Livestock have a variety of characteristics
that make them important contributors to sustainable rural
development. They directly enhance crop output through animal
traction and improvement of soil fertility. They act as a
store of wealth for future investment. Furthermore, livestock
provide marketable products, which are generally of higher
value and less vulnerable to critical harvest timing than
many crops. Livestock products with relatively high income
elasticities are particularly attractive as a means for rural
households to participate in urban-based economic growth.
Despite the above advantages, livestock were widely seen
as a poor investment for rural development. This view is gradually
changing and a number of new initiatives, with a distinct
focus on policies and institutions, are promoting livestock
as a means to provide agricultural economies with the growth
impetus required for broad-based rural poverty reduction.
Livestock policy can decisively influence microeconomic opportunities
and decisions, and likewise other economic events and behaviour
will influence household responses to livestock initiatives.
However, in today’s world, economic linkages are so
complex that it is unlikely that policy makers relying on
intuition alone will achieve anything approaching optimality.
In fact, much evidence suggests that indirect effects of many
policies outweigh direct effects and, if not adequately understood,
can substantially offset or even reverse them.
In order to obtain deeper insights into the effectiveness
of pro-poor livestock policies, data from Senegal, a West
African economy with high levels of smallholder poverty and
livestock dependence, was used to examine the linkages between
livestock and livelihoods.
Poverty and Livestock Dependency in Senegal
Senegal broadly represents West Africa, with high population
shares in arid areas engaged in subsistence agriculture and
significant levels of economic dependence on livestock.
Comparison of the standard extreme poverty headcount (population
living on less than 1$ a day) with its counterpart adjusted
for livestock dependence of the population shows that poverty
rates average nearly 20 percent higher among the livestock
dependent. Moreover, the disparity is highest in areas where
rural subsistence populations predominate, such as Kaolack
and Kolda. This higher representation among the poor by livestock
dependent people reinforces the importance of livestock as
a target for poverty alleviation.
It is tempting to interpret this indicator adversely, yet
it represents both disadvantages and advantages. Livestock
dependent households are also more subsistence oriented, which
makes them less dependent on consumption of marketed commodities.
Advantages of the latter include lower consumption price risk,
greater capacity for saving as a percent of income, and a
host of social capital attributes. It is unlikely, however,
that the market isolation advantages of subsistence outweigh
the disadvantages of lower income.
Senegal’s national poverty gap of about 35 percent
shows the typical fiscal challenge developing countries face
when contemplating poverty alleviation with transfer schemes.
With this gap, Senegal is unlikely to find a publicly financed
transfer scheme that can significantly alleviate the nation’s
poverty. Poverty alleviation must therefore rely on productive
engagement of the poor in the overall economy.
Participation of the Poor in Livestock Value Chains
Although lower income rural households receive smaller absolute
gains from the livestock value chain than higher income groups,
the relative benefits to them are greater. This further strengthens
the case for livestock as a pro-poor policy instrument, as
the marginal effect of improving livestock supply conditions
will disproportionately benefit the country’s rural
Multiplier decomposition analysis reveals that the small
absolute livestock-livelihood gain for the poorest comes almost
entirely from direct production income. Both rural quintiles
1 and 2 get more than three-quarters of their livestock related
income directly from animal (product) sales, thus leaving
the food value chain at the earliest stages.
Higher income rural households have very little direct participation
in livestock production. Despite this, they receive the largest
absolute multiplier benefit, almost entirely indirectly from
food processing and retailing. These more complex downstream
linkages to food value creation are the key to higher aggregate
income gains for this group and have important implications
for the net results of sub-sectoral policies. Given higher
income groups generally have more indirect linkages to the
livestock sector, they may capture a large percentage of gains,
even from policies targeted elsewhere.
Lower income urban households display only limited participation
in primary livestock production. Over two thirds of the benefits
this group enjoys from livestock are indirect, coming from
engagement and employment in food processing services. Although
minor, these indirect benefits the urban poor derive from
the livestock food economy are non-trivial.
Livelihood Impacts of Policy Interventions
Two producer-oriented policies, namely doubling of livestock
productivity over a ten year period and a 20 percent subsidy
to capital that might facilitate innovation, efficiency and
profitability were considered in ex ante assessments of likely
impacts of policy interventions. A third scenario examined
a generic case of trade liberalization for Senegal, with an
assumption that the country unilaterally abolishes import
The scenario of productivity increase is the most stimulatory,
with the greatest gains for most income groups. However, an
ironic but dramatic effect in this scenario is the value capture
by higher income households. Although they have limited participation
in production, and the original policy is production oriented,
greater producer cost efficiency apparently translates into
more intense competition among producers, transferring profitability
downstream in the food supply chain.
By contrast, the predicted impacts of the capital subsidy
are more modest, but more equal in their benefits. The poorest
households, with little initial savings or capital, will not
benefit, but middle income, more entrepreneurial producers
are anticipated to gain from increasing investment.
Finally, trade liberalization has modest but positive effects
across all household types, even the lower rural quintiles.
As expected, urban populations and higher income rural households,
who are more likely to be linked to external markets, benefit
most. If the rural poor are to be effectively targeted by
trade related policies, it appears that market access improvements
should focus on local and regional markets. Investments in
infrastructure can improve the rural terms of trade from two
directions, reducing the cost of urban agricultural supplies
and making rural farm products more competitive in urban markets.
Livestock can make a substantial contribution to poverty
reduction, but pro-poor policies need careful targeting. Effective,
market oriented livestock promotion has significant potential
- Increase output quantity, quality, and prices; and to
- Improve margins with more efficient production and distribution
In Senegal, policies achieving the above would sharply improve
the terms of market participation for smallholder producers
of livestock and livestock products, who currently receive
only a small fraction of the ultimate value of their output.
It is essential to emphasize, however, that this is not a
zero-sum bargaining problem. In addition to re-distributing
value along the supply chain, greater market integration for
smallholders can increase valuations at all stages. By improving
product quality, reducing perishability, and reducing inventory
and distribution costs, rural incomes can rise along with
profits at every step in the food value chain.