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Scoping Study on the
Challenges for the
Animal Feed Complex in East Asia
Prepared for:
The World Bank
by:
Agrifood Consult...
Structure
• Rationale
• Approach
• Findings
– Trends in…
– Regional policy issues
– Specific policy issues by
country
• Re...
RATIONALE FOR THE STUDY
Assess the current feed situation in East Asia
through comparative assessments and country
case st...
APPROACH
• Compilation and analysis of a consistent dataset
related to feed.
• Policy and industry review of feed industry...
Data on Feed
Low protein
• Wheat, coarse grains (aggregate of maize, barley, oats,
sorghum, millet, rye and mixed grains),...
FINDINGS
China, Indonesia, Philippines
and Vietnam
Trends in…
Composition Demand
Trade Prices
Feed
Composition
Regional trends in key feed
component use:
Concentrates 
Protein 
DDG 
Coarse grains 
MBM/fishmeal 
SHARE OF LOW PROTEIN FEED
0.6
0.65
0.7
0.75
0.8
0.85
0.9
0.95
1
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 200...
MASSIVE ENTRY OF DDG
(Feed use of DDG in six Asian countries)
0
1000
2000
3000
4000
5000
6000
1986 1988 1990 1992 1994 199...
Demand
Major growth in animal product demand
Largely attributable to:
- Increasing household incomes
- Increasing populati...
GROWTH IN ANIMAL PRODUCT CONSUMPTION
1990-2012
0
1
2
3
4
5
6
7
8
9
China Indonesia Philippines Vietnam Korea Japan
Meats M...
SELF-SUFFICIENCY RATIO
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
Vietnam
1990
Vietnam
2012
Philippines
1990
Philippines
2012
Ind...
Feed Consumption in 1990 and 2012
1990
China
Indonesia
Philippines
Korea
Japan
Vietnam
Malaysia
Thailand
99.2
4.4
30.6
12....
Trade
Reducing barriers to trade
Global: WTO accession
Regional: ASEAN free trade zone
Low feed ingredient tariffs
Signifi...
WEIGHTED AVERAGE TARIFF
0
2
4
6
8
10
12
14
16
18
20
1996 1998 2000 2002 2004 2006 2008 2010 2012
China Indonesia Korea Phi...
Broad feed price increases & increased volatility
Significant increases since 2006: higher, price plateau
Maize  (ethanol...
RELATIVE PRICE RATIO WITH MAIZE
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
Corn gluten
feed
DDG Bran Molasses Manioc Wheat
1990-1999 ...
FISH TO OILSEED MEAL PRICE RATIO
0
1
2
3
4
5
6
1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
El Ni...
Regional policy issues
Feed vs Food
Feed industry
concentration
Feed safety
Feed imports
Feed price
instability
Feed vs Food
• Broad prioritization of food over feed
• Comparative advantages in an increasingly
free trading environment...
Feed industry concentration
• Food security
– Efficiency vs livelihoods
• Can smallholders remain competitive; should they...
Feed safety
Domestic
• Increasingly politicized
– Particularly China, Philippines, Vietnam
• Examples
– China: several rec...
Feed imports
• Domestic supply of key feed components is
lagging behind demand
• High and  dependence on global feed
mark...
Feed price instability
• Various price stabilization policies in place
• Feed prices more variable than food prices
• Feed...
Specific policy issues by country
China
• Meeting demand from monogastric industries
• Managing/utilizing waste produced by monogastric
industries
• Promoti...
Indonesia
• Supporting feed production, food security (rice)
and economic (palm) policy objectives
– Promoting soybean pro...
Philippines
• Supporting insurance markets to encourage
investment in production
• Transferring R&D outcomes to smallholde...
Vietnam
• Promoting soybean production
• Improving extension, access to technologies and
inputs
• Improving feed and food ...
RECOMMENDATIONS
Address
protein feed deficit
Why?
• Strengthen domestic feed and animal industry competitiveness
• Minimize price volatili...
Improve
feed safety
Why?
• Public health benefits
• Consumer confidence
• Export and domestic market access
How?
• Lab cap...
Collect and analyze feed data and
build policy research capacity
Why?
• Inform future policymaking
How?
• Capacity buildin...
KEY MESSAGES
 Livestock product demand =>  demand for feed
 Industry concentration
 higher protein feed demand
Lagging domestic sup...
Areas to address
• Comparative advantage and Area of production
• Productivity (input quality, technology transfer)
• Link...
Thank you
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Scoping Study on the Challenges for the Animal Feed Complex in East Asia

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This is a presentation given to the World Bank about our Feed Scoping Study for East Asia.

Background of the Study:Rapidly increasing demand for animal products in East Asia is challenging traditional feed industries. This study assess the changes in a comparative fashion, looking at four countries – China, Indonesia, Philippines, and Vietnam – where livestock sector is changing rapidly; and comparing to Thailand and Malaysia where the feed sector is more developed; and Japan and South Korea where current livestock industries are highly developed, but where domestic markets for livestock products are stagnating.

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Scoping Study on the Challenges for the Animal Feed Complex in East Asia

  1. 1. Scoping Study on the Challenges for the Animal Feed Complex in East Asia Prepared for: The World Bank by: Agrifood Consulting International Francesco Goletti, Pierre Charlebois, and Tom Weaver
  2. 2. Structure • Rationale • Approach • Findings – Trends in… – Regional policy issues – Specific policy issues by country • Recommendations • Key messages
  3. 3. RATIONALE FOR THE STUDY Assess the current feed situation in East Asia through comparative assessments and country case studies Identify key areas for possible further research
  4. 4. APPROACH • Compilation and analysis of a consistent dataset related to feed. • Policy and industry review of feed industry. • Identification of policy issues.
  5. 5. Data on Feed Low protein • Wheat, coarse grains (aggregate of maize, barley, oats, sorghum, millet, rye and mixed grains), rice, root and tuber (mostly cassava), molasses, brans, dried beet pulp Medium Protein • Corn gluten feed, DDG, field peas, compound feed (double counting is avoided) High Protein • Crop protein meals (aggregate of soybean, canola/rapeseed, sunflower, groundnut, cotton seed, copra and palm kernel), MBM, fish meal and skim milk powder
  6. 6. FINDINGS China, Indonesia, Philippines and Vietnam
  7. 7. Trends in… Composition Demand Trade Prices Feed
  8. 8. Composition Regional trends in key feed component use: Concentrates  Protein  DDG  Coarse grains  MBM/fishmeal 
  9. 9. SHARE OF LOW PROTEIN FEED 0.6 0.65 0.7 0.75 0.8 0.85 0.9 0.95 1 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 China Indonesia Japan Korea Philippines Vietnam
  10. 10. MASSIVE ENTRY OF DDG (Feed use of DDG in six Asian countries) 0 1000 2000 3000 4000 5000 6000 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 KT
  11. 11. Demand Major growth in animal product demand Largely attributable to: - Increasing household incomes - Increasing populations Largely met by: - Domestic production Major growth in feed demand Largely met by: - Imports
  12. 12. GROWTH IN ANIMAL PRODUCT CONSUMPTION 1990-2012 0 1 2 3 4 5 6 7 8 9 China Indonesia Philippines Vietnam Korea Japan Meats Milk Fish and seafood 16
  13. 13. SELF-SUFFICIENCY RATIO 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 Vietnam 1990 Vietnam 2012 Philippines 1990 Philippines 2012 Indonesia 1990 Indonesia 2012 China 1990 China 2012 Meats Milk Fish and seafood
  14. 14. Feed Consumption in 1990 and 2012 1990 China Indonesia Philippines Korea Japan Vietnam Malaysia Thailand 99.2 4.4 30.6 12.3 mt 3 5,6 2012 China Indonesia Philippines Korea Japan Vietnam Malaysia Thailand 267.3 22.2 25.8 11.2 22.6 mt 6 17,4
  15. 15. Trade Reducing barriers to trade Global: WTO accession Regional: ASEAN free trade zone Low feed ingredient tariffs Significant increases in feed related imports ALL major feed components: China (massive reversal 2000->2014) Vietnam HIGH PROTEIN feed components: Indonesia Philippines
  16. 16. WEIGHTED AVERAGE TARIFF 0 2 4 6 8 10 12 14 16 18 20 1996 1998 2000 2002 2004 2006 2008 2010 2012 China Indonesia Korea Philippines Vietnam
  17. 17. Broad feed price increases & increased volatility Significant increases since 2006: higher, price plateau Maize  (ethanol) Cereals  (food, feed, biofuel supply and demand) Oilseeds  (protein) MBM  (protein, BSE) Fishmeal  (protein, limited increases in supply) Prices
  18. 18. RELATIVE PRICE RATIO WITH MAIZE 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 Corn gluten feed DDG Bran Molasses Manioc Wheat 1990-1999 2000-2005 2006-2011
  19. 19. FISH TO OILSEED MEAL PRICE RATIO 0 1 2 3 4 5 6 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 El Niño
  20. 20. Regional policy issues Feed vs Food Feed industry concentration Feed safety Feed imports Feed price instability
  21. 21. Feed vs Food • Broad prioritization of food over feed • Comparative advantages in an increasingly free trading environment – Which countries/regions are better placed to produce feed? – Which are better placed to produce food?
  22. 22. Feed industry concentration • Food security – Efficiency vs livelihoods • Can smallholders remain competitive; should they be protected? • What are the implications for: – Food safety – Food quality – Disease – Sustainability – Biodiversity
  23. 23. Feed safety Domestic • Increasingly politicized – Particularly China, Philippines, Vietnam • Examples – China: several recent, and ongoing, changes in food safety legislation – Philippines: highlighted at the Livestock Philippines Expo 2013 – Vietnam: ongoing development of VietGAP Trade • Market access/trade aspirations: SPS compliance
  24. 24. Feed imports • Domestic supply of key feed components is lagging behind demand • High and  dependence on global feed markets
  25. 25. Feed price instability • Various price stabilization policies in place • Feed prices more variable than food prices • Feed price variability has increased • Increasing instability – For what reasons? – How does feed instability affect food prices and food security? – Are current stabilization approaches effective? optimal?
  26. 26. Specific policy issues by country
  27. 27. China • Meeting demand from monogastric industries • Managing/utilizing waste produced by monogastric industries • Promoting improved soybean seed and post-harvest management • Implementing feed and food safety regulations
  28. 28. Indonesia • Supporting feed production, food security (rice) and economic (palm) policy objectives – Promoting soybean production – Increasing competitiveness of domestic maize • Encouraging investment in small-scale production • Leveraging private feed sector in smallholder production – Market links and rural livelihoods
  29. 29. Philippines • Supporting insurance markets to encourage investment in production • Transferring R&D outcomes to smallholders and allied value chains • Leveraging private feed sector in smallholder production – Market links and rural livelihoods
  30. 30. Vietnam • Promoting soybean production • Improving extension, access to technologies and inputs • Improving feed and food lab quality and capacity at regional levels • Building capacity and influence of policy researchers
  31. 31. RECOMMENDATIONS
  32. 32. Address protein feed deficit Why? • Strengthen domestic feed and animal industry competitiveness • Minimize price volatility • Minimize effects of feed price hikes on domestic food security • Generate livelihoods How? • Land use: assess comparative advantages – identify areas for soybean cultivation • Assess current policy incentives e.g. rationale for nitrogen fertilizer subsidies • Improve producer access to inputs and technology transfer • Link producers to market chains; producer organizations • Investigate and utilize new technologies and alternative feeds, such as byproducts
  33. 33. Improve feed safety Why? • Public health benefits • Consumer confidence • Export and domestic market access How? • Lab capacity • Surveillance system design and implementation • Incentives • Penalties
  34. 34. Collect and analyze feed data and build policy research capacity Why? • Inform future policymaking How? • Capacity building at national and subnational levels • Facilitate access/influence over decision makers
  35. 35. KEY MESSAGES
  36. 36.  Livestock product demand =>  demand for feed  Industry concentration  higher protein feed demand Lagging domestic supply =>  imports, particularly protein  Feed prices and greater price volatility Current trends
  37. 37. Areas to address • Comparative advantage and Area of production • Productivity (input quality, technology transfer) • Linking feed producers to market chains • Feed safety and market access (SPS compliance) • Public sector capacity in data collection and analysis and policy making
  38. 38. Thank you

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