Interaction between livestock and feeds policies: evidence from Southeast Asia

Consumption of livestock products in Southeast Asia could continue to increase rapidly, as has been the case in Northeast Asia. The extent to which domestic producers may respond to these demand developments will be influenced by government interventions in both livestock product and feeds markets. The paper analyses the net contribution of livestock product and feed price distortions on the effective rate of protection, and whether intervention in the commodity market is augmented or offset by intervention in the feeds market. While policy-induced distortions were found to exist in the livestock sectors of Thailand and Malaysia, especially in beef and dairy production, the contribution of feeds policies to these distortions was minimal. In contrast implicit taxes on feeds were high in Indonesia and the Philippines. In the latter, support on product prices was sufficient to more than offset the tax on feeds so that effective protection remained positive. But in Indonesia both livestock and feeds policies worked to provide disincentives to livestock production. It is concluded that livestock and feeds policies should be formulated with regard to objectives and priorities within both sectors. This could require that greater emphasis be placed on feeds sector assistance policies that do not affect the price of feeds.