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					     Compensation and
   rehabilitation in HPAI
   control programmes:
     issues and options
(discussion with WB and UNSIC, 13-14 July
                  2006)
     Anni McLeod and Ana Riviere Cinnamond
    FAO Emergency Centre for Transboundary
            Animal Diseases (ECTAD)
                  Overview

•   The context
•   A framework for thinking about compensation
    and rehabilitation
•   Issues and options that have emerged so far
•   Next steps
Increasing regulations raises market barriers
for small commercial producers……. (Vietnam)
                                                                        Trader (small
                                                                        quantities)                                 Retail
Breeding centres             Trader (small                                                                          markets
(large quantities)           quantities)                                                                            (slaughter)



                                                        Assembler         Wholesale
                                                                          market
                                                                          (slaughter)
Small private                                                                                 Supermarkets
entities             Big trader –
incubating and       might rep 2 or 3
selling day old      companies                Semi-commercial farmers
chicks
                                                                                  Slaughterhouse




  Large companies
  producing feed & day                       Farm-gate sales to     Local
                                             Neighbours             market                                   Consumers
  old chicks                                                                                                 (slaughter)
                                                                    (slaughter)


                         activities/linkages still operating                            no longer operating
The framework for thinking about
 compensation and rehabilitation
Framework around 5 questions....

•   Why?
•   Who?
•   How much?
•   How?
•   From where?
General principles.....

• Keep it practical
• Work off a simple framework
• Design locally, draw lessons globally
• Think beyond the emergency
• Changing the rules of the game takes time
Issues that have emerged so far
Why?
‫ ‏‬Issue1
‫ ‏‬unless you are clear about what compensation
  is and why it is being done, it is difficult to build
  a coherent plan
Reasons why countries consider
compensation for HPAI....

• Belief that compensation will encourage reporting and
   discourage panic selling (not proved). Many countries.
• Wish to prevent a public health threat. Cote D’Ivoire : high
   density of people, live bird markets. Vietnam: a matter of
   principle, human cases
• Pressure from neighbours or international organisations
   WBGS : pressure from neighbour
• Moral notion or stakeholder pressure that payment
   should be made by the government for private property
   destroyed in the public good. Held to some extent in many
   countries....... Iraq laughed
Reasons why countries consider
compensation for HPAI....

• Existence of an insurance fund, private or public-private,
   to which people have contributed. e.g. Australia. Few if any
   developing countries.
• Support on social, humanitarian or political grounds, to
   restore livelihoods or to rehabilitate the poultry industry
   (depending on stakeholder “voice”). Nigeria : pressure
   from stakeholders with high level of “voice” . Thailand:
   pressure from stakeholders, ??social conscience.


Cambodia: has firmly declared cannot afford compensation
We find it useful to distinguish
between....

1.Compensation by government: Payment for
  private property destroyed (birds culled) in the public good
2.Indemnity from private sources: Payment made
  to people who have contributed to an insurance fund
3.Rehabilitation: Support from public funds, on social,
  humanitarian or political grounds, to restore livelihoods or
  rehabilitate the poultry industry (e.g. reimbursement for
  birds that died of disease, payment for downtime,
  assistance to restart poultry enterprise or move to other
  enterprises) even when damage results from externalities
  created by risky behaviour of private individuals.
Who is supported?
‫ ‏‬Issue2
‫ ‏‬what to do about people who have suffered
  from HPAI outbreaks or control processes but
  will not be eligible for compensation because
  their birds were not culled?
1. Compensation by government:
.... compensate everyone whose birds are culled
• In Vietnam, payments made for birds “volunteered” for culling.
• A problem, Backyard producers sometimes left out of
   compulsory culling


2. Indemnity from private sources:
.... compensate people in the scheme
• limited examples in developing countries
3. Rehabilitation:
.... the jury is still out
.... payment for birds that died before the culling team got
    there? (were sold? were eaten?)
... payment for downtime?
.... help to restart local poultry in a more biosecure way?
.... help to start a different livelihoods enterprise?


Strong interest in rehabilitation in
• Cote D’Ivoire and Nigeria: strong poultry sector
• WBGS: income source for many people, ?80% protein from
   poultry – possible rehabilitation through microfinance
At risk countries are paying less attention to this aspect, it only
   becomes important when they have had an outbreak....... table
   top simulations to stimulate interest
How much?
‫ ‏‬Issue3
‫ ‏‬it is difficult to establish (and implement) a
  consistent strategy about compensation rates,
  or other forms of support, in a decentralised
  financing system
Levels of support.....
1. Compensation by government:
• Same rate for same bird everywhere in the country
  advisable (otherwise people move birds). More difficult
  with decentralised decision making and finance or very
  variable local prices. Vietnam....... Across international
  borders......
• Different prices by species and category (age, broiler
  or layer, traditional or commercial, breeding flocks). Not
  too many categories or it is hard to administer.
  Premium value on traditional birds? The opposite in Cote
  D’Ivoire.... discouraging to farmers.
• Based on % of market price or, for commercial poultry,
   production costs rather than market price. Decide in
   advance how to determine market price – average for
   month or week? the price on the day of culling?
Market prices as basis for establishing rates in Mauritania,
   Vietnam, Cote D’Ivoire, Egypt??, Nigeria, Thailand
Production costs as basis for commercial birds in WBGS, Senegal,
   Benin,
Establishing market price: in several countries, average price for
   the month before the outbreak. In EU, general principle is
   price on the day of culling (incentive to report quickly).
Percentage of market price: we recommend <=100%. Thailand,
   70-100%. Vietnam 30-50% in practice. Cote D’Ivoire 75%
   suggested after stakeholder negotiation. Iran, ?? compensated
   at 3x market price for 3 weeks only (to encourage rapid
   reporting)
Levels of support....


2. Indemnity from private sources:
• payment level standardized or agreed in advance
Levels of support.....
3. Rehabilitation:
• unlike compensation payments, process usually decided
  after an outbreak, not in advance
• agreed restocking packages? some interest in
  Afgahnistan.... very tricky in Vietnam...
• poultry development project with credit / microfinance?
  associated with training / quality management Crimea,
  UNDP
• should consider including rehabilitation planning
  and some operational work in emergency projects


Compensation may need to be entirely centrally
  funded, rehabilitation funded from local sources
How?
‫ ‏‬Issue4
‫ ‏‬may need very different financing and operational
  processes
‫ ‏‬for compensation vs rehabilitation
‫ ‏‬for situations where there is an existing food emergency
  vs those where there is not
‫ ‏‬Issue5
‫ ‏‬more evidence is needed on the best form of payment,
  and the best balance of compensation vs rehabilitation,
  for poor and vulnerable people
‫ ‏‬Issue6
‫ ‏‬rehabilitation schemes may be highly beneficial but they
  take time and expertise to establish – in the meantime,
  the future of smallholder poultry development schemes
  are uncertain
 Identifying farmers and poultry

1.Compensation by government:
2.Indemnity from private sources:
.... only pay for birds that are culled and registered
   or part of an indemnity scheme
    • Registration forms, carbon copies, supervision of
      culling and registration by veterinary services, local
      authorities, poultry owner (+ other?)....
   does not entirely prevent scams
   needs to work fast or people will cull their own.
   Gender issues? Who gets registered?
Where / by whom are payments made?
•   Cheques:
    • Issued by the National bank, cashed upon presentation of
       ID. Francophone Africa many smallholders have bank accounts.
•   Cash:
    • Smallholders thought to like cash, but not everywhere.
     Gender issues? Need a simple system that makes use of
     existing institutions. In some countries cash payments not
     possible through the government. Authorities, NGOs,
     mosques. UN agencies (refugee camps or relief areas).
Cheques or cash can be paid swiftly
•   In-kind:
    • Food? only in cases of severe food insecurity
    • Seeds? relief mechanism may exist for disbursement
 Identifying farmers and poultry

3. Rehabilitation:
.... ideally, need advance registration
    but, Smallholders (even in UK, until recently) not
   usually registered anywhere. Good records may
   be available for contract farmers.
Where / by whom are payments made?
• Poultry Mauritania suggested compensate with
    birds, Vietnam has restocking scheme (problematic)
    (i) risky in epidemiological terms, (ii) direct
    restocking by government is difficult, (iii)
    farmers might prefer to invest in other areas.
    Requires investment in a restocking/poultry
    development programme.
•   Other things e.g. help to get into non-poultry
    enterprises Vietnam restructuring plan could send 2
    million smallholders out of poultry. Examples??.
Who funds it?
‫‏‬   Issue7
‫‏‬   “where there is no money” – a widespread
    outbreak may result in a hefty compensation
    bill for a poor country – and decisions to do
    things differently next time – under what
    circumstances is international financing
    appropriate?
              Sources of finance..

1. Compensation by government:
• Taxes.... general or earmarked? General taxes used by
   many countries that have a compensation scheme... but
   fund may not be quickly accessible. FAO reports estimate
   available tax
• With a well organised private sector, can set up a fund for
   livestock emergencies, to which government and private
   sector contribute. Encourages reporting, helps insure
   against losses, shares the financial risk so that all take
   steps to reduce disease risk. e,g, Australia.
• Top up from regional economic group (e.g. EU)
• International sources... will require careful review of
   auditing process
             Sources of finance..

2. Indemnity from private sources:
• Commercial farmers who take out private insurance will
  probably be asked to join a quality management scheme


3. Rehabilitation:
• A variety of sources for rural development
Thank you
Next steps
Immediate plans.....

•   Support to more countries on request to include
    compensation and rehabilitation in HPAI control
    plans
•   “Lessons learned” – e-consultation – August
•   Prepare workshop
•   Refine generic guidelines
•   Put compensation into table-top simulations
•   Issues and options publication
•   Collaboration..... World Bank, USDA....

				
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