Creating a livestock sector with global competitor advantages in East Africa

Amos Omore International Livestock Research Institute, Dar es Salaam, Tanzania

Agribusiness East Africa Conference, 28-29 January, 2014 Serena Hotel, Dar es Salaam, Tanzania

• Trends show global and Africa’s livestock industry is growing rapidly

• Significant opportunities exist for East Africa’s livestock sector

• Research solutions are needed to transform the livestock sector

• More investments are required to take successes to scale

• Acting now, together and coherently, we can create a sustainable livestock sector with global competitor advantages in East Africa

Key messages

The global & EA’s livestock sector is growing rapidly

Livestock dominate list of highest value commodities: 4 of top 6 globally and 3 of top 6 in Africa

Source: FAOSTAT, 2013

Highest value

commodities

globally:

Highest value

commodities in

Africa:

5 FAO, 2012 Based on anticipated change in absolute tonnes of product comparing 2000 and 2030

Percentage growth in demand for livestock products: 2000−2030

Rosegrant et al. 2009

The 4 billion people who live on less than US$10 a day (primarily in developing countries) represent a food market of about $2.9 trillion per year. (Hammond et al. 2007)

• Consumption of meat and milk in developing countries is forecast to increase faster than that for any crop product. (IAASTD 2007)

• 17 billion domestic animals

• Asset value $1.4 trillion

• Employs 1.3 billion people

Economic opportunities in the livestock sector

Population growth Over 9 billion people

to feed globally by 2050

Income growth 5 of the 20 fastest-growing

economies in the world are in eastern Africa.

Urbanization Africa’s current population of 1.1 billion

is expected to double, to 2.3 billion, by 2050, and over half will live in urban areas.

Drivers of livestock growth: more, richer people and urbanization

ILRI Spearheading a

New Way Forward

Significant opportunities for Africa’s livestock sector

FAO, 2012

Per cent growth in consumption of livestock products between 1995 and 2005

Extraordinarily high increases in demand for animal-source foods in Africa expected

• By 2050, the meat and milk markets are projected to increase 145 and 155%, respectively, over 2005/07 levels.

• Over this period, Africa’s increase in volume of meat consumed will be on par with that of the developed world and Latin America.

• Gains in the size of Africa’s milk markets will be stronger than in any other region except South Asia.

• Annual growth rates in both meat and milk consumption are projected to be higher in Africa than in any other regions, excepting meat in South Asia.

• In both volume and value, beef, milk and poultry will provide business opportunities for Africa’s livestock producers, sellers and investors.

0

200

400

600

800

1000

1200

1400

1600

1800

2000

1961 1970 1980 1990 2000 2010

Qu

anti

ty (

Ton

ne

s)

Africa total meat trade

Imports

Exports

Calculated from FAO data (FAOSTAT, 2013)

• Production will not

keep pace with

consumption growth

• Africa expected to

continue being a net

importer of animal-

sourced foods

• Global trade share:

3%

• Intra-regional trade

(2009): 10%

Africa is a net importer of animal-source foods

• Developing, not developed, countries (Africa significant)

• Starting point is the smallholder producers

• Transforming the sector to meet demand in environmentally sustainable and healthy ways:

– Use and take to scale research-based successes in

> technology (feeds, breeds, health) to push productivity

> markets to pull productivity

– New business models

Future livestock sector markets and opportunities

ILRI Spearheading a

New Way Forward

East Africa is well placed to exploit these opportunities

Regional GDP Gains to 2015 from Growth in Selected Commodity Sub-Sectors (US$ million)

Source: ASARECA/IFPRI Report #150

More opportunities in milk than in beef and other meats

0 100 200 300 400 500 600

Sugar

Poultry

Beans_Peas

Wheat_Barley

Rice

Potatoes_Sweetpotatoes

Coffee_Tea

Bananas

Maize

Beef

Vegetable_Fruits

Sorghum_Millet

Cassava

Oilseeds

Milk

Source: ASARECA/IFPRI Report #150

The region dominates production Africa’s milk (40%), beef (23%) and mutton

(26%) in 2007

But there are still huge production and productivity gaps: No EA country appears in the big league!

0 10 20 30 40 50 60 70 80 90 100110120130140150160

Ukrain

Argentina

Pakistan

Turkey

New Zealand

Russia

Brazil

China

USA

India

EU-27

Volume of milk produced in 2011(>10 million tonnes)

- 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000

Nigeria

India

Egypt

China

Russia

South Africa

Italy

EU

Belgium

Spain

Netherelands

Denmark

Israel

Average production/cow

Surce: IDF/FIL dairy Situation report, 2012

More opportunities in local & regional markets

Brazil, Argentina and India much more competitive in the meat trade: They land beef in importing countries at costs < 50% than the most competitive African countries (Rich, 2009)

High perishability, lack of cold chains and poor infrastructure make livestock products uncompetitive in the region High feed costs and seasonality must be overcome to meet high quality standards Exploit local demand

Kenya

Tanzania

Uganda

80% 85% 90% 95% 100%

Market share (%): Informal raw milk markets

Smallholders who dominate the livestock sector are often competitive with bigger producers

• At least 80% of East Africa’s current

livestock production comes from

the smallholder sector.

• In many cases, East Africa’s smallholder

producers can compete well with

larger livestock producers.

• Smallholders are expected to continue

to dominate East Africa’s livestock

production for generations to come.

• The challenge is how to continue to meet the growing demand for livestock from the smallholder sector, and do so sustainably.

Aggregate welfare effects of removing trade barriers

Source: Gelan & Omore (2013)

• Non-tariff barriers and transport costs in EAC hinder

effective supply response to local & regional demand

• Removal of tariffs within EAC doubled dairy trade to 11%

in a decade

Research solutions are needed

to transform East Africa’s livestock sector

East African research-based livestock successes: FEEDS

• 70% of production cost – FEED

• 70% of feed – CROP RESIDUES

• Potential huge demand for grain for MONOGASTRICS

• Opportunities:

– Improved crop residue quantity and quality

– Improved use of crop residues with other feed resources

– Use of sorghum and other alternates to maize for monogastrics

East African research-based livestock successes: BREEDS

• Imported ‘improved’genotypes often unsuccessful in many areas

• African breeds have huge potential: − Appropriate breeding and selection − Introduction of cross-breds Example

• ‘Hairless’ worm-resistant red Maasai sheep are now, in the face of climate change, being restocked by Maasai communities.

East African research-based livestock successes: HEALTH

• Animal health becomes more important with improved genotypes

• Research solutions for animal diseases: − Vaccines (e.g. East Coast fever) − Diagnostics

• In Uganda, where pork consumption is skyrocketing, projects are enhancing the pig value chain and helping the country’s ensure the safety of its pork products.

New investments and reforms are needed

to take these successes to scale

Both investments and reforms needed in Africa’s livestock sector

• Live up to CAADP targets to employ agriculture-led growth to achieve MDG1 of halving poverty and hunger o Pursue 6% average annual sector growth at national level o Allocate 10% of national budgets to the agriculture sector

• Investments as well as policy and institutional reforms

that target markets are needed.

• These can ensure that the business opportunities generated by the growing demand for animal-sourced foods translate into widespread benefits for the population.

• Research, development, investment, businesses and farmers themselves need to be better aligned and connected.

• To meet the growing demand, we’re going to have to do things differently.

Joint public-private testing of innovations:

• Innovative franchise models are providing smallholders with access to agro-vets (‘Sidai’ in Kenya)

• New low-cost, pen-side diagnostic tools are providing diagnostics for smallholder settings

• New mobile phone systems are helping farmers monitor the health and reproduction of their animals (‘iCow’ in Kenya)

• Index based livestock insurance is reducing risk for pastoralists using banking, insurance and IT from private sector innovation

• ”East Africa Dairy Development (EADD) project is connecting farmers to service providers and new business opportunities through a hub model

• R&D partnerships under “Maziwa Zaidi” to adapt ‘hub model’ for marginalized groups in Tanzania

Examples of private-public synergies

Acting now, together and coherently, we can create a competitive and sustainable

livestock sector in East Africa

Africa’s livestock agenda: A right now opportunity window

• Partnerships − including R&D, investment, private and public sectors − are essential.

• Start with the smallholder producer.

• Transform the sector to meet demand in environmentally sustainable and healthy ways.

• Use and take to scale research-based successes in:

− Technology (feeds, breeds, health) − Markets − New business models

If we don’t act soon, importers will.

An example of acting together: Tanzania Dairy Development Forum

Key messages

• Trends show global and Africa’s livestock industry is growing rapidly

• Significant opportunities exist for East Africa’s livestock sector

• Research solutions are needed to transform the livestock sector

• More investments are required to take successes to scale

• Acting now, together and coherently, we can create a sustainable livestock sector with global competitor advantages in East Africa

Thank you