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Approaches to pro-poor livestock market development
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Approaches to pro-poor livestock market development

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Presented by Steve Staal (ILRI) to the 12th Inter-Agency Donor Group Meeting, Nairobi, Kenya, 10-13 May 2011

Presented by Steve Staal (ILRI) to the 12th Inter-Agency Donor Group Meeting, Nairobi, Kenya, 10-13 May 2011

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Approaches to pro-poor livestock market development Approaches to pro-poor livestock market development Presentation Transcript

  • Approaches to Pro-Poor Livestock Market Development Steve Staal 12 th Inter-Agency Donor Group Meeting, Nairobi 10-13 May, 2011
  • Outline of presentation
    • Concept of Pro-Poor livestock market development
    • Approaches aimed at farmers
      • Collective action
      • Innovation platforms
      • Hubs
      • Contract farming
    • Approaches aimed at small scale market agents
    • Emerging principles
  • Principles of pro-poor market development
    • Increases access to markets (volume, value, reliability) in particular for resource-poor, smallholder livestock producers
    • Provides increased access to women and marginalized group, possibly even new roles
    • Is not just about producers: small scale market agents, and value addition along the supply chain
    • Provides improved access by poor consumers to low cost and safer livestock products
    • Drives productivity increases on farm
  • Targeting farmers: Collective action
    • Cooperatives, producer companies, farmer business associations, self-help groups
    • Advantages
      • Improved bargaining power
      • Professional management
      • Improved access to volume markets, higher quality and more reliable services, including BDS
      • Platform for knowledge management, joint learning, innovation in production and value addition
      • Access to financial resources, savings
    • Risks
      • Individuals lose some control over assets and cash flow
      • Higher costs and lower prices
      • More limited end markets (formal)
      • Interference by political, community actors
  • Collective action (cont)
      • Basic lessons
        • Refrain from asset-intensive and management-intensive enterprises
        • Loyalty and farmer-ownership may not be enough to sustain participation
        • New business-oriented models offer advantages including bounded owner-membership
        • Sustainability is generally dependent on: prices and transaction costs
  • Targeting farmers: Innovation Platforms
    • Innovation platforms are simply arrangement which allow individuals and organizations to come together regularly to address issues of mutual concern and interest
    • IPs generally not designed to be sustainable over the long run
      • Short to medium driven project-driven intervention
    • Aims of Innovation Platforms
      • Improving linkages of farmers to other value chain actors :
        • Buyers, suppliers of inputs, services and knowledge, and public decision makers, regulators
      • Improving innovation capacity of members
        • Market development, negotiation, joint learning
      • End result is increased capacity to identify and interact positively and remuneratively with selected VC actors
  • Innovation Platforms (cont)
    • Conditions
      • Evidence suggests need for a credible broker to facilitate IP processes (Pusker et al 2010)
    • Implementation
      • Can be coupled with some sort of collection (hub, self-help group) that forms the sustainable component
    • Examples
      • Fodder Innovation Project (Puskur et al 2010)
      • Lili (Livestock Livelihoods) Project (Moyo et al 2010)
      • imGoats – ongoing - linked to farmer hubs
    • Jury is still out
  • EADD Chilling Plant Hub TRANSPORTERS TESTING FARMERS FIELD DAYS FEED SUPPLY AI & EXTENSION VILLAGE BANKS OTHER RELATED MEs HARDWARE SUPPLIERS CHILLING HUB Source:EADD
  • Targeting farmers: Hubs
    • EADD dairy hubs - a few lessons so far (Baltenweck et al, 2011 forthcoming)
      • Handle issues of raising equity from farmer carefully – disclosure, transparency, consequences for benefits, ownership
      • Avoid dogma wrt in-house service provision vs out-sourcing (control vs efficiency)
      • While focusing on group organizational capacity and sustainability, don’t lose sight of producer performance - extension
      • Village banks can play multiple roles – paying for BDS and new savings
      • Large variability in hub evolution, limited control by project teams
      • Assets can create vested interests, threaten member ownership
  • Targeting farmers: Contract farming
    • Principles driving contract farming
      • Managing market risks (for producer and buyer)
      • Access to quality services and inputs (producer)
      • Managing disease risk and quality, SPS (buyer)
    • Pig contract production in Vietnam (Lapar et al 2008)
      • Large scale production , not scale neutral
      • Not consistent higher returns to labor
      • Large barriers to entry, limited to large investors - so very limited opportunity for smallholders
  • Contract farming (cont)
    • Dairy contract farming in India (Birthal et al, 2006)
      • Few actual CFs in dairy, so used cooperatives and contract agents
      • Higher producer profits, in spite of lower prices
      • No increase in farm productivity
    • Emerging lessons
      • No clear livestock examples suitable for smallholders, except poultry
      • Limited to large batch production, where are substantial market risks for producer
      • “ Leakage” limits its application to dairy
  • Targeting market actors: BDS for small scale traders
    • Principles
      • “ Private sector” too often implies large private and modern/formal
      • Ignores reality that small scale or traditional agents often occupy by far the largest market share in developing countries
      • Use a BDS approach to develop their capacity to upgrade value chains, provide better services to clients, higher quality/safer products to consumers (BDS means catalyzing a 3rd party actor)
      • Requires change in mind-set away from the “evil middlemen” and instead recognition of role they play
  • BDS for traders – dairy example SDP training and certification of small scale dairy actors (Omore et al 2011 forthcoming)
      • Now formalized in GoK and KDB practices, and partly as a result, there is now a National Dairy Traders Association
      • Due to lower transactions costs, estimated over $30M in annual benefits to Kenyan economy, split between producers and consumers
      • Now being adapted and piloted in Uganda and Assam
    • Many other adaptations including the input side: FARMAfrica agro-vet franchise model
    Milk Traders Training Service Providers (BDS) Regulatory Authority Certification/Licensing Training & certification of competence Accreditation & monitoring Reporting Cess fee Training guides Applying the Innovation in a Quality Assurance Scheme Involving Business Development Services (BDS) Hygienic cans
  • Emerging principles
    • (I did not mention: auctions, approaches to export and high end markets, certification of attributes, SPS, value addition, branding)
    • Evolution of models for market collective action towards putting more emphasis on
      • Capacity for innovation, and engagement with other value chain actors
      • Stronger underlying business model, more bounded member ownership
    • No clear role for contract farming in many cases
    • Greater opportunity to bundle services, BDS, including financial services
    • Increasing recognition of potential role of small scale market actors for upgrading value chains and providing services