smallholders in the era of globalization

A Living from LivestockPro-Poor Livestock Policy Initiative

Smallholders in the Eraof Globalization

AHAT BSAS International ConferenceKhon Kaen, Thailand, 15 November 2005

Joachim Otte, Martin Upton and Achilles Costales


Outline

• Global overview of agriculture and development trends

• Rural livelihoods: Viet Nam and India

• ‘Globalization’ and trends in agricultural trade

• Possible impact on smallholders


Regional GroupingsG

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Agricultural Land 2000

Indust.24%

Trans.13%

LAC16%

SSA18%

NENA9%

S.Asia4%

E&SE. Asia16%

Global total: 5.0 billion ha

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Source: FAOSTAT


Human Population 2000

Indust.15%

Trans.7%

LAC9%

SSA10%

NENA7%

S.Asia22%

E&SE. Asia30%

Global total: 6.2 billion

Glo

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iew

Source: FAOSTAT


Agricultural Population 2000

Indust.1%

Trans.2%

LAC4%

SSA15%

NENA5%S.Asia

28%

E&SE. Asia45%

Global total: 2.6 billion

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iew

Source: FAOSTAT


Agricultural Population & Land

0

5

10

15

20

25

30

35

Ind

ust.

Tra

ns.

LA

C

SS

A

NE

NA

S.A

sia

E&

SE

Asia

1961

1970

1980

1990

2000

0

200

400

600

800

1,000

1,200

Ind

us

t.

Tra

ns

.

LA

C

SS

A

NE

NA

S.A

sia

E&

SE

As

ia

1961

1970

1980

1990

2000

Million peopleAgricultural population

ha / ag worker

Agriculture land availability

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Global Poverty (<1USD/day) G

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25 - 50

>7550 - 75

10 -25< 10

No data

Source: World Bank 2003


Agricultural Production

• In developing countries land productivity must increase (land is limiting factor)

• In developed countries, labour productivity must increase (labour is limiting factor)G

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Net Agric. Production 2000

Indust.28%

Trans.7%

LAC11%SSA

6%

NENA5%

S.Asia14%

E&SEAsia29%

Global total: 1,337 billion Int$

Glo

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Source: FAOSTAT


Labour & Land Productivity

Labour productivity Land productivity

Int$

/ag

wor

ker

Int$

/ha

agar

ea

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0

100

200

300

400

500

600

700

800

900

Indust.

Trans.

LAC

SSA

NEN

A

S.A

sia

E&SEA

sia

1961

1970

1980

1990

2000

0

2,000

4,000

6,000

8,000

10,000

12,000

Indust.

Trans.

LAC

SSA

NEN

A

S.A

sia

E&SEA

sia

19611970198019902000


Net Livestock Production 2000

538 billion Int$,40 % of Ag production

Glo

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iew

Source: FAOSTAT

Indust.38%

Trans.9%LAC

13%

SSA3%

NENA4%

S.Asia11%

E&SE. Asia22%


Livestock Share of Agriculture Proportion of agriculturalproduction from livestock

Per

cent

Glo

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iew

Source: FAOSTAT

0

10

20

30

40

50

60

70

Indust.

Tra

ns.

LAC

SSA

NEN

A

S.A

sia

E&

SEAsia

1961

1970

1980

1990

2000


Value of Livestock Products 2000

Milk cow24%

Milk other7%

Cattle meat21%

SR meat4%

Pig meat17%

Poultry meat15%

Other meat2%

Eggs9% Other

1%

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538 billion Int$Source: FAOSTAT


Livestock Labour & Land Productivity

0

1,000

2,000

3,000

4,000

5,000

6,000

Ind

us

t.

Tra

ns

.

LA

C

SS

A

NE

NA

S.A

sia

E&

SE

As

ia

1961

1970

1980

1990

2000

0

50

100

150

200

250

300

Ind

ust.

Tra

ns.

LA

C

SS

A

NE

NA

S.A

sia

E&

SE

Asia

1961

1970

1980

1990

2000

Labour productivity

Int$/ag Worker

Land productivity

Int$/ha ag area

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Source: FAOSTAT (2002)

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Livestock Population Trends (LSU)

<-0.5 -0.5 - 0.5 0.5 - 1 > 21 - 2 No data

Percent annual growth 1990 - 2000


Main Points

• Agricultural populations are still growing in most low-income countries

• Land per agricultural worker in these countries is limited and decreasing

• Increasing land productivity therefore is key both to maintain food security and to reduce poverty

• In most countries, land productivity is increased by, among other things, ‘diversifying’ into livestock

• ‘Livestock diversification’ entails increasing stocking rates rather than improved livestock performance

• The reverse of all above trends is occurring in industrialized countries

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Farming/Livestock Systems

• Industrialized Countries: very labour saving, very capital intensive - large scale dairy, industrial pigs and poultry, ranching, feed lots

• SSA, SA, SEA: labour intensive, land saving or scavenging – small scale dairy, pastoral, landless & backyard pigs and poultry

• NENA & LAC: labour saving, capital intensive –majority of livestock - labour intensive, land saving or scavenging – majority of holdings

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Vietnam: Rural Income Sources

Wages9%

Self-employm

18%

Other11%

Agric.62%

Average: USD750/household/yearPoverty line: app USD650/hh/yearR

ural

Liv

elih

oods

Source: 1998 VLSS, PPLPI 2005


Vietnam: Rural Household Types

0

200

400

600

800

1,000

1,200

1,400

1,600

Type

1

Type

2

Type

3

Type

4

Type

5

OtherWagesSelf-emplLivestockCrops

Ann

ual h

ouse

hold

inco

me

in U

SD 35%

10% 33%

6%

17%

Type:• Diversified with market-

oriented agriculture• Diversified with

agriculture for home consumption

• Agriculture, market-oriented

• Semi-market-oriented• Subsistence

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Vietnam: Returns to Livestock

0

50

100

150

200

250

Type 1 Type 2 Type 3 Type 4 Type 5

USD/LU per year

Rur

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ihoo

ds



India: Dairy Household Income

0.0

0.5

1.0

1.5

2.0

2.5

1 2 3 4 5 6 7 8 9 10 11 12

Farm number

Income per hh member (USD/day)

Land-less

Small-holders< 1 ha

‘Large’farmers> 1 ha

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Source: PPLPI Working Papers


India: Income Structure

0%

20%

40%

60%

80%

100%

1 2 3 4 5 6 7 8 9 10 11 12

Net cash farm Non-cash farm Off-farm

Farm number

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Source: PPLPI Working Papers


India: Return to Labour

• Larger farms make a profit from dairying and often generate employment for non-family members

• Landless and marginal smallholders gain most income from non-farm sources

• Return to labour for landless and marginal rural smallholders is often below local wage rate

Rur

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0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

1 2 3 4 5 6 7 8 9 10 11 12

Return tolabourLocal wagerate

USD

/hou

r

Landless Smallholders ‘Large’ farmers Source: PPLPI Working Papers


Dairy Farm Trends

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

IndiaPakistanNZUSAGermany

0.0

0.5

1.0

1.5

2.0

2.5

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

IndiaPakistanNZUSAGermany

Farm numbers (1991 = 1) Herd size (1991 = 1)

Source: IFCN 2003

Rur

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Main Points

• Agriculture (still) is the main source of income in rural areas and provides some income to most rural households

• However, non-agricultural income is also important and households diversify and are diverse

• Productivity differences between households are very large

• On-farm labour and livestock productivity of low-resource households is extremely low

• For these low-resource households the rural labour market is crucial

• Broad-based agricultural growth is a major stimulus for the rural labour market (horizontal linkages)

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Globalization & Trade

• Opening economies: increased mobility of capital, goods and services

• Strong push for standardization and harmonization of standards

• Development of new supply chains and ‘products of mixed origin’

• Heightened emphasis on ‘bio-security’ measures for biological products’

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Agricultural Exports 2000

Indust67%

Trans4%

LAC12%

SSA2%

NENA3%

S.Asia2%

E&SEAsia10%

Global total: 415 billion US$

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Source: FAOSTAT


Livestock Product Exports 2000

Indust84%

Trans5%

LAC6%

SSA0%

NENA1%

S.Asia0%

E&SEAsia4%

Global total: 76 billion US$

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Source: FAOSTAT


Trends in Agricultural Exports

0

50

100

150

200

250

300

Ind

us

t

Tra

ns

LA

C

SS

A

NE

NA

S.A

sia

E&

SE

As

ia

19611970198019902000

0

10

20

30

40

50

60

70

Ind

us

t

Tra

ns

LA

C

SS

A

NE

NA

S.A

sia

E&

SE

As

ia

19611970198019902000

Glo

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Million USD2000 Million USD2000

Livestock productsAll agricultural products


Livestock Share in Agricultural Exports

0

5

10

15

20

25

Ind

us

t

Tra

ns

LA

C

SS

A

NE

NA

S.A

sia

E&

SE

As

ia

19611970198019902000

Glo

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Global average: 18% ofagricultural exportsSource: FAOSTAT

Percent (of value)


Agricultural Imports 2000

Indust72%

Trans5%

LAC7%

SSA1%

NENA6%

S.Asia0%

E&SEAsia9%

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All agricultural products Livestock products

Indust66%

Trans6%

LAC7%

SSA2%

NENA7%

S.Asia2%

E&SEAsia10%


Net Agriculture Trade Values 2000

-25,000

-20,000

-15,000

-10,000

-5,000

0

5,000

10,000

15,000

20,000

25,000In

du

st

Tra

ns

LA

C

SS

A

NE

NA

S.A

sia

E&

SE

As

ia

CropLstk

USD million

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Source: FAOSTAT


Projected Net Trade in Meat (‘000 MTs)

85 Net Export

-24 Net Import

2015: -2,3602030: -3,520

2015: -2,9502030: -4,000

2015: -802030: -410

2015: 1,7702030: 2,770

2015: -2802030: -740

North America

Latin America

Sub-Saharan Africa

European Union (15)

Transition Countries

South Asia EastAsia

Oceania

Near East /North Africa

2015: -1,9002030: -1,090

IndustrialCountries2015: 7,9302030: 9,920

Source: FAO 2002

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Projected Net Trade in Milk (‘000 MTs)

2015: - 8,9002030: -12,500

2015: -9,5502030: -13,000

2015: -1,2002030: -1,500

2015: -6,3502030: -6,700

2015: -3,6002030: -5,200

North America

Latin America

Sub-Saharan Africa

European Union (15)

Transition Countries

South AsiaEastAsia

Oceania

Near East /North Africa

2015: 3,5002030: 5,200

IndustrialCountries2015: 28,0002030: 35,700

Source: FAO 2002

85 Net Export

-24 Net Import

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Main Points

• Globalization has only had significant impacts on agricultural trade in industrialized countries, LAC and E&SE Asia

• The largest increase in trade occurred in the 1970s

• Only a relatively small proportion of agricultural products and an even smaller proportion of livestock products is traded

• The vast bulk of this agricultural trade takes place between industrialized countries

• The latter are net exporters of livestock products but net importers of other agricultural products

• All other regions are (and will remain) net importers of livestock products (especially dairy products)

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Globalization & Smallholders

• Demand for food of animal origin in industrialized countries is saturated, while it is growing in other regions

• Livestock/food industry of industrialized countries can only expand by increasing exports and/or by investing ‘abroad’

• Investment will occur in areas where demand density is high, the law rules and minimum infrastructure is in place

• Products for middle to high income consumers

• Sourcing of primary inputs: locally and/or imported

• FDI in other sectors and from other sources too!!

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Vietnam & Globalization

1. Baseline Scenario: • Admission of China in the

WTO• Removal of quotas on textiles

to the US and the EU• Expansion of the EU to 25

members• Agricultural productivity

growth of 2 percent/annum2. Unilateral Liberalization

(UL):• Removal of all import tariffs• Removal of all export

subsidies

3. Full Global Liberalization (GTL):• Same as 2, except that the

tariffs to all countries are removed

4. Doha SDT (DSDT):• Removal of all exports

subsidies• Domestic support and tariffs

are reduced, preserving the Special and Differential Treatment of developing countries (smaller cuts) and no cuts in the least developing countries.G

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Trade Liberalization & Poverty

UL GTL DSDTUnilateral Global DohaSTD

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Vietnam: Poverty & LivestockPoverty Incidence Livestock Dependency

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Simplified Dynamics

Rural households

(Peri-)Urbanhouseholds

Agriculturalhouseholds

Non-agric. households

Agriculturalhouseholds

Non-agric.households

Subsistencehouseholds

Semi-com-mercial hhs

‘Commercial’ households

64.1 Mio 15.7 Mio

35.9 Mio28.2 Mio

1.2 Mio

3.9 Mio 10.6 Mio

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21.4 Mio

14.5 Mio

Capitalflows


Main Points• Interactions between livestock, other agricultural

factors, inputs, and outputs and the rest of the economy are complex.

• Private capital is indispensable to expanding smallholder livestock capacity.

• A multi-level approach to (rural) development and poverty reduction may be desirable, e.g.

Macro – infrastructure investment and good governance‘Median’ poor smallholder – livestock development targeted at households above a critical level of resource and financial capacityPoorest smallholder – labour market facilitationG

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References & Further Reading

PPLPI Working Papers

The Contribution of Livestock to Household Income in Vietnam: A Household Typology Based Analysis

A Review of Milk Production in Bangladesh with Particular Emphasis on Small-scale Producers

A Review of Milk Production in Pakistan with Particular Emphasis on Small-scale Producers

A Review of Milk Production in India with Particular Emphasis on Small-scale Producers

FAOSTAT: http://faostat.fao.org

For more information please visit the PPLPI website:www.fao.org/ag/pplpi.htmlwww.fao.org/ag/againfo/projects/en/pplpi/publications.html

http://faostat.fao.org/

http://www.fao.org/ag/againfo/projects/en/pplpi/docarc/wp2.pdf




http://www.fao.org/ag/againfo/projects/en/pplpi/home.html

http://www.fao.org/ag/againfo/projects/en/pplpi/publications.html

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