#%h, discussion i'*per 89data.daff.gov.au › brs › data › warehouse › pe_abarebrs... ·...

#%h, DISCUSSION $,,4 I'*PER

I nu51 ( \ I t - A,, %-, ,\%

89.5 PRICE FORMATION FOR AUSTRALIAN FIELD PEAS: THE IMPACT OF EC POLICIES

DISCUSSION PAPER 89.5 PRICE FORMA'TION FOR AUSTRALIAN FIELD PEAS: THE IMPACT OF EC POLICIES

PROJECT 42401

SCOTT BARTLEU, LINDA YOUNG AND LINLEY CRACKEL

AUSTRALIAN BUREAU OF AGRICULTURAL AND RESOURCE ECONOMICS

AUSTRALIAN GOVERNMENT PUBLISHING SERVICE CANBERRA

O Commonwealth of Australia 1989

This work is copyright. The C o p g h t Acf 1968 permits fair dealing for study, research, news reporting, criticism or review. Selected passages, tables or diagrams may be reproduced for such purposes provided acknowledgment of the source is included. Major extracts or the entire document may not be reproduced by any process without written permission of the Director Publishing and Marketing AGPS. Inquiries and requests should be directed to the Manager, AGPS Press, Australian Government Publishing Service, GPO Box 84, Canberra ACT 2601.

ISSN 1030-9527 ISBN 0 644 11037 6

Australian Bureau of Agricultural and Resource Economics GPO Box 1563 Canberra 2601

Telephone (062) 469111 Facsimile (062) 469699 Telex AGEC AA61667

Printed in Australia by Better Printing Service, I Foster Street, Queanbeyan N.S.W. 2620

Foreword

In recent years Australian field pea production has increased.drarna tically as farmers have diversified their crop mix. With the sudden owth of the field pea industry there has P arisen a need to understand the structure o the field pea market and to evaluate its potential. These issues are addressed in this paper.

BRIAN FISHER Executive Director

Australian Bureau of Agricultural and Resource Economics

August 1989

iii

Acknowledgments

The authors wish to acknowledge the significant contribution that Brent Borrell made to this paper, and also wish to thank Peter Connell for his assistance in the early stages of the project.

I CONTENTS

Summary 1

1. Introduction 1.1 Supply and disposal of Australian field peas

I 1.2 The export market

2. A theoretical model of commodity price formation 5 2.1 The interaction of country markets 2.2 Pricing and demand within a feed market

3. An overview of the EC feed market - 8

4. Modelling the EC compound feed industry 4.1 Data 4.2 Validation of the models 4.3 Application of the models

5. Results 5.1 Effect of reducing EC cereal prices 5.2 Potential for greater use of field peas

6. Implications for Australia 18

Appendix: Least cost feed models 19

References 28

List of figures and tables

Figures A The world market for field peas

B EC imports of non-grain feedstuffs and cereal use in EC compound feeds 8

C Actual compound feed prices and prices generated by least cost models

D Dependence of the price of field peas, relative to soymeal, on soymeal and cereal prices

Tables 1 Supply and disposal of Australian field peas

2 Australian exports of peas, by destination

3 Nutrient content of field peas, soymeal and wheat

4 EC compound feed production

5 EC-12 grain legume production

6 Comparison of actual feed compositions with compositions generated by the models

7 Comparison of estimated market prices for field peas with prices generated from the pig feed model

8 Effect of lower EC cereal prices on the field pea price

9 Structure of the pig feed model

10 Structure of the layer hen feed model

11 Structure of the broiler feed model

12 Feed ingredient supply activity submatrix for the feed models

1 SUMMARY The production of field peas in Australia has increased rapidly in the past few years, exceeding 500 kt in 1988-89, compared with 240 kt in 1985-86. The domestic market, the European Community and India are major destinations for Australian field peas. Australia and the Community use field peas as a livestock feed and India imports them for human consumption. The characteristics of demand in the two types of markets are quite different.

Policies supporting the price of cereals within the European Community have decreased the use of cereals in compound feeds and have motivated feed compounders to use other feedstuffs. As the demand for a feed ingredient is determined by the nutritional characteristics of the ingredient and the prices of substitutes, the low duties on imported non-grain feedstuffs have made field peas attractive to feed compounders and have raised import prices. Because other products can be used as substitutes for field peas the demand for peas is very price responsive.

A set of least cost feed models, similar to those used by the EC compound feed industry, was developed by ABARE. These least cost feed models were used to select from a wide range of potential feed ingredients the mix of ingredients that satisfies the requirements of a diet at the lowest possible cost. The models were developed for the pig and poultry industries, the main users of field peas.

Using the models it was found that current EC cereal prices are an important influence on the price that EC feed compounders are willing to pay for fielci peas. When EC cereal prices exceed world levels, EC feed compounders are willing to pay more for field peas than are purchasers in alternative markets. The results of the model also indicate that EC demand is very sensitive to changes in the prices of field peas and substitutes and that if current policies are continued the use of field peas

in compound feed could be expanded considerably.

Because the European Community can absorb large volumes of field peas it can have a major influence on the price of Australian field peas. For example, when the Community is a significant purchaser, the Indian import tariff will have little influence on world prices. Conversely, however, the influence of the European Community is diminished when, as occurred in 1988-89, reduced wheat prices in the Community decrease the price that EC feed compounders are willing to pay for field peas, and higher cereal and protein prices in Australia result in increased domestic demand for peas as feed.

The EC Commission has proposed to subsidise the use of cereals in compound feed rations in order to increase the amount of EC cereals used as feed. Such a change in EC policies would reduce EC demand for peas and would lower the price EC feed compounders were willin to pay by around US$30/t. However, t % e subsidy (or a reduction in EC cereal support prices) would support world cereal prices by reducing EC exports of subsidised wheat. As field peas are commonly grown in rotation with wheat, Australian field pea growers would probably experience both negative and positive effects on their returns.

Prices set in the EC market will also have implications for Australian oilseed and meat meal prices, because field peas can be used as substitutes for other protein meals. If offer prices for field peas in Europe are low relative to protein meal prices on the Australian market, field peas will be substituted for the other protein meals, forcing the prices of the latter toward export parity.

Australian field peas

. Introduction

Field peas, chick peas, cow peas and lupins are all grain legumes. A legume is a plant which fixes its own nitrogen from the atmosphere. Pulses are the edible seeds of grain legumes.

Australian production of field peas inaeased rapidly from 164 kt in 1984-85 to 518 kt in 1986-87 and to an estimated 516 kt in 1988-89 (table 1). Exports of field peas, on the other hand, expanded from 50 kt in 1984-85 to 340 kt in 1986-87 before falling back to an estimated 200 kt in 1988-89.

The most significant markets for Australian field peas are the European Community, the domestic feed market, and the Indian market where peas are used for human consumption. It is important to understand how changes in each of these markets may affect the level and stability of field pea prices, and the consequences of such developments for the field pea industry in Australia.

In this paper price formation for Australian field peas is investigated and a number of questions on the relative importance of the food and feed markets in price determination are addressed. A representative model of the world market provides a framework for answering questions about the price effects of increased production of field peas within the European Community and in exporting

counties, and of the recent increase in the Indian pea tariff from 10 per cent to 35 per cent. A set of least cost feed models is used to test the conclusions of the theoretical analysis. These models are also used to determine the effects of EC policy changes on EC demand for field peas and on the price of field peas.

1.1 Suppl and disposal T of Austra ian field peas In 1988-89 the area sown to field peas in Australia was 454 000 ha, up 220 per cent on the 1984-85 area (table 1). The main producing areas are Victoria (222 000 ha in 1988-89) and South Australia (140 000 ha), although the areas sown in New South Wales (45 000 ha) and Western Australia (47 000 ha) have inaeased from low levels.

The expansion into field peas was prompted by declining cereal prices and the agronomic advantages of growing field peas in rotations with cereals. Legumes can provide a break in the disease cycle for cereals, promoting higher yields in subsequent cereal crops. Legume aops also fix atmospheric nitrogen, leaving more available in the soil for subsequent crops.

The main domestic use for field peas is for pig and poultry feeds, with a smaller amount being used for seed (table 1).

1 Supply and disposal of Australian field peas a

Item Unit 1984-85 1985-86 1986-87 1987-88 p 1988-89 s

Area '000 ha 141 208 316 442 454 Yield t/ha 1.17 1.15 1.64 1.10 1.14 Production kt 164 241 518 487 516

EXPOrtS kt 50 125 340 313 200 Domestic use -food and feeds kt 93 85 134 129 276 - ~ e e d s s kt 21 31 44 45 40

a December-November uop year. p Pre1imin;ay. s ABARE estimate Smace Auatraliim Bureau of Statistics (1988,19%9rr,b,c).

2 Discussion paper 89.5

Potential exists for the increased useof field peas as a feed ingredient in the pig and poultry industries. In current feeding practice, field pea incorporation rates of 20-40 per cent for pigs, 10-20 per cent for broilers and 15-25 per cent for layers are regarded as acceptable. At the higher rates, up to 900 kt of field peas could be absorbed annually by the domestic feed industry. Costs associated with transporting peas to the main pig and poultry producing areas of New South Wales, Queensland and Victoria may prevent this potential from being realised. High incorporation rates for industries far from field pea producing areas will occur only when field pea prices are low relative to the prices of grains and oilseeds.

Production of field peas is projected to continue to expand, to around 708 kt in 1993-94. However, the rate of expansion over the next few years is expected to slow due to higher cereal prices (Bartley and Borrell1988).

1.2 The export market Export markets for Australian peas are detailed on a financial year basis in table 2. Although export data are available only for field peas, chick peas and cow peas combined, industry sources and production data indicate that field peas dominate the figures, accounting for over 80 per cent of pea exports after 1986-87. Prior to 1986-87 Australian pea exports were imported mainly b Asian countries, which use peas as food. !? ince 1986-87 large quantities of Australian peas have been imported by the European Community for livestock feed. More recently, however, EC imports of Australian field peas have declined. The reasons for the variability of EC imports are investigated in this paper.

Exports of Australian peas to India began in 1984-85 at a level of 9 kt, and by 1986-87 had risen to 94 kt; in 1987-88 they rose to 173 kt, following the drought which affected the 1987 Indian pulse and grain

3 Australian exports of peas a, by destination

Destination

European Community b Netherlands Belgium and Luxembourg France

' United Kingdom Portugal

Asia Taiwan Malaysia Singapore India

Mauritius Sri Lanka

Middle East Bahrain

Iraq United Arab Emirates

nii Canada Total (Value, $Am nominal)

a Field peas, chickpeas and cow peas for feed and food use on a July-June basis. b Regarded as twelve count~ies for all years. Sour~e: Australiari Bureau of Statistics (1989).

Australinn field peas 3

harvest. Exports to India declined in sown to this crop has doubled from 130 000 1988-89 to 133 kt due to the improved ha in 1986 to 260 000 ha in 1988. As in Indian harvest and are expected to remain Australia, low cereal prices have mo tivated around their pre-drought level over the prairie producers to diversify their medium term. production.

Indian consumers regard Australian Countries other than Canada and field peas as a low quality pulse (Mason Eastern Europe are not expected to become 1989). In poorer regions of India, Australian significant competitors with Australia in field peas are used to partially substitute feed markets, but may compete with for more expensive chick peas in the Australia in higher priced food markets. production of flour made from peas. Turkey exports lentils, chick peas and Higher quality pulses, including chick smaller quantities of other legumes, peas, pigeon peas, mung beans and lentils, Argentina exports beans to neighbouring are used as vegetables in prepared meals. countries, and the United States exports

Exports of Australian peas to the high quality legumes for canning. Though EuropeanCommunityaccountedfor66per China has exported field peas, its cent of total Australian pea exports in production and exports are declining due 1986-87. In 1987-88, reduced pea yields in to policies that encourage livestock and Australia combined with increased vegetable production (FA0 1987). demand from India resulted in lower Australian exports to the European Community; however, the EC market still accounted for 27per cent of total Australian exports of peas. In 1988-89, Australian exports of field peas to the European Community were 68 kt.

The main importing countries in the European Community have been the Netherlands, France, Belgium and Luxem- bourg, where peas are used mainly in the production of pig and poultry feeds. In the Netherlands, Belgium, Luxembourg and to a lesser extent France these industries are heavily concentrated around the ports. Australian peas compete against peas and beans produced within the European Community - mainly in France, England and Denmark - and imported peas from Canada and some Eastern European countries. Total consumption of peas and beans by the EC compound feed industry in 1988-89 was an estimated 4.5 Mt, with about 4.2 Mt from EC production. (EC production is estimated at 4.7 Mt for 1988-89, but around 0.5 Mt is used on farms and for seed.)

Other major exporters of grain legumes are Turkey., the United States, Argentina, Canada and Eastern Europe. Of these, Canada and -to a lesser extent -Eastern Europe have emerged as competitors with Australia for the European market for field peas. Canadian field pea production is largely in the prairie states, where the area


1 2. A theoretical model of commoditv 1 price formation

The world price of a commodity is determined by the balance of supply and demand by the world's exporters and importers.

2.1 The interaction of country markets The world pea market is illustrated schematically in figure A. The difference in the characteristics of demand for peas used as food and peas used as livestock feed is illustrated by the different slopes of the demand curves of the two importers.

The slope of a demand curve indicates how much a change in the price of field peas affects the quantity of field peas demanded. The demand curve for an importer of peas for food, such as India, is drawn with a relatively steep slope (panel a). The demand for food is generally less responsive to price changes (that is, less price elastic) than the demand for feed, due to lower substitutability with other items.

In feed rations, many other ingredients can be substituted for field peas, so the demands of the European Community (panel b) and Australia (panel d) are hypothesised to be very responsive to

changes in the price of field peas (that is, very price elastic).

Although relatively flat, the Australian demand curve is likely to be steeper than that for the European Community due to the geographical spread and smaller size of the Australian feed industry. Demand will be less responsive to price changes because the use of increased quantities entails rising costs of transporting field peas over progressively greater distances. In contrast, the EC compound feed industry is large and heavily concentrated around major shipping ports. In addition to being very flat the EC demand curve is represented as being higher than in other export feed markets, due to the high price of EC cereals.

The supply curves for Australia and the food importer show the typical upward sloping form. The supply curve for the European Community is kinked because below a set level producers are sheltered from world prices by a guaranteed minimum price.

The interaction of the three markets is shown in panel c, where the aggregate excess demand and supply curves are drawn. The excess demand curve represents the difference between demand and

A The world market for field peas

a. India b. European c. World market d. Australia (food importer) Community (exporter)

(feed importer)

D

D

ABARE chart

Quantity

Australian field peas 5

supply in the two importing countries, while the excess supply curve represents the difference between supply and demand in the exporting country. The world price is the point where excess supply equals excess demand.

It is hypothesised that the world excess demand curve is kinked, due to adding up the individual excess demand curves of India and the European Community, with their different slopes. If a change in supply by Australia, or demand by the Com- munity, shifts the curves over the flat portion of the world excess demand curve the change in price will be relatively small. If the change is large enough to shift the intersection of supply and demand to the sloped (inelastic) portion of the excess demand curve, the change in prices will be much greater.

The EC market is a dominant factor in world field pea price determination, because high EC cereal prices raise the price of field peas in the Community, and because EC demand is large and very price responsive. The Indian food market and Australian feed market play a secondary role. By paying a small premium, India and Australia can attract a large portion of the crop away from the Community. The remainder of this chapter and the next chapter describe the characteristics of the EC feed market. In chapters 4 and 5 the responsiveness and the level of the EC field pea demand are measured empirically using models similar to those developed by the EC feed industry to formulate least cost feed rations.

emphasis on protein sources, including vegetable proteins.

For a given level of feed demand three factors are important in determining the price that a specific feedstuff can command: its availability, its nutritional characteristics and the price of substitutes.

The nutritional characteristics of a feed determine its potential range of use in the pig, poultry, cattle and sheep industries. The nutritional needs of these animals are significantly different, and make some feeds superior to others for a particular industry Cattle and sheep can digest feeds ' with a high fibre content and can manufacture some of the amino acids they need when they are not provided in the diet. Pigs and poultry do not have these abilities (Sutherland 1970).

Soymeal, cereal and peas are used in pig and poultry rations. The price that a compound feed manufacturer is willing to offer for a feed is determined largely by the content and quality of its protein and its energy content, although other characteristics such as the fibre content also influence its price. Soyrneal, which accounts for over 70 per cent of the trade in vegetable proteins, provides the standard against which other feeds are priced. Soymeal commands a high price relative to other protein feedstuffs due to its high protein level and its balance of the amino acids needed by pigs and poultry. It has a relatively low fibre content.

Cereals are an important source of energy, and have a moderate level of protein and low fibre. As indicated in table

2.2 Pricin and demand within a f eed market When field peas are used as feed they become part of the larger market for feedstuffs, and the prices that they command reflect their position in that market. The demand for feed is derived from the demand for livestock products, and the level of livestock production has a significant influence on the overall level of prices received for feedstuffs. The market for feedstuffs contains a wide variety of very different products, and the growth of intensive feeding has brought increased

3 Nutrient content of field peas, soymeal and wheat a

Digestible Ingredient energy Protein Fibre

Soymeal 14.0 44.0 7.1 field peas 14.2 22.5 5.8 Wheat 14.2 9.1 2.4

a Estimates are indicative of nutrient content only. Actual values vary between mples. Souns: Synthgised from National Research Council (1977, 1979); Ensminger and Olenfine (1978); Canadian International Grains Institute (1982), Mdntosh and Williams (1984); and Evans (1983.

6 Discussion pper 895

3, field peas have half the protein content soymeal and cereals. Field peas will receive of soymeal and twice that of wheat, while a price that relates their protein and energy their energy level equals that of wheat. The content to the implicit prices of protein and fibre content of peas is between that of energy in soymeal and cereals.


An overview of the EC feed market

In the European Community a combination of policies has resulted in EC feed compounders placing a high value on field peas, and this in turn has caused the EC market to have a dominant influence on the world price of peas. Supported EC cereal prices have decreased the use of cereals in compound feeds in favour of other feedstuffs. Policies supporting the producer price of vegetable protein crops have resulted in a large increase in their production. At the same time, low duties on imported non-grain feedstuffs have made these feedstuffs attractive to feed compounders, resulting in increased import volumes. Policies supporting the producer price of meat, in combination with the availability of cheap feedstuffs, have contributed to the profitability of livestock production, increasing demand for livestock feed.

The Common Agricultural Policy of the European Community has maintained high producer and consumer cereal prices through a combination of intervention buying, import levies and export subsidies (for details, see Bureau of Agricultural Economics 1985). One result of these policies has been that cereal prices within

B EC imports of non-grain feedstuffs and cereal use in EC compound feeds

Cereal use (%) \ 25 30

Mt ABARE chart % . . 1676 ' 1678 ' 1680 ' 1682 1684 1986

the EC are usually much higher than world cereal prices. Another result has been the transformation of the Community from a major importer to a major net exporter of grain. Wheat, barley and maize are the most important cereals grown in the Community, accounting for approximately 90 per cent of grain plantings.

While EC cereal prices are usually above world prices, a wide range of imported feedstuffs is available to feed compounders at world prices or at low rates of duty. The duties for non-grain feedstuffs were fixed in 1962 during the Dillon Round of negotiations under the General Agreement on Tariffs and Trade (GATT); these zero or low fixed duties are now commonly referred to as the 'GATT bindings'. Imports of feedstuffs into the Community reached a peak of nearly 44 Mt in 1982 and are summarised in figure B. The percentage of cereals in EC feed rations declined from 43 per cent in 1976 to 32 per cent in 1986 (Commission of the European Cornmun- ities 1988b).

Inadequacies in the data on field pea trade make it difficult to calculate an exact figure for EC field pea imports. However, they are very small in relation to total feedstuff imports-between 1 per cent and 2 per cent.

EC livestock support policies have contributed to a strong expansion in the production of meat and livestock products and have therefore had a significant influence on the demand for feed. As field peas are used almost exclusively in rations for the pig and poultry industries, the beef and dairy cattle industries will not be considered here.

Pig production is supported by import levies, intervention buying and export subsidies. Import levies are adjusted for changes in production costs to ensure that EC pig meat producers are not penalised when EC cereal prices are above world levels. Export subsidies are paid to enable

Discussion paper 89.5

4 EC compound feed production

Germany, FR France Italy Netherlands Belgium and Luxembourg United Kingdom Ireland Denmark Spain Portugal Total a

a EC-6 for 1970, EC-9 for 1975 and 1980, EC-10 for 1981-85, an available. Sourctz European Feed Manufacturers' Federation (1987).

exporters to compete on world markets. These policies have been important in transforming the European Community into a significant exporter of pig meat.

Poultry and egg production in the Community is also protected by import levies and export subsidies. For further detail on pig and poultry policies, see Hams, Swinbank and Wilkinson (1983).

The growth of the intensive livestock sector and the cost advantages of imported feedstuffs have contributed to a rapid increase in compound feed production. Table 4 indicates that EC production of compound feed increased from 33 Mt (for the EC-6) in 1970 to 97 Mt in 1986 (for the EC-12). Only part of this increase was due to the change in membership of the European Community. In the original six countries, production almost doubled between 1970 and 1981, and has remained fairly constant since then.

The growth of the compound feed industry was facilitated in the Federal Republic of Germany, the Netherlands, Belgium and Denmark by two factors. First, their proximity to the port facilities of Rotterdam and Hamburg lowers the transport costs of imported feeds. Second, the operation of fnonetary compensatory amounts (MCAs) has favoured the use of imported feedstuffs in some countries. In Germany, the Netherlands and Belgium, which have strong currencies, MCA adjustments have raised the domestic

~d EC-12 for 1986. na Not applicable. Figures for Greece not

prices of grains, making it attractive to import non-grain feeds and oilseed meals which are not subject to MCAs (Schmidt and Gardiner 1988, p. 16). At the same time, MCAs are also applied to livestock products and their support prices, increasing livestock prices and thus further benefiting users of non-grain feed ingredients.

The world shortage of protein feed in the early 1970s and the US embargo on soybean exports prompted the Community to change its regimes for protein feeds in order to increase its level of self-sufficiency. Another goal of the same policies was to reduce the grain surplus by making alternative crops more attractive. Increases in support prices for soybeans, rapeseed and sunflowerseed resulted in an increase in oilseeds production from 2.3 Mt in 1979-80 to 11.6 Mt in 1987-88; oilseeds self-sufficiency increased over this period from 11 per cent to 46 per cent.

In 1978 support policies were instituted for peas and beans. (In 1984 sweet lupins

1. The MCAs are a system of taxes and subsidies on agricultural trade which change with the parities of individual EC currericiee and agricultural exchange rates relative to the ECU (European Currency Unit), effectively preventing internal agricultural trade from being fully affected by depreciations and appreciations. In practical terms the MCA is the difference between the rates of exchange at which agricultural commodities are traded in EC countries and those at which non-agricultural goods and services are traded.


5 EC-12 grain legume production

I

Country 1982 1983 1984 1985 1986

I 1987 1 Field peas -France -Denmark - United Kingdom Beans - United Kingdom -Italy -West Germany -France -Spain

I Total 1 200 1 450 2 000 2 530 2 950 3360 1 I

I Source: Toepfer International (1987).

were also included.) As a result EC production of field peas and beans increased from 1.2 Mt in 1982 to 3.4 Mt in 1987 (see table 5), and to an estimated 4.7 Mt in 1988. Further expansion of production may be inhibited by policy modifications adopted by the EC Council in February 1988. These modifications aimed to reduce budgetary costs by restraining the production of many crops, including grain legumes, for the three marketing years commencing 1988-89. If production of grain legumes in these years exceeds 3.5 Mt, support prices will be reduced. In the 1988-89 marketing year, support prices were to be reduced by 0.45 per cent for each 1 per cent production overshoot. For subsequent marketing years the penalty would be 0.5 per cent. However, these reductions are in terms of European Currency Units (ECUs) and may be more than counteracted by changes in the conversion rates at which support prices are converted into national currencies.

The major features of the support regime for peas, beans and lupins are a minimum grower price for producers and an 'incorporation aid' subsidy for crushers who have paid growers this minimum price. The incorporation aid is intended to make EC peas, beans and lupins competitive with protein feeds, such as

10

soymeal, which are imported at world prices. Crushers are eligible for the aid payment when world soybean meal prices (cif Rotterdam) are below an 'activating price' which is set each year during price negotiations and which serves as a minimum price for protein feeds. For peas and beans the aid payment is 45 per cent, and for lupins 60 per cent, of the amount by which the world soybean meal price falls short of the activating price. These percentages are intended to reflect the differences in nutrient values between peas, beans and lupins and soymeal.


4. Modelling the EC compound feed indus trv

J

In chapter 2 it was argued that the European Community plays an important role in price formation for field peas. This argument rests on the hypotheses that EC demand for field peas is very price responsive (elastic) and that high EC cereal prices raise the demand for field peas.

To test the validity of these hypotheses I three representative least cost feed models I were developed -for the Dutch pig meat,

poultry meat and egg industries. These models are similar to those used by EC producers to design feed mixes for more specific purposes; they are fully described in appendix A. The models can also be used for forecasting prices of field peas and determining the effects of policy changes on the demand for and price of field peas.

'Advanced price formulation systems for compound feeds are used in most EC countries, with least cost formulations being widespread in the EC feed milling industry' (UNCTAD 1984). Least cost feed models are used to select from a large range of potential feed ingredients the mix that satisfies the requirements of a diet at the lowest possible cost. The choice of feed ingredients depends on the nutrient requirements of the ration, the nutritional value of the feed ingredients and their availability and prices. Substitution of feed ingredients occurs as the relative prices of feed ingredients change.

Least cost feed models can also be used to provide other economic information. The models can be solved to show how changes in the price of one feed ingredient, such as soymeal, affect the demand for that and other ingredients. They can also be used to show how the price a compounder would be willing to pay for a particular ingredient, such as field peas, alters with changes in the prices of other feed ingredients. These relationships are central to understanding the process of price formation for field peas in the EC feed industry.

The three least cost feed models are based on diets that constitute the major proportion of feed produced for each industry. The pig model represents a diet for a pig of over 50 kg liveweight with unrestricted access to feed. The other models represent diets for a broiler aged 3-6 weeks with unrestricted access to feed and for a layer hen fed 120 g a day. The Dutch feed industry was chosen because the Netherlands is a major EC market for Australian field peas and because price data for most ingredients are readily available on a cif Rotterdam basis. Other major markets for Australian field peas include France, Belgium and Luxembourg.

Because much of the Dutch compound feed industry is located around Rotterdam, the largest port in Europe, and because it is cheaper to transport animal products than the feed used to produce them, the Netherlands has a comparative advantage in the use of imported feed ingredients. As explained above, high use of imported feed ingredients is encouraged by the high price of cereals relative to imported feed ingrc- dients, and this is particularly truc of the Netherlands. In 1985, cereals (excluding cereal by-products) accounted for only 15 per cent of Dutch compound feed (including cattle and other livestock feed), while the EC-12 average was 35 per cent.

Nevertheless, the method used to model the Dutch feed industry is likely to be applicable to the industries of other EC countries. The criteria used to select ingredients will be the same throughout the Community: differences in the use of ingredients between the Netherlands and other EC countries will reflect differences in the relative costs of feed ingredients after transport and currency adjustments.

4.1 Data The data required were obtained from a large range of sources. Price data were


- -

obtained from Eurostat (1988), Oilworld International Grains Institute 1982; (19881, Toevfer International (1987) and McIntosh and Williams 1984; Evans 1985). ~omr&ssioh of the European Communities (1988~). Data for the diet specifications and feed ingredient incorporation rates were originally derived from National Research Council reports (1977,1979) and were updated where more recent information was available (Low 1980; McIntosh and Williams 1984). Draft models were reviewed by Australian industry personnel and adjusted accordingly. Material from a thesis on the West German compound feed industry (Hillberg 1984) was also used to refine the models.

The nutrient composition of the feed ingredients used in the models was synthesised from a range of sources (National Research Council 1977, 1978; Ensminger and Olentine 1978; Canadian

4.2 Validation of the models To verify the accuracy of the models, annual Dutch prices for pig, layer hen and broiler compound feed rations were compared with those generated for the period from 1983-84 to 1986-87 (figure C). , Although the prices generated are much , lower than the actual feed ration prices they exhibit the same relativities between the feeds and similar variations from year to year. The model prices are lower because they are based on cif Rotterdam feed ingredient prices and exclude other costs incurred in feed manufacturing such as wharfage, transport, processing, storage, handling, labour, finance and marketing.

6 Comparison of actual feed compositions with compositions generated by the models

1983-84 1984-85 1985-86 Average absolute

Feed Actual Model Actual Model Actual Model difference 70 % % % % 70 %

Pig feed Cereals 16 19 12 16 12 18 34.0 High protein meals 22 21 23 25 25 27 7.1 Medium protein meals 18 18 17 15 17 18 5.9 Manioc 23 30 * 27 30 * 30 30 * 13.8 Legumes a 6 6* 6 6 * 6 - 33.3 Total 85 94 85 92 90 93

Layer hen feed Cereals 43 48 45 46 38 46 11.6 High protein meals 24 24 25 25 27 25 2.4 Medium protein meals 11 10 11 9 12 10 12.3 Manioc 8 8 9 10, 10 10, 3.7 Legumes a - I* - 1 * 1 - 100.0 Total 86 91 90 91 88 91

Broiler feed Cereals 39 60 35 45 29 45 45.9 High protein meals 38 36 38 38 39 39 1.8 Medium protein meals 3 - 2 - 3 - 100.0 Manioc 10 - 12 12 * 12 12* 33.3 Fats 5 3 3 4 4 4 24.4 Legumes a - - - - 4 - 33.3 Total 95 99 90 99 91 100

aLegume incorporation rates were set at 6 per cent for pigs and I per cent for poultry to reflect use and availability over the period of comparison. * Upper limit.


C Actual compound feed prices and prices generated by least cost models

ABARE chan

300 Broilers

250 1 200

100 Layers

US$/t - Actual - - Model

1983 1684 1985 19i6 -84 -85 -86 -87

These costs were excluded due to difficul- ties in obtaining this information, and in the belief that these costs would have only a small influence on the relative costs of feed ingredients and hence on their use.

Model results were also compared with year to year changes in the actual mix of feed ingredients used to produce feeds for the pig and poultry industries. In table 6, ingredient use in the Netherlands from 1983-84 to 1985-86 is compared with that generated by the models. Note that the classes of feed ingredients listed in table 6 do not include all the ingredients modelled, and the latter in turn did not include all the ingredients actually used by the industries. In the broad terms shown here, the model results align reasonably well with actual feed ingredient use. The cereal component is generally greater in the model feeds than in the actual feed data because only a limited set of ingredients is specified in the models. The listed ingredients account for a smaller proportion of the actual feeds than of the model generated feeds, as is shown by the subtotals.

Within the broad classes of ingredients, such as within the protein meals, there are some larger differences between the actual use of individual ingredients and that in the model results. Differences at the ingredient level are not unexpected, because the models represent only one feed ration within each industry and because they are based on average annual prices and cannot account for seasonal changes in prices and availability of feed ingredients.

- - - --

The linear nature of the models also tends to result in high levels of incorporation of some ingredients at the expense of others, based purely on relative prices. In reality, compound feed manufacturers may be slightly conservative in selecting ingredients, taking into account not only relative price movements but the desirability of maintaining diversity in sources of ingredients and of avoiding large changes in the feed rations. Such changes can have adverse effects on livestock performance (John Drury, Allied Mills, personal communication, April 1987).

Bearing these problems in mind, it can be concluded that the models approximate the industry data reasonably well. To test the importance of the differences in ingredient use for predicting field pea prices, incorporation rates of key ingredients were adjusted in the models. In all cases moderate changes in rates had little effect on the field pea prices generated.

The accuracy with which the models could predict field pea prices was tested by restricting the amount of field peas in the models to obtain a shadow price for field peas: an estimate of the price EC compounders would be willing to pay for field peas. Prices derived from the pig model arc compared with actual prices over the period 1983-84 to 1987-88 in table 7. The pig model was chosen as the main basis for this comparison as this industry has been the principal market for field peas. The model prices are reasonable estimates of field pea values, with the maximum error over the period being a 7 per cent

- - - - - -- - pp

7 Comparison of estimated market prices for field peas a with prices generated from the pig feed models

Year Estimated market price b Model price

US$/t US$/ t

1983-84 1 84 188 198485 139 149 1985-86 1 67 1 63 1986-87 186 189 1987-88 19&220 c 200

a cif Rotterdam. b Calculated by subtracting the 'inco~poration aid' payment from the market price of field peas in the Netherlands. c Obtained from an Australian grain trader.


overestimation. Prices obtained from the relativities betwecn them. The shadow layer hen model are similar to those from price, which in this application provides an the pig model, while those from the broiler estimate of the price compounders would model are generally lower, probably be prepared to pay for field peas in a because of the higher energy and protein competitive market, was obtained from requirements of the broiler rations and each solution. This procedure was repeated their lower tolerance to fibre. In 1985-86 with cereal priccs at various levels to there was some use of legumes in the determine the influence of EC cereal broiler industry, but this may have been for policies, and changes to these policies, on breeding stock rather than for broilers. the price EC feed compounders are willing

to pay for field peas.

4.3 Application of the models The first application of the models was to determine the relationship between field pea values and the prices of protein and cereal feed ingredients. The incorporation of field peas in the diets was restricted to a level reflecting current availability of field peas and beans. The price of field peas in the model was set at a low level. The model was then solved repeatedly using successively altered prices for all protein feed ingredients, maintaining the

second ipplication of the models was to derive the quantity of field peas demanded over a range of field pea prices, and thus the responsiveness of EC demand for field peas. The model was solved over a range of field pea prices, and the rate of incorporation of field peas in each diet was recorded. All other feed ingredient prices were held constant. Estimates of the aggregate demand for field peas in Dutch compound feeds manufacture were derived by scaling the above incorporation rates for field peas by the outputs of the three industries in 1985-86.

I

I 14 Discussion paper 89.5

5. Results

The three diagrams in figure D illustrate the relationship between EC wheat prices, soymeal prices and the value of field peas to feed compounders. In panel a, the relationship between the price of soymeal and the price that feed compounders would be prepared to pay for field peas is shown. As the price of soymeal rises, so does the price of field peas.

This price relationship is repeated in panel b for two different wheat prices. As the wheat price rises, so does the price of field peas. The ratio of the field pea price to the soymeal price (shown in parentheses in panel c) changes with both soymeal and wheat prices. At higher wheat prices, field peas have a higher price relative to soymeal, while at higher soymeal prices the price of field peas is lower relative to the soymeal price.

These movements in prices result from the nutrient compositions of the feeds. As was shown in table 3, field peas have characteristics of both high protein feeds and cereals. They are high in protein relative to grains but low in fibre. As the price of soymeal declines relative to the price of cereals, the value of the grain characteristics of field peas increases relative to the value of their protein content, and hence the value of field peas rises relative to soymeal and other high

protein feeds. The-converse is true when soymeal prices rise relative to the price of cereals. These results demonstrate that the high prices of EC cereals raise the price that EC feed compounders are prepared to pay for Australian field peas.

5.1 Effect of reducing EC - cereal prices Cereal prices within the European Community have been shown to be important in determining the price that Dutch feed compounders are willing to pay for peas. In view of this link, the effect of changing EC cereal prices was examined.

The prices of cereals in the model were lowered from 1987-88 EC levels to the medium term projected world levels. All other prices were held at their 1987-88 levels. Table 8 shows the effect of this change on the price that Dutch feed compounders would be willing to pay for field peas. With 1987-88 EC cereal prices, the pfice for peas is US$200/t. If internal EC cereal pricesare lowered to world levels the price for peas drops to US$167/t. (This price should be considered as being only indicative, as the analysis does not include second-round effects caused by changes in the world supply and demand of products such as manioc and cereals.)

8 Effect of lower EC cereal prices on thefield pea price a

Assumption

Assumed prices Model field

Wheat Corn Soymeal pea price

With 1987-88 EC cereal prices 200 242 223 200

With EC cereal prices at world levels 150 130 223 167

a All price cif Rotterdam.


The recent European proposal to the prices of other non-grain feed introduce a subsidy on cereals used in ingredients). compound feeds would also lower field The proposal requires approval by the pea prices. Under the proposal, subsidies Council of Ministers before it can be would be paid to feed compounders for implemented, and it is uncertain if and grain incorporation above 20 per cent. This when this will be given. More generally, it subsidy would be applied on a progressive is unlikely that the Community will make scale, but would be expected to average 45 major changes to its cereal policies quickly ECU/t (approximately US$50/t). The or dramatically. It is more probable that models were run using 1987-88 prices for changes will occur gradually, giving the all ingredients except cereals, for which the market time to anticipate and adjust. subsidy was deducted from the 1987-88 It is also likely that any changes in EC price. The use of cereals increased cereal policies would be part of a package substantially, and the price that EC of policy reforms. The most commonly compounders would pay for field peas fell discussed package includes removal of the by US$30/t (an approximation only, since GATT bindings for non-grain feedstuffs, this analysis does not allow for changes in which could result in higher import duties

Dependence of the price of field peas, relative to soymeal, on soymeal and cereal D prices

Field pea price

US$/t Panel a As the price of soymeal rises so does the price of field peas

u Soyrneal price US$R

Field pea I Wheat US$200/t/ price

US$/t

Panel b As the price of wheat rises so does the price of field peas

Field pea price

US$/t

Soyrneal price US$/t

Soyrneal price US$/t

Panel c The ratio of field pea prices to soymeal prices (in parentheses) is not constant


for field peas and lupins (whose duties are currently bound at 3 per cent and 5 per cent, respectively).

5.2 Potential for greater use of field peas Total consumption of peas and beans by the EC compound feed industry in 1988-89 is estimated to be around 4.5 Mt. Since compound feed production for pigs and poultry is estimated at 58 Mt, field peas and beans presently account for less than 10 per cent of feed ingredients.

The model was used to estimate the quantity of field peas that feed compounders could use if a larger supply were available. Maximum incorporation rates of 30 per cent for pigs, 20 per cent for layer hens and 15 per cent for broilers were assumed.

The results indicate that, based on 1987-88 prices, Dutch feed compounders could use up to 3.1 Mt of field peas at a price of US$185/t (cif Rotterdam). At US$195/t, use was estimated at 1.6 Mt. The implied elasticity of demand over this range is around -12, which in comparison with food demand elasticities is extremely high. Use in 1985-86 was only 0.65 Mt, indicating that substantial growth may be possible.

The Netherlands produces only around 17 per cent of the Community's output of compound feed produced for pigs and poultry, so the potential for total EC market expansion is likely to be much greater. In Germany and Belgium, cereal prices have been marginally higher than those in the Netherlands over recent years. Prices for field peas in these countries are likely to be similar to those in the Netherlands, since they are situated close to Rotterdam and have their own ports. Thus, the potential for increased use of field peas is likely to be high in Germany and Belgium. In France, cereal prices are lower, and this will have a depressing effect on field pea prices; however, this effect will be partially offset by the higher cost of protein feeds. France was in fact a major importer of Australian field peas in both 1986-87 and 1987-88.

Since current use of field peas is below potential use, and feed demand is highly price responsive, an increase in the EC

supply of grain legumes would not be expected to lower grain legume prices appreciably. Panel b in figure A illustrates from a purely theoretical perspective that because the demand curve is very flat little price response is expected to result from an increase in supply in the European Community. This will occur as long as the maximum incorporation rate of field peas in compound feed rations has not been reached. For the same reason, increased exports of field peas from Canada to the European Community are not expected to have a significant effect on price.

In recent years, due to the high demand for field peas and limited supply, the market price for field peas in the European Community has remained above the minimum grower price. As long as this situation continues, the incorporation aid payment will not affect the market price for Australian field peas. Because large supplies of Australian field peas can be exported to Europe, it also follows that the increase in Indian tariffs on imported peas from 10 per cent to 35 per cent in October 1988 will (taken alone) have only a small effect on pea prices, despite the expected consequent reduction in Indian import demand.

- - pp


6. Implications for Australia

The model results presented in this paper support the hypothesis that current EC cereal prices have an important influence on the price that EC feed compounders are willing to pay for field peas. When EC cereal prices are above world levels, EC feed compounders will pay more for field peas than could be obtained for them in alternative markets. The results also support the hypothesis that EC demand - and hence import demand - for field peas is very sensitive to changes in price.

When EC cereal prices are high relative to world levels, the Community will import a large amount of field peas and the Community will then be dominant in determining the world price of peas. As most of the Australian crop will be exported under these conditions, the Community will also be dominant in determining the prices received by Aust- ralian producers. As long as the European Community is an important export market for Australian field peas, the Indian market is not pivotal for price determination. The increase in the Indian tariff on field peas, and the subsequent reduction in import demand, will have only a small effect on world prices.

However, changes in price relativities between soymeal and wheat in the European Community and Australia could result in most of the Australian field pea crop being consumed in the Australian feed market. Preliminary data indicate that a larger percentage of production was consumed domestically in 1988-89 than in most previous years.

Oilmeals and meat meal have been used as high protein feedstuffs in the Australian pig and poultry industries. Increased availability of field peas in Australia has increased the supply of high protein feeds. Because field peas have characteristics of both high protein feeds and cereals, when they are introduced into a feed ration they will replace oilmeals, meat meals and

cereals. If field pea prices in Europe are low relative to other protein meal and cereal prices on the Australian domestic market, field peas will be substituted for the other protein meals and cereals in Australia. Due to the dominance of the export market for cereals, and the very small proportion of the cereal crop that would be affected, no effect on cereal prices would be expected.

It would be expected that increased use of field peas would depress the price of oilmeals toward export parity price levels, if the size of the intensive livestock feedstuff market were constant. However, pig and poultry production is expected to increase between 1989 and 1993 (Geldard 1989), and a corresponding 15-20 per cent increase in feedstuff demand can be expected. It is not known whether any downward pressure exerted by com- petition from field peas will outweigh the support given to prices by an expanding feedstuffs market.

Conclusions The price of field peas is determined largely by the prices of energy and protein as expressed in the prices of cereals and soymeal. As field pea prices are influenced by both wheat and soymeal prices, the ratios between the pea and wheat price and between the pea and soymeal price are not constant. An understanding of the relationship between the soymeal, wheat and pea prices in both the EC and Australian feed markets will assist farmers, traders and feed compounders in anticipating in which market Australian field peas will be consumed.


Appendix Least cost feed models

The structures of all three feed models are similar. Each model consists of an objective function, a set of nutrient supply and demand activities and a set of constraints on the activities. The components of each model are specified as a set of linear inequalities which are solved simul- taneously in a linear programming package. The models differ in the coefficients of the inequality constraints applied to the activities. The structures and coefficients of the three feed models are presented in tables 9-12.

The objective in each model is to minimise the cost of producing a diet that meets the nutritional requirements prescribed in the constraint section of the model. A range of ingredients is available at given prices, each with a different nutrient composition. The price that a compounder would be willing to pay for a feed ingredient depends on the nutrient requirements of the diet, the nutrient status of the ingredient and the prices of alternative feeds.

The objective function (COST) contains the price of all feed ingredients, cif Rotterdam. Two types of activity are defined: ingredient supply activities and diet demand activities. A supply activity, such as WHEAT, represents a feed ingredient and the combination of nutrients it makes available at a given cost. The full range of supply activities represents a finite number of feed ingredients from which the ration can be composed. A demand activity, such as XPROTEIN, represents an essential component of the diet and the nutrient or combination of nutrients required to make that component complete.

Upper bounds can be placed on supply activities to represent the maximum rate of incorporation of a particular feed ingredient or class of ingredients. Upper and lower bounds are also placed on demand activities to represent the


acceptable maximum and minimum amounts of a nutrient or a particular combination of nutrients that can be incorporated in the diet. The nutrient constraints, such as PROTEIN, ensure that the amount of a nutrient required by a demand activity is equal to that available from the supply activities (setting the constraint to zero), and also ensure that the full complement of nutrients supplied by a selected ingredient are used by the diet activities.

In the poultry models the nutrient requirements of each dcmand activity are represented simply by the upper and lower bounds on each activity. In the pig model the nutrient requirements of some diet demand activities are more complex, with minimum balances of some nutrients relative to others. Available lysine (ALYS) is related thus to the energy demand activity (XDE), while other amino acids are related to the total lysine demand activity (XTLYS). To represent these relationships the energy demand activity also demands available lysine (ALYS) at the rate 0.006 per cent per megajoule of energy, while the total lysine demand activity (XTLYS) also demands various proportions of the other amino acids. Because only minimum balances are important, the constraints on available lysine (ALYS) and the other amino acids are set to be less than or equal to zero.

No micro-mineral or vitamin requirements were specified within the diets, on the as sump ti or^ that these will always be supplied through the addition of diet premixes. These premixes were excluded from the modelled diets for simplicity.

Constraints XMET Methionine XMECY Methionine + cystine

Nutrient constraints XIS0 Isoleucine DE Digestible energy XLE U Leucine ME Metabolic energy XTHR Threonine PROTEIN Crude protein XTRY Tryptophan FIBRE Fibre XARG Arginine A LYS Available lysine XHIS Histidine TLYS Total lysine XPHE Phenylalanine MET Methionine XPHTY Phenylalanine + tyrosine MECY Methionine + cystine XVAL Valine IS0 Isoleucine XCA Calcium LEU Leucine XP Phosphorus THR Threonine XNA Sodium TRY Tryptophan XCL Chlorine ARG Arginine XK Potassium HIS Histidine XMG Magnesium PHE Phenylalanine PHTY Phenylalanine + tyrosine VAL Valine Feed ingredient supply activities

CA Calcium WHEAT Wheat P Phosphorus BARLEY Barley NA Sodium CORN Corn CL Chlorine SOYML Soybean meal K Potassium FFSOY Full fat soybeans MG Magnesium RAPEML Rapeseed meal

SUNML Sunflowerseed meal COTTML Cottonseed meal

Joint feed ingredient constraints COPRA Copra GRAIN Proportion of grain in the diet MANIOC Manioc SOYS Proportion of soybeans and CNGLFD Corn gluten feed

soymeal in the diet CITRUS Citrus pulp OILMLS Proportion of other oilseed SUGRBT Sugar beet pulp

meals in the diet WHBRAN Wheat bran ANPROT Proportion of animal proteins MOLASS Molasses

in the diet MEATML Meat meal LEGUME Proportion of legumes in the FISHML Fish meal

diet ALFAML Alfalfa meal FATS Proportion of fats and oils FLDPEA Field peas

in the diet TALL0 W Tallow S UPP Proportion of supplements ANFAT Animal fats

in the diet LIMEST Limestone INGRED Proportion of ingredients ROCKPH Rock phosphate

in the diet ROCKS Rock salt DICALP Dicalcium phosphate SYNLYS Synthetic lysine

Activities SYNMET Synthetic methionine

Diet demand activities XDE Digestible energy XME Metabolic energy XPROTEIN Crude protein XFIBRE Fibre XTLYS Total lysine

20 Discussion paper 89.5 I

9 Structure of the pig feed model

Feed Diet demand activities ingredient

Constraints ~U.PP'Y

XDE XPROTUN XFIBRE XTLYS XCA X P XNA XCL XK XMCactiv~tiesb Signc RHS Unit a MJ/kg % % % % % % % % % t

Objective function COST $

Nutrient constraints DE MJ/kg 1 PROTEIN % FIBRE % ALYS % 0.006 TLYS 70 MET % MECY % IS0 % LEU % THR % TRY % PHE % PH7Y % ARG 70 HIS '70 VAL % CA % P % N A % CL % K % MG %

Joint ingredient constraints GRAIN % SOYS % OILMLS % ANPROT % LEGUME % FATS 70 SUPP % INGRED %

Activity bounds Lower 12.50 16.00 4.50 0.80 0.50 0.10 0.13 0.17 0.01

15.00 18.00 6.00 1.20 0.70 Bi

Upper Bi

a MJ/kg, megajoules per kilogram; % per cent by weight. b See table 12 for details. c N, potential ob~ectlve function; E, equal to; L, less than or equal to; G, greater than or equal to.

Australianfield peas 21

10 Structure of the layer hen feed model

Diet demand activities

Constraints XDE XPROTUN XFIBRE XTLYS XMET XMECY XlSO XLEU XTHR XTRY XPHE

Unita MJ/kg % % % % % % % % % %


Nutrient constraints ME MJ/kg 1 PROTEIN % FIBRE % TLYS % MET % MECY % IS0 % LEU % THR % TRY % PHE % PHTY % ARG % HIS % VAL % CA % P % N A % CL % K % MG %

Joint ingredient constraints GRAlN % SOYS % OILMLS % ANPROT % LEGUME % FATS % SUPP % INGRED %

Activity bounds Lower 10.30 18.00 0.79 0.26 0.51 0.59 1.27 0.38 0.18 0.51 upper 11.70 20.00 5.00

aMJ/kg, megajouls per kilogram; %,per cent by weight. b See table 12 for details. c N, potential objective function; F,, equal to; G, greater than or equal to; L, less than or equal to.


Feed ingredient

supply XPHTY XARG XHIS XVAL XCA XP X N A XCL XK XMG act~vi t~esb Signc RHS


11 Structure of the broiler feed model

Constraints

Diet demand activities

X D E XPROTUN XFIBRE XTLYS XMET XMECY XlSO X L E U XTHR XTRY X P H E

Unita MJ/kg % % % % % % Y O % % %


Nutrient constraints ME MJ/kg 1 PROTEIN % FIBRE % TLYS % MET % MECY % IS0 % LEU % THR % TRY % PHE % PHTY % ARG % HIS % VAL % CA % P % N A % CL % K % MG %

Joint ingredient constraints GRAIN % SOYS % OILMLS 70 ANPROT % LEGUME % FATS % SUPP % INGRED 70

Activity bounds Lower 12.10 22.00 1.00 0.45 0.72 0.7 1.36 0.66 0.19 1.1 upper 14.00 24.00 4.50

aMJ/kg, megajoules per kilogram; %,per cent by weight. b See table 12 for details. cN, potential objective function; E, equal to; G, greater than or equal to; L, less than or equal to.

I

I 24 Discussion paper 89..5

Feed ingredient -

S ~ P P ' Y XPHTY XARG XHIS XVAL XCA XP X N A XCL XK X M C a ~ t l v l t l e ~ b Signc RHS


12 Feed ingredient supply activity submatrix for the feed models a

Constraints WEAT BARLEY CORN SOYML FFSOY SUNML RAPEML C O ~ M L COPRA nsHML MEATML FLDPEA

Unit a Coef c t t t t t t t t t t t t

Objective function COSTd $ Cj 200 197 242 223 255 132 148 156 156 478 335 190

Nutrient constraints DE MJ/kg Aj 14.2 13.2 ME MJ/kg Aj 13.0 10.4 PROTEIN% Aj 9.1 10.6 FIBRE % Aj 2.4 5.0 ALYS % Aj 0.29 0.26 TLYS % Aj 0.31 0.29 MET % Aj 0.20 0.15 MECY % A] 0.40 0.34 IS0 % Aj 0.45 0.40 LEU % Aj 0.60 0.60 THR % Aj 0.32 0.30 TRY % Aj 0.12 0.13 PHE % A] 0.50 0.47 PHTY % Aj 0.90 0.78 ARG % Aj 0.40 0.44 HIS % Aj 0.21 0.20 VAL % Aj 0.48 0.47 CA % Aj 0.05 0.05 P % Aj 0.33 0.33 NA % Aj 0.01 0.02 CL % Aj 0.08 0.15 K % Aj 0.40 0.53 MG % Aj 0.10 0.12

Joint ingredient constraints GRAIN % Aj 1 1 1 SOYS % Aj 1 1 OILMLS % Aj 1 1 1 1 ANPROT % Aj 1 1 LEGUME % Aj I FATS % Aj SUPP % Aj INGRED % Aj 1 1 1 1 1 1 1 1 1 1 1 1

Bounds Layer hen model

Lower % Bj Upper % Bj

Broiler model Lower % Bj Upper % Bj

Pig model Lower % Bj Upper % Bj

a Estimates are indicative of nutrient content only. Actual values vary between samples. b MJ/kg, megajoules per kilogram; %, per cent by weight. c Coeffiaents listed in tables 9 to 11. d 1987-88 ingredient prices.


I CNWFD MAMOC W B M N U T R U S SUCRBT ALFlML ANFATTALLOW MOLASS UMEST DICALP ROCKPI1 RGCKS SYNLYS SYNMET


References

Australian Bureau of Statistics (1988), Crops and Pastures, Australia: 1986-87, Cat. No. 7321.0, Canberra (and previous issues).

--(1989a), Summary of Crops, Australia: 1987-88, Cat. No. 7330.0, Canberra.

--(1989b), Selected Agricultural Commodities, Australia: 1988-89 Preliminary, Cat. No. 7112.0, Canberra.

--(1989c), Foreign Trade, Australia, Exports: 1988-89, Cat. No. 5436.0, Canberra (and previous issues).

Bartley, S. and Borrell, B. (1988), 'Commodity outlook: legumes', Quarterly Review of the Rural Economy 10(4), 360-1.

Bureau of Agricultural Economics (1985), Agricultural Policies in the European Community: Their Origins, Nature and Effects on Production and Trade, Policy Monograph No. 2, AGPS, Canberra.

Canadian International Grains Institute (1982), Grains and Oilseeds - Handling, Marketing, Processing, 3rd edn, Canadian International Grain Institute, Winnipeg, Manitoba.

Commission of the European Com- munities (1988a), Agricultural Markets, Luxembourg, (and previous issues).

-(1988b), The Agricultural Situation in the Community, Brussels (and previous years).

Ensminger, M.E. and Olentine, C.G. Jr (1978), Feeds and Nutrition - Complete, The Ensminger Publishing Company, California.

European Feed Manufacturers' Federation (1987), Feed and Food Statistical Yearbook, Brussels (and previous years).

Eurostat (1988), Agricultural Prices 1978-1987, Statistical Office of the European Communities, Luxembourg.

Evans, M. (1985), Nutrient Composition of Feedstuffs for Pigs and Poulty, Queensland Department of Primary Industries, Brisbane.

FA0 (1987), Commodify Review and Outlook 1986-87, Food and Agriculture Economic and Development Series No. 43, Rome.

Geldard, J. (1989), The outlook for meat on the domestic market. ABARE paper presented at the National Agricultural Outlook Conference, Canberra, 17-19 January.

Harris, S., Swinbank, A. and Wilkinson, G. (1983), The Food and Farm Policies of the European Community, John Wiley and Sons, New York.

Hillberg, A. (1984), The impact of European Community recommendations to limit grain substitutes imports on the West German manufactured feed economy. Masters thesis, Purdue University, Indiana.

Low, A.G. (1980), 'Amino acid use by growing pigs' in W. Haresig (ed.) Recent Advances in Animal Nutrition - 1980, Butterworths, London.

Mason, D.J. (1989), Outlook for oilseeds and grain legumes. Paper presented at the National Agricultural Outlook Conference, Canberra, 17-19 January.

McIntosh, B. and Williams, K. (1984), Pig Nutrition - Diet Specifications, Farmnote, Queensland Department of Primary Industries, Brisbane.

National Research Council (1977), Nutrient Requirements of Poultry, No. 1 in Nutrient Requirements of Domestic Animals, 7th edn, National Academy of Science, Washington DC.

- (1979), Nutrient Requirements of Swine, No. 2 in Nutrient Requirements of Domestic Animals, 8th edn, National Academy of Science, Washington DC.

Oilworld (1988), Oilworld (ISTA Mielke GmbH, Hamburg) 49(31), 9 December (and previous issues).

Schmidt, S.C. and Gardiner (19881, Non-grain Feeds - EC Trade and Policy Issues, Foreign Agricultural Economic


Report No. 234, US Department of Toepfer International (1987), Grain and Agriculture, Washington DC. Feedstuffs Market Statistics, Hamburg.

Sutherland, J.A. (1980), Understanding Farm UNCTAD (United Nations Conference on Animals: A n Introduction to the Science of Trade and Development) (1984, Animal Animal Product ion, Angus and Robert- Feed Ingredients: A Study of Selected son, Sydney. Markets, Geneva.


#%h, discussion i'*per 89data.daff.gov.au › brs › data › warehouse › pe_abarebrs... ·...

Documents