Compensation and rehabilitation in HPAI control programmes: issues and options (discussion with WB and UNSIC, 13-14 July 2006)

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Compensation and rehabilitation in HPAI control
programmes issues and options(discussion with
WB and UNSIC, 13-14 July 2006)

• Anni McLeod and Ana Riviere Cinnamond
• FAO Emergency Centre for Transboundary Animal
  Diseases (ECTAD)

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Overview

• The context
• A framework for thinking about compensation and
  rehabilitation
• Issues and options that have emerged so far
• Next steps

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(No Transcript)
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Increasing regulations raises market barriers for
small commercial producers. (Vietnam)

activities/linkages still
operating no longer operating
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• The framework for thinking about compensation and
  rehabilitation

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Framework around 5 questions....

• Why?
• Who?
• How much?
• How?
• From where?

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General principles.....

• Keep it practical
• Work off a simple framework
• Design locally, draw lessons globally
• Think beyond the emergency
• Changing the rules of the game takes time

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• Issues that have emerged so far

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• Why?

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• Issue1
• unless you are clear about what compensation is
  and why it is being done, it is difficult to
  build a coherent plan

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Reasons why countries consider compensation for
HPAI....

• Belief that compensation will encourage reporting
  and discourage panic selling (not proved). Many
  countries.
• Wish to prevent a public health threat. Cote
  DIvoire high density of people, live bird
  markets. Vietnam a matter of principle, human
  cases
• Pressure from neighbours or international
  organisations WBGS pressure from neighbour
• Moral notion or stakeholder pressure that payment
  should be made by the government for private
  property destroyed in the public good. Held to
  some extent in many countries....... Iraq laughed

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Reasons why countries consider compensation for
HPAI....

• Existence of an insurance fund, private or
  public-private, to which people have contributed.
  e.g. Australia. Few if any developing countries.
• Support on social, humanitarian or political
  grounds, to restore livelihoods or to
  rehabilitate the poultry industry (depending on
  stakeholder voice). Nigeria pressure from
  stakeholders with high level of voice .
  Thailand pressure from stakeholders, ??social
  conscience.
• Cambodia has firmly declared cannot afford
  compensation

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We find it useful to distinguish between....

1. Compensation by government Payment for private
   property destroyed (birds culled) in the public
   good
2. Indemnity from private sources Payment made to
   people who have contributed to an insurance fund
3. Rehabilitation Support from public funds, on
   social, humanitarian or political grounds, to
   restore livelihoods or rehabilitate the poultry
   industry (e.g. reimbursement for birds that died
   of disease, payment for downtime, assistance to
   restart poultry enterprise or move to other
   enterprises) even when damage results from
   externalities created by risky behaviour of
   private individuals.

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• Who is supported?

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• Issue2
• what to do about people who have suffered from
  HPAI outbreaks or control processes but will not
  be eligible for compensation because their birds
  were not culled?

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• Compensation by government
• .... compensate everyone whose birds are culled
• In Vietnam, payments made for birds volunteered
  for culling.
• A problem, Backyard producers sometimes left out
  of compulsory culling
• Indemnity from private sources
• .... compensate people in the scheme
• limited examples in developing countries

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• Rehabilitation
• .... the jury is still out
• .... payment for birds that died before the
  culling team got there? (were sold? were eaten?)
• ... payment for downtime?
• .... help to restart local poultry in a more
  biosecure way?
• .... help to start a different livelihoods
  enterprise?
• Strong interest in rehabilitation in
• Cote DIvoire and Nigeria strong poultry sector
• WBGS income source for many people, ?80 protein
  from poultry possible rehabilitation through
  microfinance
• At risk countries are paying less attention to
  this aspect, it only becomes important when they
  have had an outbreak....... table top simulations
  to stimulate interest

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• How much?

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• Issue3
• it is difficult to establish (and implement) a
  consistent strategy about compensation rates, or
  other forms of support, in a decentralised
  financing system

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Levels of support.....

• Compensation by government
• Same rate for same bird everywhere in the country
  advisable (otherwise people move birds). More
  difficult with decentralised decision making and
  finance or very variable local prices.
  Vietnam....... Across international borders......
• Different prices by species and category (age,
  broiler or layer, traditional or commercial,
  breeding flocks). Not too many categories or it
  is hard to administer. Premium value on
  traditional birds? The opposite in Cote
  DIvoire.... discouraging to farmers.

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• Based on of market price or, for commercial
  poultry, production costs rather than market
  price. Decide in advance how to determine market
  price average for month or week? the price on
  the day of culling?
• Market prices as basis for establishing rates in
  Mauritania, Vietnam, Cote DIvoire, Egypt??,
  Nigeria, Thailand
• Production costs as basis for commercial birds in
  WBGS, Senegal, Benin,
• Establishing market price in several countries,
  average price for the month before the outbreak.
  In EU, general principle is price on the day of
  culling (incentive to report quickly).
• Percentage of market price we recommend lt100.
  Thailand, 70-100. Vietnam 30-50 in practice.
  Cote DIvoire 75 suggested after stakeholder
  negotiation. Iran, ?? compensated at 3x market
  price for 3 weeks only (to encourage rapid
  reporting)

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Levels of support....

• Indemnity from private sources
• payment level standardized or agreed in advance

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Levels of support.....

• Rehabilitation
• unlike compensation payments, process usually
  decided after an outbreak, not in advance
• agreed restocking packages? some interest in
  Afgahnistan.... very tricky in Vietnam...
• poultry development project with credit /
  microfinance? associated with training / quality
  management Crimea, UNDP
• should consider including rehabilitation planning
  and some operational work in emergency projects
• Compensation may need to be entirely centrally
  funded, rehabilitation funded from local sources

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• How?

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• Issue4
• may need very different financing and operational
  processes
• for compensation vs rehabilitation
• for situations where there is an existing food
  emergency vs those where there is not
• Issue5
• more evidence is needed on the best form of
  payment, and the best balance of compensation vs
  rehabilitation, for poor and vulnerable people
• Issue6
• rehabilitation schemes may be highly beneficial
  but they take time and expertise to establish
  in the meantime, the future of smallholder
  poultry development schemes are uncertain

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Identifying farmers and poultry

• Compensation by government
• Indemnity from private sources
• .... only pay for birds that are culled and
  registered or part of an indemnity scheme
• Registration forms, carbon copies, supervision of
  culling and registration by veterinary services,
  local authorities, poultry owner ( other?)....
• does not entirely prevent scams
• needs to work fast or people will cull their own.
• Gender issues? Who gets registered?

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Where / by whom are payments made?

• Cheques
• Issued by the National bank, cashed upon
  presentation of ID. Francophone Africa many
  smallholders have bank accounts.
• Cash
• Smallholders thought to like cash, but not
  everywhere. Gender issues? Need a simple system
  that makes use of existing institutions. In some
  countries cash payments not possible through the
  government. Authorities, NGOs, mosques. UN
  agencies (refugee camps or relief areas).
• Cheques or cash can be paid swiftly
• In-kind
• Food? only in cases of severe food insecurity
• Seeds? relief mechanism may exist for disbursement

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Identifying farmers and poultry

• Rehabilitation
• .... ideally, need advance registration
• but, Smallholders (even in UK, until
  recently) not usually registered anywhere. Good
  records may be available for contract farmers.

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Where / by whom are payments made?

• Poultry Mauritania suggested compensate with
  birds, Vietnam has restocking scheme
  (problematic) (i) risky in epidemiological terms,
  (ii) direct restocking by government is
  difficult, (iii) farmers might prefer to invest
  in other areas. Requires investment in a
  restocking/poultry development programme.
• Other things e.g. help to get into non-poultry
  enterprises Vietnam restructuring plan could send
  2 million smallholders out of poultry.
  Examples??.

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• Who funds it?

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• Issue7
• where there is no money a widespread outbreak
  may result in a hefty compensation bill for a
  poor country and decisions to do things
  differently next time under what circumstances
  is international financing appropriate?

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Sources of finance..

• Compensation by government
• Taxes.... general or earmarked? General taxes
  used by many countries that have a compensation
  scheme... but fund may not be quickly accessible.
  FAO reports estimate available tax
• With a well organised private sector, can set up
  a fund for livestock emergencies, to which
  government and private sector contribute.
  Encourages reporting, helps insure against
  losses, shares the financial risk so that all
  take steps to reduce disease risk. e,g,
  Australia.
• Top up from regional economic group (e.g. EU)
• International sources... will require careful
  review of auditing process

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Sources of finance..

• Indemnity from private sources
• Commercial farmers who take out private insurance
  will probably be asked to join a quality
  management scheme
• Rehabilitation
• A variety of sources for rural development

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• Thank you

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• Next steps

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Immediate plans.....

• Support to more countries on request to include
  compensation and rehabilitation in HPAI control
  plans
• Lessons learned e-consultation August
• Prepare workshop
• Refine generic guidelines
• Put compensation into table-top simulations
• Issues and options publication
• Collaboration..... World Bank, USDA....