports (kt cwe)
Beef 0 0 0 0 0 0 0 0 0
Pig meat 0 0 0 0 0 0 0 0 0
Poultry meat 2 1 1 0 0 0 0 0 –14.4
Dairy 3.0 2.7 2.5 2.3 2.1 1.3 1.2 1.1 –4.9
Import dependency (%)
Beef 9.9 14.2 18.0 24.1 26.7 41.6 56.5 70.1
Pig meat 0.0 0.2 0.3 0.7 0.9 3.3 8.3 16.1
Poultry meat 0.4 0.6 0.9 1.8 1.8 2.9 4.6 7.3
Dairy 11.8 16.0 19.8 22.5 24.9 34.8 42.1 47.8
Consumption (kt rw)
Beef 267 286 307 330 349 471 641 875 6.1
Pig meat 144 156 168 175 186 250 330 436 5.7
Poultry meat 665 812 873 927 983 1319 1753 2314 6.4
Dairy 970 1048 1131 1205 1282 1712 2232 2875 5.6
Per person consumption (kg rw/person)
Total meat 15.9 17.7 18.7 19.4 20.2 24.8 30.3 37.1 4.3
Beef 1.2 1.9 2.0 2.1 2.2 2.8 3.6 4.7 6.9
Sheep and goat meat 0.4 0.4 0.4 0.4 0.4 0.5 0.7 0.8 4.4
Pig meat 0.7 0.7 0.8 0.8 0.8 1.0 1.3 1.7 4.6
Poultry meat 3.1 3.7 3.9 4.1 4.3 5.5 7.0 8.8 5.4
Seafood 10.6 11.1 11.6 12.0 12.4 14.9 17.7 21.1 3.5
Dairy 4.50 4.80 5.11 5.38 5.65 7.16 8.87 10.91 4.5
kt = kilotonnes; cwe = carcass weight equivalent; rw = retail weight
Source: GMI model and CIE calculations
Table 5.3. Baseline projections for Indonesia.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 5 — Indonesia: Recent Performance and Baseline Projections 63
Key points
• Per person meat consumption will more than double over the next 20 years.
• Domestic production growth is strong for pig meat and poultry meat but lower for beef. Beef
production prospects will be curtailed by the very low productivity of native breeder cattle
farms. Even with higher growth for poultry and pig meats, production will lag behind
demand growth.
• Production growth for milk will average nearly 3 per cent.
• Dependency ratios on imported beef and dairy products will increase substantially. More
modest increases for pig meat and poultry meat reflect greater scope for technology catchup
and production expansion in these sectors.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 6 — Vietnam: Recent Performance and Baseline Projections 65
Chapter outline
This chapter provides the following information:
• data on Vietnam’s economy-wide performance (summary indicators)
• meat industry data for beef, dairy, poultry, pork and seafood
• trends in per capita consumption of meat and dairy products
• Engel curves showing the relationship between per capita meat protein consumption and
per capita income for beef, dairy, poultry, pork and seafood
• information on production systems, policy settings and future developments for beef, pig
meat, poultry and dairy
• baseline projections to 2020 for production, imports, exports, import dependency,
consumption and per person consumption.
Where relevant, each section of data concludes with a set of key points, which appear in a
shaded box.
Vietnam: Recent
Performance and Baseline
Projections
6
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 6 — Vietnam: Recent Performance and Baseline Projections 66
Economy-wide Performance
Year GDP(real) per capita Population
Dong/capita Growth rate (%) Millions Growth rate (%)
1990 1,993,363 66.02
1991 2,061,201 3.40 67.24 1.86
1992 2,187,874 6.15 68.45 1.80
1993 2,318,151 5.95 69.65 1.75
1994 2,471,441 6.61 70.83 1.69
1995 2,654,141 7.39 72.00 1.65
1996 2,848,125 7.31 73.16 1.61
1997 3,091,763 8.55 74.04 1.20
1998 3,156,670 2.10 75.46 1.92
1999 3,246,172 2.84 76.60 1.51
2000 3,380,037 4.12 77.69 1.42
Source: http://www.imf.org/external/pubs/ft/weo/2002/02/data/index.htm
Table 6.1. Summary indicators, 1990–2000.
Key points
• Per capita income growth has been around 4 per cent per year.
• The population growth rate is slowing but still high.
Meat Industry Data
Import
Productiona Consumptiona Exportsa Importsa dependencyb
(kt) (kt) (kg/capita) (kt) (kt) (%)
Beef
1990 75.0 52.6 0.80 0.039 0.130 0.17
1991 75.5 52.8 0.79 0.026 0.000 0
1992 77.5 54.2 0.79 0.065 0.000 0
1993 75.0 52.5 0.75 0.026 0.000 0
1994 80.2 56.2 0.79 0.156 0.195 0.07
1995 83.0 58.2 0.81 0.260 0.455 0.33
1996 83.0 58.2 0.80 0.005 0.155 0.26
1997 83.0 58.1 0.79 0.008 0.045 0.06
1998 83.2 58.2 0.77 0.008 0.045 0.06
1999 85.5 59.9 0.78 0.013 0.026 0.02
2000 92.3 64.6 0.83 0.013 0.026 0.02
2001 93.9 65.8 0.83 0.011 0.025 0.02
Growth (%)c 1.82 1.82 0.18 NA NA
Dairy
1990 60.0 62.9 0.95 0.000 2.900 4.61
1991 60.0 67.5 1.00 0.000 7.460 11.06
1992 60.8 69.4 1.01 0.000 8.586 12.37
1993 63.4 78.6 1.13 0.000 15.200 19.34
1994 64.2 103.7 1.46 0.000 39.500 38.09
Table 6.2. Meat industry data, 1990–2001.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 6 — Vietnam: Recent Performance and Baseline Projections 67
Import
Productiona Consumptiona Exportsa Importsa dependencyb
(kt) (kt) (kg/capita) (kt) (kt) (%)
1995 65.8 84.4 1.17 0.000 18.600 22.04
1996 67.4 89.7 1.23 0.000 22.300 24.86
1997 69.0 107.8 1.46 0.000 38.800 35.99
1998 69.8 116.1 1.54 0.000 46.300 39.88
1999 69.6 85.6 1.12 0.000 16.000 18.69
2000 82.1 98.1 1.26 0.000 16.000 16.31
2001 84.2 103.0 1.31 0.000 18.836 18.28
Growth (%)c 22.57 4.85 3.16 17.72
Poultry
1990 169.6 149.2 2.26 0.040 0.000 0
1991 164.7 144.9 2.16 0.050 0.000 0
1992 177.1 154.5 2.26 1.600 0.000 0
1993 168.7 147.9 2.12 0.650 0.000 0
1994 170.4 149.6 2.11 0.350 0.000 0
1995 175.8 154.2 2.14 0.620 0.000 0
1996 196.7 173.0 2.36 0.191 0.068 0
1997 218.6 192.6 2.60 0.426 0.722 0.15
1998 260.2 229.2 3.04 0.166 0.426 0.11
1999 325.4 286.3 3.74 0.090 0.030 0
2000 351.0 308.8 3.98 0.090 0.030 0
2001 378.1 332.7 4.22 0.1 0.030 0
Growth (%)c 27.72 7.76 6.03 –1.66
Pork
1990 728.6 555.7 8.42 16.156 0.000 0
1991 715.5 538.6 8.01 25.019 0.000 0
1992 820.0 630.0 9.20 12.310 0.000 0
1993 878.0 669.5 9.61 19.700 0.000 0
1994 957.7 737.2 10.41 12.600 0.038 0
1995 1007.0 780.5 10.84 6.400 0.081 0
1996 1052.0 817.1 11.17 4.600 0.102 0
1997 1154.2 896.6 12.11 4.772 0.085 0
1998 1228.0 949.9 12.59 10.185 0.068 0
1999 1318.2 1024.1 13.37 5.300 0.017 0
2000 1409.0 1074.0 13.83 32.000 0.017 0
2001 1509.7 1154.2 14.63 30.0 0.017 0
Growth (%)c 7.15 7.33 5.61 –6.34
Seafood
1990 941.2 445.8 6.75 43.7 0.0 0
1991 999.2 452.8 6.73 66.8 0.0 0
1992 1041.0 460.6 6.73 80.7 0.0 0
1993 1120.2 489.3 7.03 94.8 1.6 0
1994 1370.0 606.0 8.56 109.7 3.3 0
1995 1474.0 689.0 9.57 83.7 6.2 0
1996 1646.7 764.6 10.45 98.7 7.0 0
1997 1690.9 677.5 9.15 211.1 9.4 0
1998 1719.0 689.4 9.14 207.1 2.6 0
1999 1867.1 750.6 9.80 234.1 13.8 0
2000 1967.1 768.3 9.89 264.6 10.0 0
2001 2129.0 830.1 10.52 312.6 35.6 0
Growth (%)c 8.23 6.41 4.70 18.15 256.18
kt = kilotonnes; NA = not available or not applicable
a Production, exports and imports measured in kt carcass weight equivalent; consumption and consumption per capita measured in kt retail weight
b Calculated as the ratio of net imports to total consumption, all measured in carcass weight equivalent
c Average logarithmic growth rate, 1990–2001
Source: GMI database
Table 6.2. Meat industry data, 1990-2001 (cont’d).
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 6 — Vietnam: Recent Performance and Baseline Projections 68
0
5
10
15
20
25
30
35
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
0
5
10
15
20
25
30
35
1990 1995 2000
Beef
Poultry
Pork
Seafood
Dairy
Beef
Poultry
Pork
Seafood
Dairy
Consumption per person (kg) Consumption per person (kg)
Data source: GMI database
Key points
• Meat consumption is dominated by pork.
• The rate of increase in per capita consumption is high.
• There has been rapid growth in the production of pork and poultry to match demand
growth by domestic consumers (zero export dependency).
• There is a growing dependency on imported dairy products, but per capita consumption is
very low.
Figure 6.1. Trends in per capita consumption of meat and dairy, 1990–2000.
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
1530 1930 2330 2730 3130 3530
Consumption per person (kg)
Data source: GMI database
GDP per person (dong '000)
0
2
4
6
8
10
12
14
16
1530 1930 2330 2730 3130 3530
Consumption per person (kg)
Data source: GMI database
GDP per person (dong '000)
Relationship Between Per Capita Meat Protein Consumption and Per Capita
Income (Engel Curves)
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 6 — Vietnam: Recent Performance and Baseline Projections 69
Figure 6.2. Beef.
Figure 6.3. Dairy.
0
2
4
6
8
12
10
14
16
1530 1930 2330 2730 3130 3530
Consumption per person (kg)
Data source: GMI database
GDP per person (dong '000)
0
2
4
6
8
10
12
14
16
1530 1930 2330 2730 3130 3530
Consumption per person (kg)
Data source: GMI database
GDP per person (dong '000)
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 6 — Vietnam: Recent Performance and Baseline Projections 70
Figure 6.4. Poultry.
Figure 6.5. Pork.
0
2
4
6
8
10
12
14
16
1530 1930 2330 2730 3130 3530
Consumption per person (kg)
Data source: GMI database
GDP per person (dong '000)
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 6 — Vietnam: Recent Performance and Baseline Projections 71
Figure 6.6. Seafood.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 6 — Vietnam: Recent Performance and Baseline Projections 72
Beef
Recent performance • Production growth averaged 1.8 per cent per year over the last
decade.
• Body weights are low at 180–200 kg for cows and 300 kg for bulls
(yellow cattle breed).
Policy settings • There is discouragement of integrated feed and meat production.
• There are no barriers to the importation of breeding animals,
livestock semen or veterinary products.
• The Ministry of Science, Technology and Environment has imposed
quality control requirements on meat and by-products, including
offal.
• The Ministry of Agriculture and Rural Development (MARD) has
identified beef as a national priority.
• There is a tariff of 20 per cent on imported beef.
Socioeconomic and • There is a resurgence of Buddhism (some practitioners enforce
institutional framework vegetarianism).
• Cattle are a source of income for families in smallholder systems in
two ways – final product (slaughter) and sale of male offspring. They
are also used as farming implements.
• Young calves are sold off for income because they become a burden
in terms of feed, time and land area if held until slaughter age.
Environmental issues • Meat cattle are concentrated in the central regions and pose little
threat to water resources.
Production system • There are inadequate slaughtering facilities for commercial
production.
• The usual rearing is 1–4 head; however the central zones have herd
sizes in the order of 10 or more.
• Crop residues are the primary feed source.
Product demand and • There has been only marginal growth in per capita consumption
market opportunities over the past decade, but government projections for the future
show more growth.
Future developments • By 2010, the government expects production of ruminant meat
(primarily beef) to be 3 kg per capita with consumption in the order
of 3.6–4.2 kg per capita.
Production Systems, Policy Settings and Future Developments
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 6 — Vietnam: Recent Performance and Baseline Projections 73
Pig meat
Recent performance • Production growth has averaged 7 per cent annually over the last
decade, with nearly 20 million pigs slaughtered in 2000.
• Pork is the most important protein source (70 per cent) for the
Vietnamese.
• Per capita consumption of pork has increased significantly with
increases in GDP per capita.
Policy settings • There is intensive cross-breeding to improve livestock yields.
• Pork is critical to food security and is seen as an area with export
potential.
• There are no barriers to the importation of breeding animals,
livestock semen or veterinary products.
• According to the US pork lobby group, there is a 0–15 per cent
differential tariff on fresh and frozen pork and an official tariff of
40 per cent on processed meats.
• There are tariffs of 30 per cent on fresh and foreign pig meat imports
but no imports.
Socioeconomic and • There is a resurgence in Buddhism (some practitioners enforce
institutional framework vegetarianism).
• Pork is a basic part of the Vietnamese meat diet. Pig hides are also
valuable, and pig manure is an important source of fertiliser for
crops, especially rice.
Production system • Production is skewed to the north of Vietnam, and centres around
areas with high concentrations of cassava, rice and soybeans.
• State-owned piggeries provide sucklers to households.
• Smallholder pig-rearing is replacing the state-owned supply chain;
however smallholders are looking to more valuable agricultural
opportunities.
• The average pig farm is small (5–100 pigs). Much feed is scavenged
on very small farms. A few state-owned enterprises have operations
with 500–1000 pigs.
Product demand and • Around 93 per cent of pork product is consumed fresh, 4 per cent
market opportunities goes into food service businesses and 3 per cent is processed.
• Most pork is consumed within 10 km of the slaughter site.
• There is a consumer switch toward lean meat that sells at a price
up to 30 per cent higher than that of fatty pork.
• An ACIAR project on breeding and feeding pigs in Vietnam has
contributed significantly to improving genetic stock, feed use
efficiency and carcass quality.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 6 — Vietnam: Recent Performance and Baseline Projections 74
Future developments • Lean pork is being demanded by people in major urban cities.
• Identified as an area for development by the Vietnamese
government.
• A policy has been launched heralding Vietnam’s plans to export
80,000 tonnes of pork by 2005, increasing to 100,000 tonnes by
2010.
• Poor quality and low hygiene processing and slaughter facilities will
constrain growth.
• Lack of improved feed is a constraint.
Poultry
Recent performance • Production growth is nearly 8 per cent per year (faster than pork).
• Average meat yield per slaughter is around 0.6-0.75 kg.
Policy settings • There are no barriers to the importation of breeding animals,
livestock semen or veterinary products.
• Poultry tariffs are at 20 per cent.
Socioeconomic and • There is a resurgence in Buddhism (some practitioners enforce
institutional framework vegetarianism).
• Chicken is the second most important protein source for the
population.
Production system • Boosted by international investment from Thailand, particularly
through the Chinfon Group.
• The main locations are close to large urban centres and provinces
with large amounts of waste from food-processing industries.
• State-owned hatcheries supply day-old chicks for fattening and
supply feed and veterinary supplies for household farms.
• Government sources say smallholders represent 17 per cent of the
nation’s farmers.
• Some 70 per cent of birds are local breeds produced outdoors, with
30 per cent divided among foreign breeds, which are ‘industrial’
chickens.
• Distribution channels are short (primary method is motorcycle, cyclo
or foot; there is no cool transport).
Product demand and • Vietnamese poultry is low quality (below world standard) and this
market opportunities means low export potential.
• Imports of chicken are claimed to be targeted at the growing tourist
market in Vietnam.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 6 — Vietnam: Recent Performance and Baseline Projections 75
• Some 70–80 per cent is sold via local markets, unprocessed;
15–20 per cent is dressed and sold to restaurants; the residual is
sold to food processors.
• Although industrial broiler production has grown rapidly, consumers
prefer local chicken (price premium).
Future developments • NGO-sponsored research into optimal bird breeds and productivityinducing
feed might create better birds (currently low quality, low
quantity).
• KFC is entering the Vietnam market; it is rumoured that Jolibee and
Texas Chicken are also moving into the market.
Dairy
Recent performance • Local production (modest growth) accounts for 10–12 per cent of
total milk demand.
• Average yield is 3720 kg per lactation.
• Dairy consumption has increased slightly, and from a very low base,
with increases in GDP per capita.
• There has been production growth of 2.6 per cent per year, but
faster demand growth is met by imports, which are growing rapidly.
Policy settings • Infant milk products are subject to special approval to stop any
abuse of market power (they saw Nestle coming).
• The Ministry of Science, Technology and Environment has imposed
quality control requirements on milk and cream, yoghurts and
products containing milk constituents. Also included are butter and
fats, cheese and milk curds.
Socioeconomic and • Vietnamese people are developing a taste for milk with increases in
institutional framework per capita income (particularly in the urban areas).
• They have also developed a taste for ice-cream and yoghurt.
Production system • Becoming dominated by foreign investment, with companies like
Nestle, St Lawrence and Austdairy developing milk supply capacity.
• Only 40 per cent of cattle milk is produced by farms with organised
distribution links to processing centres. The residual 60 per cent is
supplied by smallholders.
• Most dairy production occurs in the south, primarily in and around
Ho Chi Minh city.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 6 — Vietnam: Recent Performance and Baseline Projections 76
• One estimate says 70 per cent of producers have 3–5 cows,
25 per cent have 10–15 cows and 5 per cent have more than
50 cows.
• VINAMILK is the largest processor in Vietnam.
Product demand and • VINAMILK is pushing demand for greater output as the primary
market opportunities supplier into the market. Its products occupy 85–90 per cent of the
domestic market.
• In about 1996 Nestle invested US$100,000 into a network of
smallholder farms in Ha Tay Province.
• A majority of dairy cattle breeds are imported.
• A significant proportion (95 per cent) of milk consumption is from
imported powder products.
Future developments • Indications are that the government will allow foreign investment
proposals in dairy which incorporate the development of local dairy
farms (similar to pure joint venture structures).
• Identified by the government as a sector for near-term development,
with plans to increase milk consumption to 8–9 kg per capita by
2005.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 6 — Vietnam: Recent Performance and Baseline Projections 77
Baseline Projections
These are shown in Table 6.3. Appendix B shows projections assuming GDP growth for the six
countries is one-third below baseline.
Annual
growth
2001–20
2001 2002 2003 2004 2005 2010 2015 2020 (%)
Production (kt cwe)
Beef 94 98 102 106 111 135 164 201 3.9
Pig meat 1510 1563 1619 1678 1739 2088 2512 3024 3.5
Poultry meat 378 399 421 444 468 606 769 911 4.5
Dairy 84.2 86.7 89.3 92.0 94.8 109.9 127.4 147.7 2.8
Imports (kt cwe)
Beef 0 0 0 0 0 0 0 0 NA
Pig meat 0 0 0 0 0 1 9 83 NA
Poultry meat 0 0 0 0 0 0 0 1 NA
Dairy 95 102 109 116 124 166 221 295 5.8
Exports (kt cwe)
Beef 0 0 0 0 0 0 0 0 0
Pig meat 30 24 18 12 10 1 0 0 –33.4
Poultry meat 0 0 0 0 0 0 0 0 0
Dairy 0 0 0 0 0 0 0 0 0
Import dependency (%)
Beef 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.2
Pig meat 0.0 0.0 0.0 0.0 0.0 0.0 0.3 2.7
Poultry meat 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1
Dairy 48 50 51 52 53 57 61 64
Consumption (kt rw)
Beef 66 69 71 74 77 94 115 141 3.9
Pig meat 1154 1201 1249 1299 1349 1628 1966 2423 3.8
Poultry meat 333 399 421 444 468 606 769 912 5.2
Dairy 163 172 181 191 201 255 324 414 4.8
Per person consumption (kg rw/person)
Total meat 48.5 50.3 52.1 53.9 55.9 67.3 82.7 103.3 3.8
Beef 1.0 1.2 1.2 1.3 1.3 1.5 1.7 1.9 3.1
Sheep and goat meat 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.2 7.1
Pig meat 18.7 19.1 19.5 19.9 20.3 22.6 25.4 29.6 2.3
Poultry meat 4.8 4.9 5.1 5.3 5.5 6.6 7.8 8.7 3.0
Seafood 24.0 25.1 26.2 27.4 28.7 36.7 47.7 62.8 4.9
Dairy 2.1 2.1 2.2 2.3 2.4 2.8 3.3 4.0 3.3
kt = kilotonnes; cwe = carcass weight equivalent; rw = retail weight; NA = not available or not applicable
Source: GMI model and CIE calculations
Table 6.3. Baseline projections for Vietnam.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 6 — Vietnam: Recent Performance and Baseline Projections 78
Key points
• Per person meat consumption will more than double over the next 20 years. Seafood will
continue to account for more than half this consumption.
• Vietnam is likely to remain self-sufficient in meat over the period.
• A moderate growth in demand for dairy products will lead to an increase in imports; over
60 per cent of dairy consumption could be sourced from imports by 2020.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 7 — Philippines: Recent Performance and Baseline Projections 79
Chapter outline
This chapter provides the following information:
• data on the Philippines’ economy-wide performance (summary indicators)
• meat industry data for beef, dairy, poultry, pork and seafood
• trends in per capita consumption of meat and dairy products
• Engel curves showing the relationship between per capita meat protein consumption and
per capita income for beef, dairy, poultry, pork and seafood
• information on production systems, policy settings and future developments for beef, pig
meat, poultry and dairy
• baseline projections to 2020 for production, imports, exports, import dependency,
consumption and per person consumption.
Where relevant, each section of data concludes with a set of key points, which appear in a
shaded box.
Philippines: Recent
Performance and Baseline
Projections
7
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 7 — Philippines: Recent Performance and Baseline Projections 80
Economy-wide Performance
Year GDP(real) per capita Population
Pesos/capita Growth rate (%) Millions Growth rate (%)
1990 11,719 61.48
1991 11,373 –2.94 63.69 3.59
1992 11,164 –1.84 65.34 2.59
1993 11,141 –0.21 66.98 2.51
1994 11,351 1.89 68.62 2.45
1995 11,603 2.22 70.27 2.40
1996 12,003 3.45 71.90 2.32
1997 12,346 2.85 75.53 5.05
1998 12,009 –2.73 75.15 –0.50
1999 12,484 3.96 74.75 –0.53
2000 12,718 1.87 76.18 1.91
Source: http://www.imf.org/external/pubs/ft/weo/2002/02/data/index.htm
Table 7.1. Summary indicators, 1990–2000.
Key points
• There has been a generally poor overall economic performance, with low per capita income
growth.
• The population growth rate remains high.
Meat Industry Data
Import
Productiona Consumptiona Exportsa Importsa dependencyb
(kt) (kt) (kg/capita) (kt) (kt) (%)
Beef
1990 82.0 65.0 1.06 0.000 10.881 16.74
1991 84.0 66.0 1.04 0.000 10.252 15.54
1992 85.0 69.6 1.06 0.000 14.395 20.69
1993 92.0 76.5 1.14 0.000 17.296 22.61
1994 90.0 87.9 1.28 0.000 35.551 40.45
1995 97.4 97.8 1.39 0.000 42.342 43.30
1996 112.9 117.8 1.64 0.000 55.443 47.05
1997 136.6 143.6 1.90 0.000 68.490 47.70
1998 155.8 144.6 1.92 0.000 50.707 35.08
1999 189.9 177.9 2.38 0.000 64.166 36.07
2000 190.2 192.6 2.53 0.000 85.033 44.14
2001 197.0 192.8 2.48 0.025 78.437 40.67
Growth (%)c 9.77 12.23 9.89 NA 25.05
Dairy
1990 20.00 158.83 2.58 0.082 138.910 87.41
1991 17.00 129.89 2.04 0.026 112.917 86.91
1992 15.42 135.55 2.07 0.084 120.211 88.62
1993 12.50 128.77 1.92 0.101 116.375 90.29
1994 12.10 160.10 2.33 0.030 148.027 92.44
Table 7.2. Meat industry data, 1990–2001.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 7 — Philippines: Recent Performance and Baseline Projections 81
Import
Productiona Consumptiona Exportsa Importsa dependencyb
(kt) (kt) (kg/capita) (kt) (kt) (%)
1995 12.11 173.85 2.47 0.020 161.758 93.03
1996 11.50 168.59 2.34 0.100 157.190 93.18
1997 10.22 181.53 2.40 0.282 171.596 94.37
1998 9.24 154.18 2.05 0.335 145.273 94.01
1999 9.85 158.98 2.13 0.216 149.348 93.80
2000 10.00 198.43 2.60 7.591 196.023 94.96
2001 9.33 202.29 2.60 10.77 203.74 95.39
Growth (%)c –6.71 2.81 0.57 41.93 3.93
Poultry
1990 241.7 212.9 3.46 0.059 0.241 0.09
1991 287.2 252.8 3.97 0.082 0.116 0.01
1992 307.3 270.7 4.14 0.000 0.231 0.09
1993 363.5 320.3 4.78 0.000 0.426 0.13
1994 380.5 335.6 4.89 0.000 0.925 0.28
1995 418.6 369.6 5.26 0.000 1.467 0.40
1996 474.1 418.7 5.82 0.001 1.682 0.40
1997 515.7 456.3 6.04 0.001 2.768 0.61
1998 511.3 453.4 6.03 0.000 4.010 0.88
1999 517.1 472.4 6.32 0.000 19.747 4.18
2000 549.7 501.5 6.58 0.007 20.238 4.03
2001 558.1 504.5 6.48 0.029 15.279 3.02
Growth (%)c 7.78 8.13 5.87 61.94
Pork
1990 684.0 534.1 8.69 0.383 1.179 0.15
1991 701.6 547.3 8.59 0.368 0.462 0.02
1992 658.0 513.5 7.86 0.029 0.417 0.08
1993 731.0 570.2 8.51 0.032 0.046 0.00
1994 765.0 596.9 8.70 0.002 0.235 0.04
1995 805.0 628.7 8.95 0.026 1.071 0.17
1996 860.0 674.8 9.39 0.000 5.120 0.76
1997 901.8 708.9 9.39 0.000 7.037 0.99
1998 932.8 733.0 9.75 0.000 6.909 0.94
1999 973.0 773.1 10.34 0.023 18.169 2.35
2000 1008.0 799.0 10.49 0.017 16.344 2.04
2001 1064.0 837.9 10.76 0.005 10.190 1.22
Growth (%)c 4.52 4.67 2.49 NA 51.63
Seafood
1990 2504.2 1395.5 22.70 102.0 195.5 6.70
1991 2599.6 1432.2 22.49 111.6 193.2 5.69
1992 2626.2 1482.7 22.69 103.2 221.4 7.97
1993 2632.5 1439.0 21.48 135.7 208.1 5.03
1994 2721.5 1512.5 22.04 142.2 239.5 6.43
1995 2785.6 1590.8 22.64 127.1 269.4 8.94
1996 2769.7 1556.4 21.65 148.6 264.7 7.46
1997 2767.2 1602.7 21.22 129.0 292.8 10.22
1998 2790.9 1419.9 18.89 202.0 170.5 0
1999 2822.2 1560.2 20.87 161.5 254.2 5.94
2000 2940.0 1778.4 23.35 129.2 378.8 14.04
2001 2978.4 1808.4 23.23 134.7 394.3 14.36
Growth (%)c 1.31 1.53 –0.68 4.29 4.09
kt = kilotonnes; NA = not available or not applicable
a Production, exports and imports measured in kt carcass weight equivalent; consumption and consumption per capita measured in kt retail weight
b Calculated as the ratio of net imports to total consumption, all measured in carcass weight equivalent
c Average logarithmic growth rate, 1990–2001
Source: GMI database
Table 7.2. Meat industry data, 1990-2001 (cont’d).
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 7 — Philippines: Recent Performance and Baseline Projections 82
0
5
10
15
20
25
30
35
40
45
50
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
0
5
10
15
20
25
30
35
40
45
50
1990 1995 2000
Beef
Poultry
Pork
Seafood
Dairy
Beef
Poultry
Pork
Seafood
Dairy
Consumption per person (kg) Consumption per person (kg)
Data source: GMI database
Key points
• Dairy production is small and declining, with a large and growing import dependency.
• There has been a rapid growth in beef production (based on feeder cattle from Australia)
and poultry production.
Figure 7.1. Trends in per capita consumption of meat and dairy, 1990–2000.
0
2
4
6
8
10
12
14
16
11,000 11,200 11,400 11,600 11,800 12,000 12,200 12,400 12,600 12,800
Consumption per person (kg)
Data source: GMI database
GDP per person (pesos)
Effects of Globalisation and Economic Development on the Asian Livestock SectorChapter 7 —
Philippines: Recent Performance and Baseline Projections 83
Key points
• There has been a steady growth in per capita meat consumption.
• Pork remains the dominant meat, but poultry consumption is growing rapidly.
• Beef consumption is increasing rapidly from a low base.
Figure 7.2. Beef.
Relationship Between Per Capita Meat Protein Consumption and Per Capita
Income (Engel Curves)
0
2
4
6
8
10
12
14
16
.
11,000 11,200 11,400 11,600 11,800 12,000 12,200 12,400 12,600 12,800
Consumption per person (kg)
Data source: GMI database
GDP per person (pesos)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
11,000 11,200 11,400 11,600 11,800 12,000 12,200 12,400 12,600 12,800
Consumption per person (kg)
Data source: GMI database
GDP per person (pesos)
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 7 — Philippines: Recent Performance and Baseline Projections 84
Figure 7.4. Poultry.
Figure 7.3. Dairy.
0
5
10
15
20
25
30
11,000 11,200 11,400 11,600 11,800 12,000 12,200 12,400 12,600 12,800
Consumption per person (kg)a
a Note different scale for seafood
Data source: GMI database
GDP per person (pesos)
Figure 7.6. Seafood.
0
2
4
6
8
10
12
14
16
11,000 11,200 11,400 11,600 11,800 12,000 12,200 12,400 12,600 12,800
Consumption per person (kg)
Data source: GMI database
GDP per person (pesos)
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 7 — Philippines: Recent Performance and Baseline Projections 85
Figure 7.5. Pork.
Production Systems, Policy Settings and Future Developments
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 7 — Philippines: Recent Performance and Baseline Projections 86
Beef
Recent performance • Over the past decade there has been production growth of around
10 per cent per year.
• Production growth is heavily dependent on imports of live feeder
cattle from Australia.
• As a result of a ban on beef imports from Europe in late 2000, a
mild shortage of beef occurred, which increased farm gate prices.
Policy settings • Live bovine animals are levied a 3 per cent tariff through to 2004.
• During a recent trade dispute with Australia, live cattle import duties
were raised to 7 per cent. They were later reduced to 3 per cent
following a resolution of the problem.
• Fresh chilled or frozen bovine meats face a 10 per cent tariff.
Socioeconomic and • Around 90 per cent of the cattle population is on small backyard
institutional framework farms, where animals are used for draft purposes before being
slaughtered.
• Institutional arrangements link small producers with large
commercial integrators.
• Institutional failure and poor interaction between the central and
regional authorities is a major constraint on the development of all
livestock industries.
• Around 75 per cent of pigs are raised on backyard farms.
Production system • The domestic industry is dominated by carabaos (buffalo), which
comprise 55 per cent of total bovine animals, with both milk and
meat as the primary products.
• Most cattle are bred on smallholder farms. Less than 10 per cent of
cattle are on larger-scale commercial farms. This share has fallen
from 22 per cent in 1980.
Product demand and • There has been strong demand growth over the past decade. Much
market opportunities of the demand has been met by imports. Import dependency has
increased from 17 per cent to 40 per cent, with India and Australia
the major exporters.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 7 — Philippines: Recent Performance and Baseline Projections 87
• Demand for beef decreased significantly with the bovine spongiform
encephalopathy and foot-and-mouth disease scares. Consumers
substituted pork, chicken and fish, but processors increased their
utilisation of local beef.
• The weakness of the Philippine economy, combined with a
weakening currency, has dramatically reduced the quantity of live
cattle imports. Imports fell from 267,074 head in 2000 to 98,924
head in 2001. High Australian cattle prices have also contributed.
• Lack of a cold chain system (almost non-existent outside Metro
Manila) will constrain sales.
• A major purchaser is the San Miguel Corporation (which is a
majority player in the Burger King and other livestock product
markets).
Future developments • The Philippine Association of Meat Processors has been lobbying for
a cut in import duties on beef from 10 per cent to 5 per cent.
• In a recent (2002) visit to Masbate, the president instructed the
Department of Environment and Natural Resources to reduce the
existing US$3.91 per hectare per annum pasture lease rate to
US$0.78 per hectare per annum to encourage beef production.
• Live cattle imports will expand, following a decline in 2001, as local
producers try to rebuild cattle stocks.
• Cattle are a potential fit with rice in terms of feed availability (rice
straw) and farmer time.
Pig meat
Recent performance • Average annual production growth over the decade was around
4.5 per cent, with consumption growing at 4.7 per cent. The
shortfall has been made up through imports.
Policy settings • Minimum access volumes for fresh, chilled and frozen pork were
43,365 tonnes in 2000, increasing to 45,775 in 2001; 48,185 in
2002; 50,595 in 2003; 53,005 in 2004; and 27,105 in 2005. The
utilisation rates have been low, at around 20–40 per cent.
• In-quota rates for fresh, chilled and frozen pork are 30 per cent;
out-of-quota rates are 60 per cent.
• Quota and tariffs also exist for live imports of pigs for breeding (tariff
of 3 per cent) and higher rates for live swine other than breeding
(in-quota rate of 30 per cent; above-quota rates of 35–50 per cent).
Production system • The pig meat sector comprises a substantial commercial feedlot
sector, combined with traditional backyard-style farms. Backyard
operations still account for more than 80 per cent of production.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 7 — Philippines: Recent Performance and Baseline Projections 88
• Feed costs have tended to be high. Around 50 per cent of production
costs can be attributed to feed (mostly corn). Rapid expansion in
livestock production has meant that feed must be imported to keep
pace. This has left feed costs highly susceptible to fluctuations in
the peso.
Product demand and • Pork has the highest per person consumption of all meats (excluding
market opportunities seafood). Per person consumption has grown steadily, but not as
rapidly as poultry or beef.
• Pig meat demand was not as significantly affected by the foot-andmouth
disease scare as was beef.
Future developments • Production will continue moving away from backyard operations into
more sophisticated commercial production.
• Pig meat is likely to remain the most popular meat, with strong
demand growth. Imports will increase, with demand growth more
rapid than production growth.
Poultry
Recent performance • Average annual production growth is around 8 per cent.
Policy settings • The quota for 2002 is 20,879 metric tonnes (mt); for 2003 it is
21,923 mt; and for 2004 it is 22,968 mt. It will reduce to 10,374 mt
in 2005.
• The in-quota rate was 45 per cent in 2001; the out-of-quota rate
ranged from 50 per cent to 60 per cent. Prepared and preserved
poultry meats have a uniform rate of 60 per cent (2001), reducing
by 10 per cent until they reach 30 per cent in 2004.
• Quota utilisation has ranged from 16 to 91 per cent and is not
particularly consistent.
• The Department of Agriculture is trying to force importers to bring in
whole birds only.
Socioeconomic and • There has been a significant shift away from backyard operations. In
institutional framework 1990, 70 per cent of chickens were in backyard operations.
Presently, this figure is around 50 per cent. Commercial operations
now account for more than 85 per cent of production.
Production system • Some 85 per cent of poultry is produced in integrated operations.
• San Miguel Corporation accounts for 40 per cent of poultry
production.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 7 — Philippines: Recent Performance and Baseline Projections 89
Product demand and • Five ‘integrators’ have formed the Philippine Association of Broiler
market opportunities Integrators (PABI). They use higher technological innovation and
better breeding techniques than smallholders alone.
• Small and medium-sized producers belong to the United Broiler
Raisers Association, which is less organised than PABI but provides
a voice for breeders.
Future developments • Chicken meat consumption will benefit from food safety concerns
with competing meats, especially beef.
Dairy
Recent performance • The production base is very small; production has halved over the
last decade.
• There has been a rapid growth in imports to meet steady
consumption growth.
Policy settings • Milk and cream that are concentrated or contain sugar will be levied
at 3 per cent until 2004.
• The National Dairy Development Act 1995 directs the government to
set aside approx US$2.75 million a year for dairy development.
Socioeconomic and • The government is establishing a program to support a national
institutional framework school milk feeding program.
• Around 50 per cent of all Filipinos are lactose intolerant.
Production system • Carabaos are an important source of milk (and meat).
• Some 99 per cent of milk used is imported.
• Approximately 5000 small dairy farmers and a few semicommercial
and institutional farms engage in the production, processing and
marketing of milk.
Product demand and • Two milk zones have been established in Luzon and Mindanao.
market opportunities • Dairy farmers around the milk zones have organised into
cooperative groups.
• Collection stations have been established to collect milk from the
villages located around the milk zones.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 7 — Philippines: Recent Performance and Baseline Projections 90
• In the processing/reprocessing stage, 10 dominant firms control 80
per cent of the total market: Nestle, Alaska Milk Corp, New Zealand
Milk Products, Bristol Myers Squibb, Wyeth, Philippine Dairy
Products Corp, Kraft, New Zealand Ice Creamery, Universal Robina
and Selecta Walls.
Future developments • Production is unlikely to increase significantly. Imports will remain
the primary source of dairy products.
Effects of Globalisation and Economic Development on the Asian Livestock Sector
Chapter 7 — Philippines: Recent Performance and Baseline Projections 91
Baseline Projections
These are shown in Table 7.3. Appendix B shows projections assuming GDP growth for the six
countries is one-third below baseline.
Annual
growth
2001–20
2001 2002 2003 2004 2005 2010 2015 2020 (%)
Production (kt cwe)
Beef 209 211 214 218 223 257 292 329 2.3
Pig meat 1053 1077 1106 1136 1167 1415 1678 1956 3.1
Poultry meat 596 609 625 642 659 842 1044 1263 3.8
Dairy 9 9 9 9 9 9 9 8 –0.5
Imports (kt cwe)
Beef 92 95 99 111 127 216 352 555 9.4
Pig meat 30 43 60 85 118 250 497 915 18.7
Poultry meat 21 30 40 55 76 146 265 453 16.5
Dairy 196 205 215 225 237 303 387 494 4.7
Exports (kt cwe)
Beef 0 0 0 0 0 0 0 0 0
Pig meat 0 0 0 0 0 0 0 0 0
Poultry meat 0 0 0 0 0 0 0 0 0
Dairy 0 0 0 0 0 0 0 0 0
Import dependency (%)
Beef 43.7 44.2 45.3 48.2 51.8 65.2 78.0 89.7
Pig meat 3.5 5.0 6.6 8.9 11.8 19.3 29.3 40.9
Poultry meat 3.9 5.3 6.9 9.0 11.8 16.8 23.0 30.0
Dairy 95.5 95.7 95.9 96.1 96.3 97.1 97.8 98.3
Consumption (kt rw)
Beef 211 214 219 230 245 331 451 619 5.5
Pig meat 844 874 910 952 1003 1298 1697 2239 5.0
Poultry meat 543 562 586 614 647 870 1152 1509 5.2
Dairy 205 214 224 235 246 312 396 503 4.6
Per person consumption (kg rw/person)
Total meat 41.7 42.1 42.9 43.9 45.1 53.5 63.8 76.8 3.1
Beef 2.7 2.7 2.7 2.8 2.9 3.7 4.7 6.1 4.1
Sheep and goat meat 1.0 1.0 1.0 1.0 1.0 1.2 1.4 1.6 2.5
Pig meat 10.9 11.1 11.3 11.6 12.0 14.4 17.6 22.1 3.6
Poultry meat 7.0 7.1 7.3 7.5 7.8 9.7 12.0