2. Recent Transformation of Livestock Food Demand

Per Capita Consumption

Progressive economic differentiation between countries over the last few centuries, has led to a situation where people in developed countries typically consume three to four times the meat and five to six times the milk as do those in developing countries (Figure 1). But this pattern is changing. People in developing countries have increased their consumption of animal food products over the past 20 years, and the factors driving those increases are robust and unlikely to subside in the near future. ⁴ Between 1983 (average of 1982-84) and 1993 (average of 1992-94) per capita annual meat consumption rose from 14 to 21 kilograms and milk consumption grew from 35 to 40 kilograms. During the same period per capita consumption of meat in developed countries rose only 2 kilograms and per capita milk consumption fell.

⁴ Throughout this paper, “food” is used to distinguish direct food consumption by humans from uses of animal products as feed, fuel, cosmetics, or coverings. Statistical data in this paper are taken from the FAO Statistical Database (FAO 1997, 1998), unless otherwise identified, and the world is classified into nine countries or country aggregates, with details given in the Appendix. The years 1983 and 1993 in all tables and figures refer to three-year moving averages centered on the years shown.

At the regional level, Asia witnessed the most dramatic increases in per capita consumption of animal food products. In China per capita consumption of meat and milk doubled between 1983 and 1993 (Table 2). Per capita meat consumption also increased in Other East Asia, Southeast Asia, and Latin America. Per capita milk consumption increased in India, Other South Asia, and Latin America. In Sub-Saharan Africa and West Asia and North Africa (WANA) per capita consumption of meat and milk stagnated or declined (see the Appendix for the regional classification of countries used in this paper).

Figure 1 - Per capita consumption of meat and milk, developing and developed countries, 1983 and 1993

Source:

FAO 1998.

Note:

Meat includes beef, pork, mutton, goat, and poultry. Milk is milk and milk products in liquid milk equivalents. Values are three-year moving averages centered on the two years shown.

The relative importance of animal food products in the diets of people in developing countries rose as well. Consumers obtained a greater share of calories and protein from animal food products in 1993 than in 1983 (Table 3). Throughout Asia the share of calories and protein coming from animal food products increased, almost doubling in China, indicating that many consumers are increasing consumption of animal food products more rapidly than they are of other foods such as cereals.

Table 2 - Per capita meat and milk consumption by region, 1983 and 1993

	Meat		Milk
Region	1983	1993	1983	1993
	(kilograms)
China	16	33	3	7
Other East Asia	22	44	15	16
India	4	4	46	58
Other South Asia	6	7	47	58
Southeast Asia	11	15	10	11
Latin America	40	46	93	100
WANA	20	20	86	62
Sub-Saharan Africa	10	9	32	23
Developing world	14	21	35	40
Developed world	74	76	195	192
United States	107	118	237	253
World	30	34	76	75

Source:

FAO 1997.

Notes:

Consumption refers to direct use as food, measured as uncooked weight, bone in. Meat includes beef, pork, mutton, goat, and poultry. Each number is a three-year moving average centered on the two years listed. Milk is cow and buffalo milk and milk products in liquid milk equivalents. WANA is West Asia and North Africa.

But there remains a great disparity between the per capita animal food consumed in developed and developing countries. National income is a critical determinant of this disparity. Figure 2 displays the positive, curved relationship between national per capita income and per capita meat consumption. Within this trend certain countries differentiate themselves for cultural or other reasons. China, for example, lies above the trend, reflecting the importance of pork in Chinese diets, and India lies below the trend because of religious preferences against meat. At higher incomes, per capita consumption of meat levels off because people reach saturation. This explains why developed countries have had much smaller increases in per capita meat and milk consumption over the past 20 years compared to developing countries.

Table 3 - Percent of calories and protein from animal products, 1983 and 1993

	Calories from animal products		Protein from animal products
Region	1983	1993	1983	1993
	(percent)
China	8	15	14	28
Other East Asia	11	15	29	38
India	6	7	14	15
Other South Asia	7	9	19	22
Southeast Asia	6	8	23	25
Latin America	17	18	42	46
WANA	11	9	25	22
Sub-Saharan Africa	7	7	23	20
Developing world	9	11	21	26
Developed world	28	27	57	56
World	15	16	34	36

Source:

FAO 1997.

Notes:

Each number is a three-year moving average centered on the two years listed. Animal products, using the FAO definition, include meat, dairy, egg, and freshwater and marine animal products. WANA is West Asia and North Africa.

Figure 2 - The relationship between meat consumption and income

Note:

Each dot is an observation for 1 of 78 developing and developed countries examined. The solid line is a statistically significant trend.

Countries at lower income levels are far from reaching the meat consumption satiation point despite recent increases. In the first half of the 1990s, people in developed countries consumed 76 kilograms of meat per capita per year as food, with higher amounts in the United States and lower amounts in some of the European countries (Table 2). Milk consumption in developed countries was 192 kilograms per capita. People in developing countries consumed on average 21 kilograms of meat and 40 kilograms of milk.

In Latin America, people consume 46 kilograms of meat and 100 kilograms of milk per capita, levels that are much higher than elsewhere in the developing world, though still about half the developed-country average. Per capita meat consumption in Other East Asia (44 kilograms per capita) does come close to the Latin American average and exceeds the Chinese average. Sub-Saharan Africa has some of the lowest per capita consumption levels: 9 kilograms of meat and 23 kilograms of milk per capita per year.

The share of calories and protein coming from meat is also much lower in developing countries than in developed ones (Table 3). In developed countries people obtain an average of 27 percent of their calories and 56 percent of their protein from animal food products. The averages for developing countries are 11 percent and 26 percent, respectively. People in Sub-Saharan Africa, WANA, Southeast Asia, Other South Asia, and India get a third or less than a third as many calories and half as much protein from animal products as people in developed countries.

These low consumption levels give an indication of how far animal food product consumption in developing countries could grow. The Livestock Revolution of the past 20 years will begin to look modest in comparison to the one to come if the factors that promote meat and milk consumption exert their full influence.

Determinants of Changes in Per Capita Consumption

The growth rate of per capita consumption of animal food products is determined by economic factors such as incomes and prices and lifestyle changes that cause people’s dietary patterns to evolve in qualitative ways. Per capita consumption increased in the regions where incomes grew rapidly during the 1980-95 period. For developing countries as a whole, GNP per capita grew at 2.1 percent per year (Table 4). In China, which had the most dramatic increases in per capita meat and milk consumption, GNP per capita grew at the extraordinary rate of 8.6 percent per year. India and Southeast Asia also had high income growth rates, fueling increases in per capita animal food product consumption. Latin American income growth was about zero (-0.4 percent), but the region still managed a slight increase in per capita meat and milk consumption. Sub-Saharan Africa’s per capita GNP fell significantly, explaining the region’s drop in per capita consumption of meat and milk during the period.

Table 4 - Past population, urban population, and GNP per capita growth rates

Region	Population 1970-95	Urban population 1970-95	GNP per capita 1980-95
	(percent change per year)
China	1.6	3.8	8.6
India	2.1	3.3	3.2
Other East Asia	1.6	3.0	n.a.
Southeast Asia	2.1	4.0	4.3
Latin America	2.1	3.0	-0.4
Sub-Saharan Africa	2.9	5.0	-1.3
Developing world	2.1	3.8	2.1
Developed world	0.7	1.1	1.7
World	1.7	2.6	0.9

Source:

UNDP 1998.

Note:

n.a. indicates not available. Developed world is the UNDP industrial countries. Data for WANA were unavailable.

Prices of major meat and cereal food commodities have trended downward over the past 20 years, making food more affordable to consumers of all incomes (Figure 3). Real cereal prices fell 38-46 percent (depending on the grain in question) between the early 1980s and early 1990s, while deflated liquid milk prices fell 37 percent and real meat prices fell 23-35 percent. Although cereal prices fell faster than meat and milk prices, many consumers have begun to diversify their diets into meat and milk because they are nearly satiated with cereals. Some have even reduced their consumption of cereals.

The most important lifestyle change occurring in recent years is urbanization. Consumers in urban areas are more likely to diversify their diets into meat and milk (Huang and Bouis 1996; Anderson et al. 1997). Urban consumers have greater food choices and more diverse dietary and cultural influences than those typically found in rural areas. Urban consumers also often prefer foods that offer variety and convenience rather than maximum caloric content.

Urban population growth has been substantial throughout the developing world in recent years (Table 4). Between 1970 and 1995 cities in Asia grew 3 percent per year and higher. The highest rate of urban growth, 5 percent, occurred in Africa. The average for all developing countries was 3.8 percent, more than three times the developed-country rate.

Figure 3 - Trends in the prices of major cereal and meat commodities, 1970-72 to 1994-96

Sources:

Past data are from ERS 1997, IMF 1997, USDA 1997, and World Bank 1993. World Bank projections and the Manufacturing Unit Value index used for expressing values in constant 1990 US dollars are from World Bank 1997.

Notes:

Wheat is U.S. no. 1, hard red winter, ordinary protein, export price delivered at Gulf ports for shipment within 30 days. Rice is Thai 5 percent broken, WR, milled indicative survey price, government standard, f.o.b. Bangkok. Maize is U.S. no. 2, yellow, f.o.b. U.S. Gulf ports. Soybeans are U.S. c.i.f. Rotterdam. Soymeal is any origin, Argentina 45 - 46 percent extraction, c.i.f. Rotterdam, prior to 1990, U.S. 44 percent. Fishmeal is any origin, 64-65 percent, c.i.f. Hamburg, n.f.s. Beef is Australian/New Zealand, cow forequarters, frozen boneless, 85 percent chemical lean, c.i.f. U.S. port (East Coast), exdock. Pork is European Community pork, slaughter wholesale price. Poultry is broilers, twelve-city composite wholesale price, read to cook, delivered. Lamb is New Zealand, frozen whole carcasses, wholesale price, Smithfield market, London. Milk is U.S. whole milk sold to plants and dealers, U.S. Department of Agriculture.

In addition to income growth, price changes, and urbanization, cultural differences have played an important role in consumption patterns. Poultry meat and eggs are the most acceptable livestock commodities throughout the world. Lactose-intolerance, found particularly in East Asia, has limited milk consumption. Pork, while particularly valued by East Asians and people of European descent, is excluded from the diet of a large share of the world’s population, especially Moslems in the Near East, Asia, and Sub-Saharan Africa. South Asia has lower levels of meat consumption than low income alone would suggest because of cultural and religious reasons. Growing health consciousness in developed countries has increased consumption of lean meats such as poultry and limited growth in the of consumption of red meat. These preferences are reflected in the aggregate changes in per capita consumption between 1973 and 1993 (Table 5).

Total Consumption

The importance of even small increases in per capita consumption is compounded by rapidly increasing populations in many developing regions. On average, population in developing countries grew by 2.1 percent per year between 1970 and 1995 (Table 4). The population in Sub-Saharan Africa grew the most - almost 3 percent per year during the period. Rapid population growth coupled with increased per capita consumption resulted in dramatic increases in the total consumption of animal food products throughout the developing world (Table 6). For developing countries as a whole, total meat consumption grew 5.4 percent per year and total milk consumption grew 3.1 percent. The comparable figures for developed countries were 1.0 percent for meat and 0.5 percent for milk. China experienced an extremely high meat consumption growth rate of 8.6 percent, a value that is disputed. China’s role as the fastest growing market for livestock products in the world is not in dispute, but its growth rate may not have been so far ahead of the next fastest growing region, Other East Asia. The issue is controversial because China constitutes a large component of world demand.

The food consumption figures used in this report are from the FAO statistical database (FAO 1997, 1998). For China, as for most countries, the numbers are taken from food balance sheets prepared from national sources and are based primarily on estimates of production and net trade to derive estimates of consumption. Recently, the use of this methodology for estimating livestock production figures in China in the 1990s - but not in the 1980s - has been challenged (Ke 1997).

Although there is some uncertainty here, independent estimates of consumption based on household surveys and feed use suggest that meat consumption in the early 1990s in China probably ran closer to 30 million metric tons (25 kilograms per capita) than the 38 million metric tons (33 kilograms per capita) given in the tables in this report (Ke 1997). If the lower figure is correct, the actual growth rate of meat consumption in China from the early 1980s to the early 1990s would be 6.3 percent, closer to the 5.4 percent per year observed in the rest of Asia.

Table 5 - Annual per capita consumption of selected livestock food products and percent of total calories consumed from each product, 1973 and 1993

	Developed countries				Developing countries
Commodity	1973		1993		1973		1993
	(kilograms)	(percent)	(kilograms)	(percent)	(kilograms)	(percent)	(kilograms)	(percent)
Beef	26	3	25	3	4	1	5	1
Mutton and goat	3	1	3	1	1	0	1	0
Pork	26	4	29	5	4	2	9	3
Poultry	11	1	20	2	2	0	5	1
Eggs	13	2	13	2	2	0	5	1
Milk and products excluding butter	188	9	195	9	29	2	40	3
Four meats	67	10	78	11	11	3	21	6
Four meats, eggs, and milk	268	20	285	21	42	6	65	9

Source:

FAO 1997.

Notes:

Four meats includes beef, pork, mutton and goat, and poultry. Values are three-year moving averages centered on the two years shown; percentages are calculated from three-year moving averages. Milk is cow and buffalo milk and milk products in liquid milk equivalents. Food is used to distinguish direct food consumption by humans from uses of animal products as feed, fuel, cosmetics, or coverings.

Whether the true growth rate of meat consumption in China was exceedingly high (6.3 percent per year) or astronomically high (8.3 percent per year), the total amount in contention is less than 5 percent of estimated annual world meat consumption in the early 1990s. It should also be noted that the controversy does not include the distribution of consumption among meats in China, nor does it involve international trade in meat, because the downward revision in the production figures is matched by a corresponding downward revision in the consumption numbers.

Table 6 - Consumption of meat and milk by region, 1982-94

	Annual growth rate of total meat consumption	Total meat consumption		Total milk consumption
Region	1982-94	1983	1993	1983	1993
	(percent)	(million metric tons)		(million metric tons)
China a	8.6	16	38	3	7
Other East Asia	5.8	1	3	1	2
India	3.6	3	4	34	52
Other South Asia	4.8	1	2	11	17
Southeast Asia	5.6	4	7	4	5
Latin America	3.3	15	21	35	46
WANA	2.4	5	6	21	23
Sub-Saharan Africa	2.2	4	5	12	14
Developing world	5.4	50	88	122	168
Developed world	1.0	88	97	233	245
World	2.9	139	184	355	412

Sources:

Annual growth rate of total meat consumption for 1982-94 is the growth rate from regressions fitted to FAO annual data (FAO 1998). Total milk and meat consumption for 1983 and 1993 are three-year moving averages calculated from FAO 1998.

Notes:

Consumption refers to direct use as food, measured as uncooked weight, bone in. Meat includes beef, pork, mutton, goat, and poultry. Milk is milk and milk products in liquid milk equivalents. Metric tons are three-year moving averages centered on the two years shown. Milk is cow and buffalo milk and milk products in liquid milk equivalents. WANA is Western Asia and North Africa.

^a See text for qualification on China. A lower estimate of 6.3 percent per year growth, closer to the 5.4 percent observed in the rest of Asia, may be more accurate. This would mean a 1993 total meat consumption of 30 million metric tons.

According to FAO, the total quantity of meat consumed worldwide rose by 45 million metric tons between 1983 and 1993 (Table 6). Total milk consumption rose by 57 million metric tons in liquid milk equivalents. In 1983 developing countries consumed 36 percent of all meat and 34 percent of all milk consumed worldwide. By 1993 those percentages had risen to 48 percent and 41 percent, respectively.

The breakdown of the growth rates of consumption of particular commodities (Table 7) shows that in developed countries total consumption grew slowly for all commodities except poultry. In the developing countries poultry led the field as well with 7.6 percent growth in consumption per year. Beef and milk grew at about 3 percent, and pork consumption grew at 6.2 percent.

Quantifying the Effects of Growth Factors

Quantifying the effects of individual forces that are driving real consumption requires a modeling approach to statistical estimation that is capable of sorting out the simultaneous influences of a host of determinants in order to isolate the contribution of each element. Researchers typically use a multiple-regression econometric approach, although the degree of complexity in their models varies greatly. The end objective is the estimation of robust elasticities that measure the effect on consumption of a 1 percent increase in the determinant in question. These estimates often are obtained from a cross-section of households in a particular region at a particular time, yielding elasticities that are usually quite satisfactory for the time period and region concerned, but which are too specific to use across countries or over long time periods.

Elasticities from national data over long time periods are rarely estimated because of the difficulty in gathering data sets that satisfy the economic and econometric assumptions of the underlying demand model. Such estimation can, however, provide a better forecast of the evolution of national consumption patterns over time. Despite the difficulties, Schroeder, Barkley, and Schroeder (1995) estimated the effects of national per capita income growth on national per capita consumption, using annual data from 32 countries for 1975-90. The authors found that the largest effect of a US$1 increase in income on meat consumption occurred in countries with the lowest levels of national income and meat consumption. As countries got richer the impact of an increase in income on meat consumption got weaker.

Table 7 - Trends in the food consumption of various livestock products, 1982-94

		Annual growth rate of total consumption	Total consumption		Per capita consumption
Region/product		1982-94	1983	1993	1983	1993
		(percent)	(million metric tons)		(kilograms)
Developed world
	Beef	-0.0 *	32	32	27	25
	Pork	0.6	34	36	29	28
	Poultry	3.1	19	26	16	20
	Meat	1.0	88	97	74	76
	Milk	0.5	233	245	195	192
Developing world
	Beef	3.2	16	22	5	5
	Pork	6.2	20	38	6	9
	Poultry	7.6	10	21	3	5
	Meat	5.4	50	88	14	21
	Milk	3.1	122	168	35	40

Sources:

Annual growth rate of total consumption 1982-94 is the growth rate from regressions fitted to FAO annual data (FAO 1998). Total and per capita consumption for 1983 and 1993 are calculated from FAO 1998.

Notes:

Consumption refers to direct use as food, measured as uncooked weight, bone in. Meat includes beef, pork, mutton, goat, and poultry. Milk is cow and buffalo milk and milk products in liquid milk equivalents. Metric tons and kilograms are three-year moving averages centered on the two years shown. WANA is Western Asia and North Africa.

* Not significantly different from zero at the 10 percent level.

Schroeder, Barkley, and Schroeder (1995) found that for countries with annual per capita incomes in the neighborhood of US$1,000 (at 1985 prices), each 1 percent increase in per capita income would increase consumption of pork by 1 percent, poultry by nearly 2 percent, beef by more than 2 percent, and lamb by more than 3 percent. At per capita income levels above US$10,000, a 1 percent increase in income would increase per capita consumption of any of the commodities by approximately 1 percent or less. These results indicate first, that an increase in income in a richer country will have a substantially smaller impact on meat consumption than the same increase will have in poorer countries. Second, the results indicate that in countries with low but rising per capita incomes, per capita consumption of most meat commodities is likely to grow faster than growth of per capita income.

Schroeder, Barkley, and Schroeder did not report price elasticities or the effects of other structural changes on per capita consumption. Delgado and Courbois (1998) estimated expenditure, price, and urbanization elasticities based on data from 64 developing countries for 1970-95. They used a system of equations that sorted out relative price effects among animal products and that controlled for many cultural, geographic, physical, and economic differences between countries.

The resulting expenditure elasticities (Table 8) estimate the percentage increase in the weight of beef, pork and mutton, poultry, or milk consumed due to a 1 percent increase in total expenditure on all animal food products in the developing countries in the sample. Thus the whole-sample expenditure elasticity of 1.36 for milk suggests that the relative share of milk in total animal product consumption increases as real expenditure on animal food products increases across countries and over time, once the effects of relative prices, urbanization, and other factors are taken into account. The 0.27 coefficient for poultry suggests that its share decreases with a 1 percent increase in total expenditure on all animal food products,

Table 8 - Demand elasticities for major food products of animal origin from a cross-country, systems estimation, 1970-95, developing regions

	Expenditure elasticity a
Commodity	Poorest b third of countries	Whole sample	Richest b third of countries	Own price elasticity	Urban population share elasticity
Beef	0.72	0.65	0.57	-0.14	-0.20
Pork and mutton	0.96	1.10	1.30	-0.39	0.46
Poultry	0.28	0.27	0.26	-0.17	0.38
Milk	1.43	1.36	1.26	-0.86	-0.17

Source:

Delgado and Courbois 1998.

Notes:

These parameters were estimated as a system (with other explanatory variables and exclusions not shown) for 64 countries using annual data. N = 1,143 and McElroy’s multiequation R² (Judge et al. 1985,477) was 0.86. All coefficients were statistically significant at a 10 percent level or better.

^a Expenditure is the total expenditure on animal food products included in the study. Expenditure elasticities are calculated at the subsample mean, to proxy for income elasticities for specific subgroups.

^b Mean per capita gross domestic product during the 1970-95 period was used to classify all countries into one of three groups: poorest (< $800), middle ($800 - $3,000), and richest (> $3,000). The sample was divided into thirds, with each third having the same number of countries.

A comparison of the poorest third of countries to the richest third at subsample means suggests that the preference for additional milk and beef decreases marginally when moving from poorer to richer developing countries. Preference for poultry is remarkably stable across wealth groups of countries. Preference for pork and mutton rises with increasing income. ⁵ The last result may hide changes in the quality of meat products consumed when moving to richer countries, especially given the large variation in quality in pork/mutton meats. Furthermore, while these elasticities are useful for indicating the relative responsiveness of consumption of different products to income, demand for individual products in individual countries may be more or less responsive than these multicountry estimates indicate. Demand would depend in large part on whether the country in question exhibited more or less income-responsiveness for animal products as a group.

⁵ Pork and mutton are combined since most countries consume a large amount of one or the other, but not both. Depending on the country, either pork or mutton is the main substitute for beef.

The own-price elasticities in Table 8 measure the change in consumption of various animal products in response to relative price changes within the group of animal products. As expected, price rises for a given commodity are associated with decreased consumption of that commodity, other things being equal. The estimated price responsive-ness for both beef and poultry is rather modest. The price responsiveness of pork and mutton is higher, but still inelastic. Only milk among the major livestock food items is somewhat price responsive in the cross-country regressions.

It would be an error, however, to infer that there is little scope for price policies to slow down the growth in demand for meat. Delgado and Courbois (1998) briefly surveyed elasticities from several rigorous econometric demand analyses that included disaggregated animal product demand using multi-year samples and national level data for individual countries. They found a consumption response to own prices for meats of -0.5 to -1.0, suggesting that price responsiveness within countries is much higher than across countries.

The cross-country regression system reported in Table 8 involved dozens of variables to control for the many differences across time and countries that affect consumption of animal food products. Most important among these was the measure of urbanization. The urbanization elasticities suggest that as the percentage of the population living in cities increased, so did the importance of pork, mutton, and poultry in animal food product consumption, while the importance of beef and milk decreased.

The two key messages of the data and analysis summarized in this chapter are that animal food product demand has increased dramatically in the past and that it is very likely to increase in the future. The same factors that drove the enormous increases in total meat consumption are expected to exert their influence into the next century. Population is projected to grow more modestly but still at an average of 1.5 percent per year in developing countries (UNDP 1998).

With that rate of population growth, even without a change in per capita consumption, demand for animal foods will grow enormously. But per capita consumption is also expected to increase. In the next 15 years, urban populations are expected to grow 2.9 percent per year on average for all developing countries (UNDP 1998). Per capita income will also grow. Provided the poor benefit from these trends, they will significantly increase their demand for animal food products with that new income. Other factors may further boost demand. Greater trade and communications, for example, will expose people even in remote areas to other cultures and foods.

Whether the world has the capacity to meet this surging new demand with increased animal food production will be a major question for the rest of this report. The next chapter will look at the evolution of supply systems over the past two decades leading up to the Livestock Revolution. Subsequent chapters will examine whether future demand trends coincide with future resource availability and at what cost. Finally, the paper will address similar questions more qualitatively and look at environmental, health, nutritional, food security, and technological issues.