Opportunities for public-private
investment in animal health
in developing countries
For members of the Board of IFAH
25 April 2013, Brussels
Jimmy Smith, Director General, ILRI

Key messages
Demand for livestock commodities is growing
Animal health constraints are significant in
developing countries
As smallholder systems modernize, their need
for animal health inputs will grow
Smallholder producers will continue to be a large
part of the supply response for decades
New opportunities exist for synergies between
private and public investments in animal health

The global livestock sector
 Total animals:
17 billion
 Asset value:
$1.4 trillion
 Employs:
1.3 billion people
 Uses:
1/3 of the earth’s
ice-free surface
3

Four of the five highest value global
agricultural commodities are livestock products
4
Source: FAOSTAT, 2010 data

Percentage increase in demand
for livestock products
0
20
40
60
80
100
120
Developing Countries Developed Countries
Meat
Milk
Eggs
2000 to 2040
IFPRI-ILRI IMPACT model results
Far higher growth in demand will occur in developing countries

Global food production: From where?
Herreret al. 2009
Developing-country
mixed crop-livestock
systems, predominantly
smallholders, supply the
large proportion of
livestock products

By 2040, 70% of global beef and milk will be produced
in developing countries by smallholders in transition
40
45
50
55
60
65
70
75
80
85
90
2000 2040
Beef
Pork
Lamb
Poultry Meat
Eggs
Milk
IFPRI-ILRI IMPACT model results
%

Poor people care about food quality –
and more so as incomes grow
Studies in several countries show people who
shop in informal markets are willing to pay a 5-
15% premium for safer foods
Even in poor countries, dramatic changes in
consumption patterns have been observed in
response to food scares eg:
– In Vietnam, an outbreak of “blue ear” resulted in
most consumers ceasing to eating pork
– Rift Valley fever outbreaks in Kenya resulted in
consumers demanding to see butchers’ certificates
for ruminant meat or switching to poultry 9

Source: (Steinfeld et al. 2006)
Large productivity gaps between rich
and poor countries are not closing
Some developing country regions have gaps of up to 430% in milk
411
1021
517
4226
397
1380
904
6350
Africa Latin America South Asia Industrialized
Countries
Milk
(kg/cow/yr)
1980 2005

11
Animal disease remains a key constraint
Young Adult
Cattle 22% 6%
Shoat 28% 11%
Poultry 70% 30%
Source: Otte & Chilonda; IAEA
Annual mortality of African livestock
Around half due to preventable or curable diseases

0
1
2
3
4
5
6
7
8
Billion
$
lost
yearly
South Asia
Africa
Annual losses from selected diseases –
Africa and South Asia
Estimates from BMGF
Africa
South Asia

Modeling gains from dairy technology interventions -
Value of change in milk yield and herd growth
0%
50%
100%
150%
200%
250%
300%
350%
400%
450%
Genetics Feed Animal
Health
Herd
Mgmt
Percent
increase
due
to
intervention
Reducing disease can increase milk yields up to 350% -
greater than improving feed, genetics or management
Source: ILRI 2010

Smallholder livestock keepers
are competitive
 Smallholders benefit in multiple ways from keeping livestock
 They are competitive because they use low-cost labour
and integrate crop and livestock production
1. East African dairy
 In Kenya, 1 million smallholders keep the largest dairy herd in Africa
(larger than South Africa)
 The lowest-cost milk producers globally are found in Uganda (source:
IFCN)
 Small-scale Kenyan dairy producers get above-normal profits of 19-28%
in addition to non-market benefits (finance, insurance, manure, traction)
of a further 16-21% (source: SDP-ILRI, 2005)
 Small- and large-scale poultry and dairy producers in Kenya have the
same levels of efficiency and profits (source: Omiti et al., 2004)

2. Vietnam pig industry
 95% of production is by
producers with fewer than
100 animals
 Pig producers with 1-2
sows have lower unit costs
than those with more than
4 sows (ILRI 2010)
 Models show industrial pig
production could grow to
meet no more than 12% of
national supply in the next
10 years
 Smallholders will continue
to provide most of the
country’s pork for years to
come
Smallholder livestock keepers
are competitive (cont.)

Key points related to
smallholder competitiveness
 Smallholders will continue to supply most of the
livestock products in most developing countries
 There will be different trajectories of livestock growth,
with strongest dynamics in Asia
 Increasingly
in many regions,
smallholders will
commercialize their
operations and
produce for markets
 Demand for
animal health
inputs will increase
16

Increasing opportunities for
animal health inputs
17
As smallholder producers in the developing world
continue to commercialize, they increasingly pay
to reduce their animal disease burdens.

Potential private-public synergies
 Win-win investments for poor and rich alike:
Research on some disease of the South (e.g., African swine fever)
can reduce threats of those diseases moving to the North
due to climate change and increased trade
 Joint public-private testing of innovations:
– Innovative franchise models are providing smallholders with
access to agro-vets (‘Sidai’ in Kenya)
– New low-cost, pen-side diagnostic tools are providing
diagnostics for smallholder settings
– New mobile phone systems are helping farmers monitor
the health and reproduction of their animals (‘iCow’ in Kenya)

Challenges for private-public partnerships
 More and better livestock data needed in developing countries:
− Scarce livestock data limits the ability to match investments to
appropriate systems, markets and opportunities
− Potential role for the private sector in building livestock data
systems
Different animal health models needed for smallholder settings:
− Need to understand demand for inputs and then test product
applications
− Need innovative, low-cost products that meet smallholder
needs
− Need new delivery systems that match smallholder settings
and infrastructure

Key messages
Demand for livestock commodities growing
Animal health constraints are significant in
developing countries
As smallholder systems modernize their need
for animal health inputs will grow
Smallholder producers will continue to be a
large part of the supply response for decades
New opportunities for synergies between
private and public investments in animal
health

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given to ILRI.
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