Conducting Public Expenditure Reviews for Livestock Subsector: Issues and suggestions for draft fram

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Conducting Public Expenditure Reviews for
Livestock Sub-sector Issues and suggestions for
draft framework

• Joseph Karugia
• Coordinator
• ReSAKSS-ECA
• ILRI
• Agriculture Public Expenditure Review Workshop,
  May 11-12, 2009 ILRI, Addis Ababa

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Introduction

• Public expenditure is an effective instrument for
  enhancing growth and reducing poverty key goals
  of national policy
• Expenditure prioritization is important for
  achievement of these goals
• Livestock is vital to the economies of many
  developing countries

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Livestock Sector contribution to AgGDP-Average
2000-2005
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Livestock trends.

• Livestock fastest growing part of the
  agricultural sector, largely driven by the
  Livestock Revolution in emerging economies
• Need to double livestock production in developing
  world by 2020 to meet rising demand for livestock
  products

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Livestock trends.

• Doubling livestock production puts pressure on
  natural resources water, land, biodiversity
• Food standards rising rise of supermarkets
• Market chains are getting longer and complex
  small producers marginalized

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Contribution of livestock not fully appreciated..

• Milk, meat, manure, draft power, hides and skins
  are the commonly cited outputs of the livestock
  sector
• In SSA, beef is ranked top in terms of value of
  production of key commodities with a 10.1 share
  of total (ReSAKSS, 2008)

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VALUE OF PRODUCTION RANKINGS OF KEY COMODITIES IN
SUB-SAHARAN AFRICA
Sources i) Year totals FAOSTAT 2002 and
international prices 1989-1991 Notes Percent
production value is calculated as the percent of
value of production of current crop in total
value of agricultural production of regional
average (1998 -2000). Values were constant
1989-1991 international dollars. Only crop, with
at least 1 of value of production are included.
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But other important contributions are often
ignored

• Integrate and complement crop production
• Savings
• Reserve against risks
• Indirect, non- market values include
• Option values option to use in the future
• Existence values utility of knowing that a
  good or service exists
• Environmental services
• Social-cultural values

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Ignored in policy discourse.

• In HIPC countries, livestock featured poorly in
  PRSPs, even those with relatively large
  pastoralist populations (Blench et al, 2003)
• Why?
• Poor articulation of investment needs of the
  sector?
• Poor representation in the PRSP process
• Even IMF and WBs Joint Staff Assessments do not
  help
• Poor evidence base on which to base plans and
  demonstrate outcomes livestock numbers,
  populations affected, production systems, etc
• Poor representation in Budget making process
• Political economy issues
• Client-patronage relationships, poorly organized

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Some guiding principles

• What is the right level and composition of public
  livestock expenditures?
• Need to address market failures (public goods,
  externalities, natural monopoly) comparative
  advantage v/s private sector
• Cost-Benefit analysis to optimize social gain and
  equity in line with stated national policies
• LE often include animal/human health, the
  environment, livestock services (breeding,
  feeding), extension, marketing support, credit,
  and consumer support programs

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What to do (1)

• Link PE to national policy
• Often, expenditures support commercial sub-sector
• To reach the poor target expenditure programs
  that matter most to the poor Benefit incidence
  analysis
• Need evidence on role of livestock in poverty
  alleviation of
• Externalities
• Confer unfair advantage to intensive production
  systems
• Loss of biodiversity e.g. cross-breeding
  programmes
• Cross-border externalities disease control
• Understand production systems and their dynamics
• Composition of expenditures will change with
  level of development and past investments
• Link to crop agriculture

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What to do (2)

• Understand market dynamics and design appropriate
  market interventions
• Market imperfections characterize livestock
  sector, especially pastoral systems
• Do not overemphasise international markets at the
  expense of domestic and regional markets
  -developing countries are net importers of
  livestock products (FAO, undated)
• Disease free zones? high cost, low intensity,
  enforcement
• Export slaughterhouses in remote areas quality,
  transportation problems
• SPS requirements stringent

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What to do (3)

• Develop domestic and regional markets
• Improve physical market places, holding grounds,
  loading ramps, etc
• Improve price information
• Exploit the unique power of ICTs to overcome
  remoteness
• Link pastoral areas with higher potential areas
  by providing finishing infra-structure and
  incentives
• Improve transport routes
• Provide credit interventions to both producers
  and traders

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What to do (4)

• Improve water infrastructure
• Invest in veterinary services and focus on key
  diseases
• Invest in early warning systems for drought and
  diseases
• Improve security - develop effective approaches
  for the traceability of livestock

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THANK YOU!