Rising milk and meat prices bring threats and opportunities

More equitable trade policies and substantial investments in agricultural research are urgently needed to help poor farmers seize new market opportunities.

milk pricesSoaring food prices are dominating headlines. Rising prices represent threats for poor consumers as well as opportunities for poor milk and meat producers. The politics of food have grown complicated with almost as much speed as the rise in food prices. For many people who are poor, this has become an immediate crisis in their lives. It has suddenly become much more difficult for them to secure sufficient nutritious food.

ILRI’s director-general, Carlos Sere, says that governments should start focusing on the livestock sector to combat famine. He warned that the prices of livestock products will skyrocket if the prevailing conditions do not change.

But for some 800 million smallholder livestock farmers, this crisis could turn into an opportunity. Given the right support, they could earn more income from milk and meat, giving them more hope for the future.

The surge in prices of milk and meat, as well as rice, wheat and other cereal grains, is a global problem that will have the greatest impact on the world’s poor. Increasing milk and meat consumption are contributing to the spike in milk and meat prices. More people in the developing world are consuming larger quantities of animal source foods, while consumption in industrial countries is flattening out. The main driver in the increase in milk and meat prices has been the surge in demand for the products in China and India, where,fortunately, hundreds of millions of people are improving their diets as well as their incomes.

Many other factors are also contributing to the high prices. Rising global oil prices have had a negative effect on agricultural production, transportation and fertilizer costs; diversion of food grains and agricultural land to biofuels means more grain and land is being used for energy production and so less is available for food and recent bad weather, such as in Australia and New Zealand where severe droughts have hampered agricultural production.

Demand soars in Asia’s rapidly emerging economies

Over the last decade, consumption of livestock products in the emerging economies of China and India has grown dramatically. As incomes of the poor rise from USD2 a day to USD10 a day, people typically switch from a predominantly starchy diet to a more varied diet that includes more vegetables, milk, meat and eggs.

In 1985, Chinese consumers ate an average of 20 kilograms (44 pounds) of meat, equivalent to half a pound per person per fortnight. This has increased 40 per cent and today they eat an average of 50 kilograms (110 pounds) per year. This is equivalent to half a pound per week. However, many poor people are too poor to eat meat – or eat only tiny amounts. In contrast, people in the US are consuming over half a pound of meat per person every day. US per capita red meat and poultry consumption increased 8 per cent between 1980 and 2005, and now stands at 187.5 pounds per person.

Poor consumers will be hardest hit by rising prices

Higher meat and milk prices will have the greatest effect on world’s poorest 2 billion people, who live on less than USD2 a day. For most of the 800 million people who live on even less – USD1 a day – these price increases mean they will go hungry more often and their diets will not be as nutritious. Threats and opportunities exist and this depends on whether the poor are net consumers of these foodstuffs or net producers, interestingly more rural farmers are net consumers.

In some areas, the price of milk has doubled. This is bad news for consumers in high milk consuming countries such as Kenya and India. For example, the price of milk in northern India has risen from 17 to 24 rupees in last 2 years, an increase of 50 per cent. Meat prices, while not rising quite as dramatically, are expected to keep increasing in large part because the corresponding price jumps of cereal grains used to feed livestock raised in industrial systems.

The world’s growing population will keep up the pressure on demand. Some estimate that by 2030, global food demands will double from current consumption. This does not mean that the result is all bad news for the poor. Many poor farmers with a surplus to sell could benefit from rising prices. For these farmers and their families, the rising prices of milk and meat offer new opportunities to climb out of poverty as they produce and sell more livestock and livestock products. India is a great example. With its sprawling crowded cities and population of over one billion, tens of millions of people could use dairy products to get themselves and their families out of poverty. Recent food price rises are also encouraging poor farmers in northeast India to expand their production of small local pigs. The soaring price of grains along with higher transportation costs is reducing the supply of exotic pigs from northeastern Indian states and stimulating demand for local black pigs that do not need costly feeds and can thrive on locally produced fodder and kitchen wastes. With the right support and infrastructure, poor farmers could seize the new market opportunities and climb out of poverty.

Food grains for people or for livestock?

With soaring demands for milk and meat comes more livestock and this brings more stress on the environment. ILRI’s long-term research aims for sustainable animal agriculture that helps poor farmers intensify their production systems while conserving their land, water and other natural resources. Livestock farming in poor countries is radically different from the industrial, grain-fed, feedlot form of livestock production practiced throughout the West. In industrial systems, it takes 8 kilos of grain to produce 1 kilo of meat. The ruminant livestock of poor countries do not compete with people for their feed, as they eat mainly grass, forages and crop wastes.

Food grains for people or for biofuels?

Another complicating factor in efforts to increase food production is the diversion of grains and oilseeds to produce ethanol and biodiesel. The World Development Report 2008 estimates that filling up a typical 4×4 SUV with ethanol uses enough maize to feed a person for a year. The report also found that biofuels would raise the prices of grain globally. This will lead to higher rates of malnutrition among the poor in the world’s least developed countries. Governments are reassessing their biofuels policies as there is growing concern about grain and oil-based crops, such as maize, soybean and oil palm, being used for producing biofuels while millions of poor people simply do not have enough food to eat. Not all biofuels are bad for food production and support is gathering for biofuels produced from non-consumable products such as wastes from sugarcane and sweet sorghum residues.


There are no quick fixes for today’s soaring food prices and their negative impacts on poverty levels and food security and availability. An international commitment to fairer and more equitable trade, together with substantial investments in agricultural research and development, are urgently needed to cope with current and future demands.

Fairer and more equitable trade
A major concern is that the spike in commodity prices could pit the globe’s poorer South against the relatively wealthy North, elevating demands from the South for reform of rich nations’ farm and environmental policies. It could also pit neighboring countries against each other. Trade barriers, production subsidies, import subsidies and export bans will all hit the poor the hardest.

ILRI recommends:

  1. Develop smart subsidies for the most vulnerable groups. Put more funds into the hands of the poorest people to buy the food they need instead of resorting to protectionist trade barriers to keep prices low.

2. Cut subsidies to European and US farmers and open rich markets to poor suppliers.

3. Get higher prices into the hands of small-scale livestock producers to encourage them to produce more.

Increasing investments in agricultural development and growth
Food productivity increases are critical for meeting rising food demands. Without the necessary increases in productivity, the global food crisis will worsen, prices will continue to rise and it will be even more difficult for poor people to access nutritious food.  It is critical that governments substantially increase their investments in agricultural research.

ILRI recommends:
1. Invest in rural market transport and infrastructure to ensure food supply from rural producers, especially of perishable, high value products, including livestock products.

2. Use options identified by scientific research to refine the integration of crops and livestock so as to raise smallholder productivity.
3. Exploit the fact that the new prices now make many livestock technologies developed over the last 30 years financially feasible.



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