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cover: Business and livelihoods in African livestock

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  • Ugo Pica-Ciamarra
    Livestock Economist
    Livestock Information,
    Sector Analysis and Policy Branch (AGAL)
    FAO HQ, Room C-509
    Viale delle Terme di Caracalla
    Rome 00153, Italy
    Tel: +39 06 570 53897
  • ugo.picaciamarra@fao.org
Ethiopia: livelihood ©FAO/Giulio Napolitano

AGA NEWS

Business and Livelihoods in African Livestock

 

Livestock development can reduce poverty and increase food security of millions of African farmers, either as a critical livelihood-supporting asset or as a major business activity

 

A targeted approach to livestock sector policies and investments

A joint report of the FAO, the World Bank, the International Livestock Research Institute and the African Union recommends targeted interventions to tap into the growth of the African livestock sector for tackling poverty and food insecurity. The report suggests that, while diverse interventions are needed for the heterogeneity of African livestock keepers, policies and investments can be effectively framed around two overarching lines: households can either benefit from the many livelihood services livestock provide, from food through draft power to insurance, or they can use livestock as a major business activity.


Livelihood-oriented and business-oriented livestock keepers

A large number of rural households in Africa, the majority in most countries, keep livestock because of the wide spectrum of benefits these provide, such as cash income, food, manure, draft power, savings and insurance, and social capital. Few other activities are possibly as important as livestock to the lives and livelihoods of the poor: investments in livestock not only generate multiple monetary and non-monetary benefits, but also represent a first rung in a ladder out of poverty, for example when animals are sold to pay for school fees, thereby contributing to the education of children.


Since the second half of the 1990s, there have been growing opportunities for rural households to utilize livestock to get out of poverty. Population growth, gains in income and urbanization are fuelling a massive increase in the demand for high-value foods in Africa, for meat, milk, eggs and other livestock products. Expanding and upgrading livestock production and sell surplus to the market, therefore, represents an effective pathway out of poverty for livestock keepers.


Not all rural households, however, will succeed in using livestock as their way out of poverty: if the majority of them produced livestock products to sell to the market, output prices would plummet; input prices would go up; and the profitability of livestock farming would turn negative. Indeed, the majority of livestock keepers are not market- but livelihood-oriented: they keep animals more for the many livelihood services they provide rather than for selling livestock products to the market. The reason is simple: most households keep relatively small herds / flocks, in most cases less than one cattle equivalent at little or no cost, and, therefore, they cannot derive large benefits from regularly selling surplus production to the market.  


At the same time, between 5 and 20 percent of livestock keepers are potentially business-oriented, with incentives to significantly expand and upgrade their livestock production. These have the skills and capacities to maintain large enough herds / flocks, such as about four cattle or fifty broilers, to generate significant surplus production. They can thus improve their livelihoods and exit poverty by regularly selling live animals, meat, milk, eggs and other livestock products to the market.


Reducing poverty through livestock sector policies and investments

Policies and investments for poverty reduction through livestock should differently target livestock as a livelihood-supporting asset or as a business activity. In the first case, the focus should be on promoting the functioning of input value chains, as livelihood-oriented livestock keepers need access to basic production inputs to maximize the benefits they derive from their animals. Access to output market is not a major issue for livelihood-oriented livestock keepers, who sell animals and livestock products occasionally and opportunistically. Increasing the returns to their livestock, however, directly enhances these household livelihoods, e.g. through the regular availability of animal protein, through increasing crop productivity through applying manure from animals, or through helping them cope with unexpected shocks, such as to purchase medicines. Returns to investments in livestock also represent a first step in a pathway out of poverty: for example, they help households overcome threshold barriers to entry in more remunerative activities, such as petty trade; or establish business-oriented livestock operations, when the opportunity arises.

On the other hand, promoting livestock as a business activity for smallholder farmers requires that policies and investments generate an enabling environment for both input and output value chains, as business-oriented livestock keepers need adequate access not only to production inputs but also to output markets. Investments supporting livestock as a business activity will also generate employment opportunities at the farm level, along the input value chain as well as in processing, wholesaling, retailing and other related activities. In addition, these investments will increase supplies of affordably-priced animal source foods to the market, which benefit less well-off consumers.


Evidence-based livestock sector policies and investments

Available evidence provides insights for formulating policies and investments targeting livestock as a livelihood-supporting asset, as the basic constraints affecting livelihood-oriented livestock keepers are to a large extent known. It is however insufficient for the government to create an enabling environment for the use of livestock as a business activity, including the functioning of input and output value chains. Indeed, systematized data are rarely available on how business-oriented livestock keepers access and utilize input and output markets, and how the benefits are distributed along the value chain. Collecting this information should be a priority for policy makers and investors willing to use market-driven livestock as a tool to reduce poverty through income and employment.


Interventions in the livestock sector should be differentiated and consistent with local conditions. The proposed approach, targeting livestock either as a critical livelihood-supporting asset or as a major business activity, provides an effective frame for tailoring policies and investments in the sector that reduce poverty and increase food security among livestock keepers, along the value chain, and among consumers.