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Commercial Livestock Production by Asian Smallholders

Abstract

Livestock are an important part of the small farm economy in Asia. In the traditional system, they not only supply draft power, but are also a source of protein food and farm income, while their manure is a valuable fertilizer. They may act as a capital reserve to help farmers over lean periods and give greater income stability. However on the whole, the transition to commercial farming on the small farms typical of most of Asia has been more successful for crops than for livestock.
Rising incomes over recent years in many countries in Asia have meant an increase in the consumption of meat and other animal products. A number of research and extension programs have tried to develop traditional systems of backyard raising into more intensive and specialized production that will increase production and give farmers a higher income.

However, many oif these have not been very successful. How can we help small-scale livestock raisers to develop their production into a viable commercial enterprise? What are the main problems?

Livestock Raising by Smallholders

Farming Scale

What is considered a "small farm" in Asia varies from one country to another. In Taiwan, a pig farm with 2000 animals is considered a small one, while in the Philippines and Thailand small-scale raisers typically have 10-20 pigs. In Japan, Korea, and Taiwan there has been a trend towards fewer livestock farms with larger numbers of animals to give economies of scale.

Large-scale producers almost always have an advantage over small-scale ones, in terms of lower costs. In Japan, the average number of animals kept by a farm in 1992 was 25.7 times that of 1970. This is not an encouraging sign for small-scale producers in countries such as Malaysia and Thailand. It implies that the development of the commercial livestock industry may mean the disappearance of hundreds or thousands of the less economic units.

Type of Livestock

A range of livestock are common to all Asian countries - cattle, pigs, buffalo, goats, poultry. Some producers are also interested in exotic species such as sheep and turkeys. Backyard raisers tend to focus on small animals for meat or for sale, and keep large animals mainly for draft. For enterprises such as dairy, they need livestock insurance or strong government support in the form of veterinary and other services. Otherwise, large animals such as cattle are so expensive that the loss of a single animal may risk the viability of the whole farm enterprise.

Although most of the livestock raised commercially are imported breeds, improved indigenous livestock breeds are becoming more important. Indigenous breeds are often better adapted to local conditions, and may have superior meat and other desirable qualities. In Korea, for example, improved Korean native cattle are important in smallholder beef production. Korean native cattle are an ancient breed which have been raised in Korea for at least two thousand years. Originally bred for draft, they have the powerful shoulders typical of the draft animal, and are being crossed with such breeds as Angus and Charolais to improve dressing percentage as well as body weight.

Major Problems

The Feed Supply

In the traditional backyard production system, livestock eat whatever forage is available, supplemented by crop residues, cut grasses, and any other feedstuffs the farmer can find. Typically, traditional livestock breeds can tolerate a rather poor diet but are slow to gain weight. Once farmers change to more intensive commercial production, the feed supply becomes a major problem. High performance livestock need a high quality diet. The small size of Asian farms limits the amount of feed that can be grown on the farm itself, and most farmers use feed concentrates. Nearly all Asian countries are highly dependent on imported feedstuffs, and feed is generally the largest part of production costs. Programs to lower the cost of feed and make more use of local feed resources can be a great help in improving small farm efficiency. In Malaysia, there are programs to use the abundant agroindustrial wastes as livestock feed, and new sources of forage such as chopped oil palm fronds are being explored. Taiwan, with its rice surplus, has included forage in its paddy field diversification program. Specialized forage producers use their former paddy fields to grow Pangola grass, Napier grass, or green corn. This is sold to local livestock producers, and provides 70% of local forage demand.

Dairy Production

One of the main problems in milk production is that raw milk needs to be delivered immediately to the factory. Where dairy farms are small and scattered, milk collection can be difficult and expensive. In Thailand and Indonesia, dairy farms are usually aggregated in dairy colonies centered around a milk processing factory which is sometimes run by a cooperative. Dairy production is growing rapidly in both countries, with cooperative organizations playing an important role. Although only 4% of Thailand's total of 4.9 million cattle are dairy cows, the number is increasing rapidly, and milk production has been increasing in Indonesia by 4.2% per annum over the past four years. In the Philippines, the dairy industry is controlled by the industrial processing plants. These virtually monopolize the trade in dairy products, making it difficult for small-scale producers to enter the market.

The price of locally produced fresh milk in Asia is often higher than the cost of imported milk powder. Local manufacturers and processors of dairy products often exert pressure to be able to use imported milk powder. Participants at the seminar emphasized that it is important to increase efficiency to keep down production costs. Governments often support the local dairy industry by imposing a surcharge or tariff on imported dairy products, but this may not be feasible in the post-GATT world.

Supply of Superior Breeding Stock

Small-scale producers find it impossible to breed high performance animals from the small herds on their own and neighboring farms. A common problem among small-scale producers is their limited access to improved livestock. This puts them under an added disadvantage in competing with large commercial enterprises, which can afford excellent animals and have large herds of breeding stock to select from. A basic part of promoting livestock enterprises is an AI service which small-scale producers can afford.

Waste Disposal

In the traditional system, livestock manure was a valuable product used as a fertilizer in crop production. With the intensive raising of large numbers of animals, it has become difficult and expensive to dispose of livestock wastes. There are now many programs, particularly in the industrialized countries of Asia, to convert livestock wastes into a less offensive form that can be used as organic fertilizer. Even in Japan, with its massive feed imports and many intensive livestock farms, croplands have the potential capacity to absorb all livestock wastes, providing the problem of distribution can be solved.

Various types of waste treatment have been developed, including a three-stage treatment in Taiwan of solid-liquid separation, anaerobic treatment, and aerobic treatment. In countries such as Korea with a cool temperate climate, low winter temperatures slow down fermentation. Although biogas from anaerobic fermentation can be used for heating or other forms of energy, unfortunately very little is produced during the winter when it is needed most. For small pig farms with less than 200 head, a system using a manure bed in the pig house has been developed in Taiwan. The mixture of sawdust and manure is regularly collected and made into organic fertilizer.

Conclusion

It is generally agreed that the organization of small-scale producers is a key factor in successful livestock production. In developing backyard production into economically viable livestock enterprises, there are limits to what individual farmers can achieve. The development of small farm enterprises has been most successful when farmers are organized, either horizontally into agricultural cooperatives, or vertically so that production is tied to the firms which supply farm inputs and handle the marketing of animals and/or processing of their products.

Many successful programs combine these in the form of a strategic partnership between a local cooperative and a commercial firm. In Indonesia's PIR (Livestock Nucleus Scheme), commercial firms act as the nucleus, providing inputs such as breeding stock, feed and medication. Similar schemes are operating in Thailand and the Philippines. This type of organization also facilitates the administration of support services such as extension and veterinary services, including inoculation and AI. The benefits and responsibilities of this relationship are usually controlled by government regulations.

In ordinary contract farming, it is left to the individual companies and farmers to agree terms. Generally, the contracting firm supplies breeding stock and pays a guaranteed price, while the farmer supplies his labor and land. While this type of agreement goes some way to matching capital investment and the available labor supply so that both are put to productive use, farmers are often disappointed at the results. In contracts between a commercial company and small-scale farmers, the imbalance of the wealth and information of the two parties often mean a bias in favor of the company.

Finally, there is the sobering fact that even in countries like Japan where livestock production is based on relatively small farms, the number of livestock farms has fallen year by year. At the same time, the number of livestock raised on each farm has increased. It seems that in successful programs to make livestock farming on small farms viable, only some farmers will be successful. Livestock farms show an interesting difference in this respect from crop farms, which have remained stable in size and number. This may reflect the greater relative importance of economies of scale in livestock production.

FFTC International Seminar

Development Approaches for Livestock-Based Rural Enterprises

Location: Philippines
Date: May 2-8
No. Participating Countries: 8 (Indonesia, Japan, Korea, Malaysia, Philippines,Republic of China, Thailand, Vietnam)
No. Papers:14
No. Participants: 50 plus observers
Co-sponsors: Philippine Council for Agriculture, Forestry and Natural Resources Research and Development, Department of Science and Technology, Philippines
Department of Agriculture, Philippines

List of Papers

1. Livestock enterprise development in the Philippines- David E. Gorrez
2 Integrated livestock-based farming: The case of the Barzaga Farms and agribusiness
- Captain Oscar Barzaga
3. Livestock enterprise development in Malaysia
- Mr. Ahmad Tajuddin B. Zainuddin
4. Poultry enterprise development in ROC
- Cheng Taung Wang
5. Poultry enterprise development in Korea
- Dr. Chong-Dae Kim
6. Swine enterprise development in Thailand
- Chanvit Vajrabukka
7. Swine waste treatment in ROC
- Shao-Yi Sheen
8. Animal waste treatment in Japan- Yasuo Harada
9. Livestock enterprise development in Indonesia
- Endang Suharya
10. Livestock enterprise development in Vietnam
- Le Dang Danh
11. Beef cattle enterprise development in Korea
- Kie-Jun Na
12. Dairy enterprise development in Thailand- Pravee Vijchulata
13. Dairy enterprise development in Japan
- Shinichi Kume
14. Dairy enterprise development in Taiwan
- Andrew Chung-shu Wang

Index of Images

Figure 1 Former Paddy Field Producing Napier Grass. the Former Rice Farmer Has Become a Specialized Forage Producer, Who Sells His Harvest to Local Dairy Farms.

Figure 1 Former Paddy Field Producing Napier Grass. the Former Rice Farmer Has Become a Specialized Forage Producer, Who Sells His Harvest to Local Dairy Farms.

Figure 2 Napier Grass Cut As Forage for Cattle

Figure 2 Napier Grass Cut As Forage for Cattle