- PROJECTIONS MARCH 2007
- PROJEKSIES MAART 2007
Projections of protein needs for animal consumption for 2010 and 2020
Compiled by JSG Joubert (March 2007)
Introduction
- The total protein consumption of 1 481 379 tons in the base year 2005/2006 was subdivided according to consumption of specific protein sources by various animal species by applying the APR or so called Briedenhann model (see table 1).
- Although the APR Model is structured to provide for projections of protein requirements of different animal species as well as the demand for specific protein sources, the Nieuwoudt-McGuigan model was used to prepare projections for the purpose of this report. The reasons are as follows:
- The APR model does not take income elasticity into account.
- The APR model also does not take income growth into account.
It does, however, incorporate change in per capita consumption of animal products as well as changes in exchange rate and population.
- While the Nieuwoudt-McGuigan model determines changes in per capita consumption by utilising the change in income elasticities and income growth, calculation of changes in per capita consumption is based on informed opinions according to the APR model.
- Given the limitations of the APR model mentioned above, the Nieuwoudt-McGuigan model was applied in the final calculation of the projection of future protein requirements.
- The Bureau for Economic Research at Stellenbosch University (BER) has indicated that certain economic data, such as economic growth, will in future be reflected per income group rather than per race group. Ten Living Standard Measures (LSM) groups are to be identified, whilst expenditure will be determined per LSM group.
Although this method of categorisation will complicate future projections of protein needs for animal consumption, an effort will be made to determine the racial composition of each LSM category, as this will facilitate calculating the population growth rate per LSM category on a weighted basis. Calculation of elasticities and per capita consumption could then also be determined.
- The projections reflected below are, however, still based on racial groups and the related economic parameters. Changes in technology such as improved feed utilisation in respect of for example poultry, have been taken into consideration. Population growth statistics were sourced form the Bureau for Market Research (BMR) at Unisa. More recent information on income elasticities was not available.
Table 1
Total protein consumption per animal species 2005/2006 Species Soybean oilcake Full-fat soy Sunflower oilcake Cotton oilcake Gluten 60 Fishmeal Poultry by-products Total Broilers 323 826 252 082 37 341 3 989 29 400 12 809 104 095 763 542 Laying hens 111 866 0 53 982 11 256 0 0 0 177 104 Sheep 0 0 8,487 11 842 0 0 0 20 329 Cattle 0 0 23 573 38 445 0 0 0 62 018 Pork 89 078 951 71 317 0 0 12 322 7 892 181 560 Dairy 2 342 119 828 33 668 0 0 0 155 838 Ostriches 4 811 0 1 409 3 894 0 0 0 10 114 Horses 4 695 3 10 388 540 0 0 0 15 626 Aquaculture 720 0 0 0 0 1 302 0 2 022 Dogs & Cats 65 158 0 26 063 0 0 0 2 005 93 226 Total 602 496 253 036 352 388 103 634 29 400 26 433 113 992 1 481 379
Projected protein requirements
- The period 2005/2006 used as the base year for projections, refers to the period 1 April 2005 to 31 March 2006.
- The protein demand of 1 481 379 ton taken as point of departure include 26 433 ton fishmeal and 113 992 ton poultry by-product as calculated by applying the APR model.
- As the estimated consumption of oilcake is the focus of this exercise, the fishmeal and poultry by-product components are subtracted from the projected protein consumption after converting it to an oilcake equivalent (fishmeal 1,4 and poultry waste 1,2).
- The projections for 2010 and 2020 are based on four scenarios:The 2010 and 2020 projections are based on four (4) scenarios:
- High growth in income, retain protective tariffs. ¹
- High growth in income, phase out protective tariffs.
- Low growth in income, retain protective tariffs.
- Low growth in income, phase out protective tariffs.
Table 2
Projections of protein needs for 2010 and 2020 based on the four different scenarios ¹ Scenario Base year 2005 Annual growth
from base year2010 Annual growth
from base year2020 Tonnes % Tonnes % Tonnes Scenario 1 1 481 379 2.69 1 691 233 3.01 2 311 873 Scenario 2 1 481 379 -0.02 1 472 592 1.90 1 964 846 Scenario 3 1 481 379 1.73 1 613 904 1.98 1 987 840 Scenario 4 1 481 379 -0.86 1 418 999 0.91 1 697 172 ¹ Scenario 1: High growth in income, retain protective tariffs.
Scenario 2: High growth in income, phase out protective tariffs.
Scenario 3: Low growth in income, retain protective tariffs.
Scenario 4: Low growth in income, phase out protective tariffs.Note 1 – Import tariffs on livestock and livestock products
- The high income growth scenario is fixed at 3,9% per annum, and the low income growth scenario at 2,0% per annum.
- Table 3 reflects population growth statistics as calculated by the Bureau for Market Research at Unisa.
Table 3
Population growth per annum from 2005 Period Blacks Indian / Asian Coloureds Whites Total % per annum To 2010 0.46 0.68 0.69 -0.32 0.4 To 2020 0.63 0.38 0.39 -0.51 0.49
Local production of oilcake as opposed to total demand
In order to determine the extent to which local oilcake production will keep up with the projected local consumption of oilcake, the scenario best reflecting reality needs to be identified. The current economic parameters, the medium term forecast, and the probable likelihood of protective tariffs on imports of live stock products being retained, indicate that it would be appropriate to base projections of future demand on scenario one.
- The projected oilcake requirements for 2010 and 2020 are the projected protein requirements minus the fishmeal and poultry by-product components.
- (50 000 ton x 1,4 = 70 000 ton oilcake) and minus the poultry by-product (113 992 x 1,2 = 136 790 ton oilcake). The projected oilcake demand for 2010 is calculated at 1 484 443 ton, with an oilcake demand of 2 105 083 ton in 2020.
According to the Animal Feed Manufacturers Association (AFMA), real consumption of oilcake in the base year 2005/2006 amounted to 1 414 338 ton with local production supplying 572 231 ton, or 40,5%, of total consumption. During the previous year, local production supplied 34,4% of total consumption, with local production estimated at 60,3% of total consumption for the 2006/2007 season. As the volume of locally produced oilcake is subject to various factors, including climate, the average of the previous three seasons' production of local oilcake was accepted for the purpose of the current exercise.
Table 4
Locally produced oilcake as percentage of total consumption Period Locally produced oilcake Total consumption of oilcake Percentage of total consumption Tonnes Tonnes % 2004/2005 416 736 1 212 593 34.4 2005/2006 572 231 1 414 338 40.5 2006/2007 723 774 1 200 000 60.3 Average 570 914 1 275 644 44.8
Required growth rate in local oilcake production in order to provide for projected consumption
The annual growth rate required in local oilcake production in order to continue providing for 45% of the total demand can be determined by utilising the preliminary information provided.
The annual growth rate required in local oilcake production in order to establish a reduction in the gap between local production and projected consumption could also be determined, as well as the total percentage of projected consumption in 2010 and 2020 which locally produced oilcake will provide, should the growth in local oilcake production be maintained at the historical production growth rate (refer table 7).
Table 5
Locally produced oilcake as percentage of projected oilcake demand in 2010 Projected consumption Local production growth rate per annum Quantity oilcake Percentage of projected consumption Tonnes % Tonnes % 1 484 443 3.19 667 999 45 1 484 443 9.30 890 666 60 1 484 443 15.78 1 187 554 80 1 484 443 21.06 1 484 443 100 Local production growth at historical rate 1 484 443 6.36 777 074 52.34 Table 6
Locally produced oilcake as percentage of projected oilcake demand in 2020 Projected consumption Local production growth
rate per annumQuantity oilcake Percentage of projected consumption Tonnes % Tonnes % 2 105 083 3.43 947 287 45 2 105 083 5.44 1 263 050 60 2 105 083 7.48 1 684 066 80 2 105 083 9.09 2 105 083 100 Local production growth at historical rate 2 105 083 6.36 1 439 613 68.39 Table 7
Production and consumption trends of protein commodities 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 Average
annual
growth %Fishmeal consumption (ton) 196 039 187 374 96 267 127 386 142 848 118 414 82 988 127 000 127 000 80 000 -4.40 Fishmeal production (ton) 78 430 100 000 88 340 95 000 110 000 128 000 123 000 122 000 132 000 101 000 3.95 Fishmeal imports (ton) 117 809 87 374 7 927 32 386 32 848 0 0 0 0 0 48.30 Oilcake consumption (ton) 832 600 785 401 1 080 354 1 063 338 1 021 862 1 149 224 1 210 396 1 121 460 1 212 593 1 414 338 6.85 Oilcake production (ton) 400 675 319 006 493 581 554 903 514 020 482 448 472 311 489 413 416 736 572 231 6.36 Oilcake imports (ton) 431 925 466 395 586 773 508 435 507 842 666 776 738 085 632 047 795 857 842 107 8.85 AREA PLANTED (ha) Soybeans (ha) 87 000 125 000 130 500 93 787 134 150 124 150 100 150 135 000 150 000 240 570 183 000 11.86 Sweet lupins (ha) NA NA 16 300 19 000 14 705 14 785 11 000 10 100 7 100 14 100 16 000 5.39 Canola (ha) NA NA 17 000 25 000 19 145 27 000 33 000 44 200 44 250 40 200 34 700 12.26 PRODUCTION (ton) Soybeans 76 806 120 000 200 900 188 367 148 720 209 705 216 000 136 500 220 000 272 500 424 000 24.42 Sweet lupins (ton) NA NA 9 000 13 000 17 360 16 338 11 700 4 040 3 950 14 100 14 400 29.39 Canola (ton) 8 734 11 000 21 000 23 000 26 549 25 750 37 975 40 770 32 000 44 200 38 050 19.63 Figure 1
Oilcake consumption, production and imports
Figure 2
Area planted and production of protein commodities
A few remarks and conclusions
- The probable impact of a local biofuels industry was not taken into account when the growth rate required in the local production of oilcake to provide in the total demand was calculated. The by-products of the biofuels industry will contribute significantly towards narrowing the gap between production and consumption.
- There would still be capacity for an additional 707 369 tons oilcake in 2010 should the contentious possibility of the growth in oilcake production being sustained against the historical growth rate of 6,36% be realised. Should local production increase at a rate of 6,36% per annum over a period of 15 years, there would still be a deficit of 665 470 tons by 2020.
- The current historical growth rate of 6,36% in local oilcake production considerably exceeds the growth rate of 3,69% measured the previous year. This could largely be attributed to an increase in area planted, favourable climatic conditions, and the unfavourable maize and wheat prices recorded the previous year. It is doubtful whether this growth rate can be sustained over the long run in the absence of a local biofuels industry.
- The historical growth rate of oilcake consumption and imports still exceeds the historical growth rate of local oilcake production. Information to this effect is reflected in table 7.
- The average increase per annum of area planted to soybeans and canola of 11,8% and 12,26% respectively, has admittedly decreased in relation to that of the previous year (13,43% and 16,29%), but is nevertheless very positive. In addition to favourable climatic and market conditions, the various promotional activities conducted by the PRF clearly contributed to this increase. In contrast to soybeans and canola, a marginal increase in terms of the average annual growth rate is noted in area planted to sweet lupins measured against the previous year reported on.
- The proportional increase in the volume of soybean, canola and lupin production considerably exceeded the increase in area planted to these crops. Although favourable climatic conditions contributed to this increase, the positive impact of research and technology transfer can not be negated.
- The current unfavourable price ratios between certain oilseed and grain crops are indicative of strong competition for limited resources. This corroborates the view held the previous year that the PRF has to place increased emphasis on research aimed at promoting productivity as well as increased quality (such as increased protein per mass and per unit area). This will create increased competitiveness for the crops concerned in relation to rival crops, resulting in increased profit margins per unit. The concept of promoting crop production systems based on rotational systems as opposed to continuous monoculture production systems should still be considered to be of high priority.