Avian Influenza Compensation in Developing Countries: Issues and Knowledge Gaps

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Avian Influenza Compensationin Developing
Countries Issues and Knowledge Gaps
Christopher Delgado Rural Strategy and Policy
Adviser, World Bank ARD On behalf of a larger
team yet to be finalized Brainstorming Washington
, D.C. July 13, 2006
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Objectives

• Consult colleagues on compensation issues of
  strategic and operational relevance
• Promote consensus on what is doable and how
• Promote consensus on an approach to derive
  guidance from examples of good practice of
  compensation
• Agree on a way forward to make progress by this
  Fall

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Topics for Discussion

• The scope of compensation (why, what, who, for
  how long, etc.)
• Setting compensation rates
• Implementing compensation procedures
• Promoting regional coordination
• Promoting timeliness
• Identifying funding needs and sources
• Longer-run mechanisms

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Deciding on the Scope

• The objectives of compensation
• Attention to synergies and trade-offs among
  disease control and other objectives
• What will be compensated
• Who will be compensated The balance among urgent
  short-run and longer-run issues
• General guidance vs. country and region
  specificity

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Deciding on the Scope Control vs. Safety Net

• Control requires rapid and comprehensive
  responses may require harsh across-the-board
  administrative solutions if compensation
  incentives do not work quickly or comprehensively
  enough
• Safety nets require targeting and fine tuning to
  different circumstances implicitly they involve
  a vision of how the poor should adjust their
  livelihood strategies after the emergency is over
• Can One Instrument Address
• Two Different Targets??

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Reality Check Thailand
Avg. no. of birds per farm end of year, 1998 census Share of total national holdings at end of year (170 million birds)
Less than 100 30
100-999 6
1,000-9,999 31
More than 10,000 33
Source Poapongsakorn et al. 2003
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Deciding on the Scope Safety Nets

• Backyard broilers/layers
• still 20-30 of all chickens in Indonesia and
  Thailand, higher share in Africa
• Significant components of income of poor women.
• Promising ag. income source for poor
• Poultry consumption growing at 5 per annum per
  capita for 25 years in developing countries
  (compare to less than 0.5 p.a. p.c. for grain)
• But majority of economic losses are from
  consequent damages
• Losses along supply chain
• Lower economic activity in rural areas
• Lost tourism, etc.

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Deciding on the ScopeDisease Control

• Disease control is the primary objective
• Requires rapid compliance with reporting and
  culling
• Reduces losses to economy and incomes
• Compensation is a key component of the incentive
  package for compliance
• As part of a broader control effort
• Can be perverse if not implemented properly
• Governance issues affect timeliness and
  comprehensiveness of response
• Avian Influenza or broader scope?

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Deciding on the Scope What?

• All farm losses, only on-farm losses from Avian
  Influenza (and how to know?), or only on-farm
  culling by authorities?
• Off-farm losses?
• Losses beyond meat value (fighting cocks,
  grandparent stock, etc.)
• Market losses?
• Losses from undesirable or illegal poultry
  activities?

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Deciding on the Scope Who?

• Include compensation for contract farmers (who
  lose), or just the integrator as owner?
• What about other splits of management and
  ownership rights?
• What about compensating men as Heads of Household
  where the chickens belong to and are managed by
  wives?
• What about incentives to non-owners (such as
  field staff) for early reporting?

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Deciding on the Scope Time Frame For
Compensation?

• Speed is the deciding factor for emergency
  disease control need to put compensation
  procedures in place before full-scale outbreaks
• Preventing re-occurrence will require on-going
  institutional solutions including but not limited
  to how compensation is provided
• Funding for those longer-term solutions will need
  to be different than for emergency management,
  but will also need to build upon what is done
  under emergency management
• When to begin transition?

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Setting Compensation Rates

• Too high infected animals brought into new areas
  vs. too low poor compliance
• How disaggregated a commodity species, quality,
  size, economic value (grandparent stock, fighting
  cocks, etc.)?
• Market prices before or after outbreak?
• Whose market prices local, national, global? Or
  some estimate of cost? What if very different
  across countries in same region?

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Issues in Institutional Procedures (1)

• Clear pre-conditions for payment from a
  preparedness plan
• Widespread awareness of eligibility, procedures,
  amounts
• Governance procedures to build trust
• Training, equipping and deploying staff
• Certification of losses when public animal health
  services are weak (and mobilization of private
  and community workers to help)
• Dealing with collectivities for implementation
  (prod. associations in Vietnam, etc.)
• Farmer-accessible applications

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Issues in Institutional Procedures (2)

• Linking compensation to recorded losses
• Ensuring incentives actually go to those that
  make the decisions relevant to early compliance
• Timely and transparent disbursement
• Mechanisms for handling complaints
• Fund transfers among levels of government
• Alternative instruments (to cash) such as credit
  provision for re-stocking
• Improving the efficiency and transparency of the
  process

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Promoting Regional Coordination

• National borders are often not effective barriers
  to live animal transfers
• Ex. Nigeria vis-à-vis Niger and Cameroon
• Ex Laos vis-à-vis Thailand and Vietnam
• Absence of regional coordination can derail even
  an otherwise perfect compensation program

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Identifying Funding Needs

• Need estimation procedures to avoid cost of
  over-estimation of needs and loss of credibility
  from under-estimation
• Need to incorporate timing of deliver more fully
  as an issue
• Need a way to map needs to physical regions that
  is transparently derived from needs

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Identifying Sources of Funding

• Early stages governments need to begin creation
  of framework for implementation before outbreaks
  occur
• Donor funding will be needed for speedy early
  responses
• Longer term, need mechanisms to share ongoing
  costs of disease control with producers,
  processors, marketing agents and consumers

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Longer Run Development Issues

• Disease is becoming endemic in many areas many
  issues (such as vaccination) beyond present scope
  of discussion
• Yet compensation efforts for smallholders may
  need to transit to adjustment aid to either meet
  bio-security needs or find other livelihoods
• May also be a need for an international support
  mechanism for rapid responses in compensation for
  culling over the long term as outbreaks occur
  (eventually covering other animal diseases
  besides avian influenza?)

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Long Term Reality Check

• Animals and Health
• 75 of emerging disease is zoonotic
• 80 of agents with bioterrorism potential are
  zoonotic
• Nearly all new human diseases are from animal
  reservoir

• Annual Production Growth Per Capita in
  Developing Countries 1975-2001
• Poultry 5.9
• Pork 4.0
• Beef 3.2
• Cereals 0.4

Source OIE
Source FAOStat