Jump to... Benefits to the poor Livestock asset policies

This document is part of the IFAD Rural Poverty Report 2001: The Challenge of Ending Rural Poverty.

Benefits to the poor of controlling livestock assets

In many poor regions¹, the rural poor depend heavily on income from livestock production. Yet they can seldom afford to eat animal products and usually trade them for staples with lower costs per calorie. Paradoxically, the poor:

• depend most on livestock income in sparsely populated drylands where trade involves high transaction costs, not where it is easy and cheap; and
• control few large stock with more readily traded products, such as cattle, water buffalo and camels. Analysing this paradox indicates the livestock products, assets and policies that can improve the livelihoods of the poor.

In arid areas, extensive or transhumant large-stock grazing is the only way to support many people by land use. In semi-arid areas, large stock supplement coarse staples such as maize, millet, sorghum, roots and tubers as a source of income. In Asian and some African semi-arid regions, livestock are integrated into smallholders’ and labourers’ livelihoods through mixed farming systems; the animals provide draught power and manure for cropping and live off crop residues as well as grazing. Large stock enhance land and labour productivity through draught power in areas where physical or economic conditions are intermediate between those suitable for tractor cultivation and those suitable for hoe cultivation². The poor can benefit from livestock-asset control, especially in newly settled or changing frontier areas, but only with appropriate institutions for acquisition, management and trade. IFAD’s Smallholder Cattle Development Project in Sumatra provided transmigrants with draught animals, which were to be paid for in-kind by the return of two offspring within five years. This increased the average cultivated area from 1.4 ha to 2.3 ha and doubled incomes³.

Livestock produce several benefits for the poor:

They provide food directly; the poor consume some of this but sell more for cash, which is then used to buy staples.

• Livestock manure can be used as fertilizer or fuel.
• Livestock embody saving in a pro-poor way; yield is extracted largely by labour such as milking.
• In bad times, animals can be sold; many are kept with this in mind⁴. When hardship such as drought strikes almost everyone in an area, many seek to sell stock and buy grain, and the value of stock decreases as the grain becomes dearer. This reduces the food-security value of poor people’s livestock ‘savings’, especially if livestock are unequally distributed and there are few potential buyers with market power, as is the case in much of Africa.
• Selling livestock in hard times acts as a buffer against loss of other assets. In northern Nigeria, people without livestock at the beginning of a survey had 12% less land four years later; those with livestock retained the same acreage⁵.

A mix of livestock and cropland often brings more income than one or the other alone because of close links between crop and livestock production, the flexibility each provides for the other such as choice of ploughing and manuring times and difficulties with animal-hire markets. Zimbabwean smallholders that combine livestock and crop production have incomes twice as high as those with crops alone⁶. In marginal arid-to-semi-arid lands, livestock may be the only sustainable land use. In less extreme cases, drought risk to crops can exceed even the risk to cattle, especially for poor farmers with less prospect of access to water in times of crisis.

Livestock bring new risks: illness, death and theft. Nonetheless, “since crop income is risky, [a few] assets in the form of cattle [and] small livestock [are carried, to increase] risk-bearing capacity even at the cost of lower levels of income”⁷. Risk may be reduced by spreading one’s portfolio even into risky assets if some of the risks are weakly correlated; for example, drought threatens crops and livestock, but pests, theft or floods affect one much more than the other. Livestock can reduce total risk and can be used to manage risk if they can be sold in bad times.

Transaction costs of large stock are fewer if the controller also controls land, which many poor people do not have. This can be overcome, however, enabling even landless households to keep livestock assets. Semi-cooperative service arrangements collect milk daily from several owners, sometimes landless, of just one cow or water buffalo, and sometimes provide small feed packages. Such cooperatives have been pioneered in Gujarat in India, and are now widespread under the National Dairy Development Board. Many communities have common grazing. Others, such as the Fulani in Nigeria, practise transhumance, moving cattle away from drought areas (though the poorest often lack access to trek routes or food for the journey). Even when land scarcity erodes such options, stall-feeding, or zero grazing, increasingly allows the poor to substitute labour for land. Small stock, especially poultry, often have minimal land requirements.

Though the rural poor benefit from livestock-asset control, it is often skewed against them. In Botswana, the poorest 40% of farm households owned no livestock, though most farm income is derived from cattle. As in much of Africa, however, they often exchanged labour for some control of cattle owned by others, being rewarded for cattle-care with the rights to animal products, fallen animals and some calves; this is the mafisa system. In Bayan Tsgaan village, Mongolia, the poorest 25% of households had only 5% of privately owned livestock. In Madhya Pradesh in India, however, livestock ownership was less unequal than ownership of land⁸, as is the case in parts of rural northern India, where livestock income is over a quarter of the total and higher for the poor. In a village in Pakistan, small farms obtain over half of their farm income from livestock, compared with 30% on larger farms⁹.

The extent to which livestock is the focus for livelihoods among the rural poor varies greatly. How asset policy should concentrate, if at all, on getting livestock to the poor depends on the specifics. In Asia, Latin America, the Near East and North Africa and parts of sub-Saharan Africa, the “livestock revolution”¹⁰ is raising the share of farm resources going to livestock and the share of grain consumed by animals rather than humans. The rural poor, who still derive most calories and income from staples, are not in most cases well placed to benefit from such changes in asset structure and use. Can they be helped to do so?

The poor, types of livestock assets and livestock asset policies

Poor farmers are less likely than others to own several species of animals, and they are more likely to own poultry, sheep and goats than large stock. Small animals are often controlled by children and women, who in Senegal own 60% of the sheep and goats. Effective pro-poor policies for animal assets need to recognize why poor households tend to own smaller animals and decide whether to support them in this or to relieve constraints on their profitable and safe control of large stock. A number of reasons can be suggested:

• Small animals require less capital and fewer loans relative to labour to buy and maintain.
• Given herd value, more and smaller animals simplify distress sales and make the death of an animal less risky.
• Small animals grow and breed faster, reducing repayment periods; the poor pay higher interest and have greater time-preference. This diffuses risks from disease and permits mixed-age herds; even small herds have some mature animals yielding food at most times.
• Goats and sheep can thrive on harsher terrain and vegetation than large stock, which benefits poor farmers on marginal land. Contrary to conventional wisdom, they tend to do less harm in ecologically fragile zones than larger animals¹¹.

This suggests two ways of reducing poverty:

• Livestock extension, public-goods provision and research should aim more at improving the labour-intensive management of small herds of small stock, for example by improved management of infectious diseases.
• Artificial or non-economic barriers to poor people’s control of large stock assets should be removed through better access to small, dispersed livestock auctions, as is attempted in Botswana, or through cooperative arrangements for rapid collection and processing of small amounts of milk.

Provision or subsidization of ranches, a popular livestock policy in eastern and southern Africa until well into the 1990s¹², has proved counter-productive for the poor. Enclosing common land for ranching deprives their small stock and their few cattle of grazing; ranchers replace cattle guards with fences, cutting demand for the labour of the poor. Control over livestock assets can help the poor even without ownership. The crucial savings/sale function of livestock is available only to owners, however; large herd-owners are much more likely than small ones to displace employment with equipment. Livestock costs and benefits can nonetheless be shared in ways helpful to the poor, as with mafisa in Botswana, or as in Nepal, where households owning more than five buffalo often lend one to poorer households and share the profits¹³.

Just as large farmers of tobacco or cotton can become contractors for inputs and services, with the poor taking over the farming in small units and gains for all, so large herd owners may be well placed to switch to management, finance and sales of processing products such as hides and skins, tanning and dairy processing. This would create new employment, often for women, while leaving the control of cattle increasingly to smaller herders. It is important and feasible; policy should encourage such shifts.

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1 IFAD experience suggests that most of eastern and southern Africa is an exception, though there are still numerous transhumant herders among the poor in Kenya and Botswana.

2 Pingali, P., Bigot, Y. and Binswanger, H.P. (1987). Agricultural mechanization and the evolution of farming systems in Sub-Saharan Africa. Baltimore, USA, and London, Johns Hopkins University Press for the World Bank.

3 IFAD, 1994a. Thematic study on lessons learned from evaluations in selected Asian countries. Rome.

4 In The Gambia, small stock are a store of wealth used to buy grain or to save and later exchange for cattle (Itty et al., 1997). For a Tanzanian case of cattle as a hedge against inflation and devaluation, see Gijsman and Rusamsi, 1991.

5 Simmons, N. (1981). Principles of crop improvement. Harlow, UK, Longmans.

6 Gittinger et al. (1990). Household food security and the role of women. Report of the Symposium on Household Food Security and the Role of Women, January 21-24, 1990, Kadoma, Zimbabwe. Washington, DC, World Bank.

7 Dercon, S. (1998). Wealth, risk and activity choice: cattle in western Tanzania. Journal of Development Economics, 55: 1-42.

8 Average number of livestock: landless (2), marginal (<1ha = 4), small (1-2ha = 5), medium (2-4ha = 6), large (4+ha = 7).

9 Botswana: Republic of Botswana, 1975; Mongolia: Cooper, 1995; India: Siroki and Siroki, 1993, Farooqee and Nautiyal, 1996, Sharma and Poleman, 1994, Mellor, pers. comm.; Pakistan: Kurosaki, 1995.

10 Delgado, C. (1999). Livestock to 2020: the next food revolution. Discussion Paper 28. Washington, DC, IFPRI.

11 Poverty focus of small stock: for Sukumaland, United Republic of Tanzania, see Gijsman and Rusamsi, 1991; Dercon, 1998; for Mongolian villages, see Cooper, 1995; for Madhya Pradesh, India, see Siroki and Siroki, 1993; for Senegal, see Itty et al., 1997; for costs of animal types, see Seyoum, 1992; for goats, see Rao, 1995.

12 It was motivated partly by a misunderstanding (Sidahmed, 2000) that most common lands were overgrazed. Even if they were, ranching would not help. Private ranchers, subsidized to improve their herds’ condition and hence increase offspring, avoid overgrazing their ranches by shifting offspring back to the commons.

13 Thomas-Slayter, B. and Bhatt, N. (1994). Land, livestock and livelihoods: changing dynamics of gender, caste and ethnicity in a Nepalese village. Human Ecology 22(4): 462-94.