Future Developments in Global Livestock and Grains Markets: the impacts of livestock productivity convergence in Asia/Pacific

The ongoing trend towards livestock product consumption in many Asian countries has been accompanied by growth in some countries’ imports of feedgrains for their domestic livestock sectors. It has also has put pressure on available grain supplies for human consumption. With regard to China, this contributes to the ongoing debate over future levels of her grain imports. Yet published projections often pay too little attention to developments in livestock production. In other Asian countries, livestock self-sufficiency targets are becoming more difficult to achieve due to policy reforms, resource constraints and environmental issues, and imports of livestock products have been growing more rapidly than those of feedgrains. Our objective is to evaluate the impacts of productivity convergence and technological catch-up in livestock production on trade in livestock and grains products among countries in the AsiaPacific region. Production per animal unit is used as a proxy for productivity. Tests are conducted of the hypothesis that productivity levels in the Asia-Pacific region are converging and there exists ‘technological catch-up’. Projections of livestock productivity are made and incorporated in a modified GTAP model in which feedstuff substitution is permitted. The consequences for global trade in grains and livestock products, as well as the specific implications for China's production and trade balance in these sectors are explored. Presented to the 43 Annual Conference of the Australian Agricultural and Resource Economics Society, Christchurch, New Zealand, 20-22 January 1999. * Head, Department of Applied and International Economics, Massey University, New Zealand, and Director, Global Trade Analysis Project, Purdue University, US, respectively. This project is funded by the Foundation for Research, Science and Technology contract number IER801.