Integration of ASEAN’s dairy industry: Multi-market modelling to guide policy and
investment choices
Signe Nelgen and Steve Staal
International Livestock Research Institute
Mainstreaming Livestock Value ChainsAccra, 5 November 2013
The presented work is based on a paper by Steve Staal, Richard Daite and Paul Ramirez (2013), which was presented at the Wold Milk Day Celebration in
Bangkok this year.
Key questions
• What is the task set confronting policy modellers leading up to the establishment of the AEC?
• What are the challenges for modellers arising from trends in and specific characteristics of SEA’s dairy production, consumption and trade?
Outline
SEA’s dairy industry
Elements of the AEC
Questions for consideration
Challenges for modelers
Dairy sector modeling attempts
Growing share of Asia in Milk Production
100
0
500
400
300
200
800
700
600
Oceania Africa AmericaEurope Asia
15.5% 37.0%1981 1991 2001 2011
Overview of SEA’s dairy industry
Source: FAOSTAT
Overview of SEA’s dairy industry
Whole milk production by SEA country, 1981-2011
Source: FAOSTAT
Overview of SEA’s dairy industry
Milk consumption per capita, 1981-2009
Source: FAOSTAT
Net Imports, milk equivalents
-20
-5
-10
-15
2000 2005 2010
15
10
5
01995
Americas Southeast Asia Oceania
Africa South Asia
East Asia Europe
Overview of SEA’s dairy industry
Source: FAOSTAT
Looking at and beyond market prices
1.5
1
0.5
0
2.5
2
Indonesia
India Thailand Vietnam China New Zealand
Malaysia Philippines
Vat
Processor share
Farm gate price
Overview of SEA’s dairy industry
Source: FAOSTAT
Core elements of the ASEAN Economic Community
• Single market and production base
• Competitive economic region
• Equitable economic development
• Integration into the global economy.
Elements of the AEC
• Regional integration
• ASEAN• ASEA N–
China, Korea, Japan, India, Australia & New Zealand
• Existing non-tariff barriers
• Technical barriers • Sanitary standards• Customs related measures• Quantitative restrictions
Elements of the AEC
• Is there a need to stimulate consumption? • Regional or national self-sufficiency in dairy as a
goal? • Smallholder production vs. larger scale production• What about trade barriers to protect domestic
industries?• Is equitable socio-economic development achievable?
Questions for consideration
Challenges for modellers: data
Trade flows
NTB
Wages in ag and non-ag sector
Processing costs
Consumption
Price margins
Regulations
Trade Policies
Domestic Policies
Asset ownership
Challenges for modellers: model specifications
Price responses
Non-tariff barriers
Investment reactions
Economies of scale
Small vs. large scale producers
Marketing and policies in specific countries and effects on consumption and nutrition
Self-sufficiency goals
Dairy sector modeling attempts
• J.H. Grant, T. Hertel, T.F. Rutherford (2009): Identification of the dairy specific challenges for the US dairy sector
• D. Vanzetti, N. R. Setyoko, R. Oktaviani (2013): Using GTAP to model Indonesian policy addressed to promote milk consumption: data problems, inconsistent IO tables in GTAP
• FAPRI International Dairy Model: data limitations for SEA region
Thank you for your attention!
• Mechanisms towards realizing that goal?
• Can SMEs comply with non-tariff requirements?
• Implications of resource scarcity and increasing price
Questions for consideration
