Per-Capita Meat Consumption and

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Per-Capita Meat Consumption and Powered By Docstoc
					Can We Feed the Animals?

  Origins and Implications of Rising
            Meat Demand

                       by:
 Michiel Keyzer, Max Merbis, Ferdinand Pavel
Centre for World Food Studies, Vrije Universiteit
                  Amsterdam
                          Motivation

Standard projections on the future of global meat and cereal
markets (IFPRI, 2001; FAO, 2000) neglect huge potential for
structural changes (in particular in Asia):

• Consumer: - low initial per-capita consumption of meat
              - high expected rates of income growth
               strong increase in meat demand

• Producer: - limitations of traditional feeding technologies
               modernization of livestock production

                                                            2
                           Outline

1. How to implement such changes?
 Relation between per-capita income and per-capita
   demand for meat (Engel curve)
 Modernization of livestock technology (shift from residual
   feed to cereals)
2. Quantitative assessment / Comparison with FAO (2000)
 Implications for aggregate meat demand
 Implications for demand for residual feed and cereals
3. Conclusions
                                                           3
     Specification of Per-Capita Demand for Meat

      Per-capita Consumption
c2




c1


            y                   y
                                      Per-capita Income
                                                   4
Non-Parametric Estimation of Meat Demand and
 Per-Capita Income (125 countries, 1975-1997)




                                           5
Piecewise Linear GLS-Estimation of Meat Demand and
    Per-capita Income (125 countries, 1975-1997)
                                         b3=0.98
                                         (29.7)
        Per-capita Consumption
77 kg




        b1=3.25
        (10.85)                           Dummies:
                           b2=8.07        China 7.32 (5.31)
                           (62.64)        India -9.56 (-7.34)
17 kg                                     USA 23.81 (6.04)
                                          Japan -50.37 (-13.29)


            2,200 US-$               9,700 US-$           6
Income Growth and Distribution in Asia (1997-2015)




                                               7
     Consequences for Livestock Production



• Who will produce the meat?
  - Trade in livestock versus trade in feed


• Can domestic producers satisfy the increasing meat
 demand (traditional versus modern technology)?
  - By how much can residuals expand?
  - By how much must cereal-meat ratios increase?

                                                       8
Annual Growth Rates of Aggregate Meat Consumption
                   (in Percent)
                          High Growth
                         1997-   2015-
                         2015    2030
Sub-Saharan Africa        3.0     2.9
Near East/North Africa    4.1     3.2
Latin America and         2.6     1.8
Caribbean
South Asia                5.8     3.9
East Asia                 4.9     2.6
Industrial Countries      1.3     1.2
Transition Countries      1.4     1.2

World                     3.0     2.2




                                             9
Annual Growth Rates of Aggregate Meat Consumption
                   (in Percent)
                          High Growth     FAO (2000)
                         1997-   2015-   95/97- 2030
                         2015    2030     2015
Sub-Saharan Africa        3.0     2.9      3.4   3.1
Near East/North Africa    4.1     3.2      3.4   2.6
Latin America and         2.6     1.8      2.3   1.8
Caribbean
South Asia                5.8     3.9     3.6    3.5
East Asia                 4.9     2.6     2.8    1.5
Industrial Countries      1.3     1.2     0.7    0.4
Transition Countries      1.4     1.2     1.1    0.7

World                     3.0     2.2     1.9    1.4




                                                10
Annual Growth Rates of Aggregate Meat Consumption
                   (in Percent)
                          High Growth        Low Growth       FAO (2000)
                         1997-   2015-      1997-  2015-     95/97- 2030
                         2015    2030       2015    2030      2015
Sub-Saharan Africa        3.0     2.9        2.8     2.5       3.4   3.1
Near East/North Africa    4.1     3.2        3.4     2.8       3.4   2.6
Latin America and         2.6     1.8        2.3     1.6       2.3   1.8
Caribbean
South Asia                5.8        3.9     4.4       3.7     3.6     3.5
East Asia                 4.9        2.6     3.7       2.6     2.8     1.5
Industrial Countries      1.3        1.2     1.0       0.9     0.7     0.4
Transition Countries      1.4        1.2     0.9       0.8     1.1     0.7

World                     3.0        2.2     2.3       1.9     1.9     1.4

 On a world level, our estimates exceed those of the FAO (2000) by:
                                12% in 2015 and 24% in 2030 (high growth)
                                                   6% in 2030 (low growth)
                                                                     11
     Cereal Demand under various Growth Paths for
               Residual Feeds ( in mill. t.)
                              Base    High growth of   Midrange growth     Zero growth of
                              year       residuals      of residuals in    residuals in all
                                                         four regions         regions
                              95/97   2015     2030    2015       2030     2015      2030

Sub-Saharan Africa             10     22        32     95        177       146         260
Near East/North Africa         37     95       146     130       217       153         254
Latin America and Caribbean    49     79       104     79        104       284         462
South Asia                     16     42        64     65        113       79          135
East Asia                     121     238      352     440       784       585         1036
Industrial Countries          317     355      421     355       421       369         480
Transition Countries          117     153      181     153       181       189         241

 World                        667     985     1300     1318     1997       1805        2868



                                      FAO (2000) for 2030: 1100 mill. t.
                                                                                  12
                        Conclusions

• Consideration of income distribution and three consumption
regimes increases demand projections for meat significantly

• Increasingly limited availability of residual feed in developing
countries enforces a shift towards modern technology and
increases demand for cereal feeds even further.

• Magnitude of results for cereal markets is dramatic:
- Demand/technology shift:          + 200 to 1,800 mill. t. in 2030
- Climate Change (IIASA, 2001):               - 105 mill. t. in 2080
- GMOs: no large effects on yields expected
                                                               13
14
     GLS-Estimation of Meat Demand and
Per-capita Income (125 countries, 1975-1997) (I.)


                    a 1  b1 y i    if     yi  y,
                   
       c i (yi )   a 2  b 2 y i   if y  yi  y,
                   a  b y
                    3 3 i           if y  y,

Further conditions:


 i.    a1  b1 y  a2  b2 y              iii.   b1  b2  γ 1

 ii.   a3  b3 y  a2  b2 y              iv.    b3  b2   2
                                                                 15
     GLS-Estimation of Meat Demand and
Per-capita Income (125 countries, 1975-1997) (II.)
   Parameter           Estimate        Approx. Standard       t-ratio
                                                   Error
     a2                 -1.182*                 0.60665       -1.95
     b2                  8.07**                 0.12878       62.64
     1                 -4.82**                 0.44422      -10.85
     2                 -7.09**                 0.23864      -29.70
   Dummy ‘China’         7.32**                 1.37780        5.31
   Dummy ‘India’        -9.56**                 1.30257       -7.34
   Dummy ‘USA’          23.81**                 3.93967        6.04
   Dummy ‘Japan’       -50.37**                 3.79094      -13.29

   Income thresholds:              y= 2200 US-$; y= 9700 US-$
   Consumption thresholds          c1=16.6kg/year; c2=77.1kg/year

   Number of observations          2875
   R-squared                       0.6161
   Adjusted R-squared              0.6152

   * indicates significance at the ten percent level,                   16
   ** indicates significance at the one percent level.
        Per Capita Consumption of Meat (in kg/year)
                       Base   High Growth    Low Growth       FAO (2000)
                       Year      Rates          Rates
                       1997   2015 2030      2015   2030 1995/97 2015 2030

Sub-Saharan Africa     11.5   12.5   14.3    12.0   12.9     9.7   11.6        13.6
Near-East/North-       22.9   32.9   43.3    29.0   35.8    20.0   26.6        32.0
Africa
Latin America and      50.9   62.8   70.9    59.3   65.7    48.5   57.8        66.0
Caribbean
South-Asia              5.8   12.2    18.7    9.7   14.5     5.5    8.2        11.8
East-Asia              27.2   54.7    74.7   44.6   60.5    33.3   47.2        55.0
Industrial Countries   82.3   98.3   115.1   93.0   103.8   86.5   93.0        97.0
Transition Countries   46.1   58.6    71.0   54.2   62.3    49.4   61.0        69.0

World                  32.6   44.9   54.6    39.7   46.5    34.7   40.0        44.0




                                                                          17
                   Per-Capita Meat Consumption in China:
                         Official Data vs. Estimates
              50
                                 FAOSTAT
              40                 own estimates
kg per year




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                                                                                19
 Implications on Aggregate Meat Demand



Proposition:
Suppose that income growth is positive and
identical for all individuals. Then, the slope of the
aggregate meat-demand curve is rising (falling) with
mean per-capita income if and only if there is more
(less) total income spent on meat at y than at y.




                                                        19
 Effect of Economic Growth on Meat Expenditure
         (East-Asia and high growth rates)


                                                                   income fraction at income y




b2-b3                      b2-b1




 additional expenditure on meat    U2000   L1997   L2000   U1997




                                                                                                 20
         Effect of Economic Growth on Meat Expenditure
                (South-Asia and high growth rates)


                                                                                income fraction at income y




 b2-b3                            b2-b1




addtitional expenditure on meat           U2020   L1997   L2015   L2020 U2015




                                                                                                              21
    Growth Rate of Aggregate Meat Consumption for
                 Alternative Scenarios



                         High Growth Rates    Zero Growth      Dollar/Kraay
                          1997-    2015-     1997-    2015-   1997-    2015-
                          2015     2030      2015     2030    2015      2030
Sub-Saharan Africa         3.0      2.9       2.5      1.9     3.0       2.9
Near East/North Africa     4.1      3.2       1.8      1.2     4.1       3.2
South Asia                 5.8      3.9       1.8      1.1     5.8       3.9
East Asia                  4.9      2.6       0.9      0.5     4.9       2.7




                                                                       22
Cereal Feed Requirements as Function of Meat
                  Demand
  Cereal feed requirement

 Cc

 Cb




 Ca




                            Ma   Mb   Meat demand
  -R
                                                    23
  -R’
   Residual Feed Intake for High Growth Rates and
            Constant Cereal-Meat Ratios


                              1995/’97   2015   2030   Annual growth
                                                           rate
Sub-Saharan Africa             158       343    500        3.4
Near East/North Africa         46        114    172        4.0
Latin America and Caribbean    558       820    1016       1.8
South Asia                     106       288    462        4.4
East Asia                      444       895    1333       3.3
Industrial Countries           454       473    534        0.5
Transition Countries           123       162    187        1.2

 World                         1889      3095   4204        3.5




                                                                  24
                            Regions and Countries
SUBSAHARAN   NEAR EAST /                                              INDUSTRIAL   COUNTRIES IN
                             LATINAMERICA   SOUTHASIA    EASTASIA
AFRICA       NORTH AFRICA                                             COUNTRIES    TRANSITION
BENIN        ALGERIA         ARGENTINA      BANGLADESH   CHINA        AUSTRALIA    ARMENIA
BOTSWANA     CYPRUS          BAHAMAS        INDIA        FIJI         AUSTRIA      AZERBAIJAN
BURKINAF     EGYPT           BELIZE         NEPAL        FPOLYNESIA   CANADA       BELARUS
BURUNDI      IRAN            BERMUDA        PAKISTAN     INDONESIA    DENMARK      CZECH
CAMEROON     MOROCCO         BRAZIL         SRILANKA     KOREAREP     FINLAND      ESTONIA
CAR          SARABIA         CHILE                       MALAYSIA     FRANCE       GEORGIA
CHAD         SYRIA           COLOMBIA                    PAPUANG      GERMANY      HUNGARY
CONGODR      TUNISIA         COSTARICA                   PHILIPPIN    GREECE       KAZAKHSTAN
CONGOREP     TURKEY          DOMINICA                    SOLOMON      HONGKONG     KYRGYZSTAN
COTEIV       UAE             DOMINICANR                  THAILAND     ICELAND      LATVIA
ERITREA                      ECUADOR                                  IRELAND      LITHUANIA
ETHIOPIA                     ELSALVADOR                               ISRAEL       MOLDOVA
GABON                        GUATEMALA                                ITALY        ROMANIA
GAMBIA                       GUYANA                                   JAPAN        RUSSIANFED
GHANA                        HAITI                                    MALTA        SLOVAKIA
GUINEABAU                    HONDURAS                                 NETHERLD     TAJIKISTAN
KENYA                        JAMAICA                                  NZEALAND     TURKMENISN
LESOTHO                      MEXICO                                   NORWAY       UKRAINE
MADAGASCAR                   NICARAGUA                                PORTUGAL     UZBEKISTAN
MALAWI                       PANAMA                                   SAFRICA
MALI                         PARAGUAY                                 SPAIN
MAURITANIA                   PERU                                     SWEDEN
MAURITIUS                    TRINIDAT                                 SWITZERLD
NIGER                        URUGUAY                                  UKINGDOM
NIGERIA                      VENEZUELA                                USAMERICA
SENEGAL                                                               BELLUX
SEYCHELLES
SIERRAL
SUDAN
SWAZILAND
TOGO                                                                                   25
ZAMBIA
ZIMBABWE

				
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posted:11/29/2011
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