Feed Business Worldwide - September, 2012

 

Meat from here, feed from there: ASEAN feed and livestock ascendant 

 

by Eric J. BROOKS

 

 

There is only one agribusiness market that rivals China in size and is growing faster and that is Southeast Asia. Mind you, the 622 million strong, 10 nation ASEAN economic blockcontains wide disparities that defy generalisations.

 

 

 

The diversity can be seen in meat consumption statistics: ASEAN's 2011average per capita meat consumption of 29kg hides the fact that within each Southeast Asian nation, the amount and type of meat consumed--evenat the same income level--variesgreatly.

 

For example, both Indonesia's 270 million people and Vietnam's 90 million have comparable per capita GDPs. At slightly under US$5,000, average Indonesians and Vietnamese both earn slightly more than Indians but less than Chinese. But whereas Indonesia's per capita meat consumption is approximately 5kg and made up mostly of poultry, at roughly the same income level, Vietnamese eat approximately 48kg of meat per annum, with pork making up the lion's share of this sum.

 

Between its vastly higher meat consumption and the high proportion accounted for by feed-inefficient pork, Vietnam makes just as much feed crop demands on the world market as Indonesia, even though it contains only one-third of the latter's population. And despite Vietnam's rising star as an aquaculture exporter, Indonesians counterbalance low meat consumption by eating over 35kg of fish per capita.

 

Despite their many differences, both Indonesia and Vietnam are among the top five fastest growing feed and livestock markets in the world –and fuelling this growth with ever rising feed crop imports. Even with the feed wheat substitution trend of recent years, Indonesia has seen its corn imports jump roughly 100% since 2004, while Vietnam's jumped by 400% from 2004 to 2010.  With wheat's price again higher than that of corn, it is doubtful that Vietnam can keep continue substituting the former in place of the latter

 

While Indonesia and Vietnam are entering the most rapid agribusiness growth phase, behind them, the meat consumption of more than 100 million Burmese, Cambodians and Laotians is preparing to accelerate into industrialisation. And despite Cambodia's current net corn exporter status, it is doubtful that this feed grain surplus can be maintained. Not only must it accommodate a future of very high meat demand growth but as a larger proportion of Cambodia's corn gets milled at home, it will leave less available for export.

 

At the other end of the spectrum, Singapore has a higher per capita purchasing power adjustedGDP than either America or Europe and per capita meat consumption of 66kg. But Singapore represents less than 1% of ASEAN"s population. ASEAN's upper tier, with per capita meat consumption near 50kg is better exemplified by Malaysia and its per capita purchasing power GDP of US$15,568 –and corn imports rising by more than 50% since 2004.

 

Somewhat to the north, Thailand and Philippines both have per capita meat consumption near 30kg but Thailand offsets the Philippine market's advantage in population by exporting chicken and fish all over Europe and Japan. And while Thailand leveraged its large land endowment into export-driven poultry and aquaculture lines, it is doubtful that corn self-sufficiency can be maintained in the face of an anticipated vast increase in its exports to Europe and Japan.

 

 

 

Moreover, with China's wage inflation shifting economic growth momentum to lower wage Southeast Asian hinterlands, ASEAN's meat demand has been more than a match for the investment activity underway. According to the US Grains Council, from 2004 to 2011, ASEAN's meat production jumped nearly 40% from 11.9 million tonnes to 16.6 million tonnes. Despite outracing population growth and rising at a faster rate than in China, the expansion in meat output growth was insufficient for keeping up with demand growth. 

 

And this brings us to another gaping, cross-ASEAN disparity: Wide variations exist in both agribusiness technology and industry structure:

 

On one hand, Thailand's broiler rearing and meat processing is state of the art technologically. Management-wise, its biosecurity policies could teach a thing or two to many western integrators –not just for disease prevention, but also for how poultry can be economically, yet humanely grown without relying on antibiotics.

 

On the other hand, Vietnam and Indonesia are only beginning to fully rely on commercially produced, corn and soy-dominated feed. And they are relying on China and Thailand's technology and livestock management know-how to leverage these feed materials properly. Further down the spectrum, Cambodia exports corn to Thailand, re-importing some of it back, both as corn feed and in the form of fully fattened up pigs.