10. This section examines a range of policy measures for aiding the post-drought rehabilitation of the livestock sector. It will concentrate on pastoral livestock production. In this respect, there are two important points to be raised. First, while policy is normally equated with direct intervention or institution of indirect measures by government to counteract the adverse effects of drought in this context, one must realize that pastoral livestock owners in Africa have historically tried to employ their own strategies to reconstitute herds and minimize drought-induced losses of income. Such strategies include: extended search for better pasture in more distant locations outside the usual transhumance circuit; outmigration of some household members to earn additional income; undertaking supplementary production activities in conjunction with herding; conversion of large stock into rapidly reproducing small stock; and acquisition of animals from other households through different livestock "loan" systems (see Toulmin, 1985 for more details). Government policy which does not recognize such strategies at the herders, level can potentially hinder the achievement of post-drought rehabilitation objectives at the national level.
11. Secondly, government policy-makers will need to keep in mind both the balance to be maintained between various forms of aid to pastoral as opposed to other drought-affected parts of the economy and the linkages between activities in each sector. For example, a programme to help re-establish crop production after drought, by providing credit for farmers to buy new work oxen, will have important consequences for livestock owners. Initially such a programme will result in an increase in the demand and price for young male animals to be used for ploughing but subsequent restoration of normal harvests to pre-drought levels will induce a fall in grain prices. Herd-owners win benefit from this shift in the relative prices of livestock and grain.1
1
Toulmin (1985) discusses the above two points in greater detail, particularly those aspects which concern the farming (crop) sector in terms of the effects of drought on and the rehabilitation of this sector. While the livestock/crop interaction is an important and often inseparable activity, it is only for the purpose of keeping the article reasonabily short that discussion is concentrated on the pastoral livestock sector. Another article dealing with the consequences for the farming sector is planned to be produced in a forthcoming ALPAN issue.
12. The five areas of policy formulation to be discussed here are outlined in Table 1. Each policy has a particular aim and a range of instruments through which it hopes to attain its aim. Policy aims may conflict, as when exports of livestock are promoted at the expense of domestic consumption. The political objectives of government must determine the weight to be given to such conflicting aims. Within each policy area, there are a variety of instruments which vary in terms of their cost, distributional impact, spill-over effect, and administrative and institutional requirements. These are discussed in more detail below.
13. All policy initiatives involve expenditure in one form or another, whether it be by financing credit to herders or by reducing export duties on stock. Set against this increase in expenditure the following points should be considered:
(a) external finance may be available for some of these policies, as when foreign aid is available to fund a credit programme for herders.(b) there will be costs to the government from not taking action, as when a destitute population must be given relief supplies,
(c) in the longer term revenue is likely to increase once livestock production has returned to its former level.
14. In the short-term, the impact of the various policy measures, listed in Table 1, on the government budget, external trade, producers and consumers can be positive, negative or neutral. It is obviously expected that most of these policy measures affect the government budget negatively as they will require additional expenditure outlays by government to implement them. In fact 17 of the 19 measures listed will have a negative impact on the government budget in the short-term. As would be expected from a government policy geared toward the post-drought rehabilitation of the livestock sector, livestock producers will benefit from most of these measures in terms of either reduced costs which they would have incurred if there were no government intervention (e.g. items 2b, 3a, 3b, and 4b in Table 1), or compensatory income or consumption to make up for drought-induced livestock losses (e.g. items 2c, 2d and 4a).
15. Livestock producers will be negatively affected by measures that ban exports or slaughter and remove or reduce alternative opportunities for earning income (e.g. items 1c, 1d, 5c), or increase producers' selling costs (e.g. items 4c items and 5d). Consumers and the external trade sector will be negatively affected by most, of the measures except by those which clearly favour the domestic meat market or the livestock export market under policy aim items 5 and 4 respectively.
16. As mentioned earlier, the above discussion on the impact of policy measures on different sectors of the economy considers only the likely effects in the short-term. Obviously the longer term impact is an extremely important issue but its assessment is also rather complex. In some instances, the policy measures themselves will have reversed their short-term negative impact on a particular economic sector to become positive. For example, a ban on the export of female stock will reduce foreign exchange earnings in the short-run, but over a period of years, other things being equal, this ban is likely to promote faster reconstitution of herds and a more rapid return to pre-drought levels of livestock exports. In other instances, the measures themselves win have to be phased out once the policy in question has achieved its short-term aim. For example, government subsidised distribution of grain or dry milk to herders will have to be discontinued once the pressure on herders' income or consumption needs has been reduced to a level which removes the danger of excessive sales of stock.
17. In still other instances, several real constraints will not allow government to continue to apply certain policy measures whose long-term impact win de facto cease to exist. In this respect it may be more appropriate to speak about long-term repercussions whose directions of impact depend upon numerous factors. Some of the more important characteristics of the policy options represented by the measures outlined are discussed below while the major constraints faced by governments in their choices among possible policies are briefly presented in a subsequent section.
Table 1. Policy Measures to Rehabilitate Livestock Production
|
POLICY AIM: |
POLICY INSTRUMENT: |
|
1. Reconstitution of |
(a) Distribute credit to herders for them to purchase livestock |
|
livestock capital |
(b) Government or agency buys animals for distribution to herders |
|
at national and |
(c) Ban on export of female breeding stock |
|
local level |
(d) Ban on slaughter of female breeding stock |
|
2. Reduce pressure on |
(a) Reduce livestock taxes |
|
herders' incomes to |
(b) Subsidise distribution of grain or dried milk to herders |
|
prevent excessive |
(c) Develop non-pastoral sources of income, such as irrigated farming |
|
sales |
(d) Raise livestock prices paid by government. |
|
3. Raise productivity |
(a) Subsidise distribution of supplementary feed to pastoral areas |
|
of livestock sector |
or to meat fattening schemes. |
|
|
(b) Fund improved animal health programme. |
|
4. Promote export of |
(a) Subsidise exports of livestock |
|
livestock |
(b) Reduce taxes and other export costs |
|
|
(c) Increase taxes on domestic meat consumption |
|
|
(d) Impose direct controls on domestic consumption, e.g. rationing |
|
5. Favour domestic meat |
(a) Lower taxes on domestic slaughters |
|
market |
(b) Subsidise domestic consumer prices |
|
|
(c) Bank export of stock |
|
|
(d) Raise export taxes |
|
|
(e) Subsidise imports of meat |
18. Policies aiming at a single objective differ greatly in their distributional impact, depending on the policy instrument used and the course through which it achieves its effect. For example, the promotion of livestock exports can be achieved either by offering relatively higher returns to producers and traders in export markets (such as by subsidising exports or reducing export duties) or by imposing a mixture of taxes and controls on domestic sales and slaughters which shifts livestock into the export sector. In the latter case, producers will suffer a net income loss, since the diversion of stock from domestic to export markets has been achieved through direct controls rather than by providing superior price incentives. Similarly, the government might impose a ban on the export of female stock, in order to retain surviving breeding animals within the country. However, policy-makers should recognise that this ban will lead to lower domestic prices paid for stock and will put further pressure on herders' incomes, leading to increased sales by those in greatest distress. An alternative means for retaining breeding stock within the national herd should be sought, for example by reducing the need by herders to sell female stock. The range of instruments under policy aim (2) could therefore be considered.
19. There are usually a variety of policy instruments open to government to achieve a desired aim. These are not necessarily alternatives to each other and may be used in combination. Thus, pressure on herder incomes can be reduced by a mixture of policies which includes the abolition of livestock taxes, the provision of cheap grain supplies and the development of supplementary income sources.
20. Policies vary in the size of their spill-over effects into other parts of the economy. Some instruments achieve their aim fairly precisely with the minimum of side-effects while others have a substantial impact on other factor and product markets. Spill-over effects should be kept to a minimum since they cause unintended changes in relative price levels and incentives affecting the efficiency of resource use in other sectors of the economy. For example, the most precise way of helping particular herd-owners reconstitute their livestock holdings would be to identify the particular herders it was intended to aid and to supply them with animals or the credit with which to purchase stock. Less targeted measures would include increased provision of livestock health measures and the provision of subsidised inputs to all herd-owners. Policy-makers may face little choice but to adopt a broad-based policy with considerable spill-overs where they lack the administrative infrastructure to pursue a more focussed policy.
21. The administrative costs of policy implementation cover a wide range, there being in general a trade-off between the precision attainable and the cost of achieving this. For example, it could be argued that livestock tax relief should apply only to herders with the smallest number of stock, tax being levied once herd size rises above a certain level, this graduated schedule providing relief only to those most in need. However, the assessment and collection of livestock tax is sufficiently problematic in many countries already, without the additional demands on administrative staff that such a graduated tax system would require.
22. The probability of receiving external funding will differ between policy measures. Foreign donors are usually more willing to fund direct interventions in the livestock sector than to provide general financial support to the government budget.
23. Policies differ in terms of their timing, the speed with which they can be implemented, and the period over which their impact occurs. Certain actions, such as the abolition of taxes on livestock numbers or exports, can be taken immediately. Others will take much longer to implement if they require the setting in place of a new administrative structure. The latter might be the case where government policy aims to control the movement or prices of animals.
24. A comparison of policy options should also include an explicit assessment of the costs of not taking action in a particular field. In the five policy areas looked at here, the costs of inaction are composed of an extension of the time period with below average livestock production, leading to reduced opportunities for income and employment for part of the population who must as a result depend on others for support (be that from the state, famine relief agencies, family support systems, etc.), a reduced taxable base, lower export earnings and higher domestic prices for output from drought-affected sectors of the economy. The financial, economic and social costs of inaction are high. However, as the events of 1984-85 have shown, it is often easier for governments to obtain relief food supplies from abroad than finance for longer term development programmes. The receipt of food aid reduces the direct cost to the government of not taking measures to aid the rehabilitation of the livestock-producing sector.
