| Globalisation, Production Siting and Competitiveness : Summary
The workshop was held on 24th and 25th of October at the Forum of FAL. 14 speakers from the Americas, Asia, Australia and Europe focused on different aspects of the general question, "Where will livestock be produced in the future, and which way?"
During the decades to come, we may expect improved conditions for global prosperity. Economic growth, a moderately growing population and an increasing supply of grains and other crops will further improve the supply and demand of milk and meat products. Of this growth, the major part will occur in the developimg countries, especially in Asia and Latin America. The fastest growth is expected with the demand for eggs and chicken, the slowest in the beef sector. Though international trade activities will serve an increasing part of the additional demand, the major part will be supplied by expanding the domestic production.
The natural factors (climate, soils, vegetation) are most significant for the cattle sector. The conditions are most favourable on the all-year pasture grounds of New Zealand, Australia and South America.. In large parts of North America, too, beef cattle are kept outdoors all over the year which improves their competitiveness. For pig and poultry production, on the other hand, the natural environment is of minor importance.
As the economies are developing, the advantage of those production sites are growing, where modern, large production plants can be run without annoying the neighbours or endangering the natural environment, like in the Great Plains of Northern America, e. g. Compared with this, the conditions for expanding livestock production are extremely restrictive in the densely populated regions of Central Europe and East Asia.
The remote locations in the "New World" also benefitted from remarkable improvements in the technology of inventory control and tranportation, Nowadays, many livestock products can be shipped over great distances at reasonable costs. This technical progress, too, enhances the advantages of low-cost fodder locations in dairy and beef production.
On the other hand, the food processing and marketing activities can be much more flexible and effective - and thus favourable to the producers, too - if they are located close to the big centres of consumption, where close also means "familiar with the consumers' tastes and preferences". The larger these domestic markets are, the more will the producers benefit from their economies of scale, their amount of capital and their competitive power in the export business, too. This might - and should - be a good chance especially for the European Union.
Size is one of the most significant factors for economic success, in agricultural production as well as in the packing and processing, distribution and marketing business. In this respect, North American companies and their integrated producers are obviously superior to most of the European production systems. This advantage is valid not only in cost competition, but can also be crucial in the field of "quality" competition (quality as defined by the needs of wholesalers and retailers, to be true). Up to now, many regions in Europe were not successful in establishing integrated production and processing chains that would meet the needs of the big trading companies.
Policy strongly influences trading structures by imposing trade barriers. Several countries have established them, partly to protect their domestic agriculture, but also as a shield against infective diseases. Regions that built up protective trade barriers, are in return subject to narrow restrictions by the GATT-regulations, if they try to enlarge their exports. This is what the EU is going through today. Consequently, ongoing liberalization processes and an increasing demand for livestock products will merely benefit the exporting countries which did not apply protective trade barriers (esp. South America, Oceania). Some of these countries, however, will soon get in touch with their production capacities, especially New Zealand (dairy) and Australia (beef).
In this framework, South America and the transformation countries of Central and Eastern Europe are regarded as interesting regions where to invest in livestock production, because of their large and well-structured agricultural areas and their low wages. International comparative analyses have figured out this potential advantage. The major problem of these regions, however, is to be seen in various risks resulting from insecure political and economic developments, risks that do not attract international investors, especially not in the processing and marketing branches.
Conclusions for livestock production and agricultural policy in Germany:
Being close to a very big domestic market known for its purchasing power is the great advantage of European agriculture. To sell food to the majority of the consumers, however, it will be necessary to position the products in the shelves of the great sales companies. Consequently, the first task for German agribusiness is to get the big number of scattered supply activities bundled and to establish a reliable and effective supply structure on the basis of precise and stringent contracts. If this is not achieved, powerful companies from abroad will try to fill the gap with products designed just for European consumers, more and more, as the trade barriers will be reduced.
A well-organized food-processing chain is necessary, but not sufficient for being successful in the future. The second task for German agriculture is to cut down the production costs. In the future, too, the great mass of agricultural products will be sold cheap, for the processing and trading companies will be interested in cheap imports. The pressure on German producers will increase, the more the technologies of conservation and tranportation will be improved and will reduce the costs of imported products.
Economic growth, innovation, integration of production chains, and abandoning inappropriate regulations are the most important measures to improve the competitiveness of German agriculture. A difficult task for agricultural policy, indeed. On the one hand, agriculture is to be prepared for global competition, and on the other hand, the majority of the electorate lost their contact to real agriculture and make their decisions based on wishful imaginations and romantic options.
These seemingly conflicting options can to some extent be integrated, if politicians really dare to continue changing the old course. The central task will be to integrate valid social options such as the welfatre of animals, the amenity of the landscape or the protection against genetical manipulations into the agricultural environmental policy and combine it with the policy of investment subsidies.
|
