CCP: ME 98/3  |
| CCP: ME 98/3 |
COMMITTEE ON COMMODITY PROBLEMS |
INTERGOVERNMENTAL GROUP ON MEAT |
Seventeenth Session |
Cape Town, Republic of South Africa |
12-14 November 1998 |
GUIDELINES FOR INTERNATIONAL COOPERATION IN THE LIVESTOCK AND MEAT SECTOR
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II. POLICY DEVELOPMENTS AFFECTING PRODUCTION, CONSUMPTION AND TRADE OF LIVESTOCK AND MEAT
1. The Group reviewed the changes in livestock and meat policies implemented by governments since the last meeting in 1996, with the help of document CCP:ME 98/3 and its supplement. These documents had been prepared drawing from questionnaire responses to the Secretariat and other sources of information. While it was recognized that some progress had been achieved since the last review in reducing the distorting effects of government policies, such as excessive border protection measures and export subsidies. Some concern was expressed about the slow pace of these developments, as well as a rise in the application of export credit guarantees. Various delegates provided clarifications and updated information on the policies of their countries. The Group was briefed about the EC Commission's reform proposal, Agenda 2000.
2. The Group was informed of a dilemma faced by some African countries. On the one hand, exports were constrained by insufficient standards of slaughterhouses expected by importing countries. On the other hand, cheap subsidized imports had a negative impact on the meat sector of these countries which inhibited the allocation of resources needed to improve these abattoirs. An appeal was, therefore, made for assistance to abattoir improvement endeavours, particularly in Africa, which, in turn, would lend support to the strengthening of legislation on animal health and meat safety currently being put into place. In a related matter, the Group's attention was drawn to the need for appropriate animal production standards. However, it was noted that universal norms were difficult to establish as they depended on cultural value systems. In conclusion, the Group recognized that a growing number of issues of an economic, technical and scientific nature were influencing Government policies and would need to be considered in future reviews.
3. The Group supported the recommendations contained in paragraph 35 of the document. In addition, it requested the Secretariat to monitor and report on the results of work undertaken by governments and research institutions regarding the potential impact on meat production, consumption and trade as well as on other economic aspects of outbreaks of transmissible diseases in major exporting countries.
4. The Group endorsed the proposals for changes to the Guidelines for International Cooperation in the Livestock and Meat Sector contained in document CCP:ME 98/4 which had been based on the response to a questionnaire circulated to members.
5. Follow-up action by IGG member countries to the Guidelines for International Cooperation in the Livestock and Meat Sector has been regularly reviewed since their adoption at the Sixth Session in 1976. The present paper is based on replies to the Secretariat's request for information and on other sources of information. It is presented to the Group to assist it in undertaking its regular review of the progress made since 1996 in achieving the objectives of the Guidelines and in making recommendations, if deemed necessary1.
6. Canada has removed all price-based support to cattle and pig producers since 1996 and replaced it with the voluntary Net Income Stabilization Account Programme, which aims at stabilizing producer incomes. In 1997, the Canadian Food Inspection Agency was created to provide federal inspection services related to food safety, economic fraud, trade-related requirements and animal and plant health programmes. Similarly, efforts continued to be made by the United States to avert food-borne illnesses. In particular, implementation of Hazard Analysis and Critical control Point (HACCP) systems became compulsory in January 1997 for the largest firms (with more than 500 employees) and must be applied by all meat plants by January 2000. By then, meat exported to the United States will have to abide by the same or equivalent health and food safety standards. In addition, the Government Agricultural Marketing Service recently stepped up its purchases of frozen beef and pork for distribution under the School Lunch and other Federal Assistance Programmes.
7. New Zealand, under the 1998 Meat Act, removed the statutory powers of its Meat Board and redefined its strategy towards increasing the effectiveness of its risk management system, consumer protection and the competitiveness of the country on international markets. Australia is in the process of abolishing the Australian Meat and Livestock Corporation (AMLC), the Meat Research Corporation and the Meat Industry Council, which should be replaced by a single corporation to deal with the cattle and sheep sectors. In addition, the pig industry received some government financial assistance, largely for investment in processing and market promotion, to help it cope with increased foreign competition following the opening of the domestic market to processed pork imports in 1997. In recent years, Japan has slowly reduced livestock institutional prices which are used as indicators for government market intervention (table 1).
8. Since the 1992 Common Agricultural Policy (CAP) reform, the European Community (EC) has moved from indirect price to direct income support to livestock producers (table 3). The new policy approach was successful in lowering production of bovine meat and, thus, in cutting beef market surpluses and stocks. However, intervention purchases were resumed in 1996, in the wake of the Bovine Spongiform Encephalopathy (BSE) crisis. As a result, beef stocks rose from less than 25,000 tonnes on 1 January 1996 to 630,000 tonnes two years later. The BSE health scare led to the introduction or reinforcement of several policy measures to eradicate the disease, reduce beef market surpluses and restore consumer confidence in beef. In the UK, various schemes were launched, in particular the Over-Thirty Months Slaughter Scheme and the Selective Cull Scheme. Other EC-wide schemes were reinforced, in particular the Early Marketing Scheme and the Calf Processing Aid Scheme. In addition, a ban on the usage of Specific Risk Material in food and feed products was implemented in 1998. In April 1997, the EC also adopted a regulation on labelling to cover fresh, frozen and minced beef. In association with the cattle identification and traceability scheme it provides information on the country of origin, the type of production methods, etc.. While labelling can be already implemented by member countries on a voluntary basis, it is to become compulsory for all beef products, either domestically produced or imported, by January 2000.
9. The costs associated with the BSE raised the EC expenditure on internal support to the livestock sector in 1996-98. Expenditures on beef intervention2, in particular, more than doubled between 1995 and 1996 and reached a record in 1997 (table 5). Smaller expenditures are planned for 1998 as beef consumption in the Community has shown signs of returning to trend. Expenditure on the sheep meat market support also rose in 1997 but are scheduled to decline in 1998. Various forms of assistance to the pig meat market were also instigated, in response to swine fever outbreaks in several member countries in 1997. In that year, the EC Commission also presented the "Agenda 2000", a new proposal for CAP reform which is to consolidate the shift towards decoupled forms of support to the livestock and meat sector (Box).
| EC COMMISSION PROPOSALS FOR CAP REFORM OF RELEVANCE TO THE MEAT SECTOR (AS OF MARCH 1998) FEED GRAINS
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10. In recent years, Switzerland changed its policy along the same lines as the EC, moving from price to direct income support to producers and, in 1998, a new farm law was approved to cut price transfers to livestock producers by 35 percent over five years. Indicative livestock prices are to be abolished as of January 1999.
11. Major progress was made recently by Bulgaria in the restructuring of its poultry industry, while difficulties are being encountered by Romania and Poland in the sale of state-owned farms. Still confronted with declining livestock numbers, most countries in the region have redirected the limited availability of subsidized credit towards herd rebuilding. However, a number of countries continued to provide indirect support to the cattle and pig sector through market intervention, including Hungary, the Czech Republic, Lithuania, Poland, Slovenia and Slovakia. At the same time, most Governments in the sub-region have announced a shift of assistance towards production-decoupled forms of support to harmonize policies with the CAP in anticipation of integration into the EC, which should be associated in the Czech Republic, Hungary, Lithuania, Poland and Slovakia with a reform in their state intervention agencies.
12. In the CIS, the central Governments' support to the livestock sector has been seriously curtailed since 1996 in all member states. Further drastic cuts in the farm budget have been announced in the Russian Federation, which should principally affect the Soft Credit Fund. Nonetheless, the Russian Government approved in July 1998 a new procedure for procurement of basic commodities, including cattle, pig and poultry meat, which calls for state intervention whenever market prices exceed a maximum or fall below a floor level. In addition, some local regional/city governments, have been reportedly assisting the poultry meat sector through the provision of subsidies on feed and direct funding for investment, directed in prevalence to the large commercial farms.
13. In Africa, limited financial resources have constrained Government initiatives in 1996-98. Nonetheless, the trend towards privatization of veterinary services made further progress in Cameroon, Burkina Faso and Mali. Occasionally, Governments have intervened in exceptional circumstances, such as drought or disease occurrence. For instance, drought-affected countries, including Morocco, Niger and Senegal, granted subsidies for feed purchases while the Côte d' Ivoire launched an eradication programme following the occurrence of African Swine Fever in May 1996. Burkina Faso announced the setting-up of a special fund for the development of the sector, to be financed through import duties on livestock products. Ghana initiated a National Livestock Service Project in 1996 and established six pilot breeding stations to cross local breeds with high quality imported stock. The Sudan launched a new livestock development plan for 1996-98. In the Republic of South Africa, the Meat Board lost in January 1998 its control over livestock and meat marketing under the New Agricultural Products Marketing Act, paving the way for the liberalization of domestic trading. Similarly, Zimbabwe proceeded with the liberalization of agricultural marketing initiated in 1996 and is to privatize the government-owned "Cold Storage Company" soon. In 1996, the country also instituted the Livestock Development Trust to ensure orderly marketing of cattle in the communal areas and stepped up its assistance to communal farmers through the "female calf-heifer loan scheme". FMD-free zones without vaccination were recognized by the Office International des Epizooties in Botswana, Namibia and the Republic of South Africa.
14. In Latin America and the Caribbean, the Government of Costa Rica is currently considering the setting-up of a special fund to stabilize producer incomes, to be financed through slaughter fees and a tax on imports. Guatemala and Nicaragua launched in 1998 specific programmes to reactivate livestock production, especially cattle, including a special loan repayment scheme and a technology transfer programme. Mexico continued to provide drought-relief assistance to cattle owners and opened new preferential credit programmes for herd rebuilding in 1997 and 1998. In South America, Governments have given particular attention to disease eradication, in particular foot-and-mouth disease (FMD) and, more recently, to classical swine fever. Programmes to control the former have met considerable success in Argentina, Brazil, Paraguay and Uruguay3. FMD eradication programmes are also in operation in Bolivia, Colombia, Ecuador and Venezuela. Argentina announced the setting up of a beef promotion board to boost domestic demand and exports. The country also recently reduced the value-added tax on cattle to discourage illegal slaughtering. Similarly, since 1996 Brazil has introduced mandatory conditions on packaging to reduce unlicensed cattle slaughter and, at the same time, improve the quality of retailed beef. Ecuador made some changes to its slaughtering houses law aimed at enhancing the sanitary conditions and quality standards of retailed meat. In April 1996, Venezuela removed all price controls on poultry and established a new carcass classification system in 1997.
15. In Asia, a number of Governments continued to intervene to stabilize livestock markets. In China, provincial authorities have sustained local market prices in the last two years by stepping up purchases and storage of meat and by restricting the inflow of animals or meat from other provinces. In mid-1997, Hong Kong SAR culled over 1.5 million birds to fight a strain of poultry influenza virus that was identified as transmissible to humans. Producers were offered a compensation package, production sanitary requirements were made more stringent and farm licensing requirements were tightened to heighten hygienic production standards. It is also investing in the construction of new slaughtering facilities. The authorities in the Chinese Province of Taiwan also concentrated on disease eradication, following a FMD outbreak among pig herds in March 1997, providing partial compensation to producers for the loss in income associated with the culling of over three million animals. Some assistance has also been granted to scale down the national herd, as access to the Japanese market was closed following the outbreak4. However, starting in 1999, a compulsory levy will be imposed on each marketed pig. The Republic of Korea launched a programme in July 1997, with the main objective of raising the competitiveness of the local beef sector. To improve retailed meat quality standards, new meat grading and labelling systems were introduced in 1997. The Government carried out intervention purchases of indigenous cattle (Hanwoo) in 1996 and 1997 to sustain prices. In 1998, however, to relieve the strain on the Livestock Development Fund, a Livestock Emergency Support Programme was instituted which concentrates official cattle purchasing on small and medium size producers. Malaysia has maintained controls over poultry meat retail prices since 1996. The Philippines expanded the scope of its livestock programme, which provides quality breeding animals and support-services to farmers, and increased support for the setting-up of auction markets and slaughter houses and the improvement of meat safety and quality standards. In India, support to the livestock sector has traditionally concentrated on milk production but recently efforts have been oriented towards improving the quality of the meat by strengthening hygienic standards of slaughter houses. Sri Lanka is providing incentives to the private sector to supply services and inputs to livestock producers and enable the Government to withdraw from commercial-oriented activities. In 1996 and 1997, Indonesia raised the number of provinces which benefited from a beef cattle intensification programme. In 1998, a special credit scheme is to be opened to assist poultry producers. The Islamic Republic of Iran, abolished price controls on broiler meat in 1997.
16. While feed prices peaked in US dollars in 1995/96, movements were often different in the domestic markets, often reflecting the effects of currency exchange rates movements, as in the Asian financial crisis. Thus, the Republic of Korea removed value-added taxes on compound feed in July 1997 and temporarily lowered tariffs on feed grains during the second half of 1998. The Chinese Province of Taiwan, the Philippines and Thailand liberalized imports of maize in 1998. Pakistan reduced the import duty on raw material for poultry feed production in 1997. Indonesia opened a special credit package to assist the poultry sector in the purchase of feed and veterinary products. Sri Lanka also granted duty-free concession for the import of breeding material, feed ingredients and technological inputs. The country also implemented the Animal Feed Act to raise the quality of feeds. By contrast, in 1998, China reintroduced controls on domestic grain marketing by the state governments with a view to maintaining grain producer prices high.
17. In other regions, policies on livestock inputs were also changed. Thus, in 1996 Nigeria lifted the import ban on basic inputs and on day-old chicks, although it maintained the ban on feed grain imports introduced in 1986. Guinea exonerated livestock inputs from all import duties in 1997. Under a livestock emergency plan, following erratic rains in 1997 and poor pasture conditions, Senegal launched the free distribution of feed in the main livestock development areas. In 1996 and 1997, Zimbabwe completed the liberalization of agricultural products marketing, resulting in the elimination of the controls by para-statals of imports of basic livestock inputs, including feed. The EC introduced a tax on grain exports during the first half of 1996 to avert increases in domestic prices. By contrast, in 1998, Saudi Arabia reduced the high subsidy granted to poultry producers on imported maize and soybean meal. Poland reinstated tariffs on feed grain imports in 1997, while Turkey raised import duties on coarse grains in 1997.
18. Concerning the linkages with the dairy sector, in early 1998, Indonesia abolished the minimum local content regulation on dairy products and lowered import duties on dairy products. In the Republic of Korea, the Government announced in July 1998 an unlimited purchase and culling of new-born dairy calves and the purchase and slaughter of 30,000 dairy cows in an attempt to reduce dairy surpluses. In the EC, increased productivity and unchanged milk quotas resulted in a contraction in cow numbers and an associated decrease in the supply of calves. In the Russian Federation and the Ukraine, the size of the dairy herd declined as a result of the poor profitability of milk production and reduced Government support. In 1997, the Czech Republic introduced new subsidies on high yielding milking cows to boost the sector efficiency, while at the same time encouraging a reduction of dual-purpose cows to lower excess milk production. By contrast, Morocco promoted the imports of pure breed pregnant heifers and since 1997 prohibited their slaughtering for four years after their entry to encourage a rebuilding of the dairy herds. In 1997, Mexico fully liberalized domestic milk prices, which revived the interest for investment in the sector and boosted imports of dairy cattle.
19. Under the URA, the United States made the commitment to increase its preferential access to beef imports to give a 20,000 tonnes of fresh and frozen beef allocation to Uruguay and Argentina each, once these countries had achieved a FMD-free status. This status was recognized by the United States for Uruguay in July 1995 and for Argentina in July 1997. As for exports, the United States has not used the Export Enhancement Programme (EEP) since 1995, except in May 1998 for frozen poultry and pork. By contrast, the country raised funding to the GSM-102 credit guarantee programme to help importing countries, in particular the Republic of Korea, maintain purchases of livestock and meat from the United States (table 2). A relatively new programme, the Supplier Credit Guarantee Programme, was set up in 1997, that gave a 50 percent payment guarantee to exporters of meat to several countries in Southeast Asia and central America and the Caribbean. Canada opened up of its beef market to Argentina and Uruguay, without, however, raising the preferential access quota which remained at 76.4 thousand tonnes (product weight equivalent), and boosted funding to the export credit guarantee programmes to sustain its beef exports.
20. Under its URA schedule, Japan progressively lowered its tariff rates on beef imports, which passed from 50 percent in April 1995 to 42.4 percent in April 1998. The minimum import prices (gate prices) for pig meat products were also cut by 24 percent. However, following a surge in imports, special safeguard provisions were triggered and the country reverted to higher gate pork prices from July 1996 to July 1997, and to a 50 percent tariff on frozen beef imports from August 1996 to March 1997. Australia increased the availability of credit insurance to livestock exporters to the Republic of Korea in 1997-98. As for imports, the country relaxed the quarantine policies which had largely insulated its pig market and opened it up to processed pork originating from Canada.
21. Within its URA commitments, EC expenditures on livestock and meat refunds rose by four percent in 1997 to ECU 1855 million (US$ 2.10 billion), reflecting increased assistance to beef exporters to help them overcome the negative impact of the BSE on foreign markets. Budgeted refunds in 1998 are set to be reduced by 36 percent to ECU 1190 million (US$ 1.30 billion) (table 3). On a per tonne basis, refunds have followed a general declining trend, with sharp reductions effected for beef to all destinations. Refunds on poultry meat were raised significantly as of November 1997, especially to destinations in the Near East and in the CIS. Refunds on fresh and frozen pork exports, after being eliminated in May 1997, were reintroduced one year later at twice their previous level (tables 6 to 8). Since the implementation of the URA, imports are subject to high specific tariffs and ad-valorem duties and most imports enter the EC under preferential access quotas. Since 1996, the amount allowed entry under the low tariff was increased reflecting both the raising of preferential access quotas under Association Agreements with central and eastern European countries and the implementation of the URA schedules.
22. In central and eastern Europe, Bulgaria allowed duty-free poultry imports at the end of 1997 to overcome domestic shortage problems. Similarly, Romania removed all import tariffs on pig meat imports for two months to reduce the upward pressure on domestic prices at the beginning of 1998. By contrast, Poland reportedly announced the introduction of a threshold system on livestock and meat imports under which additional duties would be levied whenever domestic prices fall below a certain level or imports exceed a preset volume. Likewise, the Czech Republic and Slovakia both introduced minimum import prices in 1998. At the same time, the Czech Republic established some maximum export volumes for selected livestock products. Hungary renegotiated at the WTO its original obligations on export subsidies and, in July 1997, obtained an extension to 2002 of the period over which it is to reduce subsidies to the originally scheduled levels. In the sub-region, further progress was made in establishing the Central European Free Trade Area (CEFTA) between the Czech Republic, Hungary, Poland, Romania, Slovakia and Slovenia in 1997 and 1998 which resulted in the setting up of preferential tariffs for trade among member countries.
23. Among the CIS countries, the Russian Federation established minimum specific duties on poultry meat imports in 1996 to prevent under-invoicing, a system which was extended to the other major meat groups in early 1998. In addition, in August 1998 the Government announced the introduction of compensatory levies on supplies subject to export subsidies from the originating countries. Like the Russian Federation, Ukraine established minimum import duties on meat in 1996. In 1997, the country ruled for preferential import quotas not to exceed 10 percent of the previous year's domestic production. Kazakstan lifted in early 1997 the special preferences granted to several firms for imports of meat. In 1996 and 1997 respectively, Ukraine and the Russian Federation introduced labelling requirements on imported meat products.
24. In Africa, Nigeria removed the ban on live, chilled or frozen poultry meat imports but imposed a 150 import duty. In reaction to a fall in the sector's export earnings, Niger removed all taxes on live animal exports. Egypt added in November 1997 new labelling requirements on meat imports, calling for detailed information on the country of origin, slaughtering, etc. In July 1997, it replaced a 10-year old ban on poultry imports by a minimum import price of US$ 1500 per tonne, on top of which a 50 percent import duty will be applied. In 1997, Zimbabwe ended the parastatal export monopoly on meat exports. In 1997/98, the Governments of Zimbabwe and South Africa renegotiated the bilateral trade agreement which envisages the setting up, by the latter, of preferential import quotas on specific meat and products.
25. In Latin America and the Caribbean, there was little change in trade policies in livestock and meat, except for the extension of regional trade agreements. In particular, on 1 October 1996, Chile became an associate member of Mercosur, consisting of Argentina, Brazil, Uruguay and Paraguay, while a free trade agreement between Bolivia and Mercosur became effective on 1 April 1997. Negotiations for merging the South American countries belonging to the Andean Pact (Bolivia, Colombia, Ecuador, Peru and Venezuela) with Mercosur are also in progress. Mercosur external tariffs were raised by three percent in November 1997 in an attempt to shield member countries from the effects of the Asian crisis. A free trade agreement between Nicaragua and Mexico also became effective in July 1998. In 1997, Chile authorized the import of cooked poultry meat. Late in 1997, imports of breeding cattle into Peru were exempted from duties and value-added taxes. As for export policies, both Argentina and Brazil have increased funding to export marketing programmes, mainly to promote their beef in the EC. Several central American countries opened tariff rate quotas on meat as part of their WTO obligations, including Costa Rica for poultry and Guatemala for beef and poultry. In addition, Nicaragua approved in mid-1997 a tariff reduction schedule for poultry meat imports.
26. In Asia, China implemented a pilot project from June 1997 to March 1998, under which selected firms were authorized to import meat for the retail market from Australia, Canada and the United States. In October 1997, import tariffs on beef, pig and poultry meat were lowered, subject to a minimum entry value. In January 1998, the Government announced a tightening of controls over the enforcement of the Chinese Plant and Animal Quarantine Regulations on meat imports and it introduced an export quota system on poultry exports through which it limited the flow of trade with Japan in an attempt to maintain the level of export prices. In February 1998, the Chinese Province of Taiwan opened preferential import quotas for selected pork, beef and chicken meat products from the United States. In line with its URA schedule, in July 1997, the Republic of Korea ended the preferential access quota system for frozen pork and poultry and made all imports subject to tariffs. In addition, the Government provided special subsidies to farmers selling pigs for processing and export to Japan. In April 1998, the Philippines made all beef imports subject to a 20 percent tariff, the same rate previously applied under the low tariff quota, and inrtroduced a new system for the allocation of the pig meat preferential access quota to improve its fulfillment. Pakistan liberalized exports of livestock and processed meat in June 1998, subject to minimum export prices. Indonesia lowered import duties on live animals imports effective in September 1997. Turkey raised in 1997 import duties on cattle and sheep as well as beef and sheep meat and lowered the subsidies granted to poultry meat exporters. The country also entered into a customs union with the EC and granted some preferential access on beef to EC member countries.
27. At the multilateral level, there have been a number of developments with implications for trade. Animal health and meat hygiene equivalency agreements were concluded between the EC and New Zealand, and between the EC and the Czech Republic. The EC also negotiated an agreement with the United States, which was, however, not extended to poultry meat. Following a challenge by the United States and Canada of the EC ban on imports of beef from systems using growth promotants, the WTO panel concluded in August 1997 that the ban was inconsistent with the WTO Agreement on sanitary and phytosanitary measures. In January 1998, the WTO Appellate Body found the scientific evidence, presented by the EC to justify the ban, insufficient.
28. According to the information collected by FAO, external assistance to livestock development in the developing countries rose strongly in 1995 and 1996 when it reached US$ 320 million. Multilateral assistance increased from US$ 53 million in 1994 to US$ 184 million in 1995 and US$ 270 million in 1996. As a result the livestock sector's share in multilateral assistance to agriculture (under the broad definition6) reached three percent, the highest in the 1990s. The increase was mainly on account of much larger funding committed by the IBRD/IDA in projects pertaining to the area of "livestock services". Contributions through the other multilateral agencies tended to stagnate or decline. Bilaterally committed funds in 1995 and 1996 also dropped compared with the previous years (table 9).
29. Based on the partner trade data from 66 exporting countries and the EC and using the value of the transactions by destination, it was possible to derive meat and livestock flows by major country groupings. Despite a 30 percent increase in the value of global exports in livestock and meat from 1993 to 1996, the pattern of trade among the developed and the developing countries remained stable (table 10). The share of the developing countries in total export earnings over the period fluctuated within a range of 29 percent to 31 percent. Trade between the developed countries dominated, representing about half the value of global trade, while trade between developing countries accounted for about 11 percent of the total each year between 1993 and 1996. However, this percentage probably underestimates the trade volume between developing countries because of unrecorded flows, particularly in live animals crossing borders on the hoof, which are important in certain regions.
30. Switzerland, which already has very strict animal protection standards, adapted its legislation in July 1997 in line with changes in the EC regulations on animal transportation and veal crates. In the Czech Republic, livestock producers have been subject to a pollution fee based on ammonia emission. In early 1998, the criteria for estimation of the fee was differentiated to promote more environmental friendly animal housing. The Cote d'Ivoire introduced new rules on access to pasture by animals and prohibited the trekking on foot of commercial herds in 1996. In 1998 it also banned the installation of livestock farms in peri-urban areas. In 1998, Turkey implemented a new law on improvement of public pastures and meadows. The Chinese Province of Taiwan implemented a Clean Water Act, which imposes more stringent standards on water discharged by animal farms. Environmental legislation by the EC includes the Nitrate Directive which put some limits on the water pollution caused by agriculture and the Integrated Pollution Prevention and Control, which should be enacted in 1999.
31. The general trend towards reduced market intervention in the livestock and meat markets persisted since the last review in 1996. Very few countries maintained controls over retail prices. Although a number of Governments continued to stabilize producer prices through market intervention, especially in Europe and in the Far East, there was a tendency to let support prices fall in real terms and to compensate farmers through direct income payments.
32. While most developing countries sought to maintain high self-sufficiency in meat by maintaining border protection, several of them adopted measures towards enhancing the husbandry efficiency, through improvements in management practices and infrastructure to enable producers to withstand import competition. As a result, a growing number of Governments widened the scope of their policies to encompass not only livestock production but also livestock and meat marketing and processing.
33. Considerable progress was made by several South American and African countries in eradicating FMD, a development which should contribute, in the longer term, to a more homogeneous beef market7. At the same time, however, the repeated occurrence of animal diseases and meat-related health scares was a dominant feature of the world meat economy in 1996-98, which highlighted one potentially negative aspect of the intensification of livestock production systems. Responses at the international level took mainly the form of import bans and of a tightening of sanitary controls at the frontier. Several countries also introduced new information requirements, for instance, through labelling.
34. The period under review was also characterized by wide fluctuations in international grain prices. The impact of high feed costs in 1996 was particularly negative in those countries which had relied extensively on imported feedstuffs to develop their livestock industry. Many Governments made some attempts to shield livestock producers through changes in import tariff on feedstuffs or through preferential credits, mainly for the benefit of large-scale livestock farms.
35. Since mid-1997, currency devaluation and restructuring programmes in some developing countries, especially in Asia but also in Eastern Europe and in the CIS, have disrupted the normal pattern of livestock production and trade, especially as the countries affected included some of the fastest growing meat import markets. In general, the limited financial capacity combined with policy commitments under Structural Adjustment Programmes and the URA restrained the range of policy responses available to both the countries affected and the major exporters to those markets. Nonetheless, the major developed exporting countries have reacted by stepping up the availability of credit guarantees or, when possible, export subsidies to maintain their share in those markets.
36. Overall, the implementation of the URA had beneficial effects on livestock and meat trade in 1996-98. Regarding exports, there was a noticeable progress in reducing the volume of subsidized exports, especially by the EC in 1996 and 1997. However, depressed global import demand in 1998 added pressure on Governments to raise their assistance to exports, including through a "roll-over" of export subsidy allowances unused in previous years, which tends to accentuate the downward pressure on international prices. As a result of the URA, several countries also opened or expanded preferential access quotas or reduced import tariffs on livestock and meat. However, the latter remained, in many instances, very high, and some countries had recourse to special safeguard provisions. There was also a tendency to add technical regulations, often for sanitary reasons, by means of labelling.
37. At the multilateral level, a number of initiatives were taken to promote trade, either through the strengthening or expansion of free-trade or customs areas or the conclusion of bilateral veterinary and meat hygiene agreements. In addition, several countries already changed or are considering reforms of their livestock sectors in preparation of the future round of multilateral negotiations.
38. Thus, while there have been numerous instances of progress in 1996-98, certain areas of concern remain, in particular:
- the world-wide tendency to strengthen import sanitary requirements and other technical barriers in the wake of recurring animal diseases or health scares might have negative implications for those developing country exporters which do not have the means to sustain the additional costs to conform with them;
- the amount of meat exported at subsidized prices, though diminishing since the implementation of the URA, still constitutes a sizeable proportion of world trade. The concentration of the subsidized exports to certain destinations sometimes had destabilizing effects on the exports of other suppliers and on the livestock sectors of the importing countries, in some cases inducing the latter to adopt countervailing measures;
- against the background of depressed import demand, several developed countries have been able to defend their shares of international markets through the granting of credit guarantees, mainly to the detriment of developing country exporters.
39. In the light of the above, the Group might wish to consider the following recommendations:
a) In view of the growing use of sanitary and phytosanitary measures in international meat trade, support further research on the impact of these measures on trade.
b) That countries in adjusting their livestock policies give special attention to minimizing the negative impact on world markets.
c) That developed countries maintain the flow of international assistance to the developing countries to support their efforts to promote their livestock and meat sectors and assist them in meeting more stringent sanitary and phytosanitary regulations.
d) In the light of the increasing amount of livestock and meat traded under regional trading arrangements, that the Secretariat examine the consequences of the latter for world meat trade.
1 The Guidelines, as revised in 1996, and tables are contained in document CCP: ME 98/3 Suppl.1.
2 Inclusive of price market support and producer premiums. Excludes export refunds and support from national governments.
3 Several states in Brazil (Santa Caterina and Rio Grande do Sul in 1998) and Colombia (Uraba, 1997) obtained the status as "FMD-free, with vaccination". Both Argentina and Paraguay have been declared "FMD-free, with vaccination" in 1997. Uruguay was declared "FMD-free, without vaccination" in 1995.
4 New FMD cases were reported in December 1997, January 1998 and April 1998.
5 For a more complete description of grain policy changes, refer to the publication: Cereal Policy Review, 1995-1997 and 1997-1998 (forthcoming), FAO, Commodities and Trade Division.
6 Including contributions to forestry, input manufacturing, agro-industries, rural infrastructure, rural development, regional development and river development.
7 The international beef market has been characterized, since the early 1930s, by a segmentation into markets that on the one hand implemented a zero-risk import policy and accepted beef only from FMD-free countries (Pacific Market) and , on the other hand those which followed a less restrictive import policy (Atlantic Market).