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. Structure Rationale Approach Findings Trends in Regional policy issues Specific policy issues by country Recommendations Key messages 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. APPROACH Compilation and analysis of a consistent dataset related to feed. Policy and industry review of feed industry. Identification of policy issues. 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. FINDINGS China, Indonesia, Philippines and Vietnam 7. Trends in Composition Demand Trade Prices Feed 8. Composition Regional trends in key feed component use: Concentrates Protein DDG Coarse grains MBM/fishmeal 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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 Nio 20. Regional policy issues Feed vs Food Feed industry concentration Feed safety Feed imports Feed price instability 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. 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. 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. Feed imports Domestic supply of key feed components is lagging behind demand High and dependence on global feed markets 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. Specific policy issues by country 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. 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. 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. 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. RECOMMENDATIONS 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. 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. 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. KEY MESSAGES 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. 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. Thank you