Livestock to 2020 The Next Food Revolution

Transcription

1 Food, Agriculture, and the Environment Discussion Paper 28 Livestock to 2020 The Next Food Revolution Chris to pher Del gado Mark Rosegrant Hen ning Ste in feld Simeon Ehui Claude Cour bois IN TERNATIONAL FOOD POL ICY RESEARCH INSTI TUTE FOOD AND AG RI CUL TURE OR GANI ZA TION OF THE UNITED NA TIONS IN TER NA TIONAL LIVE STOCK RE SEARCH IN STI TUTE

2 A 2020 Vision for Food, Ag ri cul ture, and the En vi ron ment is an initiative of the International Food Policy Research Institute (IFPRI) to develop a shared vision and a consensus for ac tion on how to meet future world food needs while reducing pov - erty and protecting the en vi ron ment. It grew out of a concern that the in ter na tional community is set ting priorities for ad dress ing these problems based on in com plete information. Through the 2020 Vision ini tia tive, IFPRI is bring ing to gether di ver - gent schools of thought on these issues, gen er at ing research, and identifying rec om - mendations. This discussion paper se ries pres ents technical re search re sults that encompass a wide range of sub jects drawn from research on policy-relevant aspects of ag ri cul - ture, poverty, nu tri tion, and the environment. The discussion pa pers contain ma te rial that IFPRI be lieves is of key interest to those involved in ad dress ing emerg ing food and development prob lems. The views ex pressed in the papers are those of the authors, and not nec es sar ily endorsed by IFPRI. These discussion pa pers un dergo review but typically do not pres ent final re search re sults and should be considered as works in prog ress.

3 Food, Ag ri cul ture, and the En vi ron ment Dis cus sion Pa per 28 Live stock to 2020 The Next Food Revolution Chris to pher Del gado Mark Rosegrant Hen ning Ste in feld Simeon Ehui Claude Cour bois In ter na tional Food Pol icy Re search In sti tute 2033 K Street, N.W., Wash ing ton, D.C U.S.A. Food and Agriculture Organization of the United Nations Viale delle Terme di Caracalla, Rome, Italy International Livestock Research Institute P.O. Box 30709, Nairobi, Kenya May 1999

4 Copyright 1999 In ter na tio nal Food Po licy Re search Ins ti tu te All rights re ser ved. Sec tions of this re port may be re pro du ced without the ex press per mis sion of but with ackno wledg ment to the In ter na tio nal Food Po licy Re search Ins ti tu te. ISBN

5 Con tents Foreword vii Acknowledgments viii 1. The Livestock Revolution 1 2. Recent Transformation of Livestock Food Demand 5 3. Accompanying Transformation of Livestock Sup ply Projections of Future Demand and Sup ply to Implications of the Livestock Revolution for World Trade and Food Prices Nu tri tion, Food Security, and Poverty Alleviation Environmental Sus tain abil ity Public Health Technology Needs and Prospects Tak ing Stock and Moving For ward 59 Appendix: Regional Classification of Countries Used in this Paper 66 References 67 iii

6 Ta bles 1. Increase in food consumption of meat, milk, fish, and major cereals, Per capita meat and milk consumption by region, 1983 and Percent of calories and protein from animal products, 1983 and Past population, urban population, and GNP per capita growth rates 7 5. Annual per capita consumption of se lected livestock foor products and per cent of total calo ries consumed from each prod uct, 1973 and Consumption of meat and milk by region, Trends in the food consumption of various livestock products, Demand elasticities for major food products of animal ori gin from a cross-country, sys tems estimation, , developing regions Production trends of various livestock products, Trends in the production of meat and milk, by region, Shares of total world production of meat and milk, by region, 1983 and Distribution of the world s livestock animals, 1983 and Growth rates of livestock out put and number of ani mals slaugh tered or milked, Productivity by region and animal type, , and productivity growth rate, Trends in the use of ce real as feed, Pro jected trends in the food consumption of vari ous livestock products, Pro jected trends in meat and milk consumption, Pro jected trends in meat and milk production, Pro jected trends in production of vari ous livestock products, Pro jected trends in use of cereals as feed, Changes in IMPACT s baseline assumptions: a severe Asian cri sis and high In dian meat consumption Difference be tween baseline projections and projections of aggregate consumption in 2020 due to changes in assumptions about the Asian cri sis and Indian consumption Difference be tween baseline projections and projections of aggregate consumption in 2020 due to changes in assumptions about feed conversion Net exports of various livestock products in 1993 and 2020, baseline scenario 32 iv

7 25. Difference be tween baseline projections of net exports in 2020 and projections with changes in assumptions about the Asian cri sis and Indian consumption Difference be tween baseline projections of net exports in 2020 and projections with changes in assumptions about feed conversion efficiency Past trends in real prices of selected crop, feed, and livestock products Real prices of selected crop and livestock products as pro jected by the IMPACT model The place of livestock in the in come of the rich and poor 40 Il lus tra tions 1. Per capita consumption of meat and milk, developing and developed countries, 1983 and The relationship be tween meat consumption and income 6 3. Trends in the prices of major ce real and meat commodities, to v

8 Fore word The combined per capita consumption of meat, eggs, and milk in developing countries grew by about 50 percent from the early 1970s to the early 1990s. As incomes rise and cities swell, people in the developing world are diversifying their diets to include a variety of meats, eggs, and dairy products. This trend toward diversified eating habits is likely to continue for some time to come and it has led to considerable controversy about the risks and opportunities involved. Some observers fear that greatly increased demand for feedgrains will raise the price of cereals to the poor. Others are concerned that higher concentration of livestock production near cities adds to pollution. Still others worry about the public health effects of increased consumptio n of animal fats and the rapidly increasing incidence of diseases passing from animals to humans. On the other hand, many analysts point to the nutritional benefits of increased consumption of ani - mal products for populations that are still largely deficient in intake of protein and micron utri - ents. Furthermore, livestock traditionally have been an important source of income for the rural poor in developing countries. Finally, increased demand for livestock products may provide an engine for sustainable intensification of smallholder food and feed production systems. A team of researchers from the International Food Policy Research Institute (IFPRI), the Food and Agricultural Organization of the United Nations (FAO), and the International Livestock Research Institute (ILRI) collaborated to produce this comprehensive and even-handed attempt at defining the nature, extent, scope, and implications of what they term the Livestock Revolution in developing countries. Looking forward to 2020, they argue convincingly that the structural shifts in world agriculture being brought about by shifts in developing-country demand for foods of animal origin will continue and that increasingly global markets have the ability to supply both cereal and animal products in desired quantities without undue price rises. They emphasize,how - ever, that policy decisions taken for the livestock sector of developing countries will determine whether the Livestock Revolution helps or harms the world s poor and malnourished. The report emphasizes the importance of continued investment in both research on and development of ani - mal and feedgrain production and processing, and the need for policy action to help small, po or livestock producers become better integrated with commercial livestock marketing and processing. It details a host of requirements in the area of technology development for production and processing of livestock products, potential benefits from new technologies, and critical policy issues for environmental conservation and protection of public health. Per Pinstrup- Andersen, Di rec tor Gen eral In ter na tional Food Pol icy Re search In sti tute Ab dou laye Sa wa dogo, As sis tant Director- General, Ag ri cul ture De part ment Food and Ag ri cul tural Or gani za tion of the United Na tions Hank Fitz hugh, Di rec tor Gen eral International Livestock Research Institute vii

9 Ac knowl edg ments The ambitious and multidisciplinary topic of this paper hints at the extent to which the authors had to rely on help from col leagues with a wide variety of disciplinary and geo graphic exper - tise. They are too numerous to mention individually, but several colleagues stand out because of the degree of their support for this collaborative project and the depth of their insights on previous drafts. Per Pinstrup-Andersen and Rajul Pandya-Lorch, director gen eral and head of the 2020 Vision initiative, respectively, of the International Food Policy Research Institute (IFPRI), provided an institutional framework for the project, con stant encouragement, and detailed and insightful comments through out the process. Abdoulaye Sawadogo, assistant director-general of the Food and Agriculture Organization of the United Nations (FAO), quickly recognized the value of this collaboration, discussed issues with the team, and facili - tated the conditions for effective FAO participation. Hank Fitzhugh, director gen eral of t he International Livestock Research Institute (ILRI), consistently sought to inte grate ILRI s broad strengths with respect to livestock issues in devel op ing countries with our activi tiesa nd facilitated ILRI s effective participation. A number of formal and informal external reviewers of earlier drafts of the report greatly improved the final product. Particular mention should be made of the very detailed and help ful comments of Cees de Haan of the World Bank and Maggie Gill of Natural Resources Interna - tional (U.K.) in this regard. While the technical livestock production aspects of this report, authored as it is by economists, probably still falls short of their high standards, there is no doubt that they substantially improved it over what it would have been otherwise. Catherine Geissler of King s College, London, helped improve the nutritional insights of the report; the remaining deficiencies are entirely the responsibility of the authors. The latter would also like to express their thanks for very helpful written com ments to Mercy Agcaoili-Sombilla of the International Rice Research Institute (IRRI), Jan Slingenbergh of FAO, Steve Staal of ILRI, Claudia Ringler of IFPRI, Bob Have ner of the World Food Prize Office, and Tjaart Schillhorn Van Veen of the World Bank. Finally, they would like to commend Uday Mohan, an IFPRI editor, on his cheerful and suc cess ful struggle under time pressure to turn our collectively authored, care fully hedged prose into a read able final report. viii

10 1. The Live stock Revo lu tion A revo lu tion is tak ing place in global agri cul ture that has pro found impli ca tions for our health, live - li hoods, and envi ron ment. Popu la tion growth, urbani za tion, and income growth in devel op ing coun tries are fuel ing a mas sive global increase in demand for food of ani mal ori gin. The resulting demand comes from changes in the diets of bil lions of peo ple and could pro vide income growth oppor - tu ni ties for many rural poor. It is not inap pro pri ate to use the term Live stock Revo lu tion to describe the course of these events in world agri cul ture over the next 20 years. Like the well- known Green Revo lu tion, the label is a sim ple and con ven ient expres sion that sum ma rizes a com plex series of inter re lated processes and out comes in pro duc tion, con sump tion, and eco nomic growth. As in the case of cere als, the stakes for the poor in devel op ing coun tries are enor mous. And not unlike the Green Revo lu tion, the revo lu tion ary aspect comes from the par tici pa tion of devel op ing coun tries on a large scale in trans for ma tions that had pre vi ously occurred mostly in the tem per ate zones of developed coun tries. But the two revo lu tions dif fer in one fun da men tal respect: the Green Revo lu tion was supply- driven, whereas the Live stock Revo lu - tion is driven by demand. The Livestock Revolution will stretch the capac - ity of existing production and distribution sys tems and exacerbate environmental and public health problems. Governments and industry must pre pare for this continuing transformation with long-run policies and investments that will satisfy consumer demand, improve nutrition, direct income growth opportunities to those who need them most, and alle - viate environmental and public health stress. The 23 percent of the world s population liv ing in devel oped countries presently consume three to four times the meat and fish and five to six times the milk per capita as those in developing countries 1 (Delgado, Courbois, and Rosegrant 1998). But mas - sive annual increases in the aggregate consumption of animal products are occurring in developing coun - tries. From the early 1970s to the mid 1990s, con - sumption of meat in developing countries grew by 70 million metric tons, whereas consumption in developed countries grew by only 26 million met ric tons (Table 1). 2 In value and caloric terms, meat con - sumption in developing countries increased by more than three times the increases in developed countries. Milk consumption in the developing world increased by more than twice as much as milk consumption in the developed world in terms of quantity, money value, and calories. Even more revealing is the comparison be - tween developing-country increases in meat, milk, and fish consumption dur ing the period with the in crease in ce real consumption (Table 1). The period spans the well known Green Revolution, when seed-fertilizer in no va tions in ce real produc - tion dramatically in creased wheat, rice, and maize output in developing countries, mak ing more food available and increasing farm incomes. But dur ing the same period there was also a dramatic, if often overlooked, rise in consumption of animal-origin food products in developing coun tries. On a quan - tity basis, the additional meat, milk, and fish con - sumed be tween 1971 and 1995 in developing coun - tries was two-thirds as important as the increase in wheat, rice, and maize consumed (Table 1). The Green Revolution provided many more calo ries 1 Fish con sump tion and pro duc tion are also un der go ing revo lu tion ary changes, but this is o ut side the scope of the cur rent pa per. In - ter ested read ers are re ferred to Wil liams (1996) and Westlund (1995). 2 All tons are met ric tons in this re port. 1

11 2 Table 1 Increase in food consumption of meat, milk, fish, and major cereals, Con sump tion in crease Value of con sump tion increase a con sump tion in crease Ca loric value of Com mod ity De vel oped De vel op ing De vel oped De vel op ing De vel oped De vel op ing (mil lion met ric tons) (bil lion 1990 US$) (tril lion ki lo calo ries) Meat b Milk Fish c Ma jor ce re als d ,064 Sources: The changes in quan ti ties and in calo ries are from FAO Money val ues are com puted for the dis ag gre gated com modi ties (shown in the notes below) us ing the av er age price. The com mod ity prices used for beef, sheep an d goat meat, pork, poul try, wheat, rice, and maize are de tailed in Ta ble 28. Dis ag gre gated fish prices are av er age im port un it val ues cal cu lated from FAO (1998) im port data. Developed- country im port unit val ues are used for developed- country con sump tion and dev eloping- country im port unit val ues are used for developing- country con sump tion. Notes: Cal cu la tions rep re sent ag gre gate changes be tween three- year av er ages cen tered on 1971 a nd a Cal cu lated us ing 1990 world prices ex pressed in con stant, av er age US$. b Beef, sheep and goat meat, pork, and poul try. c Ma rine and fresh wa ter fin fish, cepha lo pods, crus ta ceans, mol luscs, and other ma rine fish. d Wheat, rice, and maize used di rectly as hu man food. than the co in cid ing increase in meat consumption, but the additional meat consumed was worth almost three times the increase in cereal consumption at constant world prices. Furthermore, if the consumption patterns in developed countries are an indication of where developing countries are going, future growth in cereal consumption as food is likely to be much smaller than that in meat. Dur ing addi - tional consumption of meat, milk, and fish in the developed countries was much larger than that of cereal in terms of weight and value. In developing countries many people will soon be reaching satia - tion in their consumption of cereals, while meat and milk consumption is likely to continue to grow even more robustly into the next cen tury. Not sur pris ingly, major trans for ma tions of the mag ni tude of the Live stock Revo lu tion are not with out prob lems. Although domes ti cated ani - mals have been a source of human food, cloth ing, tools, trans por ta tion, and farm power since pre - his toric times, the cur rent rapid changes in demand for ani mal foods in devel op ing coun tries are put ting unprece dented stress on the resources used in live stock pro duc tion. The com bi na tion of higher demand, more peo ple, and less space is rap idly lead ing to a global trans for ma tion of the live stock sec tor, from one that mobi lizes sur plus and waste resources (back yard slops, remote pas - tures, and grasses indi gesti ble by humans) to one that actively seeks new resources for the pro duc - tion of ani mal food prod ucts (Ste in feld, de Haan, and Black burn 1997). The recent rapid expan sion of live stock food pro duc tion in devel op ing coun tries resulted pri - mar ily from increased num bers of ani mals rather than higher car cass weight per ani mal. In devel op - ing coun tries this has con trib uted to large con cen - tra tions of ani mals in urban envi ron ments where the regu la tory frame work gov ern ing live stock pro duc tion is weak (for exam ple, Addis Ababa, Bei jing, Lima, and Mum bai). Larger con cen tra - tions of ani mals have also led to deg ra da tion of rural graz ing areas and the clear ing of for est. Grow ing con cen tra tions of ani mals and peo ple in the major cit ies of devel op ing coun tries also lead to rapid increases in the inci dence of zoono tic dis - eases, such as sal mo nella, E-coli, and avian flu, which can only be dealt with through enforce ment of zon ing and health regu la tions. Other public health issues raised by the Live - stock Revolution are also of major importance. The intensification of livestock production is lead ing in many parts of the world to a build-up of pes ti cides and antibiotics in the food chain. Furthermore, as the scale of output increases, es pe cially in the trop - ics, food safety risks from microbial con tami na tion are becoming more prevalent.

12 3 Overconsumption of animal food products raises another concern. A growing consciousness of the dangers of large amounts of saturated animal fats in diets exists in most developed countries. Some ex - perts have concluded that policies should prevent a similar over-consumption in developing countries by discouraging public investment in livestock produc - tion (Brown and Kane 1994; Geissler forthcoming; Goodland 1997; Pimentel 1997). Increasing livestock consumption may also af - fect cereal prices. Because ruminant livestock such as cattle, sheep, and goats consume grain, and monogastric livestock such as pigs and poultry de - pend on grain in the industrial production sys tems of developed coun tries, some ana lysts argue that the high demand for livestock products in developed coun tries and rapidly increasing demand and pro - duction in developing countries deplete the grain available for di rect consumption by people. Livestock production and consumption have proponents as well. Livestock production is an especially important source of in come for the rural poor in developing countries. It enables poor and landless farmers to earn income using public, common-property re sources such as open range - land. Livestock consume many crop by-products that would otherwise become waste, they often can be raised on land that has no other sustainable agri - cul tural use, and they can employ labor dur ing peri - ods of slack in other agricultural activities. Poor women in particular often rely on the cash income from a dairy cow or a few chickens kept in the household. As livestock consumption increases there is considerable interest in how the poor can retain their market share of livestock production. Live stock prod ucts are an ap peal ing and con - ven ient nu tri ent source. Pro tein and mi cro nu tri ent de fi cien cies re main wide spread in de vel op ing coun tries be cause peo ple sub sist on diets that are al most en tirely made up of starchy sta ples. The addition of milk and meat pro vides pro tein, cal - cium, vi ta mins, and other nu tri ents that go lacking in diets that are ex clu sively made up of sta ples such as ce re als. Besides providing food, the driv ing force be - hind in creased livestock production, livestock have other valuable uses. Livestock remain the most im - portant if not the sole form of nonhuman power available to poor farm ers in much of the developing world. The poor, in particular, use fertilizer from livestock operations, especially when rising petro - leum prices make chemical fertilizers unaffordable. Livestock also store value and provide in sur ance for people who have no other fi nan cial markets available to them. Skins, wool, oil, and other re - sources are used as in puts in other industries. This re port will ex am ine in de tail the in terrelationships over time be tween sup ply and de - mand for live stock and feed grain, using IFPRI s IM PACT model. 3 It will in ves ti gate the plau si bil - ity of the pro jected de mand in creases for live stock prod ucts and the im pli ca tions of these in creases for world mar kets in feed, milk, and meat. The paper will argue that world grain mar kets cur rently have suf fi cient ca pac ity to han dle the ad di tional de mand for feed com ing from in creas ing live stock pro duc tion, even under a va ri ety of dif fer ent sce - nar ios for tech no logi cal de vel op ment and global eco nomic per form ance. The paper will argue further that the struc tural shift in developing-country diets toward animal proteins is a given that must be dealt with. It will re - view the evidence on the impact of livestock prod - ucts on nutrition in developing countries and on the food demand and income growth of the poor. The industrialization of livestock production in devel - oping countries can harm the welfare of the poor if other policies ar ti fi cially re duce the cost of indus - 3 The model was de vel oped by Rosegrant and col leagues (Rosegrant, Agcaoili- Sombilla, and Perez 1 995; Rosegrant et al. 1997; Rosegrant, Leach, and Ger pa cio 1998; and Rosegrant and Ringler 1998). It is global in na ture and bal ances supply and demand within ag ri cul ture with market- clearing prices for ma jor ag ri cul tural com modi ties, in clu d ing live stock prod ucts and feed. Start ing with ex oge nously speci fied trends in na tional in comes for 37 country groups, the model traces food de mand, feed de mand, and sup - ply levels for 18 com modi ties, it er at ing to market- clearing prices for ma jor com modi ties an nu ally through The re sults are based on a large number of pa rame ter as sump tions taken from the lit era ture, in clud ing assu mp tions about the open ness to trade. The model is use ful for il lus trat ing how demand- led shocks in Asia, for ex am ple, work them selves out in mar kets around the world. It also il lus trates that in sys tems of in ter linked global mar kets for live stock products and feed, the net ef fect of price- mediated pol icy in ter ven tions can be quite dif fer ent from what was en vis aged.

13 4 trial turn-key operations and otherwise frustrate the participation of small farmers. The paper will sug - gest that understanding the opportunities and dan - gers of the Livestock Revolution is critical to de - signing policies that promote the incorporation of the rural poor into economically and environmen - tally sustainable growth patterns. The rapid increase in demand for livestock products in developing countries presents crucially important policy dilemmas that must be resolved for the well-being of both rural and urban people in developing countries. These dilemmas in volve complex environmental and public health issues in the context of weak regulatory environments. Taken together, the many op por tu ni ties and dan gers of the Livestock Revolution suggest that it would be foolish for developing countries to adopt a laissez faire policy for livestock development. Many spe - cific recommendations for concrete action are given in chap ters ahead. The overall focus of the paper, however, is on the four broad pillars on which to base a desirable livestock development strategy for developing countries. These are (1) removing pol - icy distortions that artificially magnify economies of scale in livestock pro duc tion; (2) build ing par - ticipatory institutions of col lec tive action for smallscale farmers that allow them to be vertically inte - grated with livestock processors and input suppliers; (3) creating the environment in which farm - ers will in crease investment in ways to im prove productivity in the livestock sec tor; and (4) promot - ing effective regulatory institutions to deal with the threat of environmental and health crises stem ming from livestock. Technological progress in the production, proc - essing, and distribution of livestock products will be central to the positive outcome of the Livestock Revolution. Rapid advances in feed im prove ment and genetic and reproductive technologies offer scope for overcoming many of the technical prob - lems posed by in creased livestock production. Insti - tutional and regulatory development will also be critical to securing desirable environmental and public health outcomes. In sum, the demand- driven Livestock Revolution is one of the largest structural shifts to ever af fect food markets in developing countries and how it is handled is crucial for future growth prospects in developing country agriculture, for food security and the livelihoods of the rural poor, and for environmental sustainability.

14 2. Re cent Trans for ma tion of Live stock Food Demand Per Capita Consumption Pro gres sive eco nomic dif fer en tia tion be tween coun tries over the last few cen tu ries, has led to a situa tion where peo ple in de vel oped coun tries typi cally con sume three to four times the meat and five to six times the milk as do those in de vel op ing coun tries (Fig ure 1). But this pat tern is chang ing. Peo ple in de vel op ing coun tries have in creased their con sump tion of ani mal food prod ucts over the past 20 years, and the fac tors driv ing those in - creases are ro bust and un likely to sub side in the near fu ture. 4 Be tween 1983 (av er age of ) and 1993 (av er age of ) per cap ita an nual meat con sump tion rose from 14 to 21 kilo grams and milk con sump tion grew from 35 to 40 kilo - grams. Dur ing the same pe riod per capita con - sump tion of meat in de vel oped coun tries rose only 2 kilo grams and per cap ita milk con sump tion fell. At the regional level, Asia witnessed the most dra matic increases in per capita consumption of animal food prod ucts. In China per capita con sump - tion of meat and milk doubled between 1983 and 1993 (Table 2). Per capita meat consumption also increased in Other East Asia, Southeast Asia, and Latin America. Per capita milk consumption increased in India, Other South Asia, and Latin Amer ica. In Sub-Saharan Africa and West Asia and North Africa (WANA) per capita consumption of meat and milk stagnated or declined (see the Appendix for the regional classification of coun - tries used in this paper). Fig ure 1 Per capita consumption of meat and milk, developing and developed countries, 1983 and 1993 The relative importance of animal food prod - ucts in the diets of people in developing countries rose as well. Consumers obtained a greater share of calories and protein from animal food products in 1993 than in 1983 (Table 3). Through out Asia the share of calo ries and protein coming from animal food products increased, almost doubling in China, indicating that many consumers are increasing con - 4 Through out this pa per, food is used to dis tin guish di rect food con sump tion by hu mans fro m uses of ani mal prod ucts as feed, fuel, cos met ics, or cov er ings. Sta tis ti cal data in this pa per are taken from the FAO Sta tis ti c al Da ta base (FAO 1997, 1998), un less oth er - wise iden ti fied, and the world is clas si fied into nine coun tries or coun try ag gre gates, wit h de tails given in the Ap pen dix. The years 1983 and 1993 in all ta bles and fig ures re fer to three- year mov ing av er ages cen tered on the years shown. 5

15 6 Table 2 Per capita meat and milk consumption by region, 1983 and 1993 Fig ure 2 The relationship between meat consumption and income Meat Milk Re gion (kilo grams) China Other East Asia India Other South Asia South east Asia Latin Amer ica WANA Sub- Saharan Af rica De vel op ing world De vel oped world United States World Source: FAO Notes: Con sump tion re fers to di rect use as food, meas ured as un - cooked weight, bone in. Meat in cludes beef, pork, mut ton, goat, and poul try. Each number is a three- year moving av er - age cen tered on the two years listed. Milk is cow and buffalo milk and milk prod ucts in liq uid milk equiva lents.wana is West Asia and North Af rica. sumption of animal food products more rapidly than they are of other foods such as ce re als. But there re mains a great disparity be tween the per capita animal food consumed in developed and developing coun tries. National income is a critical determinant of this dis par ity. Fig ure 2 displays the positive, curved relationship between national per Table 3 Percent of calories and protein from animal prod ucts, 1983 and 1993 Calo ries from ani mal prod ucts Pro tein from ani mal prod ucts Re gion (per cent) China Other East Asia India Other South Asia South east Asia Latin Amer ica WANA Sub- Saharan Af rica De vel op ing world De vel oped world World Source: FAO Notes: Each number is a three- year moving av er age cen tered on the two years listed. Ani mal prod ucts, us ing the FAO defi ni tion, in clude meat, dairy, egg, and fresh wa ter and ma rine ani mal prod ucts. WANA is West Asia and North Af rica. Note: Each dot is an ob ser va tion for 1 of 78 de vel op ing and de vel oped coun tries ex am ined. The solid line is a sta tis ti cally sig nifi cant trend. capita in come and per capita meat consumption. Within this trend certain countries dif fer en ti ate themselves for cultural or other reasons. China, for example, lies above the trend, reflecting the impor - tance of pork in Chinese diets, and India lies below the trend because of religious pref er ences against meat. At higher incomes, per capita consumption of meat levels off because people reach saturation. This explains why developed countries have had much smaller increases in per capita meat and milk consumption over the past 20 years compared to developing countries. Countries at lower income levels are far from reaching the meat consumption satiation point de - spite recent increases. In the first half of the 1990s, people in developed countries consumed 76 kilo - grams of meat per capita per year as food, with higher amounts in the United States and lower amounts in some of the European countries (Table 2). Milk consumption in developed coun - tries was 192 kilograms per capita. People in devel - oping countries consumed on average 21 kilo grams of meat and 40 kilograms of milk. In Latin America, people consume 46 kilo - grams of meat and 100 kilograms of milk per capita, levels that are much higher than elsewhere in the developing world, though still about half the developed-country average. Per capita meat con - sumption in Other East Asia (44 kilograms per cap-

16 7 ita) does come close to the Latin Ameri can aver age and exceeds the Chi nese aver age. Sub-Saharan Africa has some of the lowest per capita con sump - tion levels: 9 kilograms of meat and 23 kilograms of milk per capita per year. The share of calories and protein com ing from meat is also much lower in developing countries than in developed ones (Table 3). In developed coun tries people obtain an average of 27 per cent of their calories and 56 percent of their protein from animal food products. The averages for developing coun tries are 11 percent and 26 percent, re spec - tively. People in Sub-Saharan Africa, WANA, South east Asia, Other South Asia, and India get a third or less than a third as many calories and half as much protein from animal products as people in developed countries. These low consumption levels give an in di ca - tion of how far animal food product consumption in developing countries could grow. The Livestock Revolution of the past 20 years will begin to look mod est in comparison to the one to come if the fac - tors that promote meat and milk consumption exert their full in flu ence. Determinants of Changes in Per Capita Consumption The growth rate of per capita consumption of animal food products is determined by economic factors such as incomes and prices and lifestyle changes that cause people s dietary patterns to evolve in qualita - tive ways. Per capita consumption increased in the regions where incomes grew rapidly during the period. For developing countries as a whole, GNP per capita grew at 2.1 percent per year (Table 4). In China, which had the most dramatic in - creases in per capita meat and milk consumption, GNP per capita grew at the extraordinary rate of 8.6 percent per year. India and Southeast Asia also had high income growth rates, fueling increases in per capita animal food product consumption. Latin American income growth was about zero ( 0.4 percent), but the region still managed a slight increase in per capita meat and milk consumption. Sub-Saharan Africa s per capita GNP fell signifi - cantly, explaining the region s drop in per capita consumption of meat and milk during the period. Table 4 Past population, urban population, and GNP per capita growth rates Re gion Popu la tion Urban population (per cent change per year) GNP per cap ita China In dia Other East Asia n.a. South east Asia Latin Amer ica Sub- Saharan Africa De vel op ing world De vel oped world World Source: UNDP Note: n.a. in di cates not avail able. De vel oped world is the UNDP indus trial countries. Data for WANA were un avail able. Prices of major meat and ce real food com - modi ties have trended down ward over the past 20 years, mak ing food more af ford able to con sum - ers of all in comes (Fig ure 3). Real ce real prices fell per cent (de pend ing on the grain in ques - tion) be tween the early 1980s and early 1990s, while de flated liq uid milk prices fell 37 per cent and real meat prices fell per cent. Al though ce real prices fell faster than meat and milk prices, many con sum ers have begun to di ver sify their diets into meat and milk be cause they are nearly sa ti ated with ce re als. Some have even reduced their con sump tion of ce re als. The most important life style change occurring in recent years is urbanization. Consumers in urban areas are more likely to diversify their diets into meat and milk (Huang and Bouis 1996; An der son et al. 1997). Urban consumers have greater food choices and more diverse die tary and cultural influ - ences than those typi cally found in rural areas. Urban consumers also often prefer foods that offer variety and convenience rather than maxi mum caloric content. Urban popu la tion growth has been sub stan tial through out the de vel op ing world in re cent years (Table 4). Be tween 1970 and 1995 cit ies in Asia grew 3 per cent per year and higher. The high est rate of urban growth, 5 per cent, oc curred in Af rica. The av er age for all de vel op ing coun tries was 3.8 per cent, more than three times the developedcountry rate.

17 8 Fig ure 3 Trends in the prices of major cereal and meat commodities, to Sources: Past data are from ERS 1997, IMF 1997, USDA 1997, and World Bank World Bank pro jec tions and the Manu fac - tur ing Unit Value in dex used for ex press ing val ues in con - stant 1990 US dol lars are from World Bank Notes: Wheat is U.S. no. 1, hard red winter, or di nary pro tein, ex port price de liv ered at Gulf ports for ship ment within 30 days. Rice is Thai 5 per cent bro ken, WR, milled in dica tive sur vey price, gov ern ment stan dard, f.o.b. Bang kok. Maize is U.S. no. 2, yel low, f.o.b. U.S. Gulf ports. Soy beans are U.S. c.i.f. Rot ter dam. Soymeal is any origin, Ar gen tina per cent ex trac tion, c.i.f. Rot ter dam, prior to 1990, U.S. 44 per cent. Fish meal is any ori gin, per cent, c.i.f. Ham burg, n.f.s. Beef is Aus tra lian/new Zea land, cow fore quar ters, frozen bone less, 85 per cent chemi cal lean, c.i.f. U.S. port (East Coast), ex dock. Pork is Euro pean Comu nity pork, slaugh ter whole sale price. Poul try is broil ers, twelve- city com po site whole sale price, read to cook, de liv ered. Lamb is New Zealand, fro zen whole car casses, whole sale price, Smith field mar ket, London. Milk is U.S. whole milk sold to plants and deal ers, U.S. De part ment of Ag ri cul ture. In addition to income growth, price changes, and urbanization, cultural differences have played an important role in consumption pat terns. Poultry meat and eggs are the most acceptable livestock commodities throughout the world. Lactoseintolerance, found particularly in East Asia, has limited milk consumption. Pork, while particularly valued by East Asians and people of Euro pean descent, is excluded from the diet of a large share of the world s population, especially Mos lems in the Near East, Asia, and Sub-Saharan Africa. South Asia has lower levels of meat consumption than low income alone would suggest because of cultural and religious reasons. Growing health consciousness in developed countries has in creased consumption of lean meats such as poultry and limited growth in the of consumption of red meat. These pref er ences are reflected in the aggregate changes in per capita con - sumption be tween 1973 and 1993 (Table 5). Total Consumption The importance of even small increases in per cap - ita consumption is compounded by rapidly increas - ing popu la tions in many developing regions. On average, popu la tion in developing countries grew by 2.1 percent per year between 1970 and 1995 (Table 4). The popu la tion in Sub-Saharan Africa grew the most almost 3 percent per year dur ing the pe riod. Rapid popu la tion growth coupled with increased per capita consumption resulted in dra - matic increases in the total consumption of animal food prod ucts through out the de vel op ing world (Table 6). For developing countries as a whole, total meat consumption grew 5.4 per cent per year and total milk consumption grew 3.1 percent. The com - pa ra ble fig ures for de vel oped coun tries were 1.0 per cent for meat and 0.5 percent for milk. China experienced an extremely high meat consumption growth rate of 8.6 percent, a value that is dis puted. China s role as the fastest growing market for live - stock products in the world is not in dis pute, but its growth rate may not have been so far ahead of the next fastest growing region, Other East Asia. The issue is con tro ver sial because China constitutes a large component of world demand. The food consumption figures used in this re - port are from the FAO statistical da ta base (FAO 1997, 1998). For China, as for most countries, the numbers are taken from food balance sheets pre - pared from na tional sources and are based primarily on estimates of production and net trade to derive estimates of consumption. Re cently, the use of this methodology for estimating livestock production figures in China in the 1990s but not in the 1980s has been challenged (Ke 1997). Although there is some uncertainty here, inde - pendent estimates of consumption based on house - hold surveys and feed use suggest that meat con -

18 9 Table 5 Annual per capita consumption of selected livestock food products and percent of total calories consumed from each product, 1973 and 1993 De vel oped coun tries De vel op ing countries Com mod ity (kilo grams) (per cent) (kilo grams) (per cent) (kilograms) (per cent ) (kilo grams) (per cent ) Beef Mut ton and goat Pork Poul try Eggs Milk and prod ucts ex clud ing butter Four meats Four meats, eggs, and milk Source: FAO Notes: Four meats in cludes beef, pork, mut ton and goat, and poul try. Val ues are three- year moving av er ages cen tered on the two years shown; per cent ages are cal cu lated from three- year mov ing av er ages. Milk is cow and buf falo milk a nd milk prod ucts in liq uid milk equiva lents. Food is used to dis tin guish di rect food con sump tion by hu mans from uses of ani mal products as feed, fuel, cos met ics, or cov er ings. sumption in the early 1990s in China proba bly ran closer to 30 million met ric tons (25 kilograms per capita) than the 38 mil lion met ric tons (33 kilo - grams per capita) given in the tables in this report (Ke 1997). If the lower fig ure is correct, the actual growth rate of meat consumption in China from the early 1980s to the early 1990s would be 6.3 percent, closer to the 5.4 per cent per year observed in the rest of Asia. Whether the true growth rate of meat consump - tion in China was ex ceed ingly high (6.3 percent per year) or astronomically high (8.3 per cent per year), Table 6 Consumption of meat and milk by re gion, An nual growth rate of to tal meat consumption To tal meat con sump tion To tal milk con sump tion Re gion (percent) (mil lion met ric tons) (mil lion met ric tons) China a Other East Asia In dia Other South Asia South east Asia Latin Amer ica WANA Sub- Saharan Af rica De vel op ing world De vel oped world World Sources: An nual growth rate of total meat con sump tion for is the growth rate from re gres sions fit ted to FAO an nual data (FAO 1998). To tal milk and meat con sump tion for 1983 and 1993 are three- year mov ing av er ages cal cu late d from FAO Notes: Con sump tion re fers to di rect use as food, meas ured as un cooked weight, bone in. Meat in clude s beef, pork, mut ton, goat, and poul try. Milk is milk and milk prod ucts in liquid milk equiva lents. Met ric tons are three- year mov ing av er ages cen tered on the two years shown. Milk is cow and buf falo milk and milk prod ucts in liquid milk equiva lents. WANA is Western Asia and No rth Af rica. a See text for quali fi ca tion on China. A lower es ti mate of 6.3 per cent per year growth, closer to the 5.4 per cent ob served in the rest of Asia, may be more ac cu rate. This would mean a 1993 total meat con sump tion of 30 million met ric tons.

19 10 the total amount in contention is less than 5 percent of estimated annual world meat consumption in the early 1990s. It should also be noted that the contro - versy does not include the distribution of con sump - tion among meats in China, nor does it in volve international trade in meat, because the down ward revision in the production fig ures is matched by a corresponding down ward re vi sion in the con sump - tion num bers. According to FAO, the total quantity of meat consumed worldwide rose by 45 mil lion met ric tons between 1983 and 1993 (Table 6). Total milk con - sumption rose by 57 mil lion metric tons in liq uid milk equivalents. In 1983 developing countries consumed 36 per cent of all meat and 34 percent of all milk consumed world wide. By 1993 those percentages had risen to 48 percent and 41 per cent, respectively. The breakdown of the growth rates of consump - tion of particular commodities (Table 7) shows that in developed countries total consumption grew slowly for all commodities except poultry. In the developing countries poultry led the field as well with 7.6 percent growth in consumption per year. Beef and milk grew at about 3 percent, and pork con - sumption grew at 6.2 percent. Quantifying the Effects of Growth Factors Quantifying the effects of individual forces that are driv ing real con sump tion requires a mod el ing approach to statistical estimation that is capable of sorting out the simultaneous influences of a host of determinants in order to iso late the contribution of each element. Research ers typically use a multipleregres sion economet ric approach, although the degree of com plex ity in their models varies greatly. The end objective is the estimation of robust elas - ticities that meas ure the effect on consumption of a 1 percent increase in the deter mi nant in question. These estimates often are obtained from a crosssection of house holds in a particular region at a par - ticular time, yielding elasticities that are usually quite satisfactory for the time period and region concerned, but which are too specific to use across countries or over long time peri ods. Elasticities from na tional data over long time periods are rarely estimated because of the diffi - culty in gathering data sets that satisfy the economic and econometric assumptions of the underlying de - mand model. Such estimation can, however, pro - vide a bet ter fore cast of the evolution of national Table 7 Trends in the food consumption of various livestock prod ucts, An nual growth rate of to tal con sump tion To tal con sump tion Per cap ita con sump tion Re gion/product (per cent) (mil lion met ric tons) (kilo grams) De vel oped world Beef 0.0* Pork Poul try Meat Milk De vel op ing world Beef Pork Poul try Meat Milk Sources: An nual growth rate of total con sump tion is the growth rate from re gres sions fit tedt o FAO an nual data (FAO 1998). Total and per cap ita con sump tion for 1983 and 1993 are cal cu lated from FAO Notes: Con sump tion re fers to di rect use as food, meas ured as un cooked weight, bone in. Meat in clude s beef, pork, mut ton, goat, and poul try. Milk is cow and buf falo milk and milk products in liq uid milk equiva lents. Met ric tons and kilo gra ms are three- year moving av er ages cen tered on the two years shown. WANA is West ern Asia and North Af rica. *Not sig nifi cantly dif fer ent from zero at the 10 per cent level.

20 11 consumption pat terns over time. Despite the diffi - cul ties, Schroeder, Bar kley, and Schroeder (1995) estimated the effects of national per capita income growth on na tional per capita consumption, using an nual data from 32 countries for The authors found that the largest ef fect of a US$1 increase in in come on meat consumption occurred in coun tries with the lowest levels of national income and meat consumption. As countries got richer the impact of an increase in in come on meat con sump - tion got weaker. Schroeder, Barkley, and Schroeder (1995) found that for coun tries with an nual per cap ita in comes in the neigh bor hood of US$1,000 (at 1985 prices), each 1 per cent in crease in per cap ita in come would increase con sump tion of pork by 1 per cent, poul try by nearly 2 per cent, beef by more than 2 per cent, and lamb by more than 3 per cent. At per cap ita income lev els above US$10,000, a 1 per cent in - crease in in come would in crease per cap ita con - sump tion of any of the com modi ties by ap prox i - mately 1 per cent or less. These re sults in di cate first, that an in crease in in come in a richer coun try will have a sub stan tially smaller im pact on meat con sump tion than the same in crease will have in poorer coun tries. Sec ond, the re sults in di cate that in coun tries with low but ris ing per cap ita in comes, per cap ita con sump tion of most meat com modi ties is likely to grow faster than growth of per cap ita in come. Schroeder, Bar kley, and Schroeder did not re - port price elasticities or the ef fects of other struc - tural changes on per capita consumption. Del gado and Courbois (1998) estimated expenditure, price, and urbanization elasticities based on data from 64 developing countries for They used a system of equations that sorted out relative price effects among animal products and that controlled for many cultural, geographic, physical, and eco - nomic differences be tween countries. The resulting expenditure elasticities (Table 8) estimate the percentage increase in the weight of beef, pork and mutton, poultry, or milk consumed due to a 1 percent increase in total expenditure on all animal food products in the developing countries in the sam ple. Thus the whole-sample expenditure elasticity of 1.36 for milk suggests that the relative share of milk in total animal product consumption increases as real expenditure on animal food prod - ucts increases across countries and over time, once the ef fects of relative prices, urbanization, and other factors are taken into ac count. The 0.27 coefficient for poultry suggests that its share decreases with a 1 per cent in crease in total expenditure on all animal food products, A com pari son of the poor est third of coun tries to the rich est third at subsam ple means sug gests that the pref er ence for ad di tional milk and beef de - creases mar gin ally when mov ing from poorer to richer de vel op ing coun tries. Pref er ence for poul try Table 8 Demand elas tici ties for major food products of animal origin from a cross-country, systems estimation, , developing regions Com mod ity Poor est b third of coun tries Ex pen di ture elas tic ity a Whole sam ple Rich est b third of coun tries Own price elasticity Ur ban population share elasticity Beef Pork and mutton Poul try Milk Source: Del gado and Cour bois Notes: These pa rame ters were es ti mated as a sys tem (with other ex plana tory vari ables and ex clu si ons not shown) for 64 coun tries using an nual data. N=1,143 and McEl roy s mul tie qua tion R 2 (Judge et al. 1985, 477) was All co ef fi cients were sta tis ti cally sig nifi cant at a 10 per - cent level or bet ter. a Ex pen di ture is the to tal ex pen di ture on ani mal food prod ucts in cluded in the study. Ex pe n di ture elas tici ties are cal cu lated at the subsam ple mean, to proxy for in come elas tici ties for spe cific sub groups. b Mean per capita gross do mes tic prod uct during the pe riod was used to clas sify all co un tries into one of three groups: poor est (<$800), mid - dle ($800 $3,000), and rich est (>$3,000). The sample was di vided into thirds, with each third h av ing the same number of coun tries.