The EEFS project recently launched an analytical guidance document identifying the enabling environment factors that drive animal source food (ASF) market system success in terms of economic growth, resilience, inclusiveness, and improved nutrition. The guidance document organizes findings in three interconnected categories: supply-side factors, marketing factors, and financial services factors.

The first installment of this series provides a general examination of the guidance document and how its findings will benefit USAID decision-making. This second installment summarizes four supply-side factors in the enabling environment that drive successful ASF market system outcomes. In the coming weeks, EEFS will be sharing additional installments that summarize the marketing and financial services factors for ASF system success.

Supply-side factors of the enabling environment influence producer incentives and capacity to produce ASF sustainably and profitably. Four factors identified and discussed at length in the guidance document include those that affect the access, availability, and quality of animal feed, animal genetics, animal health products/services, and labor. The full guidance document additionally discusses factors that affect access to land and water, as well as the importance of the prevailing informal norms around producers’ business orientation and how they influence system responsiveness to market signals.

1. Animal Feed

Livestock production systems may rely on commercially processed feed, purchased fodder and forages, or planted forages. The quality of commercially processed feed products can vary from season to season as a result of feedstuff availability and prices. Feedstuffs may include grains, oilseeds, oilseed cake, vitamins, minerals, and other nutritious additives.

Constraints on the domestic availability of feedstuffs may include lack of domestic productive capacity or high demand for human consumption. Where countries are unable to produce sufficient feedstuffs to meet animal feed demand, processors must import them. In these cases, tariffs, non-tariff barriers, and access to foreign exchange will be critical determinants of animal feed supply and price.

Constraints on access to purchased fodder may include limited market infrastructure in rural arid areas. Access to planted forages has generally been constrained in developing contexts where private sector input providers have shown limited interest in investing in the production and distribution of forage seed, and national systems are less effective.

2. Animal Genetics

Farm Animal Genetic Resources (FAnGR) influence animals’ reproduction rate; conversion of feed into meat, milk, and eggs; and their agroclimatic resilience. A producer’s access to the genetic characteristics that best meet their production objectives relies on both the public and the private sector.

The public sector is often the initial source of access to improved genetics as the sector increases its commercialization. However, operational capacity improvement is often needed to deliver appropriate genetics at the scale and cost necessary to reach target producers. As commercialization expands, there are increased incentives for private sector providers to enter the market, although it remains appropriate for public-private collaboration to share germplasm, facilities, and knowledge. Private sector providers often rely heavily on imports of improved genetics, therefore the import regulations, tariffs, non-tariff barriers, and access to foreign exchange will all influence the availability and cost of improved genetics for producers. Readers are encouraged to check out the full report for more detail on species-specific factors for improved cattle, poultry, small ruminant, and pig genetics.

3. Animal Health Products/Services

Animal health services and veterinary products are needed to control the infectious diseases that increase mortality, reduce productivity, and limit export opportunities. Similar to the early stage development of animal genetics, the delivery of animal health products/services relies on both public and private sector roles.

The public sector is best suited to focus on issues with public externalities, such as epidemic diseases, by instituting control measures, such as disease surveillance, quarantine services, and vaccinations. The private sector is better suited for the import, production, and distribution of veterinary products as well as the delivery of market-driven vaccination and animal wellness services. In certain cases, the public sector can fund disease control efforts, while private actors provide delivery.

The veterinary capacity (quantity and quality) within a country will influence the service delivery available to producers. Additionally, veterinary interests often play a significant role in influencing the regulations around animal health product/services delivery, which can either limit or expand the availability for producers. Where smallholder producers have a limited willingness or ability to pay for products/services, the expansion of para-veterinary capacity can be a source of low-cost animal health service delivery to remote rural areas that private veterinarians rarely service.

Smallholder livestock producer performance is also affected by the prevalence of counterfeit, substandard, or noncompliant drugs in local markets. Where governments do not have the capacity or resources to regulate the importation and/or sale of these problematic products, it is increasingly necessary to promote harmonized quality standards across countries, coupled with training and awareness raising among market system actors, including producers, veterinarians, and dealers.

4. Labor

The importance of the availability and cost of labor for smallholder livestock production systems is often ignored. Since the application of many improved technologies and practices requires increased labor inputs, in cases where family labor is constrained, it is necessary to hire labor. Therefore, one of the most important determinants of the uptake of improved inputs in smallholder settings is the ratio of labor wage rates to land rental rates.

Land scarcity is closely associated with higher productivity practices because producers have less access to resources on their own land. To understand the likelihood of the uptake of improved technologies and practices, it is therefore necessary to consider not only the market incentives for producers, but also their access to labor and how this influences the profitability of their enterprise.

Key Takeaways

The EEFS project recently launched a report on the enabling environment factors that drive ASF market system success. The report categorizes factors by supply-side, marketing, and financial services. This article highlights four specific supply-side factors that will influence the competitiveness, inclusivity, and resilience of ASF market systems. These include the factors that improve the quality, cost, and availability of animal feed, animal genetics, animal health products/services, and labor for smallholder livestock producers.

The next two installments of this series will focus on marketing factors and financial services factors. Stay tuned!

The Feed the Future Enabling Environment for Food Security (EEFS) project is a pre-competed Blanket Purchase Agreement (BPA) for USAID Missions and Operating Units to access evidence-based analysis of how legal/regulatory and institutional factors influence agricultural market system performance, food security, and nutritional outcomes. For further information on how USAID can access EEFS’ expertise, please contact the Chief of Party, Adam Keatts at [email protected].