Impacts may be complex, affect each stakeholder in a value chain differently, and change over time. Important and potentially beneficial effects should not be ignored.
Countries and people with negotiating power have a greater chance of being winners, those that have a lobbying group to ensure that returns from changes in market structure actually accrue to them. Countries with support from a regional trading group may stand a higher chance of influencing the standards setting process to minimise negative impacts. In many countries the dominant livestock commodity group has a union or association that lobbies for it. Many have smallholder members. However, they charge membership fees so the poorest and least entrepreneurial are likely to be excluded and smallholder members may have limited influence within the union.
External support can help to overcome the time lag between increased investment and increased returns. Small producers who are able to enter formal, vertically integrated chains are likely to receive help from the controlling company in setting up the necessary infrastructure. Programmes run by private companies or NGOs often provide formal, targeted assistance to bring people into the market (e.g. credit, training, ensuring that inputs are available). Such programmes may be beneficial to women, who have limited access to resources when operating in the informal market, and lose control over income when there is an increase in sales of livestock products. They can be specifically targeted by programmes that train them or support women’s groups to overcome these barriers.
Changes in the value chain may result in job creation, e.g. processing, quality control.
Producers or consumers may experience positive externalities. For example, vaccination of livestock owned by poor farmers has in some cases been subsidised by richer ones. Excess Thai chicken parts from the export market, with high safety standards, are sold to domestic consumers.
Consumers who can afford safe food should experience benefits in health.
When producers enter the formal market and encounter tax, they will hope to see taxes being reinvested in the livestock sector. However, there is limited evidence of earmarked taxation being used in this way.
Countries or individuals that are unable to participate in the lobbying process may find that standards set are inappropriate to the risk involved and disadvantageous to them. Lobbying is a hidden but important cost for countries attempting to enter an export market. Negotiation with prospective trade partners on certification and conditions for export may also be an important cost.
Countries or individuals that cannot afford to meet compliance requirements or costs, especially for infrastructure requirements, will find that certain markets are unavailable to them. Compliance may require capital investment, knowledge and finances to change management practices, as well as certification or assurance.
When international standards are above minimum required standards for food safety, they will create a barrier to trade. It could be argued that current BSE regulations are disproportionate to risk.
The developed country consumer may lose if standards are not appropriately formed by science in view of the trends to intensification and consolidation. Safety of such consolidation is not known for many food chains.
There may be a need to make investments or management changes very quickly - therefore, although long term benefits may be attractive, cash flow or lack of knowledge may make it impossible for people to take advantage.
Higher value markets not only require greater investment in standards compliance but may also carry a higher risk of losing the market, e.g. as a result of a disease outbreak. This may affect not only those who are in the chain but also those who are outside it, producing a similar product for a different market.
The intensification and consolidation within the country of supply may compromise local and domestic access to products produced “for export” and actually create hardship in poor populations.
When a vertically integrated market develops there are three clusters of producers - those who are already competitive, those that can be helped to make it, and those who will never make it, who will either remain in the informal market or need other sources of income. In some countries the transformation takes many years, in others it happens very quickly. In Malaysia and Thailand, as market chains for pigs and poultry have become more export oriented and vertically integrated, and standards have been more strictly imposed, the number of smallholders participating has become much smaller.
