1. Livestock & Food Markets
for Food Security
J. Otte, U. PicaCiamarra, G. Franceschini & D. Roland-Holst
FAO and UC Berkeley
ETH Zuerich, 12 December 2008
2. Key Points
• Agricultural populations are still growing in many
parts of the world while the potential for
expansion of agricultural land is limited.
• Because of high value-added livestock can play a
major role in the required intensification of
agricultural production.
• In developing countries, higher income
elasticities for livestock products promise faster
growth of farm incomes than staples.
• Livestock can thus also play a major role in
poverty reduction via urban – rural wealth
transfers.
4. Global Income Distribution (2004)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
>10.0
2.0-10.0
1.0-2.0
< 1.0
$/day
1.0
billion
Developing
1.4 billion
1.6
billion
1.4
billion
2.3
billion
Developed
0.9 billion
5. Poverty & Food Insecurity are Twins
50%ofWorldPopulation
80%
6. Where are the Poor/Food Insecure ?
0 500 1,000 1,500
South Asia
East Asia
SS Africa
L America &
Caribb
E Europe &
C Asia
Near East &
N Africa
<1$
1-2$
2-10$
Million people
7. Where are the Poor/Food Insecure ?
0
100
200
300
400
500
600
SouthAsia
SSAfrica
EastAsia
L.America
NE&NA
Urban
Rural
Million extreme poor
Source: Ravallion et al., 2007
8. Agricultural Populations & Land
0
200
400
600
800
1,000
1,200
OECD
Trans.
LAC
NENA
SSA
S.Asia
E&SEAsia
1961
1970
1980
1990
2000
Million people
Agricultural population
0
5
10
15
20
25
30
35
OECD
Trans.
LAC
NENA
SSA
S.Asia
E&SEAsia
1961
1970
1980
1990
2000
Ha / ag worker
Ag land availability
9. The Role of Livestock - Household
• More income from
natural resources
through:
• Access to common land
resources
• Utilization of ‘waste land’
not suitable for crops
• Utilization of crop by-
products
• Increase in output of crop
production by nutrient
cycling
• More income from family
labour through:
• More efficient use of
heterogeneous labour
resources
• Balance seasonal labour
demand for crop farming
• Release labour for more
productive purposes
(draught animals)
• Use of labour for
processing of primary
products (value-added
capture)
10. The Role of Livestock - Agriculture
60
80
100
120
140
160
1961
1970
2000
Dev/ping
Dev/ped
Index of share of agricultural GDP
from livestock
Source:FAOSTAT
Index 1961=100
1980
1990
11. Elements of a Pro-poor Policy
• Focus on asset classes that
the poor possess, and
• increase the returns to these
assets, i.e.
• increase asset productivity
• target output to demand
• improve market access
• strengthen supply chain
bargaining power for the
poor
19. Income & Food Preferences
Q4
Q3
Q2
Q5
Live animals, wet markets
Wet markets, cheap cold chain
Inexpensive, partially processed
cold chain products
High value processed and
convenience cold chain
products
Income & consumer preferences
Aho, 2005
100
Annual per capita income in USD ppp
Proportion of population in agriculture (%)
China
India
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
0 20 40 60 80
Indust
LAC
NENA
S.Asia
SE&E.Asia
SSA
Tran
Q1 Hardly any market participation
Average income by Quintile
20. Bottom 3 Quintile Markets
Water ICT Health
Transport Housing Energy
Food
Market Size by Sector
$2.9
trillion
Source: WRI 2007
21. Food Markets and Poverty Reduction
• The poor are highly dependent on food
markets, both as producers and consumers
• Areas of high food expenditure density and
predominantly smallholder food production are
to a large extent co-located
• In the case of livestock, demand for live
animals and inexpensive partially processed
food dominates these markets
• Improving ‘market institutions’ can therefore
benefit both poor producers and consumers
26. Viet Nam Poultry Keepers & Poultry
8.3 million producers, 218 million birds (2001)
94.77%
5.19%
0.03%
Extensive Semi-intensive Intensive
Flocks
54.23%
19.96%
25.81%
Extensive Semi-intensive Intensive
Birds
27. Ha Noi Consumer Preferences
0
10
20
30
40
50
60
70
80
Local Chicken Crossbred
Chicken
Industrial Chicken
Regular Price
High Price
Price by Chicken Type (VND ‘000)
0
1
2
3
4
5
Price Taste Disease risk Regular
Supply
Ranking of Chicken Attributes
Source: Ifft et al., 2008
28. Poultry Flows North Viet Nam
Poultry Farmers
Itinerant Village Traders
(farmgate)
Retailers
W holesalers
Local/Community Market
Neighbors/Villagers
(farmgate)
47% 15%38%
(64%)
CONSUMERS
(18%)(18% )
73% 27%
(19% )
(54%)
(27% )
Other
intermediaries
93%
7%
Source: Tung & Costales 2007
29. Markets, Smallholders, and Food
Security
• Market participation by smallholders is plagued
by high access costs and information failures
• These threaten food security by undermining
supply and investment incentives for farmers,
• Promote a chronic cycle of subsistence poverty
and rural to urban migration
• Reduce national food supplies while increasing
the urban food-dependent population
• Market access reforms can strengthen low
income supply chains and multiply pro-poor
impacts
30. And, it can be done......
• Ha Noi consumers care
about and are willing
to pay for certified
safe local chicken
varieties.
• Under these conditions
smallholders can be
recruited into a
virtuous quality cycle
that increases their
incomes and improves
food safety. ‘Certified’
smallholder ‘village’
chicken