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Highly Pathogenic Avian Influenza (HPAI) may not haveaffected Cambodia to the extent it has Cambodia’sneighbors,however,therehavebeennearly25confirmedpoultrycasesandsevenhumandeathsfromHPAIsincethediseasewasdiscoveredinthecountryin2004.Duringthistime, the disease has affected more than 20,000 birds.Since the disease penetrated Cambodia’s borders, it hasbecomeapparentthatthereisahighlytemporalpatterntothediseaseoutbreaks.Inthepastfouryears,70%ofHPAIoutbreaks in Cambodia have occurred between Februaryand May while 25% have occurred between June andSeptember, and 5% between October and January.Moreover, all 7 human cases have occurred betweenFebruaryandMay.Outbreakshavealsooccurredprimarilyin selective geographical regions. Consequently, there isreasontobelievethatCambodiamaybeabletotargetriskmitigation policies and effectively manage HPAI at arelativelylowcost.

Thepurposeofthisbriefistodiscussastudythatsupportsanapproach thatbalances riskmanagementwithpovertyalleviation. One possible strategy would be to promotepro-poorHPAI risk reductionbyutilizingademand-drivenapproach to disease risk mitigation, by supporting localcooperativesand/ortraceableregionalmarketchainsthatmaintainminimum safety standards.Modelled on similarprojectsundertakeninotherMekongcountries,thisstudycombines an assessment of local market chains with anevaluation of household poultry purchasing preferences.Another issue is that, in lightof thedecreasednumberofoutbreaks and in conjunction with the internationaleconomic downturn, resources for combating HPAI are

ACollaborativeResearchProjectFundedby:

Implementedby:

KeyFindings

• Small-holderfarmersareunlikelytoadoptcompulsorybio-securitymeasuresgiventhecurrentincentivesstructure.

• Consumershighlyvaluesafetyasaqualityofpoultryproducts.

• Thestructureoftheducksectormakestheseproducersparticularlyvulnerabletodiseaseinfectionandpropagation.TheseactorsshouldbedirectlyaddressedinanycomprehensiveHPAImanagementstrategy.

• WerecommendthatthisevidencebemorefullyconsideredinformulatingsociallyeffectiveandsustainableHPAIstrategies,particularlyifavianinfluenzadiseaseisendemicinSoutheastAsia.

ControllingAvianFluandProtectingPeople’sLivelihoodsintheMekongRegionHPAIResearchBrief|No.11-Year:2009

Pro-PoorHPAIRiskReductionforSmall-holderPoultrySupplyChains

S.Heft-Neal,J.Otte,D.Roland-Holst

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likely to decrease in the future. Approaches that selectively target geographic areas andtemporalperiodsofhighrisk,aswellasapproachesthatcanpotentiallybeselffinanced,aremorelikelytobesustainableinthelongrun.

Fromthesestudies,twogeneraltypesofpolicyrecommendationscanbederived.Thefirstrelates to the consideration of farmers’market incentives with regards to riskmitigationstrategies.The secondcategoryof recommendation relates to the strategic importanceofsmall-scale poultry market chains and their pro-poor multiplier effects with regard tonational development. Both types of recommendations have implications for HPAI riskmanagementpolicies.

RationaleandMotivation

Thepurposeofthisprojectwastoproduceanassessmentofpoultrysupplychainconditionsin the Kampot and Siem Reapmarket catchment areas. Thiswas donewith detailed andseparatesurveysatfourlevels;producers,traders,vendors,andconsumers.Modeledonthesurveys already undertaken in Viet Nam and Thailand, these questionnaires aimed toelucidate production conditions, market access, contractual relationships, consumerpreferencesandconsumerwillingnesstopay.

Taken together, these resultscan informpolicy initiatives to improve incentives forhigherpoultryquality(includinghealthstatus)andhighervalueaddedateachstageofthesupplychain.Recommendationsthat followfromtheseactivitiescanpromotesustainablemarketparticipation by small-holder poultry producers. In addition, these recommendationspromoteimprovedlarge-scaleproducersafetypractices.Thisincludes,butisnotlimitedto,programs for micro-credit and technology transfer, certified supply chains, and contract-farming programs for bio-secure production of both chickens and ducks. In addition toreducing HPAI risk and the economic vulnerability of rural poor farmers, theserecommendations strive to increase product quality, safety and revenue across thetraditionalchickenandducksupplychains.

Another important motivation of this study was achieving a better understanding of thecurrentmarket incentives facing small-holders. This is essential topredicting responses topolicies such as compulsory bio-security implementation, trade regulation, and otherapproaches meant to mitigate disease risk. Policies that drive production and tradeundergroundmayhurt rural peoples’ livelihoods andare less likely to reduce risk.On theotherhand,allowingtheregionalpoultrytrade(inparticularduck),initscurrentform,mayposeriskstopublichealthandlarge-scaleproducers,inadditiontotherisksposedtosmall-holders’poultryandtheirownhealth.Itiswithinthiscontextthatweseektopromotepro-poorHPAIriskreductionpolicies.

ProjectActivities

Projectactivitiestookplaceintwoprovinceswithhighdensitiesofbackyardchickenfarmsandlarge-scaleduckfarmsthatwereaffectedbyHPAI;SiemReapinthenorth,andKampotinthesouth.Consumerandmarketsurveyswereconductedinthecapitaldistrictsofeach

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province, and farmer and aggregator surveys were conducted in districts within closeproximityofthecapitaldistrictmarket(<75km).

Household consumer surveys aimed tobetter understand poultry purchasinghabits of households that acquire theirpoultry products through markets. Adetailed surveywas carried out revolvingaroundhouseholdtastes,pricesensitivity,breed preference, and other aspects ofshopping habits. In addition, this surveyassessed interest in paying for traceablepoultry. One important facet of theconsumer survey was evaluatinghouseholds’ willingness to pay fortraceablepoultryproducts.Consequently,anexperimentwasdevelopedtoevaluatethis issue.The respondentwaspresentedfirst with a detailed description of aproposed certification system andsubsequently with a hypothetical market

visitwiththreemeatproductalternatives;local chicken meat, cross-bred chickenmeat, and duckmeat, only one of whichhasbeencertifiedastraceabletothefarmoforigin.Therespondentwasthenaskedto choose the most appealing product.This process was repeated 5 times foreach household, with prices andtraceabilityrandomizedforeachscenario.Priceswere randomlyselected froma listof seven prices ranging 25-30 Percentabove and below average prices for agiven product (average prices wereestimated from market visits). Whichproduct would be certified for eachrepetition was also randomized. Acertification premium of 4,000 Riles (~1USD)was added to the item selected forcertificationineachrepetition.Producer surveyswere also conducted inorder to better understand farmer coststructure, resource utilization, and assessthe adjustment of poultry producers inresponse to HPAI control measures. Thesurveys assess these issues by focusingquestionsonevaluatingfarmerinputsandoutputs,productioncoststructure,accesstomarkets, trading relationships, barriersto expansion, andHPAI experience. Fromthesedatacollectedwearebetterabletoestimatethecosttoproducersfromshiftsin policy or structural changes in theCambodianpoultrysector.

In addition, aggregator surveys strive to improve our understanding of the marketingnetwork and trading relationships as well as to collect information on pricing, diseaseconsiderations, resourceutilization,andoperationcosts.Thesurvey includedtradersofallpoultry products including chicken and duck eggs/meat, and chicks/ducklings for sourcingproduction. Finally, market vendor surveys collected information about the sources ofpoultry products sold in urban markets, the trading relationships that facilitate thesetransactions,aswellaspriceandbreeddata.

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FindingsandOutcomes

One of the main outcomes of the study was significantly better understanding of howexisting institutionsandstakeholdersoperateand interactwithinsupplychains. Itbecameevident that trust, reliability, and market information are main components of theserelationships.Inaddition,emphasiswasplacedonunderstandingtheincentivesthatfarmersfacewhendecidingwhetherornottoinvestinsafetyprecautions.

Wefoundthatmostsmall-scalechickenandduckproducershavenotadoptedbio-securitymeasuresontheirfarms.Infact,mostfarmersinvestminimalresourcesintoproductionandexpecthighmortalityrates.Averagesurveyparticipantsspendlessthan20minutesperdayattendingtochickensandonlyrarelyprovideadditionalfeedtosupplementscavenging.Forthese reasons, poultry production is seen as an ancillary activity that does not warrantadditionalinvestments.Inaddition,farmersbelieveHPAIposeslittlerisktotheirownflocks.Onascaleof0to3,respondentsrankedHPAIrisktotheirflocksandtotheirfamiliescloseto 1. Risks from other livestock diseases were ranked significantly higher. Consequently,while considerable resources have been invested into HPAI public awareness campaigns,farmersareunlikely toadoptbio-securitymeasures tocombatHPAI in the future.Policiesthataddressotherlivestockdiseases,suchasNewcastledisease,incoordinationwithHPAIaremore likely tobeadopted.Nonetheless,measures that requireadditional investmentsfromfarmers,whetheritisintheformoftimeorotherresources,areunlikelytobeadoptedunlessthereareadditionalincentivesprovidedtodoso.Despiteitslowstandinginthehouseholdeconomichierarchy,poultryproductiondoesservean important role in rural livelihoods.Every survey respondentusespoultryproduction tosupplement household diets.More than half of all respondents also receive cash incomefromthesaleofbirds. Moreover,womenareoften incontrolofthe incomefrompoultrysalesandtendtoputthemoneytowardsessentialconsumptiongoods,schoolfees,andtosave for use in emergencies. Consequently, policies seeking to combat HPAI should nothindertheproductionandsaleofbirdbysmall-holders.Moreover,asCambodiacontinuesto urbanize, poultry production could potentially be used as a tool for rural povertyalleviation.Thesurveysalsofoundthatpoultrymarketingisbasedlargelyontradingrelationshipswithfriends and acquaintances.More than half of respondents in Siem Reap reported tradingwith peoplewhom they interactedwith regularly outside of the poultry trade. Therefore,anypoliciesthatseektoregulatepoultrytradeneedtotakeintoaccounttheimportanceofpre-existing relationships. Moreover, attempts to create alternative trading networks, inorder to improve regulation,would need to incorporate existing relationships in order topreventabreakdownofthesystem.Anespeciallyimportantfacetofthisstudywasthesurveyoflarge-scaleduckproducers.Themostcommonformofduckproductionencounteredinoursurveyswaslarge-scaleduckeggproduction(>100birds).Weestimatethattherearemorethan100activeducklayerfarmsper district in the catchment area sampled in Kampot province. However, the number ofduckhatcheriesisveryfew(itrequiresspecializesskillstoidentifythesexofducklings)andmost producers source eggs from the same suppliers. Consequently, the duck product

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supply chain may be vulnerable to disease outbreaks that occur high up on the chain.Moreover,hatcheriesinKampotprovincereportedsignificant,albeitillegal,sourcingofduckeggsfromVietnam,acountrywithfarmoreseriousHPAIproblemsthanCambodia.Infact,one hatchery reported that nearly 40 percent of eggswere sourced fromVietnamduringparticular seasons. This practice may pose a significant risk of introduction of livestockdiseaseintotheCambodianpoultrysector.However,therehavebeenfewstudiesexploringtheabilityofduckeggstotransmitH5N1.Consequently,itisunclearexactlyhowmuchofarisktheseactivitiespose.Duckeggsarealso themost commonly tradedand consumedpoultryproducts.However,urbanhouseholdstendtoalsopurchasechickenmeateveryweek.Generally,consumersareveryconsiderateabouttheproductstheybuy,butthereisconfusionabouthowdiseaseriskcanbedetermined.Safety is judgedbyappearance,eitherof the livebirdorof themeat.Nonetheless, consumers do place a high value on safety. More than three-quarters ofconsumer survey respondents felt that the safety of the chickenmeat they buy could beimproved, andmore than 85% said that theywere interested in paying a premium for aproposed“safetyguaranteedchicken”.Moreover,mostrespondentsreportedawillingnessto pay this safety premium even when the base price of poultry products (without thepremium) were priced 10-20% higher than normal cost. These findings are in line withsimilarfindingsinVietnamandThailand,suggestingthathouseholdsvaluesafetyoverprice.Consequently, there is potential for farmers tomarket “safe chicken” at a higher price ifconsumers believe the safety guarantee. The potential for demand side approaches toimprovingproductiontechniques,andrurallivelihoods,shouldbefurtherinvestigated.

GuidelinesforIncentive-BasedPoultrySupplyChainImprovements

OurdetailedinvestigationsofthepoultrysupplychaininCambodiasuggestthatsmall-scalepoultryproducersareunlikely toadoptbio-securitymeasures,while large-scaleproducers(in particular duck farmers) prefer to implement bio-security technologies but face costconstraints thatmayprevent themfromdoingso.For thesereasons,werecommendthatthisevidencebemorefullyconsideredinformulatingsociallyeffectiveandsustainableHPAIstrategies,particularlyifavianinfluenzadiseaseisendemicintheregion.

The detailed findings suggest a broad spectrum of socially constructive policy responses,initiatives that will advance HPAI risk reduction while improving economic conditions forpoorfarmerswhoarethemajoritypopulationinruralCambodia.Accesstoinformationandtechnologycanbe improvedforduckfarmers,particularlywithrespecttoproductquality,pricing, and other market conditions. On the financial side, micro-credit schemes canaccelerate technology adoption and small enterprise modernization, improving productquality/reliabilityandleadingeventuallytoestablishedbrands/reputationthatconferhigherlong term value added at lower transaction cost. Professional training is also important,especially for product certification and enforcement of standards with veterinarians andtechnicians. Similarly, rudimentaryeducationwith respect to contracting,negotiation, andconflictresolutionwouldimprovethetermsofmarketparticipation.

Previousoutreachactivitieshavepromotedtheadoptionofbio-securityasamechanismtoprotect flocks and families from HPAI. Our findings suggest that this is

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unlikely to convince farmers to adoptthese technologies. Instead, we advocatefor programs that promote overall‘product quality improvement’ amongsmall-holders so that there are lowermortality rates and healthier appearingbirds that can potentially be sold for ahigher price. Promoting market-basedprograms where farmers receive cashbenefits in exchange for improving theirbio-security is more likely to convincefarmerstoadoptthesemeasuresbecausethe risk of an individual farm contractingHPAI is far lower than the many healthrisks that rural farmers face on a dailybasis(e.g.,securingcleandrinkingwater).Furthermore, consumers appear to bewilling to pay a premium for safety as a

qualityofpoultryproducts.Consequently,the potential for funding small-scale bio-security adoption through higher marketpricesshouldbefurtherexplored.

Unlike chicken production, duck egg production is a primary economic activity for mostparticipating farmers. Therefore, most producers invest significant resources in order toprotect their flock. On average, survey respondents spend more than 7 hours per dayattending to theirduck flocks.Consequently,duckproducersaremorewilling (someeveneager)toadoptbio-securitytechnologiesifitisfeasible.Themajorconstraintstoimprovingproduction,citedbythemajorityofrespondents,arespaceandcost.Commercialfeedistheprimaryexpenditure.Consequently,imposingminimumbio-securitystandardsamonglarge-scale duck producers might be feasible, if the program also helped ease farmers’ costconstraints. Moreover, because of the potential of this sector to propagate disease, anyoutreach programs seeking to promote safe poultry production practices should place anemphasison large-scaleduckproducers. Inaddition, temporarymeasures suchaskeepingbirdsinanenclosure,shouldbepromotedduringthehighdiseaseriskmonthsofFebruary–May.However, unless there is a program in place (market based or other) that alleviatescash constraints, farmersmay not be able to implement these technologies despite theirpositiveincentivestodoso.

Finally,aprimarysourceofdiseaseconcernistheduckhatchery.Relativelyfewhatcheriesserve largecatchmentareas inCambodia.Therefore, infectionsoccurringathatcheriesarelikely to spread throughout the supply chain and have potential to infect a wide region.However, like duck farmers, hatcheries tend to invest significant resources protecting thehousehold’s primary economic activity. Nonetheless, if safety inspections are going to beimplemented, they shouldbeginwithduckhatcheries. Furthermore, informationoutreachprograms should include hatchery owners and the potential for creating a certificationsystemforhatcheriesshouldbefurtherinvestigated.

Disclaimer: The views expressed in this paper are solely those of the authors and do not reflect an officialposition of DFID, FAO, RVC or RDRC. More information about the project is available at: www.hpai-research.net/......