A Collaborative Research
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Poultry value chains and their
linkages with HPAI risk factors:
Synthesis of case study findings
Karl M. Rich
Iheanacho Okike
Thomas Fitz Randolph
James Akinwumi
Gezahegn Ayele
Akwasi Mensah-Bonsu
Julius J. Okello
Asep Sudarman
Africa/Indonesia Team Working Paper XX
May 2011
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Africa/Indonesia Team Working Paper
Table of Contents
List of tables ............................................................................................................................................ ii
List of figures ........................................................................................................................................... ii
Preface ................................................................................................................................................... iii
Acronyms ................................................................................................................................................ v
Glossary ................................................................................................................................................... v
Executive summary ............................................................................................................................... vii
1. Motivation: value chains and the socio-economic analysis of animal disease ................................... 1
2. Overview of the value chain approach ............................................................................................... 4
3. Case study methodology ..................................................................................................................... 7
4. Overview of poultry value chains in study countries ........................................................................ 19
4.1 Product scope, actors, and flows ................................................................................................ 21
4.2 Governance and coordination mechanisms ............................................................................... 35
4.3 Impacts and response mechanisms to HPAI ............................................................................... 38
5. Main themes emerging from the case studies ................................................................................. 44
6. Conclusions and ways forward ......................................................................................................... 52
References ............................................................................................................................................ 55
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List of tables
Table 1. Sampling for data collection in Ethiopia ................................................................................... 8
Table 2. Actors interviewed and sampling techniques used in Ghana .................................................10
Table 3. Number of respondents by actor category and by location, Bogor, Indonesia ......................13
Table 4. Gender of respondents, by actor category for each commodity chain, Bogor, Indonesia .....13
Table 5. Distribution of proposed number of Focus Group Discussion questionnaire guides for
each study state in Nigeria ....................................................................................................17
Table 6. Summary of Focus Group Discussions conducted and other data collected in Nigeria..........18
Table 7. Summary of poultry value chains in study countries ..............................................................19
Table 8. Poultry populations in Kenya, by province and category, 2006 (thousand birds) ..................31
Table 9. Summary of impacts and responses to HPAI in study countries.............................................39
Table 10. Estimated annual volumes and value added generated by poultry trade in the
principal poultry value chains in Bogor .................................................................................50
List of figures
Figure 1. Generic form of a livestock value chain. .................................................................................. 5
Figure 2. Map of study sites for the value chain analysis in Ethiopia. .................................................... 8
Figure 3. Map of Bogor and location of study interviews, by category of respondent. .......................12
Figure 4. Map of Kenya and location of study interviews. ...................................................................15
Figure 5. Value chain for backyard poultry production in Ethiopia. .....................................................22
Figure 6. National level value chains for poultry in Ethiopia. ...............................................................23
Figure 7. Inter-regional trade routes for local poultry in Ghana. .........................................................25
Figure 8. Trade routes for table eggs. ...................................................................................................26
Figure 9. Map of value chains in the Bogor poultry sector ...................................................................26
Figure 10. Broiler value chain in Bogor (volumes and value). ..............................................................28
Figure 11. Value chain for indigenous chickens and volume shares handled by each channel,
Vihiga, Kenya. ....................................................................................................................32
Figure 12. Seasonality of live chicken prices in Ethiopia, 2008/2009 ...................................................47
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Preface
Since its re-emergence, highly pathogenic avian influenza (HPAI) H5N1 has attracted considerable
public and media attention because the viruses involved have been shown to be capable of
producing fatal disease in humans. While there is fear that the virus may mutate into a strain
capable of sustained human-to-human transmission, the greatest impact to date has been on the
highly diverse poultry industries in affected countries. In response to this, HPAI control measures
have so far focused on implementing prevention and eradication measures in poultry populations,
with more than 175 million birds culled in Southeast Asia alone.
Until now, significantly less emphasis has been placed on assessing the efficacy of risk reduction
measures, including their effects on the livelihoods of smallholder farmers and their families. In
order to improve local and global capacity for evidence-based decision making on the control of
HPAI (and other diseases with epidemic potential), which inevitably has major social and economic
impacts, the UK Department for International Development (DFID) has agreed to fund a
collaborative, multidisciplinary HPAI research project for Southeast Asia and Africa.
The specific purpose of the project is to aid decision makers in developing evidence-based, pro-poor
HPAI control measures at national and international levels. These control measures should not only
be cost-effective and efficient in reducing disease risk, but also protect and enhance livelihoods,
particularly those of smallholder producers in developing countries, who are and will remain the
majority of livestock producers in these countries for some time to come. This synthesis is based on
value chains and socio-economic analyses of the disease in Ghana, Indonesia and Nigeria (infected
countries), and Ethiopia and Kenya (non-infected countries).
Authors
Karl M. Rich, Senior Research Fellow, Norwegian Institute of International Affairs and Agricultural
Economist, International Livestock Research Institute (ILRI), Oslo, Norway
Iheanacho Okike, Agricultural Economist, ILRI, Ibadan, Nigeria
Thomas Fitz Randolph, Agricultural Economist, ILRI, Nairobi, Kenya
James Akinwumi, Department of Agricultural Economics, University of Ibadan, Ibadan, Nigeria
Gezahegn Ayele, Senior Research Fellow, Department of Agriculture and Rural Development,
Ethiopian Development Research Institute, Addis Ababa, Ethiopia
Akwasi Mensah-Bonsu, Lecturer, Department of Agricultural Economics and Agribusiness, University
of Ghana, Legon, Ghana
Julius J. Okello, Lecturer, Department of Agricultural Economics, University of Nairobi, Nairobi, Kenya
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Asep Sudarman, Animal Scientist, Centre for Tropical Animal Studies, Bogor Agricultural University,
Bogor, Indonesia
Disclaimer
The views expressed in this report are those of the authors and are not necessarily endorsed by or
representative of the International Food Policy Research Institute (IFPRI), ILRI, or of the cosponsoring
or supporting organizations. This report is intended for discussion.
Acknowledgments
This synthesis report draws from a series of five country studies of poultry value chains and how
HPAI and its control affect them. The framework and design for the studies was developed by Karl
Rich, and the individual studies were led by Akwasi Mensah-Bonsu in Ghana, Asep Sudarman in
Indonesia, James Akinwumi in Nigeria, Gezahegn Ayele in Ethiopia, and Julius Okello in Kenya. They
managed teams of enumerators who are cited in their individual reports. We also want to recognize
the very important contributions made by Fred Unger to the Indonesia study, and by Iheanacho
Okike to the Ghana and Nigeria studies.
More information
For more information about the project please refer to http://www.hpai-research.net.
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Acronyms
AICP
Avian Influenza Control Project (Nigeria)
DOC
Day-old chicks
DFID
Department for International Development
ETB
Ethiopian birr
FAO
Food and Agriculture Organization of the United Nations
FGD
Focus Group Discussion
HACCP
Hazard analysis critical control point
HPAI
Highly pathogenic avian influenza
IDR
Indonesian Rupiah
IFPRI
International Food Policy Research Institute
ILRI
International Livestock Research Institute
NGN
Nigerian naira
PAN
Poultry Association of Nigeria
PDSR
Participatory Disease Surveillance and Response
PIR
Plasma Inti Rakyat (Nucleus-Plasma Farming System)
USD
United States dollar
VCA
Value chain analysis
VSD
Veterinary Services Directorate (Ghana)
Glossary
Farm Categories (Food and Agriculture Organization of the United Nations [FAO] 2010)
Sector 1 farm : Industrial integrated system with high levels of biosecurity and birds/products
marketed commercially (e.g. farms that are part of an integrated broiler production
enterprise with clearly defined and implemented standard operating procedures
for biosecurity)
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Sector 2 farm : Commercial poultry production system with moderate to high biosecurity and
birds/products usually marketed commercially (e.g. farms with birds kept indoors
continuously; strictly preventing contact with other poultry or wildlife)
Sector 3 farm : Commercial poultry production system with low to minimal biosecurity and
birds/products entering live bird markets (e.g. a caged layer farm with birds in
open sheds; a farm with poultry spending time outside the shed; a farm producing
chickens and waterfowl)
Sector 4 farm : Village or backyard production with minimal biosecurity and birds/products
consumed locally
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Executive summary
Highly pathogenic avian influenza (HPAI) has a variety of socio-economic and livelihood impacts that
reverberate throughout the poultry marketing chain from producer to consumer. The most visible
impacts of HPAI, and animal diseases in general, come at the farm level through the losses in
production stock and/or productivity caused by overt disease or mitigation strategies for its control
(e.g. culling policies). Not surprisingly, public policies are overwhelmingly aimed at the farm sector
(often biased towards the commercial sector), whether looking at technical mitigation policies or
compensation policies aimed at replacing lost stock. However, downstream activities in poultry value
chains represent important non-farm opportunities in rural areas; losses associated with animal
disease can thus induce negative multiplier impacts that can reverberate across rural areas more
generally. The failure to capture these diverse impacts may further have important implications on
the evolution and control of disease that may accentuate its impact. Particularly in informal settings,
the socio-economic linkages embedded in livestock value chains may serve as important risk factors
for the entry, spread and persistence of disease.
In this context, we undertook an assessment of the major value chains of the poultry sectors in five
countries (Indonesia, Ethiopia, Ghana, Kenya, and Nigeria) in an attempt to identify the key linkages,
market failures, incentives, governance mechanisms and interactions with risk pathways that might
influence the entry and spread of disease. Major findings from the study are below:
Uneven coordination and governance mechanisms exist in selected poultry value chains, with limited
evidence of chain “champions” to drive and coordinate chains…
Commercialized chains for layers and broilers tend to involve shorter chains with fewer actors
involved in more long-term arrangements, but formalized coordination mechanisms such as contract
farming or vertical coordination are much less common, other than in Kenya and Indonesia, which
also tend to have the most biosecure value chains.
In the traditional sector, there is a general lack of any coordination, with the price mechanism
governing trade between different nodes of the chain. Incentives for biosecurity are minimal given
the part-time nature of production at the producer end and low margins among downstream actors.
Furthermore, due to the pervasive nature of indigenous poultry production among rural households,
the chain lacks actors to coordinate more biosecure production.
While various value chain associations exist, their power to adequately organize actors and
coordinate between nodes is extremely limited. Rather, most associations serve more of a
professional or social function, rather than a strong coordinating one, and their influence is
overwhelmingly concentrated among medium- and large-scale producers, not small-scale actors.
Nigeria is an exception, where associations have played an important role in promoting activities to
resuscitate the sector post-outbreak.
Trust among chain actors is relatively low. While atomistic in nature, traditional poultry value chains
often exhibit concentration at the distribution side of the chain between producers and retail
markets. Intermediaries in the chain, such as collectors, maintain both monopsony power (with
producers) and monopoly power (with retailers), by virtue of facing limited competition as the
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conduit between producers and markets. This can serve to limit incentives for control efforts
downstream and upstream.
Livelihoods and economic impacts of HPAI were often severe throughout the chain, though
alternative activities sometimes mitigated impacts …
In general, price and sales declines associated with HPAI were relatively sharp (20-70%) in all study
cases, with the exception of Indonesia, where prices rebounded quickly both after the initial
outbreak in poultry and again after the first reported deaths in humans, reflecting the importance of
poultry as a source of protein there.
Reported losses from outbreaks (and scares, as in Kenya and Ethiopia) were proportionally greater
among commercial actors who derive the majority of their livelihoods from poultry. Backyard
producers (Food and Agriculture Organization of the United Nations [FAO] sector 4), insofar as they
were impacted by HPAI, were mainly affected by their inability to leverage poultry (whether through
direct loss from HPAI or indirect loss by market dislocation) as a means of “quick cash” for the
payment of school fees, social events, and other petty cash needs. Direct, severe losses in the
backyard sector were relatively limited.
Greater losses were found among small- and medium-scale commercial farms (sector 3 farms, FAO
classification). These farms lack the biosecurity measures of larger-scale commercial farms, but rely
heavily on poultry as a source of livelihood.
Traders and retailers were especially hard hit by HPAI outbreaks and scares in study countries that
markedly lowered sales volumes and margins for variable periods of time. The ability of traders,
retailers and other downstream actors to cope with disease varied by context, but in all cases, there
was evidence of drawing down from savings, borrowing from relatives, reducing expenditures on
social activities and school fees, and attempting to engage in alternative activities, though the
presence of such alternatives was often limited. Shifts in sales to other meat products (pork, fish,
mutton, beef) were common at the retail end.
Seasonality and the timing of HPAI outbreaks also matter both in terms of the transmission of
disease and its impacts on the value chain itself, given wide price variations and traded volumes for
poultry that correspond to seasonal festivals.
Government response measures have had variable success, and focused overwhelmingly on
upstream actors, not on the full chain …
In study countries where outbreaks occurred (Ghana, Indonesia and Nigeria), the government
response has been relatively strong in combating disease. In Nigeria, government was especially
proactive in its response, taking strong action and providing incentives to facilitate the disclosure,
confirmation and stamping out of infected birds. This is in contrast to Indonesia, where government
policies initially focused on culling, but moved towards targeted vaccination policies in light of the
rapid shift to endemicity of HPAI on Java.
In Nigeria and Ghana, government played an important role in educating relevant stakeholders
through media and other dissemination outlets. Campaigns and workshops were held to inform and
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enlighten poultry producers, consumers and the general public on the nature of the virus, its
method of transmission, the symptoms and how to deal with it, with various flyers and leaflets
produced.
Most government policies were disproportionately focused on the producer side, particularly in
terms of payment of compensation. Traders in Ghana were clearly affected by movement controls
imposed by government, but compensation was not provided to any downstream actors, despite
sharp declines in sales. Similarly, in Nigeria, live-bird traders were an important component of the
government’s media campaign to promote HPAI awareness, yet compensation was not directed
towards these groups either. Government needs to view disease management options – including
compensation – through the lens of the chain, and not individual nodes, given the important
contributions made by actors at each node.
Regional contexts relating to strong consumer sovereignty in “buyer-driven” chains matter, as do
their interactions …
Regional differences and influences play an important role in establishing the impact and possible
spread of disease. In the Kilifi District of Kenya, regulations governing slaughter in particular are
much more strictly followed than elsewhere in the country, ostensibly in response to demands for
products with higher levels of food safety from the tourism sector. In southeast Nigeria, unlike the
rest of the country, direct sales of birds from live-bird markets to consumers are commonplace,
reflecting local preferences and limited venues for formal processing, creating greater risk of human
exposure to HPAI.
This type of regionalization matters in the sense that public policy and contingency plans need to
consider how region-specific production practices and trade flows influence the spread of disease.
Given resource constraints in the public sector, knowledge of these potential hotspots is critical as a
means to better target surveillance efforts both regionally and within particular nodes of the chain.
Taken together, the four general findings highlighted above as emerging from the value chain
studies across the five study countries in many ways confirm the challenges faced by veterinary
authorities in developing countries in implementing and articulating appropriate strategies for
controlling HPAI. The high diversity of poultry production and marketing systems found in the study
countries represents a major constraint to conventional command-and-control tactics applied by
veterinary services to control outbreaks of a disease such as HPAI. These tactics typically assume
that the relevant actors in the poultry sector will always cooperate, whether to avoid penalties or
because it serves their own interests. The reality, however, as shown by the analyses, is that
willingness of certain categories of actors to comply with prescribed control measures is often weak
and difficult to police. The alternative would be to identify and capitalize on incentives that already
exist or could be created within the different value chains for individual actors or groups of actors to
improve compliance with control measures, including improved biosecurity. Indicators of incentives
examined by the value chain studies have included financial capacity and effects on profitability
among each category of actors, and how actors relate to one another and governance mechanisms
within the chains. The overall message is that effective HPAI control will need to rely on better
informed, more in-depth understanding of the context faced by the different actors in each value
chain, with ‘smarter’ strategies that address, rather than ignore, the constraints to compliance.
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Whether formulating such strategies before the disease follows its own natural epidemic course and
becomes lower priority remains an open question.
Regarding lessons about the value chain approach for improving disease control, the descriptive
mapping of the various poultry value chains has proven important in understanding the complex
web of actors and their relationships, providing key background information for analyzing the
dynamics of HPAI and its control. Information, in particular, about the distribution of production, the
magnitude and directions of trade flows of poultry and their products, and the types of practices
used at each stage from input provision to production, market and the consumer have offered
certain insights that could potentially improve targeting and impact of control measures.
There were expectations, however, that value chain analysis would provide even more detailed
insights in terms of quantifying the economic incentives of the actors in the value chain, revealing
governance mechanisms within the value chain that could be leveraged to enhance control, as well
as identifying components of the value chain where HPAI risk is particularly high or critical, which
have been referred to as ‘critical control points’ or ‘risk hotspots’. In each case, experience gained
during the country studies highlighted limitations of the value chain approach to generate the
desired level of detail needed to identify specific opportunities and interventions that could be
recommended for improving disease control. Value chain studies alert policymakers to the chain and
systems context (and challenges) of the decisions that need to be made, but still require greater
fleshing out of the complexities and behavioural (epidemiological and economic) responses at
various, interacting nodes, some of which can be counterintuitive on first glance. Also, analytical
platforms that integrate the epidemiology of disease with its ramifications on chain-level behaviour
and those feedbacks on the progression of disease are in short supply, but greatly required (Rich
2007). At the end of the day, evaluating the risk of disease in the absence of the behaviour of those
modulating that risk potentially misses much of the story necessary to develop appropriate chainlevel interventions that sustainably control disease. This suggests that value chain analysis as
implemented in this study is a first step in a larger process of understanding how best to conceive
and target appropriate policies in their value chain context.
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1. Motivation: value chains and the socio-economic analysis of
animal disease
Highly pathogenic avian influenza (HPAI) has a variety of socio-economic and livelihood impacts that
reverberate throughout the poultry marketing chain from producer to consumer. In Indonesia,
where the HPAI outbreak began in 2003 and quickly became—and has since remained—endemic in
many parts of the country, both animal and human health alike has been affected; over 16 million
birds died or were culled over the first five years of the outbreak and 141 people have died as of late
2010. The extent of losses has sparked calls in policy circles to restructure traditional forms of
poultry marketing in an effort to control the disease. In Nigeria, two successive waves of HPAI
outbreaks that peaked in February 2006 and February 2007 affected 3,057 farms, resulting in the
culling of 1.3 million of the country’s 160 million poultry population at a cost of 5.4 million United
States dollars (USD) paid in compensation by the government (Akinwumi et al. 2010). The mere
incident of false alarms of HPAI in Kenya in 2005 and in Ethiopia in 2006 markedly reduced consumer
demand for poultry products, causing short-term dislocations throughout the marketing chain in
each country. Ghana experienced three confirmed HPAI outbreaks in 2007 and the economic costs
of the outbreaks were estimated at USD 4.3 million (Veterinary Services Directorate [VSD] 2008).
The most visible impacts of HPAI, and animal diseases in general, come at the farm level through the
losses in production stock and/or productivity caused by overt disease or mitigation strategies for its
control (e.g. culling policies). These impacts can vary widely when looking at differences between
commercialized marketing channels and traditional, informal marketing chains. For commercialized
producers, the loss of animals from a disease outbreak can negatively impact livelihoods when such
production represents the predominant source of income. Even in traditional settings where
livestock are part of a farm’s income diversification strategy, the multifaceted social or cultural roles
played by poultry do not lessen the broader livelihood effects of animal disease. Not surprisingly,
public policies are overwhelmingly aimed at the farm sector (often biased towards the commercial
sector), whether looking at technical mitigation policies or compensation policies aimed at replacing
lost stock.
At the same time, some important impacts of HPAI are often overlooked in policy circles, particularly
those impacts felt among actors further down in the marketing chain, such as traders, processors,
retailers and other support actors (Otte et al. 2008; Rich et al. 2011). Evidence from other disease
outbreaks illustrates the importance of these downstream impacts. For instance, Rich and Wanyoike
(2010), in the context of Rift Valley Fever in Kenya in 2007, found severe negative economic impacts
among causal workers in slaughterhouses, both among those workers who were laid off for over two
months and those who remained employed. In the latter case, livelihoods were severely affected
because worker pay is linked to slaughterhouse throughput, which fell significantly during the
outbreak. These impacts continue downstream at the retail end of the chain, particularly among
local butchers and employees of retail shops and supermarkets. In rural areas, these downstream
activities in value chains represent important non-farm opportunities and thus losses associated
with animal disease, even when they originate from the commercial sector, can induce generalized,
negative multiplier impacts on rural livelihoods.
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The failure to capture these diverse impacts may further have important implications on the
evolution and control of disease that may accentuate its impact. Particularly in informal settings, the
socio-economic linkages embedded in livestock value chains may serve as important risk factors for
the entry, spread, and persistence of disease. Where business deals are governed anonymously
through ad hoc, price-based transactions among atomistic agents at each node in the chain, the
effort required from an already limited capacity to manage disease at any given point in the
marketing channel is compounded. Moreover, where these relationships are imbued with mistrust
or tension, or where market power disproportionately biases certain nodes of the chain over others,
the incentives among chain actors to coordinate production and marketing practices on the basis of
chain efficiency over individual (and sometimes not economically-based) rationality are limited, if
not non-existent. Furthermore, the interactions of commercial and traditional chains at different
nodes (e.g. collectors, live-bird markets) could compromise sector-level biosecurity, even if some
actors such as commercial farmers regularly comply with good operating practices.
The preceding discussion strongly suggests an urgent need to look more holistically at the poultry
sector as a system of interacting actors, each with its own values and constraints that shape the
incentives for control, given the socio-economic contexts and disease impacts faced by each actor.
An understanding of these linkages is critical to better inform and target public policy and
understand the broader livelihoods impacts of disease. In this context, we undertook an assessment
of the major value chains of the poultry sectors in our five study countries (Indonesia, Ethiopia,
Ghana, Kenya and Nigeria) in an attempt to identify the key linkages, market failures, incentives,
governance mechanisms and interactions with risk pathways that might influence the entry and
spread of disease. The complexity of the poultry sector in each country necessarily limited our
analysis to specific sub-sectors and sites within each country, and consequently our results should be
interpreted as suggestive of these key interactions, rather than broadly generalizable in a national
context. That said, the analysis provides salient insights that could be explored in-depth in a
particular setting to better address and target appropriate disease control measures at that level of
analysis.
The research questions addressed in our value chain studies included the following:
1. What are the characteristics of participants in the different poultry value chains?
2. What types of market chains exist for major types of poultry products generated in each of the
study countries, and how do such chains differ by level of commercialization? What is the flow of
volume and value by chain? What is the spatial distribution of poultry and trade in such chains?
3. Who benefits from value chain participation in terms of the shares of value added received by
different actors in the chain?
4. What are the governance structures of the value chain for poultry products? To what extent can
(and were) these be mobilized to effectively enhance disease control? To what extent do
governance structures impede compliance with control mechanisms? To what extent did
grassroots organizations or associations play a part in the control of disease and dissemination
of critical information?
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5. What types of negative impacts, in terms of economic impacts and effects on employment, have
been caused by HPAI?
6. What are the critical points for disease risk in the value chain and what types of mechanisms
could be adopted to enhance incentives for disease control?
Specific hypotheses examined in the analysis include the following:
1. Disease (HPAI) transmission pathways are linked to economic incentives faced by poultry chain
actors;
2. Risks of disease transmission are strongly related to commercial practices;
3. Consumer sovereignty is not sufficient to influence governance and commercial practices;
4. Chain actors face economic incentives that encourage them to conceal information essential for
effective HPAI control.
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2. Overview of the value chain approach1
The methodology used in this analysis follows the value chain approach spelled out in Kaplinsky and
Morris (2001). This analysis characterizes value chains through a four-step process: chain mapping,
governance relationships, upgrading in the chain, and distribution effects. An important advantage
of this approach is that it is a systematic, peer-reviewed way of highlighting the linkages and
interactions between key actors in the value chain, highlighting not only the nature of economic
transactions but also social, political, and cultural factors that influence how such transactions take
place. This approach has been applied in the context of livestock systems (Humphrey and Napier
2005; Baker et al. 2009) and in the analysis of livestock diseases (Kobayashi 2006; Taylor et al. 2008;
McLeod et al. 2009). In the context of HPAI, researchers and veterinary practitioners have given
particular attention to the value chain approach to help them understand how the complexity of
poultry production and marketing systems in developing countries influences the appropriateness
and effectiveness of control efforts. This led to an emphasis on ‘disease risk focused’ value chain
analysis in which the value chain framework would be combined in spirit with epidemiological risk
assessment and be used to identify risk hotspots (sometimes loosely referred to as “critical control
points,” despite their more specific technical meaning in the Hazards Analysis Critical Control Point
[HACCP] literature) that might impede disease control due to their socio-economic and value chain
level context (Taylor et al. 2008).
The first step in a value chain analysis (VCA) is to systematically map the actors participating in the
production, distribution, marketing, and sales of a particular product (or products). This mapping
assesses the characteristics of actors, profit and cost structures, flows of goods throughout the
chain, employment characteristics, and the destination and volumes of domestic and foreign sales
(Kaplinsky and Morris 2001). Value chain analysis is suitably flexible to examine the broader
commodity chain or specific characteristics of particular sub-sectors, though a broader analysis will
come at the expense of specific sector detail. The approach taken in this study was to first identify
the larger poultry value chain and to then elucidate details of the most important sub-chains present
at a regional level.
As illustrated in a generic example in Figure 1, livestock value chains are replete with a multitude of
different chain actors. At a basic level, livestock value chains consist of producers; intermediaries
including traders, processors and wholesalers; and various types of retailers (butchers,
supermarkets, restaurants and hotels). Different types of ancillary service providers, such as feed
manufacturers and animal health service providers, further support livestock value chains.
Moreover, as illustrated in Figure 1, there is a range of products derived from the primary
production of animals, including meat, hides, eggs, manure and other by-products, each with its own
value chain.
A second component of VCA is understanding the role of governance in the value chain. Governance
in a value chain refers to the structure of relationships and coordination mechanisms that exist
among actors in the value chain. Many of the issues in the governance of the value chain are related
to who decides what is produced, how the rules of trade are determined, and the nature of
1
This section draws on the description of VCA from Sudarman et al. (2010) and Rich and Perry (2011).
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Figure 1. Generic form of a livestock value chain.
relationships among the participants. The extent of chain power may be related to the relative size
of a particular firm in the chain in terms of the share of chain sales, share of chain value added, share
of chain profits, share of chain buying power and/or control over a key technology. Some authors
have looked at governance from the standpoint of power relationships, with the emphasis on which
actors in the value chain are responsible for coordinating activity (Dolan and Humphrey 2000).
Gereffi et al. (2005) proposed a typology of five governance structures of increasing integration
based on the complexity of transactions, the ability to codify transactions and the capabilities
present in the supply base. The analysis of chain governance is important from a policy perspective
since it allows for the identification of institutional arrangements that may need to be targeted to
improve capabilities in the value chain, remedy distributional distortions, and increase value-added
in the sector. In this study, we try to identify the nature of transactions in terms of whether there is
no coordination (i.e. reliance on anonymous market transactions), partial coordination (i.e. informal
relationships that govern transactions) or formal coordination (i.e. contracts between value chain
actors). For the purposes of illustration, such governance structures can be graphically mapped
based on the level of coordination in a particular chain.
Third, VCA can be used to examine the impact of upgrading within the chain. This differentiates it
from the filière approach, which tends to take a static view of relationships within the chain
(Kaplinsky and Morris 2001). Upgrading can involve improvements in quality and product design that
enable producers to gain higher value or diversify the product lines served. In the context of animal
health, upgrading has been applied as in this study to better understand how the chain adapts to
and copes with shocks (past and present), in terms of products, markets, relationships and the cost
of compliance with new regulations (Rich et al. 2011). An analysis of the upgrading process includes
an assessment of the profitability of activities within the chain as well as information on constraints
that are currently present. As noted in UNCTAD (2000), governance issues play a key role in defining
how such upgrading occurs. In addition, the structure of global regulations, entry barriers, trade
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restrictions and standards can further shape and influence the environment in which upgrading can
take place. Upgrading further addresses the capabilities of actors to innovate and ensure continuous
improvement in product and process development.
Finally, VCA can play a key role in identifying the distribution of benefits accruing to different actors
in the chain. That is, through the analysis of margins and profits within the chain, one can determine
who benefits from participation in the chain and which actors could benefit from increased support
or organization. This is particularly important in the context of developing countries (and agriculture
in particular), given concerns that the poor are vulnerable to the process of globalization (Kaplinsky
and Morris 2001). One can supplement this analysis by determining the nature of participation
within the chain to understand the characteristics of its participants. In the context of animal
diseases, these distributional effects can be studied to assess the impact of HPAI – and measures to
control it – on different actors in the chain to better assess incentives and capacity for control in the
context of the practices of the different actors. This provides further insights on the nature and scale
of potential risks and compliance fail-points along the value chain.
The value chain framework has significant utility to highlight the various differential impacts of
animal diseases. At the same time, VCA places emphasis on governance and upgrading modalities
which might influence the spread and control of disease in a number of key ways. First, where the
governance of the value chain involves relatively tighter forms of coordination, it will be much easier
to organize value chain activities in a manner consistent with greater biosecurity efforts, particularly
if regulations and standards are promoted by a “chain champion” that coordinates chain activities
(e.g., supermarkets in developed countries, see Dolan and Humphrey, 2000). However, if
disproportionate amounts of market power are concentrated within a certain node in the chain, this
could reduce compliance within the chain, particularly if such measures distort incentives or
information among chain actors. Similarly, the concept of upgrading can be adapted to illustrate the
reactions of value chain actors to changes in activities, perceptions, and practices associated with
animal disease. Viewed in such a manner, VCA becomes an important vehicle for assessing
behaviour in addition to impact.
6
Africa/Indonesia Team Working Paper
3. Case study methodology
The study involved the development and use of general semi-structured survey instruments
(“checklists”) for the different actors of the poultry sector, including producers, traders,
transporters, processors, and feed millers. In each country, teams of enumerators were mobilized to
adapt the checklists to the local context and collect primary data through the use of key informant
interviews and focus group discussions (FGD). Prior to initiating fieldwork, the enumerators worked
to identify the broader structure of the poultry sector in each country and identified the major subsector value chains and field sites to be visited. Transcripts from these interviews were used to
populate and validate these chains and to develop country-level reports. Secondary data
complemented the primary data collected from the fieldwork.
The following sections describe in more detail the approach applied in each of the five study
countries.
Ethiopia: Major products analyzed included commercial layers (including eggs), commercial broilers,
and traditional chickens. Three sites were chosen in Ethiopia: Modjo, Debre Zeit, and Addis Ababa.
These sites are found along major production and consumption areas that link southern and eastern
parts of the country to the capital, Addis Ababa. The selection criteria for the study areas were based
on repeated consultation of experts, transport costs and accessibility to major markets, importance
of poultry for farm households, level of commercialization and HPAI risks. Previous studies of
marketing of poultry indicated that poultry production and marketing is primarily concentrated
along the Rift Valley routes along the way to Addis Ababa due to higher quality road infrastructure
and market connectivity.
Figure 2 graphically illustrates the location of the study sites. The first selected site, located 47
kilometers from the capital city, is Debre Zeit (Adaa District), commonly known as the ‘poultry
village’ of the country. There are many commercial and small-scale farms in this area, which usually
are potential sources of poultry farm inputs (fertile eggs, day-old chicks [DOC], pullets, poultry feed,
etc.) that serve farms in other parts of the country. Our second site, Modjo (Lume District), is located
close to Debre Zeit, connects the nearby town of Nazereth (Adama District) and serves as a strategic
center for newly emerging poultry farms. Our third site, Addis Ababa, befitting its role as the capital
city of the country, acts both as a terminal and radial market, connecting producers and major
consumers for diverse poultry end-products.
After selecting the three sites (referred to as weredas/districts), we conducted the fieldwork in each
site by interviewing producers of commercial layers, commercial broilers, small-scale layers and
small-scale broilers; millers; hatchery breeders; transporters; traders; and slaughterers/processors.
The study was conducted using FGD, and key informant interviews implemented with the help of 4
enumerators and 4 technical assistants over a total of 20 days (Table 1). Sample selection was not
random as our focus was on a qualitative rather than quantitative statistical analysis.
7
Pro-Poor HPAI Risk Reduction
Figure 2. Map of study sites for the value chain analysis in Ethiopia.
Table 1. Sampling for data collection in Ethiopia
Actor group
Processors
Millers
Broiler farmer
Layer farmer
Traders
Backyard poultry
Addis
Not allowed 2 millers
No broiler farm 1 key
2 FGD
Ababa
to process in
informant
1 producer
Addis
producer
1 FGD
Debre
2
1 miller
2 commercial
1 key
1 trader
2 FGD
Zeit
commercial
farms
informant
FGD
1 producer
farms
1 producer
2 FGD
Modjo
1 private
1 miller
Small-scale
farm
FGD
Note: FGD generally comprised 8-10 participants drawn from a mix of various categories such as women and
men as well as from youth groups.
Site
Training was conducted for two consecutive days with the five enumerators:2 They worked as two
teams, pairing the two experienced MSc-level holders with the other two less experienced diplomalevel enumerators. All came from a research background, facilitating communication and
management of the fieldwork. For the training, a manual was prepared by the principal consultant
from ILRI and a questionnaire prepared. The training consisted of practical exercises to simulate
farm conditions with mock interviews carried out between enumerators to make sure that the
2
The selection of enumerators was based on their educational background, familiarity with the poultry sector, and knowledge of local
conditions including local languages for communicating during the FGD.
8
Africa/Indonesia Team Working Paper
questionnaire was properly understood by the enumerators before implementation. The semistructured questionnaire or checklist was translated into Amharic (local language) and was
administered using the local language. Mapping exercises were conducted on the major value chains
to simulate field conditions and refinements were then made before launching the study. Some of
the enumerators have been working directly with the poultry sector and this experience helped
them to more easily identify some of the problems and adjust the checklist to local conditions
accordingly.
Ghana: Major products analyzed included commercial layers (including eggs), commercial broilers,
and traditional chickens. Four sites, Accra/Tema (Greater Accra Region), Kumasi (Ashanti Region),
Dormaa Ahenkro/Sunyani (Brong-Ahafo Region), and Tamale (Northern Region) were selected for
the study. Accra/Tema, Kumasi and Dormaa-Ahenkro/Sunyani are the major centres for commercial
poultry production that depend on exotic breeds of chickens to meet urban demand. While Kumasi
accounts for the largest stock of industrial poultry production in the country, traditional poultry
production predominates in the Northern Region, exemplified by Tamale. These areas therefore
provide collection points where agents stockpile poultry products for distribution throughout the
country and for export. According to Akunzule (2008), egg collection points in Kumasi and Accra
have existed for over 25 years and there are women egg seller associations at these two markets.
The production and distribution of local poultry (e.g. local chicken and guinea fowl) are concentrated
in the three regions in the north, namely Northern, Upper East and Upper West Regions. Tamale,
which is the capital for the Northern Region, is a major production and market centre for local
poultry, hence its selection.
Survey instruments used in primary data collection were designed and finalized in collaboration with
the project team and adapted as needed to suit the context of Ghana. Semi-structured questions
were developed for the different actors of the poultry sector, including producers, traders,
transporters, processors, and feed millers. The actors included in the survey and a summary of how
they were selected from each of the four different sites are presented in Table 2.
9
Pro-Poor HPAI Risk Reduction
Table 2. Actors interviewed and sampling techniques used in Ghana
a. Dormaa/Sunyani Site
Actors interviewed
Sampling technique
Feed millers
Poultry shop
Traditional (traders)
Transporters
Retailers (live-bird)
Commercial layer
Wholesalers in eggs
Egg collectors
Focus group discussion
Purposive
Availability
Purposive
Availability
Purposive
Simple random
Simple random
Simple random
Group (6 in a group)
Transborder risk assessment
Availability
Number of actors interviewed
Dormaa
Ahenkro
Sunyani
Total
2
2
1
1
2
2
2
2
1
5
6
6
6
3
3
2
2
1
1
1
1
TOTAL
26
b. Kumasi Site
Actors interviewed
Feed millers
Poultry shop
Traditional (traders)
Transporters
Retailers (live-bird)
Commercial layer
Wholesalers of live birds
Collectors
Focus group discussion
Hatchery operator
Method of sampling
Purposive
Available
Purposive
Available
Simple random
Simple random
Simple random
Available
Group (8 in a group)
Available
Commercial broiler
Available
Processors
Available at a market place
Available outside market place
Availability
Transborder risk assessment
Total
Number of actors
interviewed
1
1
2
4
6
3
2
2
1
1
2
10
6
2
1
34
Africa/Indonesia Team Working Paper
c. Accra/Ashiaman/Tema Site
Actors interviewed
Breeders/hatchery
Feed millers
Poultry shop
Transporters
Retailers (live-bird)/processors
Commercial layer farmers
Commercial broiler farmers
Egg retailers
TOTAL
Sampling
technique
Availability
Number of actors interviewed
Accra
Ashiaman/Tema
TOTAL
1
1
Purposive
Availability
Availability
Simple random
Simple random
Purposive
Simple random
2
1
2
2
1
2
2
4
2
3
2
1
2
2
6
3
5
22
d. Tamale Site
Actors interviewed
Method of sampling
Hatchery operator
Purposive
Feed millers
Poultry shop
Traditional (traders)
Transporters
Retailers
Commercial layer/broiler farmers
Local poultry producers
Traders/wholesalers
Itinerant traders
Collectors
Focus group discussion
Processors
Total
Number of actors
interviewed
1
Availability
Simple random
1
3
Simple random
Purposive
4
3
Availability
Simple random
Small-scale producer groups (10, 15, 12)
Purposive
1
2
3
4
22
Indonesia: Major products analyzed included commercial layers (including eggs), commercial
broilers, kampong (or traditional) chickens, and ducks. In Indonesia, our analysis focused on a
specific region (Bogor) located directly to the south of Jakarta on the island of Java. As with other
parts of Indonesia, poultry industries in Bogor have been directly affected by HPAI. At the same time,
the new poultry regulations imposed by the local government in Jakarta provide opportunities for
Bogor to supply the Jakarta market provided that HPAI could be effectively controlled. Primary data
were collected from four sub-districts in Bogor: Ciawi, Cibinong, Leuwiliang and Parung, and in Bogor
City itself (Figure 3). These four sub-districts represent a geographical distribution covering four
corners of Bogor District. Ciawi and Leuwiliang are predominantly inhabited by the Sundanese ethnic
group, which represents the indigenous culture. The inhabitants of Cibinong and Parung, which are
located closer to Jakarta, represent a multitude of different local cultures. Other reasons for
choosing these sub-districts are: (1) their access to main roads; (2) presence of a sub-district wet
market; and (3) presence of a regional livestock services unit (unit pelaksana teknis daerah).
11
Figure 3. Map of Bogor and location of study interviews, by category of respondent.
Pro-Poor HPAI Risk Reduction
12
Africa/Indonesia Team Working Paper
Table 3 shows the number of respondents interviewed in each study location. Our target research
group in each location consisted of breeders, feed mills, livestock farmers, poultry shops, collectors,
slaughterhouses, slaughter points, retailers and supermarkets. Based on information provided by
Livestock and Fisheries Services of Bogor District (Disnakan, 2009), we identified nine breeders and
four major feed millers with operations in Bogor District; no breeders and feed millers were found in
Bogor City. The number of sector 4 farmer respondents was the highest with 125 respondents (53%
of the total); FGD were used for collecting information within this group.
Table 3. Number of respondents by actor category and by location, Bogor, Indonesia
Actor Category
Breeder
Feed mill
Farmer Sector 2&3*
Farmer Sector 4*
Poultry shop
Collector
Slaughterhouse
Slaughter point
Retailer
Supermarket
Total
Ciawi
0
0
7
30
1
4
1
2
5
0
50
Cibinong
0
2
9
30
1
6
1
8
13
0
70
Number of Respondents
Bogor District
Leuwiliang
Parung
1
0
1
0
7
6
35
30
2
1
7
3
0
0
3
3
14
4
0
0
70
47
Total
1
3
29
125
5
20
2
16
36
0
237
Bogor
City
0
0
0
0
0
5
0
8
22
2
37
*See the Glossary for definitions of the Food and Agriculture Organization of the United Nations [FAO] farm sector classification.
The gender category of respondents as shown in Error! Not a valid bookmark self-reference.
revealed that most respondents (91%) were men. Women in poultry business were only involved in
kampong chicken farms and as carcass retailers in traditional markets. Neither activity requires
intense levels of energy, hence are considered suitable for women. Other poultry farming (duck,
layer and broiler farms) and trading activities are mostly carried out by men. Such activities require
high capital for transactions or high mobilization for transporting the product.
13
Pro-Poor HPAI Risk Reduction
Table 4. Gender of respondents, by actor category for each commodity chain, Bogor,
Indonesia
Commodity
Actor Category
N
Broiler Carcass
Retailer
Retailer
Collector
Slaughter point
Slaughter house
Farmer sector 2/3*
Retailer
Collector
Slaughter point
Farmer sector 2/3
Retailer
Farmer sector 2/3
Retailer
Collector
Slaughter point
Farmer sector 4*
Farmer sector 2/3
Retailer
Collector
Slaughter point
Farmer sector 4
Farmer sector 2/3
Breeder
Retailer
Collector
Retailer
Retailer
7
3
7
14
2
15
3
1
2
10
6
2
7
6
5
44
1
9
6
3
81
1
1
7
5
8
8
3
5
2
274
Broiler
Layer
Male Layer
Duck
Kampong
chicken
Layer eggs
Duck eggs
Kampong eggs
Feed mill
Poultry shop
Supermarket
TOTAL
Number
Male
Female
5
2
3
0
7
0
14
0
2
0
15
0
2
1
0
1
1
1
8
2
5
1
1
1
7
0
6
0
5
0
44
0
1
0
9
0
6
0
3
0
66
15
1
0
1
0
7
0
5
0
8
0
8
0
2
1
5
0
2
0
249
25
Percentage (%)
Male
Female
71
29
100
0
100
0
100
0
100
0
100
0
67
33
0
100
50
50
80
20
83
17
50
50
100
0
100
0
100
0
100
0
100
0
100
0
100
0
100
0
81
19
100
0
100
0
100
0
100
0
100
0
100
0
67
33
100
0
100
0
91
9
*See the Glossary for definitions of the FAO farm sector classification.
Kenya: Major products analyzed included commercial layers (including eggs), commercial broilers,
traditional poultry, and guinea fowl and ducks. In Kenya, this study was conducted in four districts:
Kiambu, Vihiga, Nakuru and Kilifi (Figure 4). The study focused on two divisions in each district, one
with the highest population of poultry and the other with a low population of poultry. This
distinction was made in order to capture the differences in management strategies used by mostly
subsistence farmers (low density areas) and mostly commercial systems (in the high density areas).
In Kiambu, we selected Kikuyu Division because it mainly falls under sectors 1-2 in the Food and
Agriculture Organization of the United Nations (FAO) classification scheme (see Glossary for detailed
definitions), and is characterized by a high concentration of commercial poultry produced under a
system that both monitors the production process and has a system of managing waste. By contrast,
14
Africa/Indonesia Team Working Paper
Figure 4. Map of Kenya and location of study interviews.
Ndeiya Division has a larger population of poultry that falls under sectors 3-4 in FAO’s classification.
In Nakuru, we focused on Rongai Division, which not only falls under FAO sectors 1-2, but also
contains a high concentration of indigenous poultry. Vihiga mainly contains sectors 3 and 4 types of
production with a focus on indigenous poultry. In Kilifi, we selected Kikambala and Ganze Divisions.
The former contains sectors 1-2 poultry that is dominated mainly by broiler production in contracted
farms and medium-scale commercial production. Ganze Division, on the other hand, is dominated by
indigenous chicken and falls under sectors 3-4.
In each division, interviews were held with officials from the Ministries of Agriculture and Livestock,
poultry hatcheries, poultry processors, large and small-scale commercial poultry farmers, indigenous
poultry farmers, feed and veterinary medicine stockists, poultry transporters, poultry traders
(wholesalers, retailers, and intermediaries [brokers]) and meat inspectors. Specific chains targeted
included: traditional (range raised chicken), commercial broiler, commercial layer, and ducks/guinea
fowl. The following actors (and numbers) were interviewed in each of these poultry chains:





1 breeder/hatchery
3-6 traders/rural assemblers/brokers (including at least one dealing with commercial
farmers)
3 poultry retailers (including one major destination market/supermarket)
2 commercial broiler farmers
2 commercial layer farmers
15
Pro-Poor HPAI Risk Reduction



2 feed stockists/agro-input dealers
2 processors
1 slaughterhouse
In addition to the chain actors, we also interviewed 10 informant interviews in each selected
district giving a total of 40 key informant interviews. The key informant respondents were
carefully selected to include:




2 livestock officers (especially those dealing with poultry) at the district level
2 divisional (site) livestock officers
4 traders and/or leaders in the major poultry markets (2 in site/local market and 2 in the
district market, depending on the existence of such markets)
2 in the major markets
Lastly, we held one FGD in each of the divisions (sites). FGD members were selected from among
farmers, traders and local livestock staff.
Nigeria: Major products analyzed included commercial layers, commercial broilers, table eggs, and
indigenous poultry. The HPAI outbreaks that occurred in Nigeria in 2006-2008 tended to cluster
around four locations mostly contained in Lagos/Ogun States, Anambra State, Plateau State and
Kano State which were sometimes loosely referred to as ‘HPAI hubs’. These hubs were purposively
selected as study sites especially since they also conveniently covered the four major agro-ecological
zones of Nigeria and could provide insights on possible roles of ecology on the epidemiology of the
diseases. Lagos/Ogun States represented the humid zone, Anambra State for the sub-humid zone,
Plateau State for the Northern Guinea Savanna zone, and Kano State for the Sudan Savanna zone.
Other reasons for selecting these study sites included: i) coverage of the two major production
systems – commercial layer, broiler and table egg production systems in the south compared to
indigenous poultry production systems in the north; and ii) capturing the existence of niches and
markets for poultry products which determined the direction of flow of products, e.g. indigenous
poultry flowing mostly to the south versus table eggs and broilers flowing to the north.
Understanding the implications of these cross-directional product flows when monitoring specific
sub-chains could better inform disease mitigation strategies such as movement control.
Following the conceptualization of the study purpose, a stakeholder workshop was convened at ILRI
Ibadan in August 2008. The workshop helped to clarify and confirm the conceptual propositions,
identify relevant actors, define key value chains and characterize the poultry industry in Nigeria.
Participants shared their knowledge of the national poultry industry and applied it to make choices
of priority questions to be studied. A second workshop was then held at ILRI Ibadan in January 2009
to focus on the types of data to be gathered and how to conduct the field survey. Field enumerators
were brought to the workshop to be trained and to review the contents of the questionnaire guides.
Six sets of guides were prepared to study specific groups of poultry stakeholders: (i) poultry
producers sorted into three groups, namely free-range, backyard commercial and medium-to-largescale commercial producers; (ii) breeder/hatchery operators who supply DOC to commercial
producers; (iii) feed millers, classified into branded millers and toll millers, who produce the feed
used by commercial poultry producers; (iv) live-bird traders; (v) processors who help consumers to
16
Africa/Indonesia Team Working Paper
de-feather and dress live chickens for cooking; and (vi) transporters who help to distribute DOC,
feed, and mature live birds around the country, linking production to the market and to consumers.
Four teams of enumerators were constituted to include an agricultural economist as leader, a rural
sociologist and the Avian Influenza Control Programme (AICP) veterinary officer in charge of the
respective focus states. The veterinarian was expected to use his/her experience in HPAI campaign
activities in the state to guide and facilitate the team’s work. He or she was to provide transport for
the team while covering the state and to link the team with counterparts in adjacent states for
completion of work there. The AICP officers in adjacent states would then guide the team through
those states, also providing transport.
Each team was equipped with the questionnaire guides, blank copies of the Nigerian map and empty
flow charts to be used to trace the channels of flow of different types of poultry and poultry
products within and across the states covered by the team. Instructions were given to the
enumerators concerning the number of FGDs to conduct on each type of respondent in each state.
Most FGD were concentrated in the focus state in each region; details are presented in Table 5. In
each of the remaining 32 states, FGD were planned for 3 trader groups and 1 transporter group. The
enumerators were instructed to spend at least one week in each central focus State and two days in
each of the other states. The AICP officer in each state was asked to liaise with the FGD groups and
prepare them for the interviews. Out of the three live-bird trader FGDs, one was meant for interstate traders, the second for intra-state traders and the third for egg traders in the non-focus states.
Table 5. Distribution of proposed number of Focus Group Discussion questionnaire guides for
each study state in Nigeria
State*
Lagos/Ogun
Anambra
Plateau
Kano
Total
Producers
12
6
6
9
33
Hatchery
4
2
2
2
10
Feed
millers
3
1
2
2
8
Live-bird
traders
4
3
4
4
15
Processors
3
2
2
3
10
Transporters
2
2
2
2
8
Total
28
16
18
22
84
Source: Planning Workshop, January 2009.
Field work was carried out in January and February 2009. Adjustments were required during the
data collection: the southeast team was not able to assemble the appropriate number of FGD
groups in Anambra and in several other states in that zone; the northwest team interviewed only
two live-bird trader groups in each state, while omitting at least three producer FGD in Kano State.
The summary of interviews performed is presented in Error! Reference source not found.
17
Pro-Poor HPAI Risk Reduction
Table 6. Summary of Focus Group Discussions conducted and other data collected in Nigeria
S/N
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Nort
heast
3
11
116
8
4
12
3
Group / Item
Feed prices
Egg trade
Live-poultry trade
Producers
Feed millers
Live-bird markets
Medium-scale commercial & household
free-range producers
Backyard commercial & Medium-scale
commercial producers
Backyard commercial & household freerange producers
Egg chain
Layer chain
Indigenous poultry chain
Broiler chain
Processors
Transporters
Breeders/hatcheries
Traders
Grand total (observations)
18
North
west
5
18
22
4
1
10
1
Sout
heast
14
23
73
2
1
15
6
South
west
3
20
59
15
8
13
5
TOTAL
25
72
270
29
14
50
15
3
1
6
3
13
3
1
6
3
13
16
22
26
18
2
14
2
49
8
8
9
8
1
4
0
32
21
19
23
23
1
5
1
39
9
10
0
7
0
13
4
59
54
59
58
56
4
36
7
179
954
Africa/Indonesia Team Working Paper
4. Overview of poultry value chains in study countries
In this section, we provide an overview of the nature and characteristics of each of the studied value
chains. The emphasis here is to provide a broad discussion of the general nature of the different
chains; specific details of the sub-chains that are presented can be found in the individual country
reports.
Table 7 provides a summary of the chains studied in our study countries, including the types of
chain, predominant actors, and types of governance mechanisms present. Section 4.1 below
elaborates on salient aspects of the chains by country, while Section 4.2 discusses the governance
aspects. A discussion of impacts and response mechanisms is given in Section 4.3.
Table 7. Summary of poultry value chains in study countries
Type of chain
(X) indicates
predominate
chain
Ethiopia
Layers/egg
Broiler
Traditional
(X)
Ghana
Layers/egg
Broiler
Traditional,
including
guinea fowl
(X)
Main actors in chain
Form of governance/market coordination
Importers (DOC), breeder-hatcheries,
government multiplication centres, large
commercial layer farms, pullet suppliers,
small-scale commercial poultry farms,
feed millers, egg and live-bird traders,
poultry processors, retailers
Importers (DOC), breeder-hatcheries,
government multiplication centres, 2
large commercial farms, small-scale
commercial broiler farms, feed millers,
retailers
Government multiplication centres,
backyard poultry producers, collectors,
traders
Concentration among larger producers with
vertical integration and control of input
supplies, no effective producer or trade
associations, ad hoc market transactions
throughout chain
Importers (DOC), breeder-hatcheries,
commercial layer or mixed poultry farms
(varying in scale), feed millers, egg and
live-bird collectors and traders,
transporters, live-bird processors, egg and
live-bird retailers
Importers (DOC), breeder-hatcheries,
commercial farms (varying in scale), feed
millers, collectors, traders, transporters,
processors, retailers
Concentration with a number of major
producers with vertical integration, mix of ad
hoc and relational coordination among
actors, numerous local and regional producer
or trade associations, stable distribution
patterns, volume discounting
Larger producers with vertical integration,
mix of ad hoc and relational coordination
among actors, numerous local and regional
producer or trade associations, informal
credit practiced
Hybrid forms of coordination, Largely ad hoc
trade transactions, with trade associations
informally regulating market transactions
Small-scale guinea fowl breeders,
backyard poultry producers, collectors,
transporters, traders, a few commercial
processors, itinerant traders, retailers
19
Concentration among 2 large producers with
vertical integration and control of input
supplies, no effective producer or trade
associations, ad hoc market transactions
throughout chain
Ad hoc market transactions, no producer or
trade associations
Pro-Poor HPAI Risk Reduction
Type of chain
(X) indicates
predominate chain
Indonesia
Layers/egg
Broiler
(X)
Kampong
Duck
Kenya
Layers/egg
Guinea
fowl/ducks
Nigeria
Spent layers
Form of governance/market coordination
Importers (DOC), breeder-hatcheries,
pullet suppliers, large to small-scale
commercial layer farms, feed millers, egg
and live-bird collectors and traders,
transporters, live-bird processors, egg
and live-bird retailers
Semi-coordination (esp. repeated
transactions and longer-term relationships)
between larger producers and buyers, mostly
ad hoc arm’s length transactions between
smaller producers and collectors, producer
associations mostly as national lobby groups,
some local trade associations
Full coordination between large vertically
integrated producers and smaller outgrower
farms (PIR), other small to medium producers
independent, semi-coordination between
larger producers and buyers
Some semi-coordination (repeated
transactions and longer-term relationships)
between larger producers and buyers, largely
ad hoc trade and market transactions, local
producer associations do not play
coordination role
Largely ad hoc trade and market transactions,
local producer associations do not play
coordination role
Importers (DOC), breeder-hatcheries,
pullet suppliers, large to small-scale
commercial layer farms, feed millers,
collectors and traders, transporters,
processors, retailers
Specialty breeder-hatcheries (DOC),
pullet suppliers, small-scale commercial
farms and backyard producers, feed
millers, egg and bird collectors and
traders, transporters, processors,
retailers
Small breeder-hatcheries for pullets, few
small-scale commercial farms, mostly
backyard producers, feed millers, egg
and bird collectors and traders,
transporters, processors, retailers
Hatcheries, small to large commercial
farmers, brokers, feed stockists,
transporters, veterinarians and livestock
production officers, processors, retailers
Broiler
Traditional
Main actors in chain
Hatcheries, a few large vertically
integrated industrial farms, many
medium-to-small commercial farms,
brokers, feed stockists, transporters,
veterinarians and livestock production
officers, processors, retailers
(X)
Backyard poultry producers, collectors,
transporters, traders, retailers
Small-scale commercial producers,
collectors, transporters, traders, retailers
Industrial farms, hatcheries, DOC
distributors, backyard commercial
producers, medium-to-large commercial
producers, collectors, traders, feed mills,
transporters, processors, retailers
20
Contracts common between larger-scale
commercial producers, their suppliers and
buyers, otherwise mainly informal
relationships based on arm-length
transactions, regional associations of
producers help coordinate marketing
Stronger coordination with outgrower
contracts between small-scale commercial
farms and large-scale companies in Central
Region, tourist industry driving requirements
at Coast, elsewhere semi-coordinated with
informal relationships, some regional
associations of producers help marketing
Ad hoc market transactions, informal
coordination (price collusion) among traders
Semi-coordinated for guinea fowl with
contracts or advance purchases for specialty
products and supply arrangements with
hotels for birds, ad hoc market transactions
for ducks
Some large companies with vertical
integration, semi-coordination (esp. repeated
transactions and longer-term relationships)
between some producers and buyers, mostly
ad hoc arm’s length transactions between
smaller producers and collectors, producer
and trader associations mostly as national
Africa/Indonesia Team Working Paper
Type of chain
(X) indicates
predominate chain
Broiler
Indigenous
Eggs
(X)
Main actors in chain
Form of governance/market coordination
Same as for spent layers above.
Backyard poultry producers, collectors,
transporters, traders, informal
processors, retailers
Industrial farms, hatcheries, DOC
distributors, feed mills, backyard
commercial producers, medium-to-large
commercial producers, egg collectors
and traders, transporters, retailers
lobby groups with strong informal
coordination through local trade/market
associations
Same as for spent layers above.
Mostly ad hoc market transactions with some
relational, repeated transactions, informal
coordination (price collusion, permission to
trade) by traditional authorities and among
traders through local market associations
Semi-coordination (esp. repeated
transactions and longer-term relationships)
between larger producers and buyers, mostly
ad hoc arm’s length transactions between
smaller producers and collectors, producer
and trader associations mostly as national
lobby groups with strong informal
coordination through local trade/market
associations
4.1 Product scope, actors, and flows
Ethiopia: Backyard poultry is the predominant production system currently practiced in Ethiopia.
The traditional poultry production system is characterized by small flock sizes, low inputs and
outputs, and periodic devastation of flocks by disease. It involves about 7 million farm households
with varying flock sizes. Major actors in this sector include small-scale farmers, government-owned
poultry multiplication centers, traders and collectors.
Backyard producers do not consider poultry rearing a major activity, but rather a supplementary
activity along with the growing of seedlings, rearing of sheep, and producing crops. Most households
have as many as 40 chickens at the beginning of the year, but may end up with only 10 adult
chickens due to high rates of mortality. The average flock size of chickens was 10-15 birds. Around
the Debre Zeit area, farmers interviewed engaged mostly in other farming activities such as
gardening and dairy farming. In such systems, poultry keeping is often an activity undertaken by
women and considered as a source of supplementary income and consumption for festivals and
special occasions. FGD respondents explained that the income from poultry provided about 10-15%
of household expenditure, much of this controlled by women. Other FGD discussions estimated that
backyard poultry could contribute as much as 20-25% of the income received by a given household.
Women also play an active role in decision making in backyard production systems. At the same
time, many households are afraid to rear poultry in large numbers due to fears about epidemic
diseases that could kill the entire poultry flock. Indeed, Newcastle disease is a common disease that
affects the performance of small-scale producers, but farmers often consider vaccinating their
poultry low priority among the demands on their limited cash resources.
Value chains for the traditional poultry sector are not that complex. Only a few intermediaries such
as collectors liaise between producers and consumers (Figure 5). Traders are sometimes important
21
Pro-Poor HPAI Risk Reduction
for small-scale backyard farmers, but their influence is often seasonal or indirectly mediated in spot
markets. In addition, we observe that in the majority of cases, farmers themselves play the function
of processors, transporters, and sellers of their products, directly interacting with consumers either
in the village market or live-bird markets. Traders and collectors could be potential threats for HPAI
and other disease spread when they assemble chickens from unknown sources.
Figure 5. Value chain for backyard poultry production in Ethiopia.
By contrast, when we look at the modern commercial sector, we find a larger diversity of actors,
including input or service providers, producers, traders, processors, feed millers, and exporters,
though some large firms such as ELFORA are vertically integrated in input production, processing,
and retail themselves. At the same time, in both the commercial layer and broiler sectors,
production is dominated by large producers, with little scope for production by small-scale
producers. The limited number of broiler farms reflects the limited broiler demand given that the
consumption of processed poultry meat is uncommon in Ethiopia except in urban and peri-urban
areas and by big hotels and restaurants. The majority of people prefer instead to purchase live birds
for special occasions, preferably from traditional breeds. The consumption of poultry meat in
restaurants, unlike other meat products like mutton, beef, etc., is also uncommon to the majority of
Ethiopians.
Seasonality greatly impacts price movements in the poultry sector, with the highest prices found
during religious holidays, and lowest prices often coinciding with regular outbreaks of Newcastle
disease that occur in the late Spring (April-June). Actions by large producers such as ELFORA play a
large role in setting market prices, particularly for commercial products such as broilers. The fact
that the HPAI scare in 2006 took place in February likely mitigated its impact somewhat, although it
would have influenced prices and the availability of birds in the run-up to the Easter holiday.
22
Africa/Indonesia Team Working Paper
Figure 6 maps the national value chain for poultry products, distinguishing flows between the
backyard and commercial sectors. Breeders provide domestically produced or imported DOC directly
to large-scale commercial operators, small-scale farms, and government multiplication centers. The
latter are the primary interface for small farmers to obtain improved chicken breeds. The total
aggregate volume of production and sales flows from the commercial sector are estimated at 45,000
DOC, 38 million table eggs, 920,000 broilers, and 340,000 pullets. About 60% of these products are
directly sold to consumers or restaurants and hotels, mostly in Addis Ababa, with 10% each sold
directly to consumers and traders, and 20% to small-scale farmers. A small portion of production (25%) from commercial farms, such as ELFORA and Modjo, is exported to neighboring countries. The
market size for eggs is relatively large compared to broiler meat since religious and cultural factors
limit the market size for broiler meat. Modern poultry production and processing has both forward
and backward linkages and employment generation for other sectors in the industry. Commercial
farms such as ELFORA are integrated in the production of poultry and feed, and also maintain their
own processing units and sales and distribution channels including supermarkets, thus avoiding sales
to third-party slaughterhouses and processors.
Figure 6. National level value chains for poultry in Ethiopia.
The interaction of the backyard sector with feed millers is very limited as they often use a free-range
scavenging system for chicken production. It is estimated that close to 90,000 tons of concentrated
poultry feed is produced by commercial millers; this excludes production from toll millers, informal
millers who mix feed from a variety of sources often in ways that are not biosecure. Over 95% of the
feed produced is supplied to either small- or large-scale commercial producers. Large-scale
commercial producers often prepare their own feed for self-consumption and they also sometimes
supply a small portion to small-scale farms after meeting their own demand. The linkages among the
23
Pro-Poor HPAI Risk Reduction
actors are not sufficiently strong to influence each other and are typically uncoordinated and
sporadic.
In summary, while the dominant flow of exotic birds and products in the commercial sector is
governed by the one or two large commercial farms, the largest production and supply comes from
small backyard farmers, with strong levels of sales particularly during holidays and festivals and
during the onset of disease outbreaks. In the latter case, farmers sell their poultry as a measure to
prevent or minimize expected financial losses from high morbidity and mortality. The interaction in
both village and urban central markets with consumers and traders for live birds becomes very
intense during these peak seasons. Many birds of unknown quantity and quality enter into market
places. The pattern of outbreaks of disease also closely follows the distribution routes for indigenous
poultry in different parts of the country (Bewket and Chaka 2009). As a result, the risks of a disease
outbreak (such as HPAI) are very high in live-bird markets where there are no biosecurity measures
in place.
Ghana: Value chains for poultry products in Ghana have a distinct regional dimension. In Kumasi,
layer chains are relatively short, with limited roles for intermediaries such as traders and brokers.
Rather, here there is significantly more vertical organization among large-scale producers, not
surprisingly given the greater emphasis on industrial production in this region. In Dormaa/Sunyani,
by contrast, collectors play a more important role.
Local trade in poultry and poultry products are mainly in live birds and table eggs. Live-bird trade is
conducted largely through live-bird markets located in towns and cities. Limited quantities of live
birds are imported into Ghana from Burkina Faso through the cities of Paga, Bongo and Bolgatanga
(Akunzule 2008). The trade in eggs takes place in all market centres, with main collection points from
poultry farms at railway or lorry parks in Accra, Kumasi, Cape Coast, Takoradi, Koforidua and
Sunyani. Taxis, vans and pick-up trucks are the main transport systems for movement of eggs and
live birds within and from market to market (ibid.). These types of transport have no cold storage
systems. Transports for eggs are also without any cooling systems. Live birds and table eggs are
transported from producers to live-bird markets by road.
There are a number of live-bird markets in major cities and towns in the country. Live-bird markets
handle between 10 and 500 birds in a day. Each regional capital has a large live-bird market which
operates daily. Live-bird traders buy directly from large-scale farmers and operate on a daily basis at
designated points, while small-scale poultry farmers may take their birds to sell in the markets,
particularly on market days and during festive periods (e.g. Christmas and Easter seasons). Major
destinations of local fowl from the three regions in the north are Ashanti Region (Kumasi) and
Greater Accra Region (Accra and Tema), represented by the thick arrows in Figure 7.
Broilers are raised mainly for meat and are sold from 6-8 weeks of age. The main consumers of
broiler meat in the country are hotels, restaurants, institutions located in cities such as Accra,
Kumasi, Takoradi, Cape Coast, Sekondi, Koforidua, and Ho, and individual consumers. Spent layers
are normally sold for consumption after the birds have completed their laying. Traders in live birds
buy spent layers from poultry farms in Kumasi, Sunyani or Tema/Accra in wholesale and sell directly
to restaurants, hotels, individual households, chop bars, khebab operators and to other retailers in
Accra, Kumasi and Tema.
24
Africa/Indonesia Team Working Paper
Figure 7. Inter-regional trade routes for local poultry in Ghana.
Source: Akunzule (2008)
There are egg collection points in Kumasi, Accra, Sunyani and Dormaa Ahenkro where egg sellers
stockpile eggs from poultry farms for distribution throughout the country and for export to
neighbouring countries (Togo, Mali and Burkina Faso). There are also inflows of eggs from Côte
d’Ivoire through unapproved routes to Dormaa Ahenkro for redistribution. Trade in eggs is mainly
done by women. The egg collection points in Kumasi and Accra have existed for over 25 years and
there is a Women Egg Sellers Association at these two markets. Trade routes for table eggs are from
the poultry-producing areas in Kumasi, Tema, Accra and Dormaa-Ahenkro to all parts of the country.
Table eggs are transported by all types of vehicles to their final destinations for consumers. The main
trade routes for table eggs are from Sunyani and Dormaa Ahenkro to Accra, Tamale, Wa and
Bolgatanga, and from Kumasi to Accra, Koforidua, Takoradi and Cape Coast. Error! Reference source
not found. shows the trade routes for table eggs in Ghana where the thickness of the arrows
indicates the importance of the route in terms of volume traded.
An overarching characteristic in all of the value chains selected was the extreme seasonality
exhibited in terms of volumes traded. During festive periods (e.g. Eid, Christmas and Easter), traded
volumes are often 6 to 10 times greater than normal, suggesting that the timing of an outbreak can
have critical effects on its impacts. In the case of the 2007 outbreak, the fact that it occurred after
Easter when prices and volumes were beginning to decline likely mitigated its overall impact.
25
Pro-Poor HPAI Risk Reduction
Figure 8. Trade routes for table eggs.
Source: Akunzule (2008)
Indonesia: Value chains for poultry in Bogor are quite diverse. Figure 9 presents product flows for
the overall poultry sector in Bogor.
Figure 9. Map of value chains in the Bogor poultry sector
26
Africa/Indonesia Team Working Paper
The poultry sector in Bogor has all of the main poultry value chains represented. Poultry meat is
derived from production of exotic and indigenous kampong chickens and, on a smaller scale, ducks
either as broilers or as by-products from egg producers in the form of male or spent layers. Live birds
are traded along the supply chains with slaughter occurring anywhere from the point of production
to the point of consumption. Eggs are produced commercially mainly from exotic chicken breeds,
but also to a minor extent from kampong chickens and ducks.
Whereas some products are sold directly by producers to the final consumers—restaurants and
individuals—most pass through specialized live-bird and egg collectors to supply poultry
slaughterhouses and wet markets, or may be delivered to supermarkets (‘modern markets’). Each
specific production system tends to be associated with a particular set of supply routes.
Larger-scale commercial production relies almost entirely on exotic breeds of broilers and layers in
timed all-in, all-out production cycles, though there are some smaller-scale commercial operations
(generally <5000 birds) specializing in kampong chickens or ducks. Otherwise, the majority of
kampong chickens and ducks are kept in small flocks in backyard systems by sector 4 farmers who
sell their poultry products in small numbers in a much less systemized fashion, or use for their own
home consumption.
Poultry production in Bogor is dominated by broilers, which represented over 73% of the poultry
population in 2008. Indigenous kampong chicken populations have been falling over the past few
years and in 2008 comprised around 7% of total poultry population in Bogor. Value-added generated
from the poultry sector is estimated to be at least 359 billion Indonesian Rupiah (IDR), or
approximately USD 35.9 million. As this figure excludes many important linkages for which data were
not available, it is not unreasonable to posit that the poultry sector and its ancillary services
contribute close to 1 percent of regional GDP in Bogor. Not surprisingly, the broiler sector comprises
almost 80% of sector value added. Besides generating income, the poultry trade employs an
estimated 6,300 workers out of 1 million total work force in Bogor District.
The broiler value chain is mapped in Figure 10. The breeds used for broiler production are exotic and
therefore entail stringent requirements for feed, breeding, and management and lead to
specialization within the production portion of the broiler chain. Again, backward linkages to these
specialized inputs and services (such as the feed, pharmaceutical and vaccine industries) are not
shown with the exception of the breeding companies. The chain starts from these breeding
companies which produce final stock, then to farmers who raise the birds, and onto processors and
traders who provide poultry products to consumers.
There are two types of broiler farmers. The first is non-contract, independent farmers, accounting
for approximately one-third of broiler farms. These farmers are free to decide from whom they buy
inputs (feed, vitamin and vaccine) and to whom they sell the output, whether in open-market arm’s
length transactions or according to informal arrangements with regular clients. More common (twothirds of broiler farms) is the second type being full coordination in the form of the integrated
contractual collaboration (PIR: Plasma Inti Rakyat [Nucleus-Plasma Farming System]) between
broiler farmers and a company. The company acts as the ‘nucleus’, providing production input and
marketing the farmer's output, while farmers act as ‘plasma’, providing chicken houses and rearing
the broilers. This contract is valid for one fattening cycle, and can be renewed. The contract
agreement between a company and a farmer will usually consist of, more specifically: (1) an input
27
Pro-Poor HPAI Risk Reduction
IMPORT
15%
(12
203
424/
24.4154.92B)
EXTERNAL
INTERNAL
25%
(20 339 040/
40.68-91.53B)
Breeder
Grand Parent Stock
Nucleus
FEED, DOC
MEDICINE
DOC PS
Male = 32 284
Female = 290 558
(IDR 8.07B)
Nucleus
Contract
Farmers
Processed meat
Processing Plant
Manure/waste
Technical services
20%
(1 795 201/
25.13-32.31B)
5%
(1 304 241/
18.26-23.48B)
Arm’s length
Semicoordination
30%
(1 468 393/
29.37-36.71B)
11.61%
(5 735 329/
63.09-91.77B)
Collector
10%
(2 511 871/
27.63-40.19B)
49 403 248 birds
20%
( 9 880 650/
138.33-177.85)
69%
(34 243 800/
479.40616.40B)
Poultry Slaughter Point
Poultry
Slaughterhouse
12 392 521 birds
8 976 003 birds
40%
(3 590 401/
50.27-64.63B)
30%
(3 717 756/
52.05-66.92B)
5%
Catering
Restaurant
Hotel
70%
(17 583 100/
193.41281.33B)
Manure Collector
8%
(3 952 260/
55.33-71.14B)
Live bird
70%
(14
237
328/
35.5971.19B)
20%
(5 023 743/
55.26-80.38B)
50%
(26 084 819/
286.93417.36B)
Plasma
50%
(26 084 818/
286.93-417.36B)
5%
(1 304 241/ 5%
18.26-23.48B)
Non-Nucleus
30%
(6 101 712/
15.2530.51B)
60%
(48 813 695/
97.63-219.66B)
Meat
Independent
Farmers
Poultry Shop
3%
(1 482 097/
20.75-26.68B)
Traditional Market
70%
(8 674 765/
121.45156.15B)
Modern Market
Slaughter Point
Carcass Retailer
4 894 642 birds
1 482 097 birds
9 572 365 birds
70%
(3 426 249/
68.52-85.66B)
Rich Consumer
100%
(1 482 097/
29.64-37.05B)
Middle Consumer
70%
(6 700 656/
134.01167.52B)
30%
(2 871 709/
57.43-71.79B)
90%
(23 476 336/
328.67422.57B)
Remark: % = percent of total volume handled by the
individual actor category (volume/value in billion
IDR)
Figure 10. Broiler value chain in Bogor (volumes and value).
28
30%
(2 692 801/
37.70-48.47B)
Poor Consumer
90%
Full coordination
10%
(897 600/
12.57-16.16B)
OUTSIDE BOGOR
Rancamaya, Sukabumi,
Subang, Bekasi,
Tangerang, Jawa
Tengah, Lampung,
Depok, jakarta
Africa/Indonesia Team Working Paper
supply agreement from the company to provide DOC, feed, drug, vitamin, vaccine and disinfectant
under a contract price; (2) provision by the farmer of a land certificate as a guarantee to the
company, a poultry house with standard equipment and an obligation to look after the chickens
during fattening; (3) purchase by the company at a contract price of all fattened chickens produced;
(4) no sale of the chickens by the farmer to anyone other than the company; (5) the difference
between the cost of input used by farmers and the value of output will be the basic profit (or could
be loss) for the farmer.
Plasma farms send roughly half of their ready-to-slaughter broilers to processing plants belonging to
the nucleus farm and sell the other half to collectors, under direction of delivery orders issued by the
nucleus farm (50%; note that volume and value estimates for the various product flows are provided
in Figure 10). Independent farmers sell their production to slaughterhouses (20%), collectors (70%)
and slaughter points (10%).
Collectors in turn export over two-thirds of the live birds they handle (69%) to destinations outside
Bogor (e.g., Rancamaya, Sukabumi, Subang, Bekasi, Tangerang, Lampung and Central Java) The
remainder are distributed to slaughter houses (8%) and to slaughter points inside traditional markets
(3%) and outside these markets (20%).
After slaughtering, carcasses and other products from processing plants are mostly (90%) exported
outside Bogor (especially to Jakarta, Depok, Bekasi, and even to Batam), with the remainder sold to
modern markets (5%) and restaurants (5%). Carcasses from slaughter houses are sold to modern
markets (40%), restaurants (20%), carcass retailer (10%) and exported outside Bogor (30%), e.g. to
Jakarta, Depok, Bekasi, Sukabumi, Lampung and Central Java. Carcasses from slaughter points are
sold to restaurants (30%) and to carcass retailers in traditional markets (70%). From traditional
markets, carcasses are sold to low income consumers (30%) and middle class consumers (70%),
while those from modern markets are sold to middle consumers (70%) and upper class consumers
(30%).
Most kampong (traditional) chickens are still raised in a traditional system in small backyard flocks
ranging free to scavenge for feed. Farming, though, is actually a secondary activity for many people
who keep kampong chickens, but serves several functions. First, it provides a source of food for
home consumption, enhancing food security in the household and community (through gifts).
Farmers usually sell their chickens only when they need to pay their bills, for example tuition fees for
their children, so keeping chickens also serves as a type of financial savings and liquidity instrument.
Respondents reported selling 2-5 birds per semester (6 months). They are also used in social and
cultural events, such as wedding parties or other events in which kampong chickens cannot be
replaced by any other poultry. Kampong chickens are always available and have a special position in
society, as well as simply being appreciated as a popular hobby. For these reasons, as well as the low
investment required and its ease, keeping kampong chickens is ubiquitous and evenly distributed
across the district.
The management system used for kampong chickens ranges from extensive in small flocks, to semiintensive and intensive as flocks get larger. Sector 4 kampong chicken keepers generally source
chicks from their own flock (88%), but may also buy in pullets from other farms (12%). The pullet
price was IDR 35,000-40,000 per bird, higher than final bird price, reflecting its high value as highquality hen replacement stock. Sector 4 kampong chickens are kept until they are anywhere
29
Pro-Poor HPAI Risk Reduction
between 6-12 months old, and slaughtered for home consumption or sold when cash is needed or
for other reasons. Hens may be retained longer for egg production and raising chicks. Households
with larger flocks are generally more commercially oriented with more regular sales and production
cycles.
Given the dispersed small-scale nature of most kampong chicken production, collectors play a key
role in linking farmers to retailers. Local collectors transport live chickens and eggs to traditional
markets by bicycle, motorcycle, or public transport. Collectors also handle the larger volumes of
table eggs, kampong broilers and spent hens produced from the larger-scale commercial kampong
chicken farms. Wholesalers transport chickens or eggs from both from Bogor and from other
districts, especially Sukabumi and Cianjur, in open trucks to traditional markets in Bogor or to Jakarta
and other districts, where they are sold to retailers or taken to slaughter points.
Retailers sell live kampong chickens in traditional markets, often keeping them in bamboo/wooden
baskets. Some retailers also provide slaughtering facilities, or may send chickens to slaughter points
and then sell the carcasses. Bogor consumers choose kampong chicken because it has a delicious
taste (especially among the rich) or for ritual ceremonies. Consumers prefer to buy kampong
chickens from live-bird retailers, which may relate to the Muslim preference to ensure the ‘halal’
status of the bird they consume. Ethnic Chinese also buy live kampong chickens and have them
slaughtered at slaughter points for consumption and for the “Imlek” celebration. Kampong chicken
eggs are popular as traditional medicine.
The layer business is generally run by commercial farms classified as sector 2 and 3 as their main
household income. There are two types of layer businesses in Bogor, female layer systems that
produce eggs, and male-layer3 systems that produce meat. Female-layer farms were found in all four
study areas in Bogor, while male-layer production is only found in Parung. Male-layer DOC are a byproduct from layer DOC breeders and are produced in limited numbers. Only few farmers (those in
Parung) have access to purchasing male-layer DOC. The number of female layers raised on a farm
ranges between 1,600-40,000 birds; male layers, on the other hand, are raised on a larger scale of
between 50,000-60,000 birds per farm.
Female-layer farms produce eggs and spent layers. Small-scale female-layer farmers in Bogor are
generally independent farmers. They have no contract system for procuring inputs or selling table
eggs. These farmers are free in deciding from whom they buy feed, vitamin and vaccine, and to
whom they sell the table eggs and spent layers. They do, however, usually have regular suppliers of
pullets. Larger-scale farmers exhibit more systematic semi-coordination: they partner with feed
suppliers and egg collectors in the form of informal agreements. This coordination is important to
ensure the continuity of feed supply and to ensure a market for selling products, both eggs and
birds. All eggs produced by small-scale farms are sold to collectors, usually in arm’s-length
transactions as noted, while those from large-scale farms are sold in roughly equal shares to regular
buyers among collectors and modern markets.
3
In many breeding systems for producing egg-laying hens, male chicks are destroyed after hatching because they are less efficient for meat
production, but in Indonesia, they are kept and raised in a system similar to broilers and hence the curious appellation ‘male layer’ is used.
30
Africa/Indonesia Team Working Paper
Kenya: Our value chain analysis indicates significant heterogeneity in the types of chains present in
the poultry sector in Kenya, both by chain and region. Broilers and layers are more important in
Kiambu and Nakuru, compared to Kilifi and Vihiga. Layer and egg value chains tend to be significantly
longer and more diffuse than the value chain for broilers and indigenous chickens.
As noted in Table 8, indigenous poultry production predominates within Kenya, although broiler
production is relatively high in the Central Region to meet urban (Nairobi) demand for processed
chicken products. The demand for indigenous poultry is high in all study districts. Some consumers
prefer indigenous chicken to meat from broilers and layers because, they argue, it tastes better and
it is more nutritious. The majority of interviewed farmers keep indigenous poultry. These birds are
raised under a free-range system in which they are free to scavenge for food. In Kilifi District,
indigenous chickens are mainly found in Ganze Division, while in Vihiga, populations of indigenous
chickens dominate hybrids in both Vihiga and Sabatia Divisions. Traditional chicken production is of
major importance to the livelihoods of the more commercially-oriented farmers, but is of relatively
less importance to those who keep them for subsistence. Among farmers in the latter production
system, crop production is the major source of income.
Table 8. Poultry populations in Kenya, by province and category, 2006 (thousand birds)
Province
Rift Valley
Coast
Western
Nyanza
Central
Eastern
Layers
283.4
79.4
23.6
48.2
440.9
112.6
Broilers
1137.1
248.0
116.5
203.6
1079.2
163.9
Indigenous
5776.4
2153.5
2517.6
5944.8
1787.0
3628.8
North Eastern
Nairobi
Total
0.3
957.8
3136.5
0.2
188.1
1946.2
165.0
141.4
22114.3
Others
167.8
133.6
159.7
46.8
35.6
21.3
Total
7364.6
2614.5
2817.4
6243.3
3,342.7
3926.7
0.0
10.0
574.9
165.5
1,297.3
27,771.8
Source: Republic of Kenya (2006), cited in Okello et al. (2010).
Figure 11 presents the channels through which indigenous chickens are sold in the study districts. In
Kiambu and Nakuru Districts, approximately 90% of traditional chickens kept by non commercial
farmers were sold, with only 10% consumed by the household. On the other hand, the majority of
traditional chickens (80%) in Vihiga and Kilifi Districts are consumed by the household. Commercial
indigenous chicken farmers sold 100% of their birds, as would be expected. Indigenous chickens are
mainly sold locally to neighbors, rural brokers and in the local market. Rural brokers collect and
assemble chickens from different farmers and sell onwards to urban brokers and rural retailers.
Urban brokers transport chickens to urban centers where, in the case of Kiambu, chickens are sold in
Burma and Kariokor Markets. Indigenous chickens in the other districts are also sold in major towns
including Kilifi, Malindi, Mombasa, Nakuru, Kakamega and Kisumu. In Vihiga District, the high
demand for indigenous poultry has created a strong market for such birds from neighboring districts;
traders interviewed indicated that there was an active trade in the sale of indigenous poultry in
Vihiga by traders who transport them from Nandi District.
Commercial layer farmers buy their DOC from hatcheries either directly or through their appointed
agents. Small-scale farmers mainly buy their DOC from agents of hatcheries, while medium-to-largescale farmers buy directly from the hatcheries themselves. The use of appointed agents for DOC was
31
Pro-Poor HPAI Risk Reduction
Final consumers
25%
100%
80%
25%
50%
%
Feed stockist
100%
20%
Urban broker
5%
Other farmers
(for rearing)
75%
Rural broker
30%
Veterinary
services
85%
Market link traders
50%
15%
15%
Transporters (Minibus, bikes, motorbikes)
Retailers and hotels
20%
5%
Nandi Market
Indigenous poultry farmer
Figure 11. Value chain for indigenous chickens and volume shares handled by each channel,
Vihiga, Kenya.
more prevalent in Kilifi and Vihiga Districts which were mainly supplied by the Athi River-based
Kenchic Ltd. Farmers in Nakuru and Kiambu, on the other hand, mainly get their DOC directly from
hatcheries because these facilities were close. Producers usually sell their eggs directly to retailers or
through agents/intermediaries known as brokers. Two types of brokers are involved in the egg
business, namely rural and urban. Rural brokers comprise the village assemblers who mediate
transactions between the farmer and other market actors, usually through informal agreements.
Most of the rural brokers we interviewed pay cash on the spot and hence do not require any form of
agreement other than on price. Farmers contact the brokers (by phone or by walking to the market)
32
Africa/Indonesia Team Working Paper
when they have eggs to sell. The use of phones to contact traders was mostly common in Kikuyu
(Kiambu), Rongai (Nakuru) and Kikambala (Kilifi). These are all peri-urban areas and have traders
with mobile phones. In Kiambu and Kilifi Districts, some farmers sell their eggs directly to rural
retailers (hotels, supermarkets and restaurants), usually through prior orders. Others (especially the
larger ones) sell eggs directly to urban retailers in Nairobi and Mombasa towns usually through
advance orders and advance payments. Commercial broiler production is unique in its extent and
scale of production in each of the surveyed districts. Broiler production is less popular than the
production of layers in three of the four study districts due to narrow profit margins caused mainly
by high feed costs. Commercial production of broilers is also constrained by poor management skills,
especially among poultry farmers in Vihiga District, resulting in high chick mortality and general
losses to disease. In contrast, broiler production is more popular in Kilifi District, ostensibly because
of the high demand for poultry meat by local and urban tourist hotels in the district and in
neighboring Mombasa and Kwale Districts.
Broilers are produced by both large-scale and small-scale farmers. Large-scale poultry production
involves farmers who keep an average of 1000-2000 birds per cycle for about 50 days while smallscale producers keep around 100-600 birds per cycle. Most commercial broiler farmers follow a
feeding and vaccination program provided by the hatcheries. As in the production of layers, broiler
farms that we visited in the four study districts follow strict disease control measures including foot
baths with disinfectants at the entrance of the poultry units, regular disinfection of feeders, water
troughs and brooders, and the general hygiene of staff. Most broiler producers have poultry units
that are separated from residential buildings.
Some integrated farms such as Kenchic Ltd and KIM Poultry Farm produce broilers under contractual
arrangement with out-growers. These firms produce DOC and poultry feeds, and process the birds.
They provide all the needed inputs and make all the decisions, with the farmer providing labor,
production site, housing and management of birds. To obtain a contract with Kenchic, a farmer must
have the capacity to rear a lot of 9000-12,000 birds at any one time. Such contracts therefore target
large-scale farmers.
Nigeria: Industry operators estimate the commercial poultry population at about 24 million layers
and 40 million broilers, with indigenous poultry numbers estimated at over 100 million. Up to 80%
of DOC are produced and used in the Southwest, whereas the Southeast and Northwest of the
country have no hatcheries and so import DOC from the other regions. There are a few hatcheries in
Plateau State in the Northeast, supplying the required DOC for the zone while sending a substantial
quantity to Kano in the North-central/Northwest. Spent layers are produced in all zones as a residual
output from commercial egg production. The largest quantities of spent layers enter the intra and
inter-state trade from the Southwest moving to the Southeast in particular. Indigenous poultry are
also raised countrywide, but the largest amounts come from the northern zones for final sale in the
southern zones. Commercial eggs flow from the south to the north and from the Southwest to the
Southeast. Guinea fowl eggs flow from the north to the south when they are in season.
Four types of producers can be identified: backyard indigenous-poultry growers, backyard
commercial farmers, medium-to-large-scale commercial farmers and industrial farms corresponding
roughly to the FAO poultry sector classification for sectors 1-4. Production amongst indigenouspoultry farmers focuses mainly on chickens, but also includes guinea fowl, pigeons, and introduced
33
Pro-Poor HPAI Risk Reduction
species (ducks and turkeys) that form village poultry systems and serve for own-consumption, gifts,
and sales to meet specific cash needs. These producers allow their birds to roam freely around the
homestead, scavenging for food, which consequently may expose them to migratory wild birds
carrying the HPAI virus. Given this, and that there is practically no biosecurity measure taken by the
producers of indigenous poultry, their birds are in constant danger of contracting and spreading
HPAI as they mix with exotic chickens in cages of live-bird traders.
Backyard commercial poultry producers derive a majority of their livelihoods from poultry-related
activities, though they also engage in other types of income generation. Unlike indigenous-poultry
growers, they take more measures to maintain hygiene and biosecurity. However, they are also
quite susceptible to HPAI infection and spread, and more likely to pick up the virus through toll
milled feed, as farmers can inadvertently take the disease with them through the use of recycled
bags. This is particularly salient given the increasing importance of toll millers as input suppliers to
the poultry sector and as risk factors for the spread of HPAI. Medium-to-large-scale commercial
producers are better organized with greater care for hygiene and biosecurity. At the same time,
some of them leave their premises unfenced thus allowing indiscriminate access to the poultry pens.
The experiences of some of their colleagues whose flocks were decimated in the 2006 and 2007
outbreaks of HPAI have forced them to pay closer attention to biosecurity. Industrial farms have the
highest levels of biosecurity and given that, in Nigeria, their integration is vertical rather than
horizontal, the risk of spread of HPAI remains minimal. Since it is difficult to get information from
industrial farms, they were left out of this study.
In addition to the risk of HPAI spread from toll millers, a potentially important risk factor for the
spread of HPAI is live-bird traders, especially collectors and distributors who go from one farm to
another to gather mature broilers and spent layers and later distribute them in retail markets.
Informant interviews revealed that at the peak of the HPAI outbreak in 2006-07, many collectors
deliberately passed sick birds purchased at rock-bottom prices to retailers, and thus may have
spread the disease. Furthermore, they mixed different species of poultry in the same cages, further
encouraging the spread of HPAI. Indeed, many of the most serious cases of HPAI infection and
spread occurred between producer farms and live-bird traders. Connected with traders is the role of
transporters. As with traders, transporters were involved in the spreading of the virus by carrying
different species of poultry in the same cages and carrying both people and birds together.
Transporters had limited incentives to engage in proper biosecurity measures because they were
paid for their services even when birds died in transit. Given the crucial intermediary role of traders
and transporters, an important area for public policy will be the development of mechanisms that
better align the economic incentives of traders and transporters in the context of improved
biosecurity in the poultry trade. Indeed, collectors and traders were quite active in trying to assist in
the recovery of the sector during and after the HPAI outbreak, but were not a focus of policymakers
in terms of compensation despite the losses they incurred.
Value chains for poultry products have some distinct regional characteristics that potentially
influence disease spread. In the Southeast of the country, live-bird markets almost exclusively sell
birds directly to consumers without further processing, reflecting both local consumption
preferences and limited venues available for processing. In the rest of the country, processors and
other food service entities mediate trade between live-bird markets and consumers. Elsewhere in
commercial chains for broilers, we find greater influences of collectors in the Northwest and
34
Africa/Indonesia Team Working Paper
Southeast, suggesting greater opportunities for potential spread through intermediaries, while in
the Southwest, we find much greater reliance on external collectors for indigenous poultry products.
Furthermore, there is an emerging trade in poultry manure for vegetable production in city gardens.
Given that large quantities of the virus are shed in the faeces of infected poultry, this practice
potentially spreads the virus from farm to farm, particularly when the same vehicles and labourers
shuttle between farms without precautionary measures to disinfect the vehicles, working clothes,
etc. Moreover, as this trade takes place outside normal poultry sector channels, incentives for more
biosecure practices are much lower. The study also found that suppliers of grains to feed mills of
large poultry farms in the south sourced their supplies from the northern parts of the country which
has comparative advantage for grain production. As part of the load for their return trips, some of
these suppliers collected poultry manure from such farms and transported them sometimes as far
as 1,000 km to the north and recycled the same bags for the next grain trip to the south. Clearly, the
danger posed by the transportation of poultry manure from an infected farm across the country is
high.
4.2 Governance and coordination mechanisms
Governance in the different poultry value chains is typically characterized by market forms of
coordination (Table 7). In general, sales are made through amorphous, ad hoc relationships
governed by the price mechanism. This is particularly the case in all of the traditional poultry sectors
across the five study countries. There are exceptions among the other chains. For instance,
contractual arrangements are common among broiler producers in Kenya and Indonesia, and to a
lesser extent in Ghana and Nigeria. In some instances, market transactions are mediated through
long-term relationships that are brokered through tribal or ethnic ties.
Associations are commonplace in the poultry sector in each of the study countries, but their
effectiveness in organizing members and in the face of HPAI was relatively limited. In most cases,
associations play primarily a social function, with some assistance in terms of marketing and
information also provided. However, the low levels of trust that govern transactions across and
between nodes of the chain tend to limit the scope of effective functions provided by such
associations. As noted below, Nigeria is an exception in this case, with associations that are both
active in promoting member interests and which played important roles during the HPAI outbreak.
Specific characteristics of governance and coordination mechanisms by country are given below:
Ethiopia: There are no specific governance structures established for domestic production and
marketing. Interactions are largely ad hoc, with limited to no coordination between different parties
in the value chain. Furthermore, no public institutions are involved in import, export, production,
marketing and processing, or in biosecurity, particularly for small-scale producers. There are some
associations established by poultry producers and marketing agents, however, their role is mainly as
a professional association and is not concerned with matters of public policy. Moreover, influential
players such as large commercial farmers are not part of the association, which may be due to the
various vested interests that often conflict with market power in the market. This further limits the
ability of associations to be leveraged as an actor in the value chain to manage HPAI risk.
35
Pro-Poor HPAI Risk Reduction
Ghana: Governance relationships are largely a mix of ad hoc and relational forms of transaction,
though some informal forms of contracting exist, particularly in Kumasi and Dormaa/Sunyani layer
chains and often at specific times of the year. While relationships between different sector actors
may be long-standing, there is limited coordination in terms of contract farming or vertical
coordination, although there are a few examples of such arrangements, particularly within the layer
sector among commercialized farms in Kumasi. Nonetheless, linkages between different nodes
within the value chain are generally arms-length and devoid of coordination mechanisms related to
quality, specifications, or other formal trading mechanisms.
At the same time, we do observe greater coordination within value chain nodes. For example,
poultry farmers have organized themselves into producer associations which operate in various
production centres providing members with production information and pricing guidelines. The
producers have an umbrella body known as the Ghana National Association of Poultry Farmers.
Similarly, traders–particularly wholesalers in table eggs–have organized associations in Accra,
Kumasi, and Sunyani.
In Kumasi, large hatchery farms such as Akate and Darko Farms have increasingly integrated
themselves into more stages of poultry and feed production and processing as a way of increasing
market share. Such large players typically engage in long-term relationships with specific buyers,
including the provision of credit. Associations are important among producers in Kumasi, with
almost all producers interviewed being members of the Ashanti Region Poultry Farmers Association.
At the same time, some poultry farmers think the association is not performing its function as
required. For example, after a collective decision on product pricing, some farmers go their own way
to set their own prices and the association does not react. There are also reports of unfair trading
practices conducted by the large farms. These farms try to protect their production by colluding to
reduce prices below the agreed price. Likewise, transporters also have an association in the form of
the Cargo Transporters cooperative, located at Fanti-Newtown, Kumasi. The association has a total
of about 30 members and helps its members in times of need.
Indonesia: Governance relationships in the broiler sector involve a mix of contract farms and
independent farms. Contract farming relationships formally link farms with a company that provides
DOC, feed, and other inputs to farmers in return for guaranteed purchases of contracted birds.
Coordination and biosecurity in such chains is reasonably tight, with company standards strictly
governing transactions and prices. Independent farms involve much looser coordination, although
some coordination exists with feed suppliers. In the layer chain, spent female layers are sold almost
entirely through independent farmers, while male layers are integrated in a contract farm
relationship akin to broilers. Nonetheless, the layer business is supported by feed industry,
pharmaceutical and vaccine industry, and other actors related to poultry distribution (collectors,
slaughter points, restaurants, etc.). In both chains, a large proportion of products are sold outside of
Bogor, including to nearby markets in Jakarta.
By contrast, the traditional kampong sector is largely uncoordinated. In general, the production of
kampong chicken is not commercially oriented, with farmers selling their chickens only when they
need to pay for lumpy expenses such as tuition fees for their children. Generally they sell 2-5 birds
per six months. Kampong chickens also contribute to food security in the rural community and are
used in social and cultural events, such as wedding parties.
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Africa/Indonesia Team Working Paper
Kenya: Some coordination exists among commercialized layer, egg, and broiler producers. As noted
previously, layer and egg value chains tend to be significantly longer and more diffuse than those for
other products. For broilers, shorter chains reflect greater integration among actors through
contractual (formal and informal) arrangements, while for indigenous poultry, most trade involves
direct sales between farmers and buyers (who include other farmers and retailers). Outside of
formalized, vertically integrated arrangements, governance relationships are largely ad hoc,
although there are some qualifications to this. In Kiambu, contract broiler production involving strict
biosecurity is more commonplace, while in Nakuru, contracts for broilers are more informal. There is
also more ‘structure’ in the form of relational forms of transactions as products move into urban
areas. In rural areas, by contrast, trade patterns are much more diffuse.
Nigeria: Governance relationships in the various poultry value chains typically involve arms-length
or relationship-based interactions among value chain actors. Governance relationships tend to be
codified through the actions of traders and collectors, which mediate exchange between producers
and retailers. At the live-bird trade level, informant interviews revealed limited competition among
traders and collectors, with a powerful small group of collectors/distributors cornering large
portions of the business. Traders further play an important role in the provision of credit to retailers,
which locks them into a relationship and further limits the bargaining power of retailers. Trust
among chain actors is relatively low. At the same time and in conjunction with their main trade
association, traders have also played an important role in the campaign to get consumers back to
eating chicken and eggs during the HPAI outbreak in 2006-07.
Formalized standards in the sector appear to be relatively ad hoc, with limited coordination among
chain actors to provide any consistency in quality, food safety, or disease status of poultry and
poultry products. End consumers have little input to quality- or safety-based attributes of either live
birds or poultry meat, while willingness-to-pay for improved quality is likely to be quite low.
In the indigenous poultry chain, powerful local chiefs or their appointed market supervisors, such as
village heads or local government officers, often play an important brokering and intermediary role.
For instance, they can set prices and decide who can operate in a market within their jurisdiction.
Moreover, they often refuse access to outside traders or charge them a fee to trade in the market.
The Nigerian government and industry trade associations play an important role in the sector,
particularly among more commercialized parties, setting the rules and closely monitoring the
industry to see that the rules are obeyed. The government controls the importation of grandparent
and parent stock. It sets rules for hatchery operators, bans importation of various poultry products
and insists on hygiene and biosecurity, sanctioning those who are not in compliance, especially
those with less political influence.
Associations such as the Poultry Association of Nigeria (PAN) and two of it subsets, the Live-bird
Traders Association of Nigeria and the Egg Traders Association of Nigeria, work to enhance the
welfare and success of their members’ businesses through lobbying and information dissemination
activities. PAN shares information that will help its members to make informed decisions regarding
prices of inputs, where to find good quality of inputs and profitable outlets for their products. PAN
was actively involved in the HPAI containment campaign. It organizes seminars and workshops to
keep members abreast of happenings in the poultry industry. Some members are even sponsored to
participate in international conferences.
37
Pro-Poor HPAI Risk Reduction
4.3 Impacts and response mechanisms to HPAI
The outbreak of HPAI that began in Asia in the early 2000s affected all five study countries. Three of
countries experienced outbreaks of the disease, causing physical and economic losses in the poultry
sector and in some cases, human casualties. The other two countries did not experience HPAI, but
were nonetheless affected by false alarms which set off consumer scares. Across the countries, some
value chain actors took actions to minimize the risk of HPAI to their businesses and livelihoods, but
these were largely related to strengthening their awareness and existing biosecurity measures, in
many cases supported by ongoing public control efforts. In Indonesia and Nigeria, there were
anecdotal reports of the industrial sector (FAO sector 1 and 2 farms) incurring significant losses early
on, but very quickly ramping up their internal biosecurity and using vaccination to bring the disease
and its risk successfully under control. Otherwise, the smaller commercial broiler and layer farms
(FAO sector 3) have been the most exposed and vulnerable to—and borne the brunt of—the HPAI
outbreaks and consumer scares. They tend to practice poor or lax biosecurity, can lose large
numbers of birds at a time, can incur large financial losses if not able to market their products on
time (without benefit of compensation), and rely on poultry as their primary livelihood. Backyard
poultry keepers (FAO sector 4) were typically less affected given the smaller—though nonetheless
strategic—role poultry play in their livelihoods; their production systems are already adapted to the
constant threat faced from Newcastle disease and other poultry diseases that regularly run through
village flocks.
Beyond the tightening of biosecurity in the industrial sector, little evidence was found of actions
taken spontaneously within the value chain to respond to HPAI, or of associated changes in its
structure, relationships, or practices. Exceptions included the role of trade associations in Nigeria
and Ghana in assisting public actions to raise awareness among consumers and association
members. Otherwise, any significant changes or innovations were typically prompted by the public
sector, such as the banning of live poultry within Jakarta or the improved live-bird markets piloted in
Nigeria, beyond efforts to raise awareness and promote better biosecurity through training. Overall,
then, poultry value chains in the study countries largely reacted to HPAI as a transitory threat that
did not require major changes in the way they do their business. Most changes that did occur were
associated with public sector control measures, which were either considered temporary emergency
actions or are unlikely to be sustained.
The specific impacts of HPAI and responses to it in each study country are briefly described, and are
summarized in Table 9.
Indonesia: Since its introduction in 2003, HPAI has been endemic in Indonesia. The impacts of HPAI
in the Bogor study area varied notably by type of value chain. Repeated market disruptions due to
consumer scares that affected the whole sector proved short-lived; consumer prices fell by around
20% during one major consumer scare, but prices quickly recovered within one month. Commercial
producers of layers and poultry were greatly impacted by the outbreaks both due to direct losses of
poultry to the disease and culling, as well as reduced business activity, with layer numbers initially
falling by two-thirds and growth of the broiler flock stalling. However, with the change in regulations
in Jakarta banning live poultry in 2007, Jakarta’s demand was shifted to nearby regions such as
Bogor, and by 2008 commercial populations of both broilers and layers there exceeded pre-HPAI
numbers. HPAI contributed to higher mortality rates in sector 3 for both contract and independent
38
Africa/Indonesia Team Working Paper
Table 9. Summary of impacts and responses to highly pathogenic avian influenza (HPAI) in study countries
Indonesia
Impacts of HPAI (or HPAI scares)
Faced outbreak?
Yes
Livelihood
Highest among sector 3;
impacts
relatively low in sector 4
Market impacts
Country
Ghana
Nigeria
Yes
Highest among backyard
commercial producers
Kenya
Ethiopia
Yes
Wide-ranging, particularly in
commercial sector and
among retailers/traders
Decline of prices by 20-30%;
sales volumes fell 25-80%
depending on sector. Sales
volumes recovered slower
Strong downstream impacts
on retailers, traders, and
service employees
No
Highest among
commercial broiler
producers
20-90% decline in
consumption, 50% decline
in prices.
No
Primarily among larger
commercial farms
Between 50-80% of labor
in commercial sector idled
Idling of labor working at
commercial facilities; some
bankruptcies
Short-lived due to endemic
nature of HPAI. Initial 20%
price decline during first
outbreak; prices recovered
Higher costs associated with
biosecurity and lost
production (sectors 1-3);
higher costs to government
in mobilizing control
Prices declined 35-55% in
short-run, but recovered. Sales
volumes still below pre-HPAI
levels
Negative impacts on
hatcheries, feed providers.
Idled workers in ancillary
service sectors. Higher
biosecurity costs
Limited
Uneven, stronger role in some
chains (eggs, live-bird traders)
Strong public sector response,
with compensation provided
to producers; awareness
campaigns launched in
collaboration with associations
Limited
Limited
Limited
Movement bans,
culling/compensation,
public awareness and
education campaigns, new
biosecurity regulations
Movement bans imposed,
regulations instituted to
prevent backyard
slaughter
Contingency planning
commenced by government
Risk factors for HPAI
Market practices
Mixing of birds by collectors
Mixing of birds by collectors
Free-range system of
backyard producers, mixing
of birds by collectors
Mixing of birds by
collectors, illegal transport
of live birds
Mixing of birds by collectors
Other risk factors
Toll-milled feed
Impacts on
services/other
sectors
Governance
Role of
associations
Response
mechanisms
taken at value
chain level for
HPAI control
Uneven public sector
response, with
compensation often
delayed and changes in
vaccination policies.
Movement controls banning
live-bird sales in Jakarta
Awareness of biosecurity
practices more limited
among sectors 3 and 4
Decline in demand of 2530%, prices 50-60% over 3-6
month period
Toll-milled feed
39
Pro-Poor HPAI Risk Reduction
farmers, but more so among independent farmers. Feeding costs also rose, as feed conversion rates
increased accordingly.
Approximately 5% of kampong farms—mainly commercialized, sector 3 farms—were estimated to
have experienced HPAI outbreaks, and many went out of business. Sector 4 backyard farms were not
as impacted due to their smaller flock sizes, although mortality rates of poultry also rose. New
regulations banning backyard poultry production among households without land could potentially
impact certain backyard farmers, although it is not clear how well such regulations can or will be
enforced. Traders incurred temporary financial losses, but were generally able to absorb the losses
and adapt to the situation.
Two competing narratives with respect to HPAI control have characterized response within the value
chains: the commercial narrative with actors that had the incentive, capacity and institutionalized
coordination mechanisms to adopt improved biosecurity on their own; and the informal narrative
involving smaller-scale commercial or informal actors with little incentive, if any, to invest in
mitigating HPAI risk. These narratives are relatively mutually exclusive, although the small-scale layer
chain has a combination of coordination upstream between breeders and farmers and more
amorphous transactions downstream by traders and retailers. Risk of HPAI served to strengthen
biosecurity measures required for commercial farms participating in the nucleus-plasma system, but
otherwise did not lead to new innovations in terms of institutional arrangements. Similarly, limited
coordinating mechanisms, either through trade associations or other forms of social capital, a heavy
reliance on informal, market-based transactions, and limited financial return from improved
biosecurity have restricted the scope for response in independent commercial and backyard farms
and associated trade channels; no evidence was found of any significant subsequent changes in the
structure or conduct of these value chains. Weaker biosecurity knowledge and practices have
persisted among these actors, creating a variety of risk hotspots that potentially compromise the
control of HPAI. For example, over 50% of live-bird retailers reported that they simply throw away
the dead birds, without any treatment.
Nigeria: The Government of Nigeria reported approximately 300 HPAI outbreaks involving 3037
farms registered with losses for compensation; an estimated 1.3 million birds were lost or were
destroyed, representing 0.8-0.9% of the national flock. Data to determine a definitive breakdown of
the impacts by sector are not available, but based on the partial data available and anecdotal
reports, the incidence of outbreaks in commercial farms (FAO sectors 2 and 3) was much higher
than in backyard free-range flocks (FAO sector 4). Farmers and companies were at least partly
compensated for poultry culled from infected farms, but not for losses due to mortality from the
disease itself. In addition to suffering the most direct mortality, commercial farms also bore the
brunt of the associated consumer scare after public awareness messages initially created alarm
about contact with poultry. The period of the most severe shock was between February and May
2006 when prices fell dramatically by up to 40% and remained at that level. Live chickens were not
easily sold, or were often sold below the cost of production. Stockpiles of eggs had to be destroyed
when no buyers were found. In some case, secondary (collection) and tertiary (consuming) markets
were clogged with unsold products.
As a result, not only producers, but also traders, feed millers, hatchery operators, processors and
transporters felt the impact of the HPAI outbreak, depending on their level of involvement and
40
Africa/Indonesia Team Working Paper
dependence on poultry for their income and livelihood. The extent of losses has not been
comprehensively quantified, but there were anecdotal reports of value chain actors whose
livelihood was severely reduced to the point that they sold their other investments and properties
to feed their families or pay school fees. Others who could not pay bank loans had their collaterals
sold or farms foreclosed. There were reports of people who suffered hypertension or stroke as a
result.
The government responded immediately to the outbreaks, adopting a policy of culling and
compensation at outbreak sites while promoting biosecurity and biosafety through public
awareness campaigns and, later on, through training targeting particular value chain actor groups. It
decided to not permit vaccination. Within the value chain, the industrial sector took action to
protect itself by increasing its biosecurity and reportedly practiced at least some vaccination despite
the government policy. Producers in FAO sectors 3 and 4 generally participated in control measures
when appropriate incentives were provided. Reporting of outbreaks, for example, appears to have
improved after compensation rates were increased closer to market values. In major markets,
traders adopted better biosecurity when provided with disinfectants and spraying materials
including overalls, gloves and face masks.
Beyond these responses among individual value chain actors, existing producer and trader
associations in Nigeria also played a role. The associations described in the preceding section, PAN
and its subsidiaries, the Live-bird Traders Association of Nigeria and the Egg Traders Association of
Nigeria, Poultry Association of Nigeria, worked closely with the government to mount a quick
campaign to counter the initial negative public awareness messages that had depressed consumer
demand by reassuring the public that poultry and eggs were safe for consumption especially when
properly cooked. Within six months, the demand for poultry meat and eggs had recovered
substantially. These associations as well as local farmer and trader groups also facilitated access of
their members to biosecurity information and training. More recently, experiments with improved
live-bird market infrastructure involving market associations have suggested that higher profits may
motivate these groups to invest in and sustain such improvements.
Ghana: Three outbreaks of HPAI occurred in Ghana in 2007, leading to the loss of 40,000 birds and a
consumer scare which sharply depressed demand and prices. Market impacts were much more
widespread, both due to restrictions of movement of poultry and poultry products during the
outbreaks, and due to consumer scares incited by the media. In live-bird markets, prices fell around
20% in Kumasi to around 30% in Dormaa-Ahenkro/Sunyani. Sales volumes fell by significantly more,
with producers in Kumasi experiencing a 50% reduction in sales and collectors a reduction of 60–
70%. In Dormaa-Ahenkro/Sunyani, retailers reported a decline in live-bird sales of over 30%. The egg
market was similarly affected.
The HPAI outbreak had some negative effects on livelihoods of most actors. Commercial poultry
farmers in the Dormma-Ahenkro/Sunyani and Accra/Tema/Ashiaman study areas experienced the
temporary suspension of their poultry business, forcing them to temporarily idle some of their farm
workers and reduce household expenditure. Retailers of live birds in the Dormaa-Ahenkro/Sunyani,
Kumasi, and Accra/Tema/Ashiaman study areas temporarily ceased operations and shifted to other
businesses in order to survive the effects of the outbreak, with those in Kumasi also reportedly
having to draw on their savings and assistance from relations. Poultry traders in the Dormaa41
Pro-Poor HPAI Risk Reduction
Ahenkro/Sunyani study area sold some assets and reduced household expenditures on food,
reduced their attendance in social events (and therefore reduced social expenditures), delayed
payments of school fees for their children, and relied on remittances in order to survive the effects
of the HPAI outbreak. Retailers of eggs and dressed (frozen) birds in the Tamale study area were
compensated with increased sales incomes from frozen fish, demand for which increased during the
outbreak. Similarly, processors (e.g. khebab sellers) and poultry shop operators coped with the
effects of the outbreak by selling more roasted beef, mutton and frozen fish. Various value chain
actors recalled the business stoppage or slump lasting 3 to 4 months.
With the ongoing HPAI outbreak nearby in Nigeria since early 2006, the VSD had been on alert and
responded quickly with measures similar to those in Nigeria, including raising awareness and
encouraging safety and biosecurity measures in the value chain. Certain biosecurity practices were
established and enforced during the outbreak period, but these were not accompanied by other
incentives for the farms. According to commercial poultry producers interviewed, the measures
were supposed to be part of normal operational practices which were not being followed by the
farms. Feed millers, for example, started the practice of disinfection at mills. Though the various
value chain actors recognized the advantages of the recommended biosecurity measures, their
added cost was not always perceived as generating sufficient tangible benefits. No major changes in
production or trade practices appear to have been prompted by the HPAI outbreaks. Although local
farmer and trader associations are found in production zones, towns and cities, no activity was
reported undertaken by the associations in response to the outbreaks or the VSD control efforts.
Kenya: The effects of an HPAI scare in 2007 were short-lived, but had sharp impacts on the
commercial sector in particular. In terms of impact on livelihoods, the study found that the most
affected farmers were those that reared broilers since consumer fears were mostly related to the
consumption of poultry meat. Prices for broilers and spent layers fell by up to half, and production
and employment in these sectors experienced a temporary decline. The indigenous sector was
largely unaffected by the scare.
Ethiopia: A suspected outbreak of HPAI occurred on a farm at Gubre, approximately 150 km
southwest of Addis Ababa, and was reported on 25 February 2006, but tests failed to confirm the
initial suspicion of HPAI. Media attention created a consumer scare which was particularly severe in
urban areas, where poultry demand decreased by 25-30%. As a result, poultry prices fell by 50-60%
in some areas, especially in the southern parts of the country. The demand for broilers was almost
non-existent in the following months due to the fear of HPAI, though egg sales did not decline as
much. Poultry at the end of their production cycle could not be sold, so storage facilities for frozen
birds were soon full. Demand for chicken and its price gradually recovered after six months.
The greatest impacts of this ‘false alarm’ were felt by medium-to-large-scale commercial farms. One
farm interviewed at Debre Zeit revealed it took the preventive measure of culling about 50,000 birds
when the suspected outbreak was announced. This, combined with the subsequent reduction in
consumer demand, imposed heavy financial losses of about 2.5 million Ethiopian birr (ETB)4, or close
to USD 200,000, on this farm. In addition to the direct income lost by poultry farms, a number of
4
The Ethiopian birr (ETB) was exchanging at approximately 12 ETB = 1 USD in 2006.
42
Africa/Indonesia Team Working Paper
workers were laid off work, including those in the service sector. One commercial farm that had
operated at a scale of 15,000-20,000 chickens with about 20 employees before the scare went out of
business and its workers became unemployed. One of the FGD reported that some households lost
income valued at ETB 800-1000 immediately. Small-scale commercial farms were particularly
affected by the depressed prices and revenue losses. The overall impact on livelihoods of backyard
poultry keepers, however, was considered muted.
While the government was engaged actively in contingency planning in response to the outbreak, no
incentives or compensation were given to producers who culled all of their chickens during the false
alarm. Moreover, almost no efforts were made by private associations to influence government
policy or suggest any measures to respond to HPAI. No further changes in the sector were reported.
43
Pro-Poor HPAI Risk Reduction
5. Main themes emerging from the case studies
In comparing the key messages and lessons from the study countries, the following four main
themes emerge:
i.
Uneven coordination and governance mechanisms exist in selected poultry value chains, with
limited evidence of chain “champions” to drive and coordinate chains…
ii.
Livelihoods and economic impacts of HPAI were often severe throughout the chain, though
alternative activities mitigated impacts …
iii.
Government response measures have had variable success, and focused overwhelmingly on
upstream actors, not on the chain …
iv.
Regional contexts relating to strong consumer sovereignty in “buyer-driven” chains matter,
as do their interactions …
These emerging themes are discussed in turn.
Uneven coordination and governance mechanisms exist in selected poultry value chains, with limited
evidence of chain “champions” to drive and coordinate chains…
An important story that emerges from all of the case studies is the uneven level of coordination
within the poultry sector, which complicates HPAI control efforts. Commercialized chains for layers
and broilers tend to involve shorter chains with fewer actors involved in more long-term
arrangements, and formalized coordination mechanisms such as contract farming or vertical
coordination are uncommon. Exceptions to this exist in the commercial broiler sectors of Kenya and
Indonesia, which also tend to be the most biosecure among the studied value chains and are
overwhelmingly dominated by larger commercial farms. In the former, the largest breeder, Kenchic,
specifies production practices to be followed by contracted outgrowers, and provides DOC that are
owned by the breeder until their sale as dressed carcasses. Kenchic has introduced safety protocols
that assure the final buyer of product safety from farm to fork. In addition, a number of high-end
buyers of broilers, such as tourist hotels and the aviation industry, have adopted international food
safety quality schemes such as HACCP and require their suppliers (including Kenchic) to comply.
Some international hotels and major supermarkets in Kenya have a system of monitoring production
practices, although this system is weak compared to that used in fresh vegetable production for
export to the more demanding European supermarkets. This chain is one of the few examples of
what Kaplinsky and Morris (2001) describe as a “buyer-driven” chain, in which the standards for food
safety, product quality, etc. are driven by end-buyers (often supermarkets) and transmitted and
mandated for upstream buyers that wish to participate in it. From a biosecurity standpoint, while
safety protocols are implemented and driven downstream from the hatchery, these are in direct
response to actors at retail championing the process.
In Indonesia, two-thirds of broiler farms are engaged in an integrated contractual collaboration (PIR)
between broiler farmers and a company; this also occurs at a smaller scale for male-layer farms. As
in the Kenyan case, biosecurity is high in this chain, although evidence of specific chain champions
from the retail end was not identified.
44
Africa/Indonesia Team Working Paper
In other commercial settings in West Africa (Ghana and Nigeria), the production of layers and
broilers is less coordinated, though some informal contracts and relational mechanisms of
transactions do exist. Biosecurity in these chains is relatively high, though mitigated somewhat by
the presence of lower amounts of coordination among distributors and collectors. In Ghana and
Nigeria, collectors of birds from commercial farms are known to sometimes mix the same species of
birds from different farms, while biosecure storage at the retail level is generally unknown.
Incursions of disease in the distribution side of the chain could have important ramifications on the
commercial sector in spite of heightened biosecurity efforts from their side.
By contrast, in the traditional sector, there is a general lack of any coordination at all in the studied
value chains in each of the five countries. While there are instances of relation- or trust-based
transactions with preferred customers, in general the price mechanism governs trade between
different nodes of the chain. Incentives for biosecurity are minimal, given the part-time nature of
production at the producer end and low margins among downstream actors. Furthermore, due to
the pervasive nature of indigenous poultry production among rural households, there is an
inadequacy of actors in the chain to coordinate more biosecure production. Various associations
exist among producers and other nodes in the chain in all of the study countries, but their power to
adequately organize actors and coordinate between nodes is extremely limited. Most associations
serve more of a professional or social function rather than a strong coordinating one, and their
influence is overwhelmingly concentrated among medium- and large-scale producers, and not smallscale actors. Associations in Nigeria are somewhat of an exception in this manner, as the main
association, PAN (along with a sub-body representing live-bird traders), was quite active alongside
government in media efforts to combat HPAI, including promotional events to prove the safety of
poultry products, and the training of members in more biosecure production and handling practices.
Their reach does not generally extend to the traditional sector, but their ability to mobilize the
commercialized poultry sector is noteworthy. Nonetheless, improved biosecurity in the traditional
sector will necessitate some sort of “chain champion,” with key roles to be played by government
and community-based organizations to facilitate and broker linkages across the chain.
An often overlooked partner in promoting better biosecurity is the consumer, by linking latent
concerns about food safety and public health to improved production practices and regulation. In
Kilifi District in Kenya, regulations governing poultry chains are much stricter and better enforced by
virtue of the presence of a large tourist industry that demands higher quality food products. In most
of the study countries, there are strong local preferences for traditional poultry; in Indonesia,
kampong chicken receives a price premium that is nearly double that of the price of broilers. Finding
champions that could organize such chains in a targeted, bottom-up manner could provide the
incentives required throughout traditional chains to improve biosecurity and value-add production.
Certification schemes such as those described by Ifft et al. (2009, 2010) offer promising options.
Furthermore, such approaches are likely to be more sustainable over time than top-down mandates,
particularly in chains as amorphous and constantly evolving as those in the informal poultry sector.
Results from Nigeria, however, suggest that because poultry products are presented in so many
different forms, no single group of consumers has been able to force producers or traders to modify
their processes to suit final consumer demands. Moreover, the seasonality of demand further
encourages producers and traders to pay less attention to specific consumer signals, with such
actors concerned more about volume than quality.
45
Pro-Poor HPAI Risk Reduction
In addition to uneven governance and coordination mechanisms, market power and relationships
varied in each of the study countries, influencing the profit margins of actors at various nodes with
implications for their capacity (or desire) to invest in or comply with disease mitigation and
containment measures. Where producers receive lower prices from collectors, their ability to incur
higher costs from increased biosecurity is much more limited, while the squeezing of retailer margins
limits their own ability to profitably manage the poultry trade more safely. Associations can and
sometimes do assist producers in negotiating for better prices, but their ability to consistently do
this has been mixed.
An important finding in these cases was the potential role that differential market power plays in
many of these chains, particularly in the traditional sector. Trust among chain actors is relatively low.
While atomistic in nature, traditional poultry value chains from producers to retail markets often
exhibit concentration at the distribution side of the chain. Intermediaries in the chain, such as
collectors, maintain both monopsony power (with producers) and monopoly power (with retailers),
by virtue of facing limited competition as the conduit between producers and markets. Informant
interviews revealed that this was most pronounced in Nigeria, where a powerful small group of
collectors/distributors controls large portions of the business. This group of bulk traders further
plays an important role in the provision of credit to retailers that lock them into a relationship and
further limit the bargaining power of beneficiary retailers.
Livelihoods and economic impacts of HPAI were often severe throughout the chain, though
alternative activities mitigated impacts somewhat …
In general, price and sales declines associated with HPAI were relatively sharp in all study cases, with
the exception of Indonesia. In Kenya, following a HPAI outbreak scare, prices fell by up to 50%, with
sales volumes by hotels falling from 60-95%. In Nigeria, prices fell around 40%, while in Ghana, livebird prices fell between 20-30% and sales volumes fell between 50-70%. In Indonesia, prices fell 20%
after the initial outbreak was announced in 2004, but as media attention died down, negative
consumer perceptions faded and demand began to pick up. Demand dipped again following the first
human deaths in 2005. The fairly quick recovery is due to poultry products being the cheapest
animal-source food for consumers in Bogor and its surrounding areas. Impacts in egg markets were
mixed: in Kenya and Nigeria, consumer perceptions were often such that eggs were viewed as less
risky, with demand and prices less affected. In Ghana, fluctuations in egg markets took a regional
dimension: in Kumasi, egg prices did not change much, while in the Dormaa-Ahenkro/Sunyani study
area, prices fell by around 20%. At the same time, sales volumes for eggs plummeted by 50% in
Kumasi and from 25-80% in Dormaa depending on the actor involved. Interregional trade restrictions
and movement permit requirements made the trade in eggs particularly difficult in Ghana.
The impacts of HPAI cut across a wide range of livelihood considerations. At the producer level,
reported losses from outbreaks—and scares, as in Kenya and Ethiopia—were proportionally greater
among commercial actors that derive the majority of their livelihoods from poultry. Backyard
producers, insofar as they were impacted by HPAI, were mainly affected by their inability to leverage
poultry (whether through direct loss from HPAI or indirect loss by market dislocation) as a means of
“quick cash” for the payment of school fees, social events, and other petty cash needs. Direct, severe
losses in the backyard sector were relatively limited. For instance, the Indonesia case study reported
that only about 5% of backyard producers were severely impacted by HPAI. In Nigeria, though rural
46
Africa/Indonesia Team Working Paper
(sector 4) poultry farmers made up about 58% of farms where culling took place, only 4.6% of the
USD 5.4 million paid in compensation went to that sector due to their relatively much smaller flock
sizes compared to sectors 2 and 3. FGD results further revealed that only about 15 to 20% of
incomes of backyard producers are derived from poultry, with farmers able to diversify into other
farm and non-farm activities in the wake of an outbreak.
Greater losses were found among small- and medium-scale commercial farms (sector 3 farms, based
on the FAO classification). These farms lacked the biosecurity measures of larger-scale commercial
farms, but rely heavily on poultry as a source of livelihood. An informant interview from Indonesia
revealed losses at the sector 3 level of around 40% of income. Unlike backyard farmers, sector 3
farmers are much more constrained in their ability to diversify into alternative activities, making
coping with HPAI much more challenging. The commercial sector was impacted to varying degrees –
in Ethiopia, 10% of the commercial poultry farm sector went out of business because of the HPAI
scare there, while in Nigeria, the commercial poultry sector has not yet recovered to pre-HPAI levels.
Further downstream, traders and retailers were especially hard-hit by HPAI outbreaks and scares in
study countries due to markedly lowered sales volumes and margins. The ability of traders, retailers,
and other downstream actors to cope with disease varied by context, but in all cases, there was
evidence of drawing down from savings, borrowing from relatives, reducing expenditures on social
activities and school fees, and attempting to engage in alternative activities, though the presence of
such alternatives was often limited. It was noted, however, that retailers and processors were able
to compensate for reduced sales of poultry products with increased revenue from sales of frozen
fish and other meat products.
Price per chicken (ETB)
It is important to note that in terms of the severity of impacts, seasonality and the timing of HPAI
outbreaks also matter both in terms of the transmission of disease and its impacts on the value
chain itself. Figure 12 illustrates the seasonality of prices in Ethiopia and reveals sharp peaks in prices
that correspond to festive periods such as Eid, Christmas, and Easter. In Ghana, traded volumes of
birds and eggs during holidays are often 6-10 times greater than normal volumes.
100
90
80
70
60
50
40
30
20
10
0
Month
Figure 12. Seasonality of live chicken prices in Ethiopia, 2008-09
(Source: Ayele and Rich 2010)
47
Pro-Poor HPAI Risk Reduction
In the case of the 2007 outbreak in Ghana, the fact that it occurred after Easter when prices and
volumes generally start to decline likely mitigated somewhat its overall economic impact. In
Ethiopia, the HPAI scare occurred in February prior to the Easter peak in prices, suggesting that the
false alarm likely dampened seasonal price rises and affected chain actors more over time.
As expected, risks are highest in the backyard sector, though this is mediated by the nature of
interaction with intermediaries such as collectors …
Results from all of the cases confirm that biosecurity efforts are lowest in the traditional sector.
Production systems in the traditional sector are predominately free-range in nature with only
sporadic sales of very small numbers from any individual farm; collectors and other traders freely
mix birds from different farms and sometimes knowingly sell diseased birds to markets. Next to
traditional sector 4 farms, sector 3 farms are further at risk from the practice of toll milling. Toll
millers are small informal companies with milling capacity of 1-2 tons per hour that stock raw feed
materials and provide customized formulation and milling services for farmers on-site. In Nigeria, toll
millers have taken away about 60% of the commercial feed market from the major (branded) feed
millers over the past several years, while in Ethiopia, toll millers were estimated to handle about
10% of the market for feed. Toll milled feed is problematic from a disease risk standpoint, as farmers
can inadvertently take the disease back to their farms from the mills through the use of recycled
bags originating from an infected farm.
At the same time and despite higher biosecurity on-farm, commercial chains for poultry can still
serve as conduits for disease. In Ghana, even though biosecurity on commercial farms is high,
collectors will still mix birds from different farms purchased from the commercial sector. In the
absence of explicit coordination mechanisms throughout the commercial chain, strong biosecurity
efforts conducted at the farm level can still be undone by more lax efforts of actors downstream.
Again, this suggests that biosecurity needs to be viewed as a chain issue that requires strong
coordination among all actors.
Government response measures have had variable success, and focused overwhelmingly on
upstream actors, not on the chain …
In countries where outbreaks occurred (Ghana, Indonesia and Nigeria), the response of government
has been relatively strong in combating disease. In Nigeria, the government was especially proactive
in its response, taking strong actions and providing incentives to facilitate the disclosure,
confirmation and stamping out of infected birds. Before the Nigerian government raised the
compensation rate from a flat rate of 250 Nigerian naira (NGN) per bird (USD 2) to market rates,
producers were known to attempt to market their birds at the slightest suspicion of an HPAI
outbreak on their farms since the amount offered as compensation was below the cost of
production at that time. With its revised compensation program, costing some USD 5.4 million for
1.3 million destroyed birds, the government gained the confidence of poultry farmers who then
reported any suspected cases of HPAI infection, facilitating efforts to eradicate the disease. The
government’s procedure for reporting, confirmation, culling, and payment of compensation was
thought to be well laid out and transparent. This is in contrast to Indonesia where government
policies initially focused on culling, but moved towards targeted vaccination policies in light of the
rapid establishment of endemicity of HPAI on Java. In 2007, the local government of Bogor
municipality provided an IDR 10 billion fund as compensation for poultry culled during HPAI
48
Africa/Indonesia Team Working Paper
eradication and IDR 650 million for human recovery from HPAI diseases, while the West Java
government provided IDR 5 billion for checkpoint facilities in Gunung Sindur, Bogor District
(Sudarman et al. 2010). This fund was allocated for HPAI vaccine application and compensation for
poultry depopulation due to HPAI disease. Compensation of poultry ranged between IDR 750010,000 per bird depending on the live weight, well below market rates. However, according to Bogor
District Livestock Services (DINAS), compensation has rarely been applied at any time since the
introduction of HPAI (ibid.). In Ghana, government was particularly active in adopting movement
controls during the 2007 outbreak, with USD 160,000 compensation paid as well to affected
producers for 40,000 birds that were culled.
In Nigeria, Ghana and Indonesia, the government played an important role in educating various
affected stakeholders through media and other dissemination outlets. Campaigns were conducted
and workshops held to inform and enlighten poultry producers, consumers and the general public
on the nature of the virus, its method of transmission, the symptoms and how to deal with it, with
various flyers and leaflets produced. In Nigeria, teams of monitors were constituted and mobilized in
every state. Poultry producers and live-bird traders were taught how to maintain good hygiene and
disinfect their premises, while in major markets, traders were provided with disinfectants, spraying
materials and personal protection equipment including overalls, gloves and face masks.
Furthermore, World Bank funding under the AICP in Nigeria was used to construct improved
slaughtering sections in a few selected cities to demonstrate safe trading and processing methods.
In Ghana, the government became stricter in the enforcement of biosecurity protocols, particularly
among commercial farms, though little in the way of incentives was provided to producers to
comply. Evidence from the Ghana case revealed that these monitoring efforts subsided as the
outbreak was controlled.
At the same time, most government policies were disproportionately focused on the producer side,
particularly in terms of the payment of compensation. Traders in Ghana were clearly affected by
movement controls imposed by the government, but compensation was not provided to any
downstream actors, despite losses due to sharp declines in sales. Similarly, in Nigeria, live-bird
traders were an important component of the government’s media campaign to promote HPAI
awareness, yet compensation was not directed towards these groups either. Empirical evidence
from Indonesia, provided in Table 10, gives a preliminary indication of the contributions of
downstream actors to overall poultry sector value-added and highlights the extent to which
downstream players both contribute to income generation in the sector and the potential scope of
losses accruing to such actors resulting from an HPAI outbreak. Given the important roles
downstream actors play in biosecurity, using policy levers to engage with such groups is essential.
One suggestion for policy, highlighted by Rich and Wanyoike (2010), concerns the provision of lowinterest loans for affected groups or to empower associations to develop “rainy-day” funds for
members that are mobilized from a levy on sales. At the end of the day, government needs to view
disease management options – including compensation – through the lens of the chain, and not
individual nodes, given the important contributions made by actors at each node.
A further policy question gets back at the issue of coordination of the chain. The success of Nigeria,
Ghana, and Indonesia in handling outbreaks was mostly spearheaded by the government, with
relatively minor contributions from the private sector. Indeed, given limited coordination within the
49
Pro-Poor HPAI Risk Reduction
value chain (particularly traditional chains) and the inability of consumers to compel producers to
take any action that would ensure safety of the products presented to them, it is unclear whether
Table 10. Estimated annual volumes and value added generated by poultry trade in the
principal poultry value chains in Bogor
Commodity
Actor
Commercial
volumes traded
(‘000 birds or
‘000 kg eggs)
20339
52170
512
739
10,41
38,55
Share of
value
added
(%)
4%
14 %
25119
530
13,31
5%
49559
26085
9572
4895
1482
2135
965
6291
4756
4756
105,81
25,17
60,22
23,28
7,05
283,80
37 %
9%
21 %
8%
2%
Value added per
Unit
(IDR)
Total annual value
added
(Billion IDR)
Broilers
Poultry shops
Contract farmers
Independent
farmers
Collectors
Processors
Retailers
Modern market
Slaughter points
TOTAL
Kampong chicken
Farmers
Collectors
Slaughter points
Carcass retailers
TOTAL
1222
1569
86
862
20189
7135
5797
8257
24,66
11,19
0,50
7,12
43,47
57 %
26 %
1%
16 %
Layers (female)
DOC agent
Poultry shop
Collector
Slaughter point
Carcass retailers
TOTAL
209
209
3968
516
899
500
500
1362
2465
4291
0.10
0.10
5.41
1.27
3.86
10.74
1%
1%
50 %
12 %
36 %
Eggs
Collector
Modern market
Egg retailers
TOTAL
5340
140
320
640
791
779
3.42
0.10
0.25
3.78
90 %
3%
7%
Collector
Slaughterhouse
Modern market
Carcass retailers
TOTAL
1189
2774
554
1664
2635
1518
4491
4533
3.13
4.21
2.49
7.54
17.38
18 %
24 %
14 %
43 %
Layers (male)
TOTAL
359,16
Source: Sudarman et al. (2010)
existing value chains could effectively manage subsequent outbreaks without the government’s
aegis in a manner that looks at the chain as a unit.
Regional contexts relating to strong consumer sovereignty in “buyer-driven” chains matter, as do
their interactions …
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Africa/Indonesia Team Working Paper
Regional differences and influences play an important role in establishing the impact and possible
spread of disease. In the Kilifi District of Kenya, regulations governing slaughter in particular are
much more strictly followed than elsewhere in the country, ostensibly in response to demands for
products with higher levels of food safety from domestic and international tourists. Not surprisingly,
intermediaries in Kilifi tend to have more long-term relationships with other actors in the chain,
which may serve to militate against disease spread. In Southeast Nigeria, unlike the rest of the
country, direct sales of birds from live-bird markets to consumers are commonplace, reflecting local
preferences and limited venues for formal processing. In Ghana, layer chains in Kumasi are relatively
short, with limited roles for intermediaries such as traders and brokers. In Kumasi, there is
significantly more vertical organization among large-scale producers, not surprising given the greater
emphasis on industrial production in this region. In Dormaa/Sunyani, by contrast, collectors play a
more important role.
This type of regionalization matters in the sense that public policy and contingency plans need to
consider how region-specific production practices and trade flows influence the spread of disease.
Given resource constraints in the public sector, knowledge of these potential hotspots is critical as a
means to better target surveillance efforts both regionally and within particular nodes of the chain.
51
Pro-Poor HPAI Risk Reduction
6. Conclusions and ways forward
The value chain studies in the five countries have generated two sets of lessons. The first relates to
implications of the findings for improving HPAI control; the second relates to the value chain
approach, its strengths and its limitations for analysis related to HPAI.
Taken together, the four general findings highlighted above as emerging from the value chain
studies across the five study countries in many ways confirm the challenges faced by veterinary
authorities in developing countries in formulating appropriate pro-poor strategies for controlling
HPAI. Poultry value chains in these countries comprise a mixture of loosely structured systems with
non-professional backyard producers and informal market traders, alongside highly organized, more
stable systems of industrial production to retail sale. This diversity of actors represents a major
constraint to conventional command-and-control tactics applied by veterinary services to control
outbreaks of a disease such as HPAI; these tactics typically assume that the relevant actors in the
poultry sector will always cooperate, whether to avoid penalties or because control measures align
well with the actors’ own interests. The reality, however, is that willingness of certain categories of
actors to comply with prescribed control measures is often weak and difficult to police. As indicated
by the analyses, compliance with public control measures can be compromised by (i) weak
coordination and governance mechanisms, (ii) low reliance by certain actors on income or
livelihoods from their poultry activities, (iii) bias to production level for targeting control efforts, and
(iv) regional variation in patterns and drivers of governance.
The alternative would be to identify and capitalize on incentives that already exist or could be
created within the different value chains for individual actors or groups of actors to improve
compliance with control measures, including improved biosecurity. The analysis of financial capacity
and incentives among each category of actors provides one set of indicators where interventions
could be targeted to have most impact. Another set of indicators relates to the weakness of
governance mechanisms which limits opportunities for leveraging improved internal control. The
overall message, then, is that effective HPAI control will need to rely on better informed, more indepth understanding of the context faced by the different actors in each value chain, with ‘smarter’
strategies that address, rather than ignore, the constraints to compliance. A critical question that
remains unanswered, however, is whether such understanding can be developed and translated into
better strategies quickly enough to contribute to controlling the disease before the disease controls
itself, dying out on its own as epidemic diseases often tend to do. In Indonesia and Egypt, where the
disease succeeded in becoming endemic, it will presumably be worth the effort if the disease is to
eventually be eradicated. For other countries where the disease flared and then disappeared either
because it could not establish itself or was successfully eradicated, it may also be important to draw
lessons for improving response to future emerging infectious diseases.
Turning now to methodological lessons, value chain analyses have been adopted as a tool for
understanding certain dimensions of the socio-economic context in which HPAI and its control
occurs. Before the onset of the HPAI outbreak, the poultry sector in many countries did not attract
much attention from researchers and policy makers, and so often relatively little was known about
its structure, composition, or how it operated. Using the value chain approach for the descriptive
mapping of the various poultry value chains was therefore important in raising awareness among
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Africa/Indonesia Team Working Paper
decision makers about the complexity of the poultry sector. As noted in the third key finding
discussed in the preceding section, control efforts have tended to focus at production level; results
of value chain studies, together with those from epidemiological risk assessments, have helped to
put more emphasis on the opportunities for improving control at other points in the value chain.
There were expectations, however, that value chain analysis would provide more detailed insights at
three levels that could directly translate into improving the design and appropriateness of control
measures. The first level relates to quantifying the economic incentives of the actors in the value
chain. Characterizing budgets and margins for each type of actor would reveal the specific financial
incentives and capacity of actors to comply with control measures or change their practices. As the
studies were implemented, it quickly became evident, however, that it would be difficult to obtain
reliable information given the multitude of actor categories and their modes of operations.
Designing appropriate sampling strategies to generate ‘representative’ budgets was a particular
challenge. In the event, the financial information remained largely indicative and insufficient to
permit guiding specific changes to control measures. Only very general lessons could be drawn from
these attempts, as reflected by the second key finding from the preceding section which highlighted
the minor or secondary role of poultry activities—and hence lower motivation to comply with
control measures—for a number of actors.
Similarly, at a second level, the analysis of governance and institutional arrangements was expected
to reveal mechanisms within the value chain that could be leveraged to enhance control.
Characterizing these aspects requires a working knowledge of institutional economics, and few
researchers–and fewer enumerators–have the required training or experience. Though instruments
were developed to collect the needed information, the quality of data was consistently weak and so
the data were difficult to exploit. The analysis nonetheless yielded several of the insights discussed
in the preceding sections, but which again have remained rather general in nature.
Thirdly, combining the financial and governance information above with an assessment of practices
commonly used by the various actors along the chain was expected to reveal components of the
value chain where HPAI risk is particularly high or critical, which some analysts have referred to as
‘critical control points’ or ‘risk hotspots’. Our experience suggests that more caution is needed in
recognizing the limitations of value chain analysis in this respect, particularly in the guise of a rapid
assessment. Whereas value chain analysis can point out risky practices and actors that appear to be
displaying risky behaviour, whether those practices and behaviour actually translate into significant
disease risk must be subsequently evaluated using standard epidemiological techniques. The science
of risk assessment has made it very clear that presence of a hazard does not necessarily translate
into significant risk that merits investment in control. Unless confirmed by epidemiological studies,
there is a danger of over-interpreting results from value chain studies for identifying critical control
points. As noted by a recent FAO evaluation of the Participatory Disease Surveillance and Response
(PDSR) program in Indonesia:
Those engaged in the pilot [PDSR] project apparently drew the conclusion that the
commercial sectors of the poultry industry were largely free from HPAI infection, protecting
their flocks by a combination of biosecurity and vaccination, and that the main problem
was in backyard poultry, belonging to the so-called sector 4. They concluded very rapidly,
and without any apparent structured investigation, that the key to HPAI control in
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Pro-Poor HPAI Risk Reduction
Indonesia was the removal of the risk of transmission from sector 4. As time progressed,
there became a greater recognition of the role of sector 3, small scale commercial poultry
enterprises, but the focus of PDSR has remained – and still remains – on sector 4. (Perry et
al. 2009)
In this case, jumping to a conclusion without follow-up confirmatory epidemiological studies led to
an over-investment and emphasis on the suspected ‘critical control point’. In the context of HPAI
where understanding about the disease has been evolving, preliminary decisions must certainly be
made, and findings from value chain analyses can contribute useful information. We strongly
caution, however, against confusing such information with results generated from rigorous risk
assessments. McLeod et al. (2009) provide an excellent model of appropriately couching risk-related
results from value chain analysis by tentatively referring to ‘potentially high risk points’ rather than
presenting them as conclusive.
In summary, value chain analyses as implemented to date in the context of HPAI provide an initial,
sketch of the actors, their relationships, and what potentially drives their behaviour; this should be
viewed as a first step at guiding more in-depth analysis aimed at the design of appropriate
interventions and control strategies. Value chain studies alert policymakers to the chain and systems
context of the decisions that need to be made, but still require greater fleshing out of the
complexities and behavioural (epidemiological and economic) responses at various, interacting
nodes. Moreover, analytical platforms that integrate the epidemiology of disease with its
ramifications on chain-level behaviour and those feedbacks on the progression of disease are in
short supply, but greatly required (Rich 2007). At the end of the day, evaluating the risk of disease in
the absence of the behaviour of those modulating that risk potentially misses much of the story
necessary to develop appropriate chain-level interventions that sustainably control disease.
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Africa/Indonesia Team Working Paper
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