Livestock Market and Mortality Risk in East Africa. Christopher B. Barrett Vet Med 6723 Guest Lecture February 28, 2014. Overview. Livestock’s roles in east African economic development Wealth accumulation and mortality risk Market risk Conclusions.
Christopher B. Barrett
Vet Med 6723 Guest Lecture
February 28, 2014
and mortality risk
Result: Improved productivity of agricultural or non-agricultural enterprises.
Result: Income stream generated directly by livestock
Result: Livestock can play a valuable role where access to conventional financial products is limited or where such products are unattractive.
Not everyone is equally able to acquire or
Pronounced cattle cycles are common
And accumulation dynamics are often highly nonlinear
Examples from Boran pastoralists, southern Ethiopia, per Lybbert et al. (2004 EJ)
How idiosyncratic or covariate are these risks (i.e., what’s the best way to deal with them)?
In southern Ethiopia, we find that, rainfall aside, mortality risk is idiosyncratic w/o any significant tragedy of the commons effect (see also McPeak 2005, Human Ecology, similar findings from northern Kenya). But rainfall is a major covariate risk (on which, more later).
Nairobi-Marsabit price differentials (“basis”)
Estimated Effects of Drought On Livestock Prices
(hypothetical drop of 200 and 300 mm over 3 and 12 months, respectively)
Negative correlation exists between price and mortality because rainfall drives both lactation/reproduction and mortality.
- big variation among species
Source: Barrett et al. (2003 J. African Economies)
Estimated Effects of Quarantine On Livestock Prices
Animal disease control measures matter to prices (Barrett et al., 2003 J. African Economies)
Drought-related covariate livestock mortality risk is key. A new, commercial index-based livestock insurance (IBLI) product launched in Marsabit, northern Kenya in Jan 2010.
Subsequently adapted and extended to Ethiopia and to other ASAL areas of Kenya. Also being adapted to other contexts (e.g., hornbills conservation in southern Thailand, Chantarat et al. PNAS 2011)
Livestock play a major role in rural development in east Africa
- as production inputs to ag/non-ag enterprises
- as production systems
- as quasi-financial asset
- not everyone has equal access
- mortality and market risk are considerable and tend to be mutually reinforcing, making livestock keeping a high risk-high reward activity.
- working on developing viable insurance for livestock assets