By Al Scholz
A global livestock production will likely double to meet the needs of 9 billion people according to a landmark World Bank Report [ftp://ftp.fao.org/docrep/nonfao/lead/x6159e/x6159e00.pdf]. However, it warns of the risks of increasing livestock in regions with severe water, soils and environmental constraints.
Canada has the climate, land base, water, soils and management skills to best capture this growing market opportunity profitably and in an environmentally sustainable manner. The Former Soviet Union [FSU] has similar opportunities, but will they be competitive?
In July I visited with Al Hingston, an international livestock consultant who lives in Ukraine, to learn more about livestock production in the FSU. Hingston shared recent information on cattle, pork and poultry in Ukraine [http://www.fas.usda.gov/psdonline/psdDownload.aspx], which is similar to other FSU republics. It certainly parallel’s my observations in Kazakhstan.
Cattle production under the old Soviet production system (dual purpose dairy/beef) had to be heavily subsidized as it was incredibly inefficient. Just one example - the number of people "employed" was 10 times or more per unit of inventory than in Canada.
There has been a dramatic drop in cattle since the Soviet collapse in 1991 and the disappearance of subsidies. The “high-cost” and inefficient Soviet cattle production methods were carried over on the restructured state and collective farms of today creating huge losses. Cattle have been replaced by grain and oilseed production, which is more profitable. Only the new, larger commercial dairy farms survive, along with a few western style feedlots, which import their management from Europe and U.S..
Pig production had the same production problem as cattle during Soviet times. After the 1991 collapse, the restructured farms stopped raising pigs because of high financial losses. Similar to dairy, a few investors are starting to build large commercial pig farms in partnership with western technology – but it will take a generation to change the Soviet culture of management [“top-down” and “one-size-fits-all”].
Poultry production, interestingly, is the reverse. It has taken off since 2000, but only because of the use of western technology and management, efficiently providing meat at 1/3 to 1/4 the price of pork and beef. The governments have invested heavily to ensure a cheap and plentiful supply of meat for local/domestic consumption as it is the cheapest and fastest industry to turn around.
Access to credit is the most limiting factor in modernizing the livestock industry in the FSU. Second is not being able to independently own land. Until the rule of law improves, the only changes that will be seen in cattle and pig production will come from large corporations with outside financing.
Canadian farmers and ranchers are watching the global situation carefully, because there are lucrative markets among the growing middle classes. Kazakhstan, Ukraine and Russia are closer to these growing middle class markets – and have the open grasslands [steppe] and land for grain production – but not the management capacity. Canada, on the other hand, can improve its globally competitive position in a profitable and environmentally sustainable manner, based on continued innovation in livestock research, production, management and marketing.
Contact Al Hingston directly at allen.hingston@sasktel.net
Al Scholz is working as a research agronomist on a demonstration farm in Northern Kazakhstan from May to October 2010.
For more information and to find out what Al's been up to on a daily basis, visit his Blog at http://awellfedworld.tumblr.com/.
This article first appeared on Farmcentre.com and is the property of the Canadian Farm Business Management Council.