 |
|
|
|
 |
|||
Table of Contents | II. The Sate and the Development of the Agricultural (especially livestock) Fector in the Former/Current Centrally-Planned Economies | IV. The Experience of IFAD
| Examples of the implications of the transition for the livestock sub-sector |
Transition occurred in the centrally-planned economies mainly as a result of overwhelming international economic pressures. However, the process of transition itself was either triggered by internal policy shifts or public upheavals, or was kept under the tight control of the centrally-planned state (e.g. China). In the former situation, the speed towards reform was politically motivated, but relied heavily on the frustrated protests of the collective workers who were demoralized by years of secure, but less stimulating, working environments. In some countries, the major objective was mainly to demolish the old structure without planning for alternative measures. This led to disruptions in basic community structures and increased the suffering of the rural poor. Smallholder families were forced to trade their animals for food and other consumables. With advances in the barter system, the value of livestock as a means of saving and the accumulation of wealth increased, and the ownership of productive animals shifted in favour of the emerging community of wealthy herders.
Although the change under the tight control of the centrally-planned countries such as China was also triggered by external factors (e.g. international trade, the need for hard currency and improved technologies) as well as by internal factors (e.g. ecological and climatic factors, social changes), the transition has been smooth and well organized. The new livestock owners are not left to struggle for survival on their own. Services are gradually being privatized, starting with a progressive recovery of service costs. Rural financing has been developed under a well-organized banking and unsubsidized credit system. Transition under this model has been gradual and more effective and has provided donors such as IFAD with opportunities to support and improve smallholder livestock systems without measures that require drastic changes in the social structure of the village communities.
Indeed, and in spite of the abruptness of the transition, each country has had its own identity and features. For example, in some centrally-planned countries such as Laos, the chain of command was weak to start with because of the lack of resources and the poor infrastructure and poor communication between the central committee and rural communities. Under such conditions, the day-to-day management of the rural production systems (cooperatives or otherwise) was kept at the grass-roots level. Because the influence of the state was minimal, the problems during transition were primarily those with which the livestock producers were faced during the command economy period. In the case of Laos, the major constraint continues to be the lack of the capital needed for restocking the animals lost during the war or because of natural calamities, poor soil fertility, feed deficit, poor animal health services, poor technical skills and losses due to landmines.
The situation in Kyrgyzstan is an example of a violent transition that has demolished the social and economic fabric of a whole society in a merciless way. Five years after the collapse of the command economy, over 70% of the population was classified as poor. The former state-supported social and economic privileges (see Box 1) were not replaced by better alternatives under the command of either the private or the public sector; nor were there alternative community self-help activities. Typically, the poor lack money to buy food and other essentials. They are unable to produce what they could once produce or unable to sell what they produce.
On the other hand, the transfer of wealth and power to a small portion of society is moving in different ways, indicating the magnitude of diversity in the transition in this country and others in Central Asia. According to the six-month University of Wisconsin Land Tenure Study in Kyrgyzstan in 1995, groups of small farms were established around a large farm, and there was a symbiotic relationship for certain services. Also, some small private farms have developed close relationships with the former Solkhozes and Kolkhozes they have recently left. For example, one private farm has a long-term contract to raise heifers for a former collective farm, while another private farm mills grain and dips animals at cost for another Kolkhoz. According to the team of researchers for the USAID Collaborative Research Support Programme who visited Kyrgyzstan early 1997 some of the state and collective farms operate as modern businesses, while others have become subsistence farms and pay members with produce and barter with nearby enterprises. Some seemingly successful cooperative farms have been purchased by the 'Kolkhoz manager' and a few foreign partners.
The collapse of the social and the physical institutions in countries such as Azerbaijan, Bosnia and Georgia have had dramatic negative effects on livestock productivity. However, the recovery is more rapid in these relatively advanced countries. (There is a higher level of education and more modern agricultural systems compared to the traditional systems of Laos and Mongolia.) For example, almost all the families that received livestock as a result of the IFAD-supported investment project in Bosnia-Herzegovina were able to achieve high levels of production in spite of the destruction of war and the abruptness of the transition to the market economy. In Bosnia, the veterinary stations receive no public support and strive to build a profitable business by performing paid services for the recipients of donor-supported in-kind livestock loans.
The transition to the market economy did not accomplish most of its objectives, and countries remain in urgent need of support from the international community. Except under the controlled transition in China, the physical and institutional infrastructure as well as community institutions collapsed, leaving a vacuum at all levels. Social workers, researchers and professionals (veterinarians, animal production officers) became - in practice - jobless, while waiting for the evolution of new alternatives. The physical structure eroded, and productivity declined as a result of the collapse of irrigation systems, the unavailability of inputs and the collapse of the service delivery mechanism.
3.1 Examples of the implications of the transition for the livestock sub-sector
The livestock sub-sector was dramatically affected by the wave of change that has swept through most centrally-planned economies during the last few years. The transition from the command to the market economy was a result of several external and internal factors. In most countries, liberalization was abrupt and dramatic (as when central planning was imposed). As indicated earlier, only a few countries, such as China, have been able to implement a gradual and a tightly controlled process of reform.
3.1.1 Kyrgyzstan
Years of overgrazing have reduced the productivity of the summer, spring/fall and winter pastures over the past 30 years from 639 to 414 kg/ha, 465 to 301 kg/ha and 297 to 93 kg/ha, respectively. Because wool (from wethers kept over winter) was the major source of income from livestock production, the feed deficit caused by poor winter pastures intensified the reliance of the country on high-cost supplemental feeds over three to five months each year to the extent that the grain used for livestock feeding was twice that of human consumption. With the disruption of feed imports and the collapse of wool prices, the size of sheep and goat flocks went down by 41% from 10.4 million in 1989 to 4.3 million in 1995.
The situation was worsened by the lack of policies favourable for improving the farmgate prices of wool and mutton. The decree issued May 1996 to regulate the procurement of wool during the 1997 marketing season did not help the producer; rather, it provided the government with a monopoly over the wool market, virtually eliminated foreign buyers and reduced the farmgate prices of wool by 40% in real terms. The Government indicated that the measure was temporary, that it was necessitated by the outbreak of a disease and will not be applicable to future wool-marketing seasons. However, the flexibility of the Government and its responsiveness to the needs of the wool producers will have to be monitored by donors investing in the livestock sub-sector.
3.1.2 Mongolia
The shift from a well-planned and gradually collectivized system of Negdels under central planning to the market economy was very abrupt, almost from one day to the next. Unfortunately, the transition was started without a coherent plan or the participation of herders. Nobody was prepared, neither the central and the cooperative administrators, nor the individual people who suddenly became livestock owners. Decollectivization has meant less favourable circumstances for most herders, as it has distorted a well-managed system, and skills, the judicious use of resources, efficient health delivery systems; and efficient livestock and range resource monitoring have suddenly collapsed.
The employees of the Negdels became private stock owners in a risky and uncertain environment. Initially, household members who lacked herding skills lost their stocks and were left without a secure means of livelihood. Those who survived the early years of privatization were a mixture of highly skilled and modestly skilled herders who suddenly became responsible for the day-to-day herding without the security and privileges provided by the Negdel (e.g. health services, trucks and tractors for seasonal migration and emergencies, equipment for hay making, marketing). Also, because of high inflation rates, it became difficult and unattractive for herders to insure their animals. As a result, herders reverted to the traditional risk-minimizing strategy of raising a mixture of livestock species and organized themselves with other households into groups of families for herding in order to cope with the higher labour demands of mixed herding.
The shift to open markets and total liberty also created the drive to accumulate wealth. The livestock formerly owned by the cooperatives or the state farms were equally distributed and divided among the members or workers. Those with skills received the same share as did those with no skills. Very soon market forces resulted in the trend whereby skilled herders took over or bought additional livestock units from those who wanted to dispose of the animals and undertake activities with the money they received. The number of households unable to raise the viable herd necessary for an independent economic existence (140 sheep or an equivalent mixture of cattle/yaks, sheep, goats and camels) continued to increase, and by 1994 one third of the herders were unable to keep more than 30 animals. For the first time in several decades, a considerable number of herders have fallen below the poverty line in Mongolia. Furthermore, due to inflation and the deterioration of the price of livestock products, offtake for marketing has fallen drastically. The herders who are able to keep stocks have concentrated on becoming self-sufficient in livestock products and in building up the size of their herds.
At the same time the banking sector was restructured and is now being privatized. Rural financial services almost collapsed. In the absence of cash, barter trade dominated all commercial activities in rural areas, which is a disadvantage to the herders who are forced to buy food and other goods mainly by trading their animals. Because of the unavailability of cash, the differences in value are normally determined in favour of the supplier of the goods. For example, one bag of wheat costs about MNT 10 000 and is exchanged for a goat or sheep which is valued at MNT 12 000-14 000.
Most processing industries have deteriorated or collapsed, to the point that all butter for consumption in Ulaanbaatar is now imported. Also trading in livestock products has become inefficient, particularly because meat prices are considered too low for a profitable national processing industry. Similarly, the local wool-processing industry has become inefficient and less competitive relative to the prices offered for raw materials in neighbouring China, thus forcing producers to export wool and especially cashmere as raw material. As a result, the herders prefer to keep their livestock (rather than slaughtering them) for the sale of wool. Furthermore, with inflation and currency instability, livestock is being kept as a means of saving. All these factors have caused rapid growth in the number of animals and overgrazing in the large herd concentration areas. There is need to enact new land-use laws capable of controlling and regulating stock movements according to traditional seasonal grazing patterns.
Disruption in veterinary services has had a negative impact on the health of livestock, especially in the case of herders with less experience and those who lack the funds to pay for the services. Veterinary services are now being reorganized and should become privatized. Once the herders have to pay for the full services, some poorer herders may have difficulties. On the other hand, the abrupt shift to the market economy without a programmed phasing and organized transition period has left the herders almost without any kind of technical support. Many herders were not prepared and trained to meet the requirement of taking responsibility for a privately owned herd.
3.1.3 China
In China the transformation from the collective 'pig pot' system to the 'household production responsibility' system has been gradual, but not without problems. For example, the livestock allocation to private owners between 1984 and 1994 was not synchronized with the regulations governing the use of grazing resources. This led to the overuse of range resources by the herders who accumulated a large number of animals, at the expense of the poorer herders. The existing problems of overgrazing and resource degradation are being looked into, and many initiatives are being taken and organized by Government services.
During the transition to the market economy, livestock and land was distributed to individual households. Although the traditional preference of stock was maintained (e.g. Qinghai-Hainan Prefecture, where people like to start with small stock like sheep, goats and pigs), the pattern of nomadic mobility was lost in Inner Mongolia and Tibet because of the assignment of land to each household.
Transition to the market economy started in Viet Nam in 1989. As in Laos, remote areas did not benefit from the communal privileges under the command economy and, accordingly, were not greatly affected by the transition. On the other hand, the country was able to achieve macroeconomic stability based on a broad structural adjustment programme and to establish measures to consolidate and stabilize the transition to open markets. For example, the Government enacted and initiated several pieces of legislation on land tenure rights and institutional reforms.
The implementation of the Land Law of 1993 resulted in the reduction of the amount of communal cooperative lands to 5%. Usufruct rights for annual and perennial crops have been extended to 20 and 50 years, respectively. The law also recognizes the right to inherit land-use rights, the right to transfer, exchange and lease land-use rights and the right to receive compensation from the Government in case of dispossession or the seizure of land property. However, the speed and cost of the process of land reallocation vary with remoteness (the slowest and the most costly).
Other constraints that have intensified during the transition are household labour shortages, poor access to cash and rural finance facilities, low availability of livestock, especially cattle, and poor health and nutrition. The commune-operated breeding and artificial insemination (AI) stations have deteriorated as a result of poor management and the lack of inputs and repair, leading to poor animal performance (especially pigs).
Armenia was the first among the countries of the Commonwealth of Independent States to privatize agricultural land (in 1991). Land reform and privatization resulted in an agricultural sector which consists of 320 000 smallholder farms, with an average size of 1.3 ha. Livestock privatization was based on the distribution of five cattle and 20 sheep for each household. However, the prices that were set initially discouraged farmers from accepting the animals. When the price was subsequently reduced, most livestock had already been distributed to the well-off. On the other hand, permanent pastures and forests were not privatized, and the former remained under the control of the villages. In 1992, price controls were abolished.
The cost of the rapid movement to the market economy is already being felt by a large number of the employees of the defunct collective farms (low living standards, loss of equity). Animal numbers have been falling, and a shift of wealth in favour of a small number of herders is taking place. So far, one half of the total number of animals has been transferred, because of market forces, to only 20% of the farmers, while the majority of farmers share the other half. Sheep are being sold for meat, as wool sales have collapsed; cattle are held for milk. The performance and production of animals has declined, mainly because of poor nutrition and health status rather than poor genetic potential.
In some areas, local institutions such as the veterinary
stations, central diagnostic laboratories, animal breeding centres and
AI services have deteriorated or collapsed. The situation was worsened
by the unavailability of self-help or community-based productivity-enhancing
structures as well as of the social community privileges of the communal
systems.
Table of Contents | II. The Sate and the Development of the Agricultural (especially livestock) Fector in the Former/Current Centrally-Planned Economies | IV. The Experience of IFAD
