Integrated Poverty Assessment for Livestock Policy

A Living from LivestockPro-Poor Livestock Policy Initiative

IntegratedPovertyAssessment forLivestockPolicyFAO Policy Briefing to the Government of Viet Nam

23 March 2010

David Roland-HolstJoachim Otte, & Jenny Ifft

Livestock Development for Poverty Reduction

and Growth in Viet Nam

A Living from LivestockPro-Poor Livestock Policy Initiative

Contents

1. Livestock and the Poor

2. IPALP Methods

3. How to Help Poor Farmers

4. Conclusions & Discussion

A Living from LivestockPro-Poor Livestock Policy Initiative

Sector Transition or Parallel Development?

Smallholder poultry development offers

three important advantages to policy

makers:

1. Enhances domestic food security

2. Liberates industrial capacity for export

promotion

3. A potent catalyst for poverty alleviation

among the rural majority

A Living from LivestockPro-Poor Livestock Policy Initiative

Backyard Chickens are Ubiquitous....

although poultry sectors may be quite diverse…

Birds

Flocks

A Living from LivestockPro-Poor Livestock Policy Initiative

Viet Nam Poultry Income

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

.00 .20 .40 .60 .80 1.00

Cumulative Population Share

Cu

mu

lati

ve In

co

me a

nd

Po

ult

ry R

even

ue

Total Income

Poultry Income

Equality

Poultry income

is far more equitably

distributed thantotal income !

A Living from LivestockPro-Poor Livestock Policy Initiative

Livestock: Economic Perspectives

• More income from natural resourcesthrough:

• Access to common land resources

• Utilization of marginal resources, e.g. ‘waste land’ not suitable for crops

• Re-cycling crop by-products

• Increase in output of crop production (fertilizer)

• Savings

• More income from family labour through:

• Better use of heterogeneous labourresources

• Balance seasonal labourdemand for crop farming

• Use of labour for processing of primary products (value added capture)

• Release labour for more productive purposes (animal traction)

A Living from LivestockPro-Poor Livestock Policy Initiative

Linkage Analysis with SAMs

Multiplier Comparison Multiplier Livestock/Comp

Buff&Cattle 2.02 Veg&Fruit 0.93 2.19

Other Lvstk 1.84 Oth Crops 0.61 3.34

Raw Milk 2.24 Textiles 1.09 1.86

Silk&Wool 2.03 ElecEquip 0.74 2.73

Beef 1.37 Machinery 0.38 5.39

Other Meat 1.68 OthMfg 1.14 1.78

Dairy 1.87 Trade 1.11 1.83

Leather 2.04 Bus Serv 1.36 1.49

Livestock 2.03

Proc Food 1.74

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Policy Analysis

Three ways to help poor farmers:

1. Increase output – demand and productivity

promotion

2. Increase price – value creation and quality

3. Reduce costs – market access, information

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Viet Nam: Poultry Promotion

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Viet Nam: Pig Promotion

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Household Income Effects of a 50 % National Poultry Loss

A Living from LivestockPro-Poor Livestock Policy Initiative

Market Access and the Poor

• Market access is the gateway out of long term poverty for most of the world’s poor.

• The poultry-dependent are more likely to be poor, and poultry income thus offers a strong catalyst for poverty reduction.

• How then can we best facilitate improvements in this source of income?

Promote self-directed poverty alleviation via improved market access.

A Living from LivestockPro-Poor Livestock Policy Initiative

Most of Viet Nam’s Poor are Near Markets

Po

vert

y I

ncid

en

ce

Po

vert

y D

en

sit

ySource: IFPRI Source: IFPRI

A Living from LivestockPro-Poor Livestock Policy Initiative

Poultry Markets have Many Imperfections

High Mortality

Low Input Quality

Low SPS Standards

Low Bargaining

Power

Moral Hazard

Distrust,Low WTP

Adverse Selection

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Viet Nam and Certification

1. Detailed surveys of consumers, producers,

market intermediaries

2. Statistical analysis of economic structure,

behaviour, and market linkages

3. Certified safe chicken and duck pilot programs

4. Policy and consultative support for larger

programs by GOV and USAID

A Living from LivestockPro-Poor Livestock Policy Initiative

Overcoming Market UncertaintySupply Chain – Resource Flow

Incentives:Technology Transfer

Behaviour:Market ParticipationRisk Management

Producers

Value Chain – Income Flow

Consumers

Assemblers

Processors

Distributors

Retailers

Certification

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Certified Supply Chain Projects

• Traditional Markets (Cho) in Ha Noi

• The majority of poultry, both duck and chicken are still purchased in traditional markets in Ha Noi

• 8 vendors across 4 markets

• Coordination with: farmers, traders, slaughterhouses, and market vendors

• Specialty and grocery stores in Ho Chi Minh City

• Grocery and specialty poultry stores have a large and

growing role in poultry marketing

• Relationship with distributors or poultry companies has a large role in this type of system: coordination is with

farmers, slaughterhouses, distributors and stores/shops

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Main Findings

• Urban households exhibit significant willingness to pay for chicken traceability and certification

• Taste (breed) is also very important, i.e. a premium poultry product in Viet Nam, in addition to having a credible safety guarantee, must be free range

Policy messages:

• Bio-security and poverty reduction can be advanced

with incentive compatible, privately financed quality schemes like certification

• Field experiments are a promising way to estimate consumer valuation of traceability

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Contracting: What It can Offer

Supply Chain – Resource Flow

Producers

Value Chain – Income Flow

RetailersContracting

Quality/Reputation

Reliability/Continuity

Reliability/Continuity

Standards/Technology/Inputs

Credit

Market Access

A Living from LivestockPro-Poor Livestock Policy Initiative

Policy Implications

Livestock can make a substantial contribution to poverty reduction and economic growth, but

• Pro-poor policies need targeting

• Livestock promotion has significant potential• Increase output quantity and quality

• Improve terms of market access• Reduce trade margins

• Reduce perishability

• Improve traceability