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Jikun Huang and Jun YangCenter for Chinese Agricultural Policy, CAS
A Booming Sector of China’s Livestock:Opportunities and Challenges
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Outline
1. Rising livestock sector and driving forces:
2. Future prospects
3. Concluding remarks
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4.4% of annual growth rate of agri GDP in past 30 years
0000
1111
2222
3333
4444
5555
6666
7777
8888
1979-841979-841979-841979-84 1985-951985-951985-951985-95 1996-001996-001996-001996-00 2001-052001-052001-052001-05 2006-082006-082006-082006-08
About 4 times of population growth rate
Annual growth rate of agri GDP in 1978-2008
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0%0%0%0%
20%20%20%20%
40%40%40%40%
60%60%60%60%
80%80%80%80%
100%100%100%100%
1980198019801980 1985198519851985 1990199019901990 1995199519951995 2000200020002000 2005200520052005 2009200920092009
ForestryForestryForestryForestry
FisheryFisheryFisheryFishery
LivestockLivestockLivestockLivestock
CropCropCropCrop
Shares of output values within agricultural sector, 1980-2009, (%)
Within agriculture: meat sector has grown even faster; falling the shares of crops, rising the shares of livestock and fishery
18%
34%
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Driv
ing
forc
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•D
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0000
200200200200
400400400400
600600600600
800800800800
1000100010001000
1200120012001200
1400140014001400
1980198019801980 1985198519851985 1990199019901990 1995199519951995 2000200020002000 2005200520052005 2010201020102010
需求驱动力需求驱动力需求驱动力需求驱动力：：：：人口人口人口人口1980-2010年中国人口年中国人口年中国人口年中国人口 Population (million) Average annual growth rate in 1980-2010: 1.1%
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0000
0.50.50.50.5
1111
1.51.51.51.5
2222
2.52.52.52.5
3333
1970197019701970 1975197519751975 1980198019801980 1985198519851985 1990199019901990 1995199519951995 2000200020002000 2005200520052005 2010201020102010 2015201520152015 2020202020202020 2025202520252025 2030203020302030
人口增长率显著下降人口增长率显著下降人口增长率显著下降人口增长率显著下降Population growth rate will decline significantly in the coming decades
Source: UN, 2004
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0000
10101010
20202020
30303030
40404040
50505050
60606060
70707070
1980198019801980 1985198519851985 1990199019901990 1995199519951995 2000200020002000 2005200520052005 2010201020102010 2015201520152015 2020202020202020 2025202520252025 2030203020302030
需求驱动力需求驱动力需求驱动力需求驱动力：：：：城市化城市化城市化城市化Urban population share (%)
Average urban consumer demand more for meats but less food grain
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0000
500500500500
1000100010001000
1500150015001500
2000200020002000
2500250025002500
1980198019801980 1985198519851985 1990199019901990 1995199519951995 2000200020002000 2005200520052005 2010201020102010
GDP
GDP/Capita
需求驱动力需求驱动力需求驱动力需求驱动力：：：：经济增长经济增长经济增长经济增长Rapid economic growth in China
GDP in 2010 was nearly 20 times as that in 1978
Real GDP in 1978 = 100
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Economy is expected to maintain robust growth in the coming decade
0000
1000100010001000
2000200020002000
3000300030003000
4000400040004000
5000500050005000
6000600060006000
1980 1985 1990 1995 2000 2005 2010 2015 2020
Continued growth, continued urbanization and continued dynamism in China’s economy will affect all segments of the economy and the rest of world given the size of the country.
8%
10%
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Inco
me
grow
th is
maj
or d
rivin
g fo
rce
Inco
me
elas
ticiti
es o
f dem
and
for
vario
us fo
ods
inru
ral
and
urba
nin
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6, C
hina
R i c eR i c eR i c eR i c e
W h e a tW h e a tW h e a tW h e a t
C o a r s eC o a r s eC o a r s eC o a r s eG r a i nG r a i nG r a i nG r a i n
E d i b l eE d i b l eE d i b l eE d i b l eO i lO i lO i lO i l
S u g a rS u g a rS u g a rS u g a r
V e g e t a b l eV e g e t a b l eV e g e t a b l eV e g e t a b l e
F r u i tF r u i tF r u i tF r u i t
P o r kP o r kP o r kP o r k
B e e fB e e fB e e fB e e f
P o u l t r yP o u l t r yP o u l t r yP o u l t r y
M i l kM i l kM i l kM i l k
F i s hF i s hF i s hF i s h
-0.4
-0.4
-0.4
-0.4
-0.2
-0.2
-0.2
-0.20 000
0.2
0.2
0.2
0.2
0.4
0.4
0.4
0.4
0.6
0.6
0.6
0.6
0.8
0.8
0.8
0.81 111
1.2
1.2
1.2
1.2
R i c eR i c eR i c eR i c e
W h e a tW h e a tW h e a tW h e a t
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S u g a rS u g a rS u g a rS u g a r
V e g e t a b l eV e g e t a b l eV e g e t a b l eV e g e t a b l e
F r u i tF r u i tF r u i tF r u i t
P o r kP o r kP o r kP o r k
B e e fB e e fB e e fB e e f
P o u l t r yP o u l t r yP o u l t r yP o u l t r y
M i l kM i l kM i l kM i l k
F i s hF i s hF i s hF i s h
Rura
lRu
ral
Rura
lRu
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Urba
nUr
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Per capita food grain consumption (kg)
Significant fall in food grain consumption as income increased….
0000
20202020
40404040
60606060
80808080
100100100100
120120120120
1980198019801980 1985198519851985 1990199019901990 1995199519951995 2000200020002000 2005200520052005 2009200920092009
Rice
Wheat
Other grains
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Per capita meat and other food consumption (kg/person)
… but consumptions of fruits, edible oil, meats, fish and milk have growing significantly with income overtime...
0000
10101010
20202020
30303030
40404040
50505050
60606060
70707070
1980198019801980 1985198519851985 1990199019901990 1995199519951995 2000200020002000 2005200520052005 2009200920092009
Edible oil
Fruits
Red meat andpoultry
Milk
Fish
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Meat and total expenditure in ChinaMeat and total expenditure in China
Source: CCAP and SOW-VU, 2002.
Rural now
Urban now
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0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
RM
B/p
ers
on
Food away from home (FAFH) expenditure in urban China (in 1992 price, yuan per person)
The food consumption pattern has also changed rapidlythrough increasing food consumed away from home in China.
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0%10%20%30%40%50%60%70%80%90%
100%
Grain /G-pr o
ductsM eat/M
-pr odu
ctsEggs/
E-products
Seefood/S-prod
ucts
Vegetable
s/V-P
roductsFruit/ F
-pr oducts
Diary Prod
uctsDr i n
k sBean Products
Sh
are
by
qu
an
tity
FAH FAFH
Food at home (FAH) and FAFH:FAFH is significant, take a quite large share of
consumption(Beijing in 2007)
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Driving forces of meat demand
• Population growth (++ ���� + )Impact: weakening…
• Urbanization (+ ���� ++)Impact: increasing…
• Income growth (+++���� ++)Impact: keeping strong…
Weakening demand for food grainRising demand for meat and other high value and
safety products
Huang, Yang and Rozelle, 2010
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Supply
• Production
• Major drivers-Demand changes
-Technology change
-Market reform
-Feed trade
-…
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Meat production (1000 tons)
0
10000
20000
30000
40000
50000
60000
1980 1985 1990 1995 2000 2005 2010
NSBC
CCAP
0
10000
20000
30000
40000
50000
1980 1985 1990 1995 2000 2005 2010
NSBC
CCAP
Pork Poultry
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Meat production (1000 tons)
0
1000
2000
3000
4000
5000
6000
7000
1980 1985 1990 1995 2000 2005 2010
NSBC
CCAP
0
1000
2000
3000
4000
5000
6000
7000
1980 1985 1990 1995 2000 2005 2010
NSBC
CCAP
Beef Mutton
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TFP: total factor productivityTFP annual growth rates (1991/93-2003/04)
Internationally, if a country’s ag TFP rises more than 2% a year, it is GREAT … China’s rate of rise is more than 3 percent per year!
0
1
2
3
4
5
6
Rice
Wheat
SoybeanCotton
Cucum
berTom
ato
Orange
Hog
Egg
Beef
Jin, Ma, Huang, Hu and Rozelle, 2009.
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Integration in China’s markets (percent of market pairs that have integrated price series)
1991-1992 1997-2000 2001-2003
Maize 46 93 99
Soybean 56 95 98
Rozelle and Huang, 2004
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External economy:-- Promotion of Trading Companies
-- Tariffication and reduction of tariff
Agricultural tariff rate (%):
05
101520
253035
4045
1992 1998 2001 2005
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Agricultural export and import (billion US$) during 1983-2009
0000
10101010
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30303030
40404040
50505050
60606060
70707070
1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
Export Import
However, China has been a net food exporter in most years in thepast 3 decades (though China was a net importer in recent years)
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Maize net import (1000 tons)
-20000
-15000
-10000
-5000
0
5000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
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Soybean net import (1000 tons)
-10000
0
10000
20000
30000
40000
50000
60000
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
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Prospects of commodity market
Methodologies and Scenarios• GTAP (Global Trade Analysis Program)
• Considering major driving forces of:– Supply: Technology follow recent trend– Demand:
• Population: UN’s projection• GDP growth in 2011-2020
–Baseline: 8% growth–Higher growth scenario: 8.8% growth
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Change of self-sufficiency in 2010-2020: baselineDespite rising demand, most foods will be produced
in China except for edible oils, sugar and milk…
0.0
0.2
0.4
0.6
0.8
1.0
1.2
Rice
Whea
t
oth
er gra
in
Veg
table &
fruit
Oilseed
s
Sugar
Beef &
mutto
n
Pork &
poultry
Milk
Fish
Pro
cessedfo
od
2010 2015 2020
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Chi
na’s
Net
Exp
ort o
f agr
icul
ture
and
food
(bill
ion
US
D)u
nder
BA
SE
LIN
E in
201
0-20
20
-20
-15
-10-505
10
15
20
Rice
Wheat
other grain
Vegtable & fruit
Oilseeds
Sugar
Cotton
Wool
Other crops
Beef & mutton
Pork & poultry
Milk
Fish
Processed food
20
10
20
15
20
20
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China’s Net Export of agriculture and food (billion USD) under baseline and higher
growth scenarios in 2020
-20
-15
-10
-5
0
5
10
15
20
RiceW
heatother grainVegtable and fruit
OilseedsSugarCottonW
oolOther cropsBeef and m
utton
Pork and poultry
Mil k
FishProcessed food
Baseline
High GDP growth
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0
500
1000
1500
2000
2500
3000
3500
1978 1983 1988 1993 1998 2003
Year
An
nu
al w
age
(197
8 re
alyu
an)
Collective Other
2007
Skilled / managerial wage
Unskilled wage
During this process … what is happening to wages?P
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0
500
1000
1500
2000
2500
3000
3500
1978 1983 1988 1993 1998 2003
Year
An
nu
al w
age
(197
8 re
al y
uan
)
Collective Other
Unskilled wage
2007
Skilled / managerial wage
Since 2000
Our work has shown that wages are rising fast … especially in recent years …
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Production modes, 2001 and 2009(estimated by CCAP)
0
10
20
30
40
50
60
70
2001 2009
Backyard Special household Industry
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Conclusion remarks� Livestock sector has been rapidly
expanding and will continue to grow in the future;
� Major driving forces of demand are income growth, urbanization and food consumption pattern changes;
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Conclusion remarks� Major driving forces of supply are
rising domestic demand, technology changes, market liberalization, and feed imports;
� As income increased and wage rose, production structure has been moving from backyard to special livestock farms and large commercial (or industrial) production modes.
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Tha
nks
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