C de Haan1 - Livestock Adviser, World Bank, Washington DC, USA
Introduction
Past trends and performance
Current trends
Future directions in smallholder livestock development
References
1 This is an expanded and updated version of de Haan (1992): Livestock Services for Small holders, Yogyakarta, 1992. Views expressed are those of the author and do not necessarily reflect the policies of the World sank or its affiliates
Livestock ownership is frequently equated with wealth but livestock development often benefits the poor. In Morocco and Egypt small farms have four to six times more animals per hectare than larger farms (Glenn, 1987). Landless farmers in India and those with less than one hectare own more than 30 per cent of cattle and buffaloes and have four times more stock per hectare than larger farmers. Higher stocking rates may not result in optimal efficiency but they demonstrate the importance of livestock development for rural growth and poverty reduction. Effective and sustainable livestock services are a key issue in rural development policy and they have attracted 30-50 per cent of international support for livestock development in the last 10 years.
This overview is a developer's perspective of the current state of key issues in the establishment and functioning of effective livestock services for small holders in low income countries. The paper covers issues and trends affecting all services. It uses examples from publicly funded development support for key services such as animal health, livestock extension, breeding, credit and marketing services.
India's Operation Flood developed a comprehensive service package which eventually reached about eight million farmers (NDDB, 1994). The Turkish Foundation created a viable integrated service and processing chain based on small poultry farmers (Unger, 1993), These two projects are among few exceptions to the general situation in which livestock services in developing countries have not been very effective, especially in reaching the poor. The two key factors leading to this situation were declining budgets and administrative efficiency, and changing clients, problems and issues. The long term lack of impact has resulted in a search for alternative systems.
Declining budgets and administrative efficiency
Fiscal constraints and poor management of resources caused livestock service staff numbers in many African and Asian countries to grow faster than the means (vehicles and fuel, pharmaceuticals, etc) to support them. This decline in recurrent non-salary funding forced the services to cut back on field activities. In 1961-1962, for example, 33 per cent of livestock service budgets of six Sahel countries was allocated to operating expenditures. This share had been reduced to 25 per cent by 1975 and 16 per cent by 1988 (de Haan and Bekure, 1991). The situation in other regions is less serious but almost all livestock services in the developing world have seen large decreases in non-salary recurrent funding.
Changing clients, problems and issues
Increased demand for animal products and decreased grazing resources have led to intensification of production. Small holders with crossbred dairy cattle and pigs and hybrid poultry need higher quality services more focused on individual animal care. The introduction of crossbred dairy cattle in India, for example, increased the need for individual and immediate animal health care and for which the public sector was badly equipped. A similar shift is happening under the Chinese "lean pig" policy which involves an ambitious crossbreeding programme that will lead to a pig population that requires (and justifies) much more individual care.
This shift in technology coincided with a change in the profile of the livestock farmer as traditional livestock keeping evolves to more commercial operations. Cattle ownership in many African areas, for example, is shifting from ethnic groups with considerable indigenous knowledge to much less experienced crop farmers. These "new" livestock farmers demand more frequent and more sophisticated services than the archetypal public sector services cannot provide. In addition, there is decreasing emphasis on greater production and more regard for increased efficiency. Attention to the sustainable use of renewable resources is assuming importance and this also requires a different set of policies, services and supplies.
The two most important trends in the institutional organization of livestock services now in the mainstream of the current development dialogue are a better distribution between the public and private sector and greater decentralization and transfer of responsibility to the beneficiaries.
Redistribution of public and private sector roles
Several publications of the last 10 years have discussed the distribution of responsibilities between the public and private sector, including the livestock sector (Umali et al, 1992). They recommend redistribution of responsibilities over three broad categories whereby the public sector has tasks, which it:
· needs to do itself;
· can subcontract to the private sector, but needs to supervise closely and (at least partially) finance; and
· can transfer fully to the private sector, with Government maintaining only an overview function.
Pure public sector responsibilities
These are pure public good services such as policy planning, quarantine, food inspection and quality control. This area has traditionally received considerable donor support and no significant innovative institutional structures have emerged.
Public service responsibilities which can be subcontracted to the private sector
These remain under the responsibility and supervision of the public sector and frequently have its financial support. They are goods with externalities, such as compulsory vaccinations, extension through the mass media and research that is not patentable. In this area a significant number of new developments has emerged in recent years in the developing world.
Animal health
Subcontracting of compulsory vaccination campaigns to private veterinarians under (often partial) payment by the public sector has proven to be a very effective catalyst in developing private animal health care systems. This is clearly demonstrated in Morocco where the number of private veterinarians rose from two in 1983 to 130 by mid-1994 (World Bank data). This was due to an attractive subcontracting policy and strict curtailment of government involvement in private good services when a private veterinarian establishes a practice. It resulted in net savings for Government as the fee per animal vaccinated paid to the private operator was estimated to be lower than the average vaccination cost by the public veterinary service. Finally, it improved livestock protection as the private veterinarians, with stronger incentives, vaccinated on average a higher percentage than public sector staff (World Bank data).
Similar successful experiences also emerge from sub-Saharan Africa, where rinderpest vaccination is now being subcontracted to private veterinarians. Subcontracting also offers opportunities to increase the flexibility and impact of extension services.
Extension
Subcontracts with NGOs and private firms for extension are being introduced in, for example, Chile. A phased system has been introduced going from Government financed individual contacts, to group extension and finally to complete take-over by the beneficiaries (Amour, 1994).
Some interesting new incentive systems have also emerged recently where extension stays within the public sector. These include: (i) "contract extension", where village extension workers enter into contracts with farmers, or farmers' associations, based on a fee plus a share in the profits; (ii) "share cropping" with farmers for a profit. In this case, the farmers provide land, animals and labour, and the extension agent, with his easier access to credit, supplies the inputs. The share-cropped cow is the demonstration plot, where other farmers can see the effects of the new technology; and (iii) "voucher" programmes, whereby farmer groups are given Government vouchers that they can trade for individual or group extension to be delivered by individual extension agents (Ameur 1994).
Research
Competitive grant systems with possibilities for subcontracts to NGOs and private groups (and other Government organizations, such as universities) are being introduced in projects being funded by the World Bank in Indonesia and Kenya. Initial experiences are good.
Private sector responsibilities
These are pure private goods, such as clinical animal health care, animal breeding and credit.
Animal health
Considerable progress has been made in sub-Saharan Africa (especially in the Francophone part, where there are now an estimated 400 private vets, covering most of the clinical care and drug sales), North Africa, Eastern Europe and Latin America and the Caribbean. The public sector still dominates veterinary services in Asia, including West Asia. The discussion has now shifted in many countries from the role of the public and private sectors to distribution of responsibilities within the private sector. The role of auxiliaries (nonprofessional technical assistants) is still very much a point of discussion (VSF, 1995)
Artificial insemination
This is still almost exclusively in the public domain in developing countries and subject to rigid rules of public administration (Walshe et al, 1991). The use of sophisticated equipment and inputs (including liquid nitrogen) since the 1970s and 1980s has led, in Africa and many parts of Asia, to AI services being too expensive, not available or so unreliable that farmers cannot use them. Almost without exception, conception rates to AI in developing countries are below 50 per cent (Mergos and Slade, 1987; Walshe et al, 1991) thus defaulting on the main objective of most farmers in the developing world of having their cows give one calf per year. Commercialization of the services, with more performance-oriented incentive schemes, is being introduced in North Africa and China. Pure private Al using fresh semen and adapted transport is also strongly emerging in China.
Credit
Thinking has changed considerably recently. First, credit appears less crucial in technology adoption than previously thought. Most farmers have access to informal sources and many agricultural and livestock technologies can be introduced gradually. Second, perceptions regarding private loan intermediaries, who used to be considered exploitive, is changing. Some exploitation by private loan intermediaries does exist but private (informal) credit institutions are less exploitive than originally thought (Yaron, 1992a, 1992b). In spite, however, of the importance of livestock to the rural poor and the need for initial capital to start livestock production, credit programmes have been largely unsuccessful in getting this target group involved in livestock production. The mobile nature of livestock complicates collateral requirements and the long production cycle makes livestock production less attractive to commercial bank loans. Group lending and other institutional channels have only recently been tested for livestock and experiences such as the Grameen Bank in Bangladesh are promising.
Impact of increased privatization
The impact of increased privatization and commercialization on the poor has not been fully documented. There is, however, increasing evidence that if a good or service is subsidized or provided free its access will be restricted to the wealthy and it will not be available to the poor. Subsidized interest rates in Latin America (but also elsewhere) mainly touched the wealthier minority of producers as political influence rather than market efficiency was the deciding factor in allocation of loan funds. It has been clearly shown (Leonard, 1985) that, when the Government of Kenya shifted to a greater degree of cost recovery, access of poor farmers increased significantly.
Participation and decentralization
Participatory development is an iterative process between different stakeholders in deciding their own development interventions (Chambers, 1993; World Bank, 1995). It is now frequently used as a means of improving the beneficiaries "ownership" in development projects. A considerable number of tools exists to improve the planning, based on Rapid Rural Appraisal techniques.
A project in Egypt (World Bank, 1995) formed a local task force to involve all stakeholders in a resource management project. The use of available tools (including semi-structured interviews, herders' perceptions on the environment, seasonal and historical calendars and older techniques such as cow histories) certainly improved the "ownership" of project interventions by local Bedouin. Key issues still concern the potential conflict between participatory development, which requires continual adjustment of objectives as feed back from project beneficiaries becomes available, and sometimes rigid donor administration which, although less severe than in the past, still exists. A key outstanding issue will be the identification of credible process indicators to replace the physical input indicators of traditional project implementation.
Pastoral organizations
Pastoral organizations are one of two key Organizational forms in the livestock sector. They are important in range livestock projects in sub-Saharan Africa and are emerging in the West Asia-North Africa region. World Bank activities have been rather successful in mobilizing producers around the preferred inputs of animal health and water development in Senegal, Central African Republic, Mauritania and Guinea. They have been less successful in mobilizing support for resource management and many associations have not yet proved to be sustainable after project completion.
Processing and marketing organizations
This is the second key organizational form. Livestock products are perishable and do not give producers a great deal of leverage vis-a-vis their processors. This makes cooperative movements especially relevant in the livestock sector. Some important cooperative movements in the agricultural sector in the developing world are thus found in the livestock product processing industry, as shown by Indian dairy cooperatives and the Turkish Foundation. Both have successfuly mobilized large groups of small producers and- have provided them with inputs and services and outlets for products. Monopolistic tendencies have emerged recently, however, in several successful coop movements. Inefficient processors could now become a factor in depressing producer prices and inflating consumer prices and thus constrain overall dairy development. A main challenge in the future, therefore, will be to prepare cooperatives for a more competitive environment.
Livestock development in low income countries needs to operate within the overall development objectives of reducing rural poverty, promoting rural growth and enhancing sustainable resource use. Future development support within the World Bank, for example, could therefore be expected to concentrate on three main areas.
Further fine-tuning of economic policies
Particular attention will be paid here to:
· creating "level playing fields" for all service providers;
· improving production efficiency; and
· environmental linkages to reduce the negative and enhance the positive impacts of livestock on the environment.
Strengthening services to small holders
This will be achieved by:
· continuing the development of private services in animal health and breeding; and
· focusing on public sector tasks such as livestock research and extension but not necessarily through public sector delivery.
In extension, alternative organizational forms, such as the involvement of NGOs and the introduction of performance related incentive systems would need to be explored. Publicly funded research would need to concentrate on:
· technologies for small holders which would be low cost and "user friendly", to allow their use by non-professional staff and groups; and
· increase the efficiency and sustainability of renewable resource use.
Increased emphasis on environmental investments in the livestock sector
These, because of their significant externalities will become increasingly important in development support. Subjects for emphasis might cover the whole spectrum from land degradation and management (especially in the arid zones), through programmes to reduce livestock methane emission and then to cleaning of the environment.
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Chambers R. 1993. Farmers first: the professional revolution. Paper presented at a seminar held in Yogyakarta, Indonesia, November 1992 (mimeo).
de Haan C and Bekure S. 1991. Animal health services in sub-Saharan Africa. Initial experiences with alternative approaches (Technical Paper N° 134). World Bank: Washington DC, USA.
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Unger U. 1993. A model for small holder poultry. Proc. XIX World Poultry Congr.
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World Bank. 1995. Participation hand book. World Bank, Washington DC, USA (in draft).
Yaron J. 1992a. Rural finance in developing countries. Paper presented at the 12th Agricultural Symposium, World Bank Washington DC, USA (mimeo).
Yaron J. 1992b. Successful rural finance institutions (Discussion Paper N° 150). World Bank: Washington DC, USA.
