3.3 Livestock commodities

3.3.1 Past and present

Livestock, a major factor in the growth of world agriculture. The world food economy is being increasingly driven by the shift of diets and food consumption patterns towards livestock products. Some use the term«food revolution» to refer to these trends (Delgado et al., 1999). In the developing countries, where almost all world population increases take place, consumption of meat has been growing at 5-6 percent p.a. and that of milk and dairy products at 3.4-3.8 percent p.a. in the last few decades. Aggregate agricultural output is being affected by these trends, not only through the growth of livestock production proper, but also through the linkages of livestock production to the crop sector which supplies the feeding stuffs (mainly cereals and oilseeds), and benefits from the important crop-livestock synergies prevailing in mixed farming systems (de Haan et al., 1998).

On the negative side, and in association with policy distortions or market failures, there are environmental implications associated with the expansion of livestock production. For example, through the expansion of land for livestock development, livestock sector growth has been a prime force in deforestation in some countries such as Brazil, and in overgrazing in other countries. Intensive livestock operations on an industrial scale, mostly in the industrial countries but increasingly in the developing ones, are a major source of environmental problems through the production of point-source pollution (effluents, etc.).²⁰ In parallel, growth in the ruminant sector contributes to greenhouse gas concentrations in the atmosphere through methane emissions and nitrous oxide from the waste of grazing animals (see Chapters 12 and 13).

Important exceptions and qualifications. The strength of the livestock sector as the major driving force of global agriculture can be easily exaggerated. Many developing countries and regions, where the need to increase protein consumption is the greatest, are not participating in the process. In 40 developing countries, among those covered individually in this study, per capita consumption of meat was lower in the mid-1990s than ten years earlier. In this category are the regions of sub-Saharan Africa, with very low consumption per capita reflecting quasi-perennial economic stagnation. Also the Near East/North Africa, where the rapid progress of the period to the late 1980s (oil boom) was interrupted and slightly reversed in the subsequent years, helped by the collapse of consumption in Iraq. Similar considerations apply to developments in per capita consumption of milk and dairy products (Table 3.9). In the great majority of countries failing to participate in the upsurge of the livestock products consumption, the reason has simply been lack of development and income growth (including failures to develop agriculture and production of these products) that would translate their considerable latent demand for what are still luxury items into effective demand. Cultural and religious factors have also stood in the way of wider diffusion of consumption of meat in general in some countries (such as India) or of particular meats (such as beef in India and pork in Muslim countries).

The second major factor limiting the growth of world meat consumption is the fact that such consumption is heavily and disproportionately concentrated in the industrial countries. They account for 15 percent of world population but for 37 percent of world meat consumption and 40 percent of that of milk. Their average per capita consumption is fairly high - that of meat is 88 kg compared with 25 kg in developing countries. This leaves rather limited scope for further increases in their per capita consumption, while their population grows very slowly at 0.6 percent p.a. currently and 0.4 percent p.a. in the coming two decades. These characteristics of the industrial countries have meant that a good part of world demand has been growing only slowly. The aggregate meat consumption of the industrial countries grew at 1.3 percent p.a. in the last ten years (0.3 percent p.a. for milk), compared with 6.1 percent (3.8 percent for milk) in developing countries. This slow growth in the industrial countries has partly offset the accelerating growth in several developing countries that have been rapidly emerging as major meat consumers, such as China, Brazil and the Republic of Korea. The net effect of these contrasting trends has been a deceleration in the growth of world average per capita consumption of meat, going from 24 kg in the mid-1960s to 36 kg at present (Table 3.10). This deceleration is clearly seen in the growth rates of world aggregate consumption of meat (Table 3.11). The deceleration has been even more pronounced in the case of milk (Table 3.9), mostly because of developments in the transition economies (see below).

World averages conceal as much as they reveal. In the case of meat the strong growth in production and implied apparent consumption of pig meat in China in the 1980s and 1990s (which many observers believe to be grossly overstated in the country's statistics),²¹ has shifted world meat consumption averages upwards rather significantly, from 30.7 kg in the mid-1980s to 36.4 kg at present. Without China, the average for the rest of the world would have actually stagnated in the same period (see memo item in Table 3.10). Again, this stagnation reflects the other extraordinary event of the 1990s, the collapse of consumption in the transition economies which went from 73 kg in the pre-reform period (late 1980s, when it had been boosted by heavy subsidies) to an estimated 46 kg in 1997/99. Excluding also the transition economies and the downward bias they impart to world totals, the per capita meat consumption in the rest of the world has been growing at a much slower, but always decelerating, pace: by 2.5 kg in the first decade (mid-1960s to mid-1970s), and by 1.6 kg in the second and third decades (see memo item in Table 3.10). Meat sector trends in the developing countries as a whole have been decisively influenced not only by China's rapid growth in the last two decades, but also by a similar performance in Brazil (from 32 kg in the mid-1970s to 71 kg at present). Including these two countries, the per capita meat consumption in the developing countries went over the same period from 11.4 to 25.5 kg. Excluding them, it went from 11 kg to only 15.5 kg (Table 3.10).

For milk and dairy products, there has been no«China effect» on world totals (given the small weight of these products in China's food consumption), but a very strong negative one on account of the transition economies, leading to a sharp slowdown in the growth rate of world production and consumption. Without them, there has been no deceleration in world production and consumption (Table 3.9, memo items).

In conclusion, the modest and decelerating growth in world per capita consumption of meat has been taking place for a wide variety of reasons. For the high-income countries, the reasons include the near saturation of consumption (e.g. in the EU and Australia), policies of high domestic meat prices and/or preference for fish (Japan and Norway), and health and food safety reasons everywhere. However, by far the most important reasons have been the above-mentioned failure of many low-income countries to raise incomes and create effective demand, as well as the cultural and religious factors affecting the growth of meat consumption in some major countries.

Rapid growth of the poultry sector. Perhaps the perception of revolutionary change in the meat sector reflects the extraordinary performance of world production and consumption of poultry meat. Its share in world meat production increased from 13 percent in the mid-1960s to 28 percent currently. Per capita consumption increased more than threefold over the same period. That of pork also increased from 9.1 kg to 14.6 kg (China's statistics helping, but from 9.7 kg to only 10.3 kg for the world without China, Table 3.10). In contrast, per capita consumption of ruminant meat (from cattle, sheep and goats) actually declined a little. The most radical shifts in consumption in favour of poultry meat took place in countries that were the traditional producers, and often major exporters, of bovine meat: Latin America, North America and Oceania (accompanied in the latter two by deep cuts in the consumption of beef), as well as in the mutton-eating region of the Near East/North Africa. Significant increases in beef consumption were rare. They occurred in the Republic of Korea, Japan, Malaysia, Kuwait, Saudi Arabia, Mexico and Taiwan Province of China (all of them somehow linked to increased beef imports, often the result of more liberal trade policies), while Brazil is an example of fast growth in both production and consumption of beef.

Buoyancy of meat trade in recent years. The rapid growth in consumption of several countries was supported by even faster growth in trade. Some drastic changes occurred in the sources of exports and destination of imports, particularly in the last ten years or so. For example, Japan increased per capita meat consumption from 32.6 kg in 1984/86 to 41.5 kg in 1997/99, while its net imports quadrupled and self-sufficiency fell from 84 to 56 percent. At the global level, trade (world exports, including the meat equivalent of live animal exports) increased from 9.4 percent of world consumption in the mid-1980s to 12.7 percent in 1997/99, with poultry increasing from 12.2 to 16.4 percent and beef from 6.3 to 13.9 percent (Table 3.12). The major actors in this expansion of the meat trade are shown in Table 3.13. Japan tops the list of importers. Recent surges in the poultry meat (and to a lesser extent pig meat) imports of the countries of the former Soviet Union (overwhelmingly the Russian Federation), put this group of countries second in the league of importers, with its net imports rivalling those of Japan. On the export side, the combined exports of beef and mutton of Australia and New Zealand put them at the top of world meat exporters. However, the really extraordinary development of the 1990s has been the turnaround of the United States from a sizeable net importer of meat to a sizeable net exporter, a result reflecting its declining net imports of beef and pig meat and skyrocketing exports of poultry meat. In a sense, although the policies are different, the United States is replicating the earlier experience of the EU, which turned from a big net importer of meat up to the late 1970s to a large and growing net exporter.

The developing countries did not participate as much as the developed countries in this buoyancy of the world meat trade, although there have been some notable exceptions on both the import and the export side. In poultry meat, Brazil and Thailand became significant exporters, while Mexico became a large importer together with the more traditional importers of the Near East region (Saudi Arabia, Kuwait and the United Arab Emirates) and Hong Kong SAR. In pig meat, the largest developing net exporter continued to be China (mainland, including trade in live animals), although this has declined in recent years. China was rivalled in recent years by growing net exports from Brazil. Taiwan Province of China became a major exporter (mostly to Japan) in the decade to the mid-1990s before turning into a net importer after 1997²² following the outbreak of foot-and-mouth disease (Fuller, Fabiosa and Premakumar, 1997).

On the import side, Hong Kong SAR has continued to be the predominant developing importer, while Mexico and Argentina became fast-growing net importers of pig meat in recent years. Overall, the pig meat trade has not been buoyant in the developing countries, an outcome that has partly reflected the lack of consumption in the major meat importers of the Near East/North Africa region. In bovine meat, India joined the more traditional developing exporters of South America as a significant exporter (mostly buffalo meat). The Republic of Korea became the largest developing net importer, surpassing Egypt. Several other developing countries became significant importers of bovine meat in recent years, including some countries of Southeast Asia (the Philippines, Malaysia and Indonesia) as well as Chile. Most recently, Mexico turned from net exporter to net importer of beef (including the meat equivalent of trade in live animals - on this latter point, see USDA, 2001a). Finally, only a few of the traditional importers of the Near East/North Africa region (Saudi Arabia, the United Arab Emirates and Kuwait) continued to be significant net importers of mutton (including live animals), but the imports of other countries collapsed (the Islamic Republic of Iran, Iraq and the Libyan Arab Jamahiriya) so that net imports of the region as a whole declined.

Slow growth in the dairy trade. In contrast to the buoyancy of the meat trade in recent years, trade in dairy products virtually stagnated. There was no growth in net imports of the developing countries. Increases in East Asia and modest ones in Latin America just compensated for declines in the other regions. There was no boost from increased imports on the part of the transition economies as was the case with meat. On the contrary, the former Soviet Union turned from net importer to net exporter. The decline of production of subsidized surpluses and the associated decline in food aid shipments on the side of the major exporters were an integral part of these trade outcomes.

Growth of livestock output achieved with modest increases in the feed use of cereals. We referred earlier to the importance of the livestock sector in creating demand for grains and oilseeds. Feed demand for cereals is often considered as the dynamic element that conditions the growth of the cereal sector. Occasionally, such use of cereals is viewed as a threat to food security, allegedly because it«subtracts» cereal supplies (or the resources going into their production) that would otherwise be available to food-insecure countries and population groups. We have argued elsewhere that this way of viewing things is not entirely appropriate, although, where economies are closed to trade, negative effects on food supplies available to food-insecure population groups can be produced (Alexandratos, 1995).

Estimates put the total feed use of cereals at 657 million tonnes, or 35 percent of world total cereal use. Demand for feed in recent years has been a much less dynamic component of aggregate demand for cereals than commonly believed. The main reasons for these developments in the 1990s were discussed in the preceding section on cereals: the collapse of the livestock sector in the transition economies and high policy prices for cereals in the EU that favoured use of non-cereal feedstuffs (see also the discussion on cassava in Section 3.5 below). An additional factor that slowed down the growth of cereal use as feed has been the shift of meat production away from beef and towards poultry meat and pork, particularly in the industrial countries, the major users of cereals for feed. Pigs and poultry are much more efficient converters of feed to meat than cattle (see Smil, 2000, Chapter 5). World totals have been decisively influenced by developments in the United States where the shift was most pronounced (poultry now accounts for 44 percent of total meat output, up from 30 percent in the mid-1980s, with the share of beef declining from 43 to 33 percent). Given the predominance of the feedlot system in the United States for producing bovine meat with high feedgrain conversion rates (5-7 kg of grain per kg of beef are the numbers usually given in the literature), it is easy to see why the shift to poultry has had such a pronounced impact on the average meat/grain ratios. Finally, productivity increases (reduction of the amount of feed required to produce 1 kg of meat), resulting from animal genetic improvements and better management, also played a role, at least in the major industrial countries.

continued

²⁰ A recent study puts the problem as follows:«In 1964, half of all beef cows in the United States were on lots of fewer than 50 animals. By 1996, nearly 90 percent of direct cattle feeding was occurring on lots of 1 000 head or more, with some 300 lots averaging 16 000-20 000 head and nearly 100 lots in excess of 30 thousand head. These feedlots represent waste management challenges equal to small cities, and most are regulated as point-source pollution sites under the authority of the US Environmental Protection Agency (EPA)» (Commission for Environmental Cooperation-NAFTA, 1999, p. 202).
²¹ According to its production and trade statistics, China's per capita meat consumption, resulting from the food balance sheets, was 45 kg in 1997/99. Independent consumption statistics show per capita consumption of«pork, beef, mutton» for 1997 of 19.04 kg for urban residents and 12.72 kg for the rural ones (UNDP, 2000a). The food balance sheet data we use here show for 1997/99 36.5 kg for the same meats plus another 8.5 kg for poultry meat. For a discussion of discrepancies see Feng Lu (1998); Fuller, Hayes and Smith (2000); and Colby, Zhong and Giordano (1998). It is indicative of the reservations with which the official production (and implied consumption) statistics are received by those concerned with world trade in livestock products, feedgrains and soybeans, that in FAPRI's latest projection study the data for per capita consumption of meat in China have been revised downwards drastically, to 31.5 kg in 1997/99 (FAPRI, 2002, livestock tables).
²² In the latest FAPRI projections, the net, and growing, net importer status of Taiwan Province of China continues to 2011 (FAPRI, 2002).