CCP: ME 04/3|
COMMITTEE ON COMMODITY PROBLEMS
INTERGOVERNMENTAL GROUP ON MEAT AND DAIRY PRODUCTS
Winnipeg, Canada, 17 – 20 June 2004
THE PROVISION OF SERVICES TO THE LIVESTOCK SECTOR
1. The 19th Session of the Group requested the Secretariat to initiate a work programme on assessing the market and animal health implications of privatising veterinary and other livestock services. The concern was expressed that recent reforms in the provision of services were having a negative effect on the livestock sectors, particularly in developing countries. This document provides a framework for studying livestock service provision and a plan for future work by the Group that will lead to an assessment of experiences of the impact of alternative service configurations. The objective of this paper is to facilitate discussion around the scope and nature of concerns, methodologies for assessing alternatives and the future work of the Secretariat on the subject. It also refers to a draft questionnaire that would collect comparative information from Members on what services are now being provided and the various modalities of these services. Ultimately, the intention is to assess the impact of services on livestock sector performance and on sector participants, as well as on issues including the incidence of animal health and disease and on competitiveness and trade in livestock and livestock products, including milk.
2. Concerns over the provision of services stem from the experience of privatisation reforms since the 1990’s. Following the debt crisis of the late 1970s, most developing countries experienced tight budgetary constraints, in many cases following the adoption of structural adjustment regimes. These policies were driven by the mainstream development thinking of the time that recommended reduced state intervention and greater reliance on the ‘creative forces’ of private entrepreneurship, in particular within smallholder agriculture, and associated service industries2. In the case of livestock services, guidelines on service privatisation were released in 1991-1992 by the World Bank3 4 . According to some evaluations, the effects on agricultural productivity growth have been disappointing, due to the failure or the inability of the private sector to provide the input and marketing services previously delivered by governments. Furthermore, some consider that privatisation measures have had a disproportionate impact on small, poor farmers.
3. Rapid growth in demand for and production of livestock products in the developing countries accentuated the need for the provision of necessary input and marketing services. FAO estimates show that in developing countries, average per capita consumption of milk and dairy products grew by over 2 percent annually, while that of meat grew by 6 percent annually between 1990 and 20005 . This rapid growth in demand, resulting from increasing per capita incomes and urbanisation, augmented by population growth, has been described as the “livestock revolution” (Delgado et al. 1999, 2001). As these trends continue, albeit at a slower pace, an increase in demand for livestock services is likely to follow. Meat and dairy product trade has grown rapidly in recent years, and offers further opportunity for development. Recent experiences in animal diseases and finding the best policy options to contain them in a globalizing world also raise the importance of service provision in this policy agenda.
4. Against this background, sharing experiences of recent reforms in service provision may help governments to evaluate options before them in achieving their policy goals. The Meat and Dairy Group is a unique body where such discussion can be undertaken.
5. In economic literature, the rationale for public sector involvement is primarily derived from concerns for “allocative efficiency” and “distributive preferences”, which are themselves set within a context of general social preferences and constraints. Allocative efficiency refers to the most efficient use of available resources, and affects income levels and economic growth. Distributive preferences refer to the distribution of income and wealth; service provision in this case is motivated by issues such as pro-poor concerns, rural development etc. General social preferences and constraints refer to such concerns as for landscape, acceptable production practices, and environmental or sustainability uncertainties. Policy instruments are designed to achieve goals in these areas, and while it is often recommended that the assignment of instruments to goals be unique6 , it is usual that instruments set for one goal may also influence the attainment of other goals. This general classification offers a useful framework for categorizing and evaluating services.
6. In economic theory, the conditions for optimal supply in private markets are that marginal costs of supply, marginal benefits of consumption and market price are all equal. This situation is attained under very strict conditions in both the output (eg. meat, milk) and the input markets (eg. services, labour etc). However, in the context of public policy provision, this basic condition is translated to a “social” or “public” cost and benefit perspective, in which the optimality condition is where the marginal social costs in the supply of a service equal its marginal social benefits. The level of service provision where this optimality condition is satisfied is defined as the most efficient one. Unfortunately the “social” measurement of costs and benefits, and policies that provide corresponding signals for service provision are difficult to identify. Operationally, governments may provide services completely or not at all and rely on private markets, or alternatively, they may deliver all services but recover the costs of those that could also be provided by the private sector.
7. Stiglitz7 identifies six situations under which conditions fail and markets are not efficient. These are referred to as market failures. They provide a rationale for government to intervene, since correction of the failure, either through the public provision of a given service, subsidy, tax or regulation etc., would improve output and the welfare of the population. These situations are described briefly as follows:
(i) Imperfect competition
Where firms can exert market power, either in output (primary or processing) or input markets, output will be less optimal. In the livestock sector, it is common to encounter situations where there is only one or few suppliers of services. For example, in the case of milk, distance for transporting perishable product often confers market power imbalance to the local processing firm.
(ii) Public goods
Where certain inputs are public goods (for eg. certain forms of market information), these inputs may be undersupplied by private markets. Producers may use the service without paying for its full benefits. Although the existence of “pure” public goods has been widely debated in the economic literature, it is possible to acknowledge the presence of low-rivalry and low-excludability goods in certain livestock services.
Externalities exist where production decisions of one producer may impact on others, or on society. For example, some producers may not invest in disease control measures, and their herds could infect neighbouring farms that do follow these. Or, without regulations or incentives producers may not follow appropriate environmental practices, which could affect local health. In such a case, purchases of inputs may be under-supplied and/or output over supplied.
(iv) Incomplete markets
Incomplete markets occur in a variety of situations. These may be particularly prevalent in some developing countries. Two types of incomplete markets can arise. Assurance markets are those activities/services/regulations that assure market transactions and market rights. They may be imperfect in the presence of high innovation, high transaction costs, and asymmetries of information and enforcement costs. Complementary markets are those that indirectly support a given market, and their absence is of most relevant in developing countries where for example, large-scale coordination may be required in order to deliver certain types of services. For example, private markets may fail to integrate initiatives that deliver animal health in rural and in peri-urban areas (NGO programmes, private initiatives) into a wider national animal health system.
(v) Information asymmetries or failures
Market efficiency presumes the awareness of information for both producers and consumers in output and input markets, such as for example the price or value of animals in the market place. It is assumed that livestock keepers have access to information and are able to compare between markets. Buyers and sellers may have unequal information.
(vi) Macroeconomic disturbances
Macro-economic disturbances may create unforeseen risks, particularly those from exchange rate fluctuations and price inflation, which are external to the livestock sector. In addition, sectors in many developing countries may be highly dependent on foreign aid coming from different donor-countries and/or development agencies that affect market outcomes.
8. Freely functioning markets do not necessarily result in the distribution of economic activity and incomes which a society prefers. In this case, the public sector may intervene with services of particular orientation or limitations to address the special considerations of specific individuals or groups, or geographic regions. For developing countries these services may be provided by international aid organizations/NGOs. In this case, services may address specific market failures as noted above that may occur with these groups or regions due to their particular characteristics.
9. Social preferences also give rise to public services, often in the form of regulations, or through conditionality in the provision of services to meet other goals. These services could be related to environmental or sustainability concerns that can not be met through internalising appropriate user costs or consumer benefits. These preferences also would include concerns for animal welfare, use of public land, and rural landscape.
10. The nature and level of the public sector in the provision of services to the livestock sector may reflect the wider debate about the role that the state should play in promoting economic development. There is broad consensus that the state should provide the basic physical and institutional infrastructure, the latter including the means of enforcement of contracts and property rights, and to provide for key areas of market failure such as primary education and human health care. Perspectives regarding the appropriate role of the public sector in economic development depend upon the balance between the ultimate national development goals of economic efficiency, equity, stability and sustainability.
11. Where market failure is identified, the issues are how to correct the failure, who actually delivers the service, or implements a given regulation, who pays the associated costs and how payment is effected. In this context, cost-benefit analysis is required that conducts: a) financial analysis at market prices; b) economic analysis at shadow prices (reflecting not observed or non-market valuations)8; and, c) social impact analysis, particularly distributional impact that public measures may have. Such a cost-benefit analysis, that also includes the opportunity costs of scarce public funds, leads governments to decide on the level of a given service, and how the service is provided.
12. Countries provide a range of services to livestock producers that is often unique to their own circumstances. It is difficult to identify all of them. In this section, some of the most common livestock services are identified and described within the context of the framework established in the previous section9. A detailed assessment of these, which can only be done on a case by case country basis, is not attempted here. These services are: animal health, herd development, research and development, finance, and marketing.
13. Animal health services may be divided into six categories10:
14. In developed countries, clinical veterinary services have long been provided on a private, consumer-pays basis. Some services in developed countries, such as inspection in meat slaughter and processing plants, and milk processing plants are provided by the state, but in several cases these have been recently privatised or cost-recovered through user fees. However, institutions and policy measures to control major diseases have remained publicly provided and funded, often where there is a strong reliance on international markets where risks of market access loss are high. In many developing countries, available animal health services are provided free of charge by the state. Financial pressures for structural reform and liberalisation in recent decades have led many governments to privatise animal health services. However, there is increasing recognition that some animal health services have public good characteristics in developing countries due to their specific conditions. In addition, the presence of incomplete markets due to a lack of infrastructure in these countries contributes to market failure in the provision of these services.
15. Some broad classification is helpful. Clinical intervention, production of vaccines and drugs and their distribution are generally characterised as private goods. Disease control measures, such as disease surveillance, eradication campaigns, quarantine and movement controls, drug and vaccine quality control, and food hygiene and inspection measures are more closely identifiable as public goods. National (and international) disease eradication and control programmes, such as the Pan African Rinderpest Campaign, need to involve all parts of the country. Even though the main economic benefits will be derived in mixed farming areas, with dense livestock populations, surveillance and control measures must be applied in all parts of the country, very often most rigorously in the remote areas around national borders. Provision of these services requires public sector intervention. Other vaccination and disease vector control programmes and diagnostic services are intermediate in nature and may be provided privately or by the state. However, remoteness of location and poor road structures, as well as the small scale and cash flow situations for poor livestock producers, may limit the delivery of these services by private means as they may not be able to charge prices that can recuperate the costs of delivering them.
16. In certain African countries, animal health services with high “private good" characteristics were privatized following the World Bank guidelines. However, the viability of the private sector has been challenged for a number of reasons. These include large start-up costs for the private sector and the presence of black markets for certain drugs. In some cases, such as the PAVES Initiative in West Pokot, Kenya, the private delivery of curative services and drugs in remote areas has been provided with start-up subsidies. Other problems may be associated with co-ordination of NGO aid activity that is supporting livestock farming. These may influence the private sector role in providing services. In some Asian countries (eg. India), animal health services remain to be provided by the government. However, limited government finances have restrained spending and governments have limited service provision below the socially optimal levels.
17. Other public health services such as zoonotic and food-borne disease control, hygiene, food and feed safety and environmental control are often non-existent. A farmer may be unwilling to expose fully the risk factors existing on his farm11 as it might result in costly treatments, movement restrictions or even slaughtering of animals without compensation. Furthermore, given the poor communication and transport system in many developing countries, the act of reporting would itself be costly. In order to gain access to international markets, such controls are likely to be essential, at least in designated areas of the country.
18. In most countries, citizens hold governments accountable for food safety concerns. In urban areas, sanitary measures, including meat inspection, are feasible at officially recognised abattoirs. In some situations they are the responsibility of the Public Health Department rather than the Ministry of Agriculture. Responsibility for such services may also be contracted out to private veterinarians or other qualified agents. Such “quasi-market” contexts exist for example in the UK where meat inspection at abattoirs is publicly funded but privately delivered (Holden 1999). This requires that farmers have access to abattoirs where these services are available. Recently, Canada has undertaken a cost recovery initiative where some services are publicly provided but costs are recovered through user fees. In developing countries, it is common to slaughter for home-consumption, without undergoing any inspection, with the result that the incidence of food borne diseases may be high.
19. In high potential farming situations, such as large dairy farms and intensive pig and poultry production systems, extension and (veterinary) public health services are more likely to be delivered privately without extensive public intervention. Dairy producers often form cooperatives or farmers’ associations. Examples exist where animal health services are provided through these cooperatives. These include Israel’s HACHAKLAIT, which started as early as 1919, and New Zealand’s “Veterinary clubs” created in 1930 from associations of private livestock owners12 13. These cooperatives may contract a standard set or package of AHS to be delivered to the associated farms. In that context most services are privately funded and delivered. However, cooperatives in less developed locations may impose pre-defined service packages on their members. Such structures do not generally take into account animal health as part of the services contracted (if any) by the organisation. This is generally due to lack of financial resources. As for individual livestock farmers in rural areas, potential methods of AHS delivery would include public means or NGOs.
20. Genetic improvement of national herds is generally seen as a crucial step towards increased livestock productivity, and the quality of the national herd may have public good characteristics. The most effective way of raising livestock productivity through genetic improvement is by introducing and possibly cross-breeding with exotic breeds. However, since the animals produced from these breeding services are private property, the services are also private goods. Although artificial insemination services are, in theory, a private good, they might require government support, because of incomplete markets. There are few known cases in the developing world of successful private delivery of artificial insemination services.
21. Many development programmes, particularly for dairying, have been based on the promotion of cross-breeding with exotic, temperate country breeds. This has usually involved the importation of dairy bulls, usually for retention at an animal breeding/artificial insemination centre, or imports of their semen. The semen is retained in ‘cold store’ conditions for delivery to farms when required. Although farmers are required to pay for deliveries, the payments have rarely been sufficient to cover the costs. Subsidies have been needed to support the running of the artificial insemination centres. There are special logistical difficulties in developing countries, where communications are bad, keepers of grade cattle are widely dispersed, while timeliness is all important in ensuring successful insemination.
22. Research and development services are embodied in new forms of physical capital, as in the case of genetic material, balanced concentrated feeds, drugs, vaccines, machinery and equipment, as well as in basic knowledge generation as a public good. Technological change generated by research and development plays a key role in generating agricultural growth and (rural) development. Linked with the provision of research services for agricultural development, the state has generally provided an agricultural extension service for the dissemination of research. Though always subject to budgetary constraints, the public sector provision of research, development and extension, continues to operate in most developed and developing countries. Internationally, the multi-laterally funded Consultative Group for International Agricultural Research (CGIAR) centres conduct applied research to produce technologies for adaptive research, testing and distribution by National Agricultural Research Systems (NARS). The International Livestock Research Institute (ILRI) is the only GCIAR centre devoted to research on livestock production and health.
23. It has been argued convincingly that the private sector will under-invest in research for three main reasons 14. First, there are indivisibilities in scientific agricultural research, associated with the need for expensive scientific equipment and the benefits of working in interdisciplinary teams. Second, there is a high degree of uncertainty associated with costly investment in research, the outcome of which cannot be predicted with confidence. The third reason for the lack of private investment in some areas of research is the difficulty of appropriating the benefits.
24. Further evidence of the inadequacy of current agricultural research and extension is provided by many studies on the economic rate of return on the capital invested. A recent summary of the results of a large number of appraisals of such investments concludes that ‘research and extension programs have afforded high payoff investment opportunities15. It was found that of 375 appraisals of applied research projects, the mean Internal Rate of Return (IRR) was 49%; of 81 extension projects appraised, the mean IRR was 41%. For livestock specific research, rates of return also appear high, if lower than for crop research. Analysis of returns to agricultural research in South Africa, showed that, in the absence of research, livestock production would have fallen due to losses from animal disease. When this effect is taken into account, the estimated rate of return on livestock research is increased from initial estimates of 0-5% to 35% for animal health research and 18-27% for other animal research16.
25. Although it is clear that there are roles for both public and private sector investments in agricultural R&D, it is difficult to determine where the balance should lie. In fact there is a continuum between basic research to generate scientific knowledge, a public good, and adaptive research embodied in a new marketable product, a private good.
26. In developed countries, extension services have been cut back severely or eliminated. In developing countries, extension services continue to be more significant and in different forms. For example, Farming Systems Research (FSR), of which livestock systems research is a sub-set, was introduced in the 1970s at CGIAR centres and in NARS as a means of bringing researchers and farmers together for the transfer of information. Subsequently farmer participatory research (FPR) was proposed as a collaborative research activity, drawing on the farmers’ knowledge of indigenous technology, developed and adapted to meet local conditions and to overcome constraints. Involving resource poor farmers in controlling the research agenda should help promote a sense of collective identity and empowerment.
27. Financial services in the form of providing credit/loans for the purchase of livestock, feed, and health services and insurance against the loss of valuable productive assets may perform an important role not only in encouraging investments in new technology but also in coping with difficult problems such as drought and disease. In developed markets, financial and insurance markets are also well developed, and the public role has been declining. However, levels of support to agriculture in these markets remain high, and in the case of national disasters such as recent animal disease outbreaks demonstrate, governments still show a high propensity to assist producers. In developing country markets, where financial and insurance services are not well developed, the provision of loans/credit/micro-credit and insurance for animal loss are invariably supplied by the state or by NGO agencies.
28. It has been pointed out in the literature that smallholders are trapped in poverty because they do not have the money required to invest in income enhancing innovations. It has been acknowledged that formal credit plays an important role in the adoption of these technologies. Formal credit, however, increases in importance relative to informal credit as the economy develops17 . In most developing countries, the sources of financing generally engage government owned banks, or NGOs. Few commercial banks are involved, except where the government provides incentives for special agricultural development banking services. These sources of financing, generally involving subsidised, low-interest credit, tend not to allow smallholders to borrow money because they do not attain the loan eligibility criteria. Hence, the better off farmers are given most of the loans. Public sector provision of subsidised loans for agriculture is therefore going out of favour. However, some NGO credit schemes exist where animals are loaned or gifted to poor livestock-dependent people. Contrary to expectations, some of these schemes have been very successful. Borrowers are generally required to give back the borrowed funds either in kind (e.g. a heifer calf in the Heifer Project) or in cash (e.g. the Grameen-type credit). For example, the Grameen Bank in Bangladesh extends its credits to a range of 40-50% of landless farmers to acquire and raise livestock18.
29. Rural financial institution coverage varies from 7% in Africa to 24% in Asia, to almost universal coverage in developed countries19. An alternative proposed to overcome the lack of credit to landless farmers involves combining public and commercial finance. An important aspect of improving the supply of credit to rural clients is the development of true financial intermediaries that facilitate savings mobilisations and credit distribution. These commonly originate as indigenous NGOs. Such institutions could solve the problem of inadequate credit supply. At the same time, inventory finance to community level input suppliers and service providers has been proposed by Jabbar et al. (2002) in a study in African countries, as a way to get credit to worthy and needy African smallholders at lower cost than providing credit to smallholders directly.
30. Livestock insurance has received little attention until recent animal disease outbreaks have heightened the visibility of their large economic and financial costs to producers and the wider economy. Such insurance exists mainly in developed countries20 (e.g. in Europe) and, to some extent, in Asia (e.g. India, Thailand)21 (FAO 1992). The underlying rationale relates to the risk associated with livestock production due to unpredictable disease outbreaks that might incur high economic losses at several levels, from individual (farmer) to local, national or regional areas.
31. Livestock insurance in intensive production systems is widely used in developed countries. Asseldonk et al. (2003) propose a useful framework for analysing the losses due to epidemic disease spread. Compensation can be classified following two categories: compensation for direct losses and compensation for consequential losses. Public intervention will vary between countries and in relation to the elements for which compensation is paid. Direct losses include the value of the animal destroyed, welfare control measures and organisational aspects (e.g. monitoring of farms in restriction zones). If compensation schemes for these losses exist, these are funded either from national budgets, or from co-financed public-private schemes where farmers pay a compulsory or voluntary levy to a separate fund. Consequential losses include business interruption, losses related to the established restriction zones, additional repopulation costs, and losses from emergency vaccination and price effects. If they do exist, compensation schemes include private insurance schemes, free public disaster assistance where, or from public-private partnerships, where the government may act as an insurer or re-insurer.
32. In developed countries, the public role in compensation mechanisms remains high, although in Europe for example, private livestock insurance involvement for consequential losses seems to be increasing. In developing countries, the weak legal framework and institutional context as well as the lack of private providers of livestock insurance make public intervention, if any, the only alternative available. Livestock insurance for poor farmers exists in Asian countries. In India, as part of the national insurance scheme (General Insurance Company - GIC), livestock insurance is automatically granted to poor dairy farmers when buying an animal from a specific source. Similar livestock insurance schemes exist in other Asian countries such as Nepal, Thailand, Sri Lanka, Indonesia, Malaysia and Philippines. These schemes were burgeoning between the 1970-80s and were initially focused on dairy production, although they expanded later to include other livestock. Strong links with banks (normally national and a few commercial) have been created. For example, when the farmer asks for a loan or credit from the bank, the adoption of an insurance policy is obligatory22.
33. Marketing services include a range of activities from the provision of market information, the operation of auction markets, the grading of meat or milk, to the facilitation of marketing systems themselves involving complex systems to control and stabilise prices, the provision of marketing and processing facilities, and in some cases the transport of livestock or of raw milk. Marketing systems have been generally administered by organisations such as marketing boards, state sponsored co-operatives or some combination of both. The provision of information services, including the operation of auction markets, may be justified on various grounds, notably the public good nature of market information, as well as the potential for asymmetries of information on the part of market players. Marketing systems have been justified on grounds of imperfect competition, with many producers and few processors in regionally distant markets, often conditioned by the perishability of product, particularly in the case of milk. Product grading services provide a neutral arbitration function under asymmetric information and market power at the time of sale.
34. In the past decade, there has been substantial reform of the public provision of marketing services. Reforms have also been undertaken with the view that public or quasi public institutions were not delivering services in an efficient manner, or that the rationale for them had changed. Indeed, the record of direct state intervention in the marketing of livestock products has been mixed. In many cases, marketing boards and co-operatives have faced severe financial difficulties and were criticised for late payment to producers and other areas of weak management. Particular problems for management are associated with lack of market information, conflicting requirements of low prices for consumers and high prices for producers, seasonal and inter-year fluctuations in supply and under-capacity use of processing facilities. Following liberalisation and the ending of price controls, private sector marketing has largely replaced the public sector organisations for marketing both meat and milk.
35. Some argue that direct government intervention in livestock markets has achieved some success. Two examples are the Botswana Meat Commission and India’s Operation Flood. The Botswana Meat Commission (BMC), has established and maintained favourable export markets for local beef, and has stimulated an off-take rate for cattle, much higher than on similar range grazing conditions in other parts of Africa. India’s ‘Operation Flood’, has been successful in moving the country from a significant importer of dairy products to self-sufficiency in recent times. India is now self-sufficient in milk and the largest single producer in the world. Projects have been aimed at promoting market off-take from grassland-based pastoral systems, by providing stock routes, with water points, holding grounds and auction yards. However, even these successes have been criticized on various grounds, particularly for benefiting mainly larger commercial operations.
36. In general most analysts argue that direct state involvement in the provision of marketing and processing services has had little success in promoting development of the livestock sector, and has resulted in large financial losses. They favour greater reliance on liberalised markets.
37. This paper has laid a basic framework in which the provision of livestock services can be assessed, following economic and social rationales. These are essentially the same rationales that have been used in prescriptive policy advice to encourage the reforms of public services23. While they remain valid, it is apparent that depending on various evaluative criteria, levels and forms of service provision, and various modalities of service provision may be selected. Given that reforms have been taken place in many Member countries, it is appropriate now to evaluate experiences of Members in making such reforms. This includes an assessment of the impacts that these have had on the performance of their livestock sectors, both in terms of how well the services are performing, but also how the competitiveness of their sectors are changing. In such an evaluation, indicators of performance are also required, including herd productivity, the incidence of animal diseases, food safety concerns, meat production and trade, and incomes of poor farmers. Finally, the list of services that benefit livestock producers may be incomplete. New services may be identified that appear to be lacking, and if provided, either publicly or privately, would improve the functioning of the sector. Other key public services, such as education, and development of the social infrastructure including roads, water supplies, and telecommunications, can benefit not only livestock keepers, but the whole rural community. The same is true of improvements in human health services. Access to land, hired labour and input markets for pre-mixed feeds and special equipment are also important, at least for some types of livestock production system.
38. The Secretariat requests the guidance of the Group with regards to undertaking a comprehensive assessment of the experience of reforms in the provision of livestock services. It is proposed that the Secretariat develop a questionnaire that would attempt to take an inventory of the various services Members provide to their livestock sectors, and the various modalities of service provision. The questionnaire could also take stock of experiences with recent reforms. A draft outline for a questionnaire is attached and Delegates are requested to provide detailed comments that would facilitate the capture of the most appropriate information.
39. Given information from the questionnaire, an analysis of service provision and its effects would be undertaken. The assessment would be comprehensive, examining the impact on various indicators of service performance, sectoral performance, and other goals such as poverty relief etc. The results would be published in a report, and discussed in appropriate fora. Active participation by Members in performing the assessment would be valuable.
40. Pressures for market liberalisation and privatisation have affected the provision of services to the livestock sector in many Member countries, both developing and developed. There is recognition that governments must still participate in the provision of services to the livestock sector. The Inter-Governmental Group on Meat and Dairy is a unique body in which experiences of alternative modalities in the provision of livestock services can be discussed from economic, social and public administration perspectives. Sharing views and experiences, against an overall background of an economic perspective for sectoral performance, competitiveness and trade, could assist Members in formulating their policy practices.
41. Delegates are invited to:
Draft Questionnaire Template:
The provision of services to the livestock sector
(in PDF version)
1 This paper has benefited from a consultancy with Professor Emeritus Martin Upton at the University of Reading and Ana Riviere-Cinnamond at the London School of Hygiene and Tropical Medicine (LSHTM) and the Pro-Poor Livestock Policy Initiative (PPLPI).
2 Carney, D. (1998). Changing Public and Private Roles in Agricultural Service Provision. London: Overseas Development Institute.
3 deHaan, C. and S. Bekure (1991). Animal health services in sub-Saharan Africa. Initial experiences with alternative approaches. Washington D.C., The World Bank.
4 Umali-Deininger, D., G. Feder, et al. (1992). "The balance between public and private sector activities in the delivery of livestock services. "World Bank Discussion Paper 163: 114".
5 Upton, M. & J. Otte (2004).’ The Impact of Trade Agreements on Livestock Producers’, in E. Owen et al., Responding to the Livestock Revolution-the Role of Globalisation and Implications for Poverty Alleviation. Nottingham University Press (To be published March 2004).
6 Tinbergen, J. (1955) On the Theory of Economic Policy, North Holland Publishing Co. Amsterdam.
7 Stiglitz, J. E. (2000). Economics of the Public Sector. London / New York: W.W. Norton and Company
8 This approach ignores the possibility that some goals may be beyond measurement in monetary terms, but their pursuit is essential none-the less. The list might include protection of or improvements in human health, environmental conservation, sustainability and animal welfare. Cost-effectiveness analysis is difficult, but it is useful to quantify benefits where ever it is possible.
9 The scope of services in this paper excludes consideration of direct support programs such as domestic production or consumption subsidies, market access policies such as tariffs, and para-statal export/import agencies. These may be included in a more complete study of services whose goal it is to increase incomes of producers, but they raise other broader questions agricultural policy not specific to livestock.
10 See Riviere-Cinnamond 2004 for an extensive definition of these services.
11 Which refers to the health status of the animals, existence of vectors, feed origin and quality…
12 Smith, L. D. (2001) Reform and decentralization of agricultural services: A policy framework. FAO Agricultural Policy and Economic Development Series. Rome: FAO.
13 FAO. (1997) Profile of veterinary services in New Zealand, in FAO electronic conference on principles for rational delivery of public and private veterinary services. Rome: FAO.
14 Arrow, K.J. (1962). ‘ Economic Welfare and the Allocation of Resources for Inventions,’ in R.R. Nelson (ed.) The Rate and Direction of Inventive Activity, Princeton University Press pp 609-625
15 Evenson, R.E. (2001). Economic Impacts of Agricultural Research and Extension, in B.L. Gardner & G.C. Rausser, Handbook of Agricultural Economics, Volume 1A: Agricultural Production. Amsterdam: Elsevier
16 Townsend, R.F. & C.G. Thirtle (2001). Is livestock research unproductive? Separating health maintenance from improvement research. Agricultural Economics 25 (3) 177-189
17 Jabbar M.A., Ehui S.K., von Kaufmann R. (2002). Supply and Demand for Livestock Credit in Sub- Saharan Africa: Lessons for Designing New Credit Schemes. World Development,Vol.30, No 6, pp 1029-1042
18 The Grameen Bank, which originated as an NGO, has now been taken over as a public sector institution
19 Desai B.M., Mellor J.W. (1993). Institutional Finance for Agricultural Development: An Analytical Survey of Critical Issues. Food Policy Review 1. Washington D.C.: IFPRI.
20 Van Asseldonk, M.A.P.M., Meuwissen, M.P.M., Huirne R.B.M. and Wilkens, E. (2003). European public and private schemes indemnifying epidemic livestock losses: A review. Forthcoming in Livestock insurance products
21 FAO (1992). Livestock Insurance in Asia. Experience of Selected Asian Countries. FAO Regional Office for Asia and the Pacific (RAPA). Bangkok: Thailand.
22 Insurance premiums vary between 3 and 5% of the value of the animal. Premiums are generally kept in a parastatal fund. The funds collected serve to reimburse the farmer when the insurance policy refunds in the stipulated cases.
23 See for example Reform and decentralization of agricultural services, FAO Agricultural Policy and Economic Development Series, Rome 2001.