40th General Session of the EuFMD • 22-24 April 2013, Rome (Italy)

Access of the rural poor to goods and services to control Foot-and-Mouth

Disease (FMD)

Barriers, opportunities, and the role of the private and public sectors and international organizations in achieving change

R. Emerson Tuttle European Commission for the Control of Foot-and-Mouth Disease (EuFMD) Food and Agriculture Organization of the United Nations August 1, 2013

+ Agenda

Defining the problem

Conclusions

New investments in developing countries at the Base of the Pyramid (BoP)

Is there a potential market for FMD control?

What are the barriers preventing access to quality FMD control options?

Business models to overcome existing barriers

An evolving role for the public sector and international organizations

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+ The problem Rural livestock keepers have minimal – if any – access to

control options for FMD

Governments manage risk for constituents, leaving individuals to suffer from inefficiencies

How can the current model be improved?

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http://www.theguardian.com/global-development/2011/jan/21/farm-africa-animal-healthcare-franchise

+ The current paradigm

Increased circulation of virus

Public response

Foreign aid

Disease outbreak

-Decreased resilience -Negative livelihoods impact

-Decreased market access -Limited ability to trade products internationally

Temporary management

Disease outbreak seen as the problem

?

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+ Towards a new paradigm Current paradigm does not properly work

Animal diseases are widespread

Governments need to improve animal disease control and management systems, but resources are limited1

What is the role for the private sector to complement public service animal health delivery systems?

In this presentation: FMD control in East Africa and the scope for a private sector role

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+ Conclusions

There is a market for rural FMD control

Numerous barriers (demand-side and supply-side) prevent this market from functioning

Current business models can be adapted for more effective FMD management

Governments must evolve to facilitate private investment in disease control

International organizations must design a framework for understanding socioeconomic barriers to access

An optimum balance of public/private FMD control provision must be found!

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+ Evidence Rapid and continued growth projected for Sub-Saharan Africa2 An emerging trend of privatization in Africa

Viewing the poor as a conscious consumers as opposed to victims

Challenge the idea that the poorest are not willing to pay for goods and services

Design interventions targeting those at the BoP

Many consumers – low purchasing power

Impact investments also include a social dimension

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http://moonofthesouth.com/kenyan-media-accused-stereotyping-2/

+ Evidence: Wealth at the BoP?

Refers to a heterogeneous group of consumers in the market with relatively little purchasing power Globally: 4 billion people living on <$2.50/day

Ethiopia: $84 billion of wealth in the BoP3, 22 million rural poor

Kenya: 15 million rural poor4

Target this consumer class through high volume/low value business models Market-based solutions (MBS) to development

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http://www.generationim.com/sustainability/challenges/real-needs-base.html

+ Evidence: Impact investments

Interventions that have a positive social/environmental benefit while securing financial returns5

Examples:

Microfinance loan programs

Clean water delivery systems

Information technology networks

Energy provision

Sale of desired food commodities, nutritional supplements

Hygiene products and public health improvements

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http://www.thankyouwater.org/

+ No MBSs in animal health: Why? Inaccessible/non-quantified market

Demand- and supply-side barriers preventing proper market functioning

Intricacies of FMD require innovation and adaptation: Genetic variation of the virus

Cold chain requirement

Rapid spread

Sub-clinical or chronic infection

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+ FMD control: What is the potential market value?

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http://www.oie.int/wahis_2/public/wahid.php/Diseaseinformation/Diseasedistributionmap

Outbreak distribution: Jan-Jun 2012

+ FMD control: What is the potential market value?

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Robinson and Siembieda, 2011

+ FMD control: What is the potential market value?

Focus on cattle in the East African region, specifically Ethiopia and Kenya: Ethiopia – 54 million head6

Kenya – 17 million head7

14.5 million dairy cattle combined

Business of $142 million per year for control strictly through vaccination

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+ FMD control: Are the potential consumers willing to pay? The market: rural cattle-owning households (not large

producers)

Small farmers keep the large majority of the cattle stock 88% of rural households in Ethiopia rely on livestock production8 92% of such households own cattle

Non-homogenous group differentiated across three major characteristics: Poverty Herd size Magnitude of importance of livestock to income

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All rural households Livestock-owning households Cattle-owning rural households

81% of total, ~61.5 million individuals in Ethiopia alone

+ A new paradigm

Increased circulation of virus

Disease outbreak

-Decreased resilience -Negative livelihoods impact

-Decreased market access -Limited ability to trade products internationally

Demand-side barriers Supply-side barriers

Poor access of rural livestock holders to quality FMD control options

Minimal/no preventive rural control

Underlying socioeconomic issues create the environment for disease to persist

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+ Barriers to access: Demand-side

1) Lack of trust in government services (by consumer class)

2) Lack of trust in products

3) Limited resources

4) Political voice of those at the BoP

5) Lack of knowledge of local FMD situation

6) FMD as one of many concerns

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+ Barriers to access: Supply-side

1) Exclusive government capture of FMD control

2) Spatial distribution of consumers

3) Temporal distribution of demand

4) Vaccine requirements

5) Limited access to appropriate epidemiological info

6) Impediments to pharmaceutical importation

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+ Building trust: Sidai Africa9

Franchise-based social enterprise in rural Kenya

Operates under full cost-recovery from keepers

Establish trust amongst consumers through brand recognition

Liaise with suppliers to provide appropriate and quality goods

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http://www.sidai.com/index.php?page=aboutus

+ Breaking barriers:

Demand-side 1) Lack of trust in government services (by consumer class) 2) Lack of trust in products 3) Limited resources 4) Political voice of those at the BoP 5) Lack of knowledge of local FMD situation 6) FMD as one of many concerns

Supply-side 1) Exclusive government capture of FMD control 2) Spatial distribution of consumers 3) Temporal distribution of demand 4) Vaccine requirements 5) Limited access to appropriate epidemiological info 6) Impediments to pharmaceutical importation

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+ Streamlining disease information: Vovixa’s Alerta System10

Data management system developed to eliminate inefficiencies in Peruvian health data reporting

Paper system = lag-time, data entry error

Telecom system = instantaneous, direct contact from the field to the central government (and vise versa)

Use of local community health workers as mobile reporting hubs

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+ Breaking barriers:

Demand-side 1) Lack of trust in government services (by consumer class) 2) Lack of trust in products 3) Limited resources 4) Political voice of those at the BoP 5) Lack of knowledge of local FMD situation 6) FMD as one of many concerns

Supply-side 1) Exclusive government capture of FMD control 2) Spatial distribution of consumers 3) Temporal distribution of demand 4) Vaccine requirements 5) Limited access to appropriate epidemiological info 6) Impediments to pharmaceutical importation

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+ Other examples Una tantum voucher system for vaccination with a high quality

‘experience’ good Stimulate demand through positive experience

Address issues of: trust in products, limited resources, temporal distribution of demand

Aggregation platforms: dairy cooperatives Increase purchasing power through network of livestock owners

Reduce transaction costs for consumers AND suppliers

Address issues of: limited resources, political voice, spatial distribution of demand

Mobile service delivery platforms: Address issues of: spatial distribution of demand, (vaccine

requirements)

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http://www.opportunity.org/

http://www.heifer.org/eadd/

+ An expanded role for the public sector role Shift from a delivery model to a regulatory model: Information provider

Bolster purchasing power

Encourage investment in animal health

Develop institutional framework

Fill in service delivery gaps that private sector cannot reach

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http://ccafs.cgiar.org/sites/default/files/pastoralist_sossahel.jpg?1345797745

+ Provider of FMD information For livestock keepers: Local FMD conditions

Preventive management options

Product quality and regulations

For suppliers: Number of animals requiring vaccination

Distribution of consumers

Relevant FMD epidemiology

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http://www.africom.mil/Newsroom/Article/8615/ugandan-us-health-workers-come-together-for-animal

+ Purchasing power Support aggregation and microfinance platforms

‘Smart’ subsidies:11 to livestock keepers to incentivize preventive management

to service providers investing in rural control

sub-contracting of private veterinarians to work in rural areas

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+ Encouraging private investments in animal health

Provide incentives to businesses to devise/test innovative business approaches to FMD control Loans at preferential rate

Grant funding

Tax rebates

Collaterals

Establish innovative private-public partnerships to test different methods for effective FMD control, and animal disease and control management in general

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+ The role of international organizations

Incentivize governments to shift towards a model that includes private sector involvement: Provide simple tools for analysis of socioeconomic barriers

Integration with the Progressive Control Pathway (PCP)

Develop systems for common vaccine registration

Support harmonization at the regional and international level

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+ Acknowledgements

Keith Sumption

Ugo Pica-Ciamarra

EuFMD team: Eoin Ryan, Marko Potocnik, Nadia Rumich, Gregorio Torres, Lily Polihronova, Manuela Zingales, Rossana Cecchi, Cecile Carraz

Mokganedi Mokopasetso, Nick Lyons, Alasdair King, Christie Peacock, Carolyn Benigno, Mohinder Oberoi

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+ References 1) Vosloo, W, ADS Bastos, O Sangare, SK Hargreaves and GR Thomson. 2002. Review of the status and control

of foot and mouth disease in sub-Saharan Africa. Rev. sci. tech. Off. int. Epiz 21 (3): 437-449.

2) Hatch, G, P Becker and M van Zyl. 2011. The dynamic African consumer market: Exploring growth opportunities in Sub-Saharan Africa. Accenture. 44pp.

3) Hammond, AL, WJ Kramer, RS Katz, JT Tran and C Walker. 2007. The next 4 billion: Market size and business strategy at the base of the pyramid. World Resources Institute and International Finance Corporation Report. 164 pp.

4) World Bank. 2013. World Databank: World Development Indicators for Ethiopia and Kenya, 2005-2011. Accessed on 23 June, 2013 at: http://databank.worldbank.org/.

5) Clark, C, J Emerson, J Balandina, R Katz, K Milligan, R Ruttman and B Trelstad. 2012. Investing for impact: How social entrepreneurship is redefining the meaning of return. Credit Suisse and the Schwab Foundation for Social Entrepreneurship. 58pp.

6) Central Statistics Agency (CSA), Federal Democratic Republic of Ethiopia. 2013. Agricultural sample survey volume II: Report on livestock and livestock characteristics (private peasant holdings). Addis Ababa, Ethiopia. 194pp.

7) Kenya National Bureau of Statistics (KNBS). 2009. Livestock population census data. Accessed on 16 June, 2013 at: http://www.knbs.or.ke/censuslivestock.php.

8) CSA. Federal Democratic Republic of Ethiopia. 2012. Living Standards Measurement Study – Integrated Survey on Agriculture (LSMS-ISA): Ethiopia rural socioeconomic survey. Addis Ababa, Ethiopia. 4pp.

9) Sidai Africa Ltd: Tunza Mifugo Yaka. 2013. Accessed on 10 June 2013 at: http://www.sidai.com/.

10) Casas, C, WC Lajoie, and CK Prahalad. 2006. The Voxiva story. Accessed online on 6 June 2013 at: http://www.mit.edu/~gari/teaching/prahalad_sec_Va.pdf.

11) Pica-Ciamarra, U, J Otte and C Martini. 2010. Livestock sector policies and programmes in developing countries: A menu for practitioners. Pro-Poo Livestock Policy Initiative: A Living from Livestock, FAO. Rome, Italy. 150pp.

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+ Questions?

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+ Discussion points Additional demand barrier: what of the research pointing to

the fact that individuals do not see the benefit of vaccination? EuFMD trainings point otherwise: there are individuals who are

able to pay for control that would be interested in doing so given the opportunity

Also, papers such as Barasa et al. 2008 Jibat et al. 2013, and Radeny et al. 2006 suggest that there is a benefit to vaccination, and livestock keepers are shown to have an increasing awareness and interest in FMD control

Comments on Sidai: massive international investment to start the program, issue of monopolization and control of many sectors (credit, advice, animal health, etc.), crowding out local provision Not as cut-and-dry, issues are present in this model as well, yet

international donors providing an investment in market functioning in such a way displays a shift in the mindset that may prove useful to explore

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+ Discussion points (continued) How can we influence ministries in these countries to change

their policies? Easier to do with a government interested in foreign export Provide a concrete and solid economic incentive or argument

displaying the benefits Be better in connecting development goal desires with animal health

means – investments in this sector are surely tied to these goals, yet better outreach to this end is needed

Shift focus from disease to services What is needed is an institutional/communication innovation rather

than animal health innovation per se

‘Livestock entrepreneurs’ will not be easy to motivate: better targeting of the disease control message is necessary

If 90% of individuals are not willing, or able to pay for services, what of the other 10% who are? There exist individuals who do wish for better access and can pay for goods and services, we should be working to find means to connect these individuals to quality options

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+ Discussion points (continued) Cost of compliance issues Animal health interventions are sometimes far too costly and the

incentives don’t necessarily line up

‘Receiving services’ sometimes forgotten – aggregation platforms act as a means to targeting this issue

Vaccine technology really acts as one of the largest barriers Cold chain Serotyping Delivery costs of ~$1.7 on average in recent calculations Provide infrastructure and burden-sharing mechanisms that

reduce transaction costs

Disease control is not merely about immunology/epidemiology, it is also about knowledge Systems of communication through mobile phone technologies?

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+ Discussion points (continued)

The poor really are not victims, they can be accessed by markets For example, an individual with a cow most likely isn’t even in the

scope of ‘poor,’ and providing access and the appropriate quality/incentive structure should lead to local buy-in for control

Temporal nature of vouchers, target sales right after harvest (in the case of fertilizer distribution) – similar translation in livestock sector at animal markets?

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