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Realising the projected growth of the next decade

It has been two months since OECD and FAO jointly published Agricultural Outlook 2013-2022. Have we already considered the implication for our businesses and activities? What is necessary for us to achieve the growth for the next-decade as the report projects?

Developing countries will be winners in the growth contribution stakes, with an 80% share of the additional global meat output towards 2022. The centre of business activities will inevitably have to be shifted from developed countries to developing countries, with required transfer of knowledge and production capacity. However, a number of conditions for livestock production, processing and transportation to the market will need to be in place, to maintain the operation competitive and profitable for all involved in the supply chain.

Constraints
Rising energy and feed costs that translate into higher production costs are key for livestock farmers, to start with. Next to that, increasing pressure from competing land uses, eg. pasture versus crops, is adding a constraint to secure a strategic location for both raw materials sourcing and market place. Inadequate infrastructure could be an issue together with social issues relating to a shortage of an educated and skilled labour force on farms. And then, the climate is not ideal everywhere to run livestock farms, which in part results in water constraints. These limiting factors all play a role in the growth projection to slow to 1.6% p.a. in the decade ahead, compared to 2.3% p.a. in the previous decade.

Productivity
Larger meat production is expected to be realised by productivity growth eg. improved genetics, animal health and feeding practices in both the poultry and pig meat sectors, where production cycles are shorter and technical change quicker than for beef and sheep meat. However, further productivity gains will become increasingly harder to achieve, particularly where existing high levels of technical efficiency and economies of scale are bound to experience diminishing marginal returns. A notable example is expected for poultry, with a decline projected in production growth in developed economies from 3.7% p.a. over the last decade to 1.9% p.a. through 2022. A similar phenomenon, although to a lesser extent, is expected for pigmeat, with production growth decelerating from 1.8% p.a. to 1.4% p.a. over the next decade. Future productivity gains in these industries will increasingly depend on how well the sector invests in research and development and technological innovation, rather than simply wider diffusion of existing technology.

Cooperation and knowledge sharing
Part of the challenges are directly related to business activities, but there are also issues which the livestock industry is only indirectly involved, especially in developing countries. With all those challenges ahead of us, cooperation is key - with local industry, society and policy makers. The aim being to support the development of the local economy and life environment, eventually to realise a larger livestock production. Sharing knowledge of farming practice, animal health, disease prevention, nutritional requirement, feed efficiency among many other fields of expertise with organisations and individuals throughout the livestock supply chain is equally a success driver, as what one knows as a ‘best practice’ could be a totally new vision for others.

Kaori Nishide

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