Informalmarkets, small volumes and largely generic products make productdifferentiation difficult. This stifles innovation towards value addition inresponse to market signals. Certification, for which training is aprerequisite, provides a differentiation mechanism in such market settings uponwhich further marketing innovation can be built. Policy makers also requirewell documented justification for departures from prevailing procedurestargeted at the informal sector. Rules to protect public health in suchsettings are often unrealistic in that, while they significantly limit marketaccess, they are not based on locally derived information, which is usuallylacking.

Commercialisedsupply of training and certification (T&C) through accredited businessdevelopment service (BDS) providers has been successfully tested as a mechanismfor addressing food quality and safety concerns and improving market access.Food quality and safety concerns raised by consumers and policy makers areimportant barriers to market access for small-scale producers and marketagents, especially those selling highly perishable livestock products. Whilethese markets dominate the supply of milk and meat in the ECA region, theyoften operate outside the formal economy and without official support due topolicies addressing quality and safety concerns.

T&Cprovides an appropriate level of justification in this context by addressingtwo key problems: the need to bridge the gap between regulated and unregulatedmarkets, and the need to overcome food safety concerns raised by consumers andhealth regulators. Addressing these problems through T&C has been shown toaddress safety concerns and bridge the regulatory gap, while creating employmentand providing greater access to quality nutrition for the poor.

Livestockoffers the main opportunity for improving livelihoods in arid and semi-aridlands (ASALs) where productivity losses associated with climate change risksare high. Overcoming market barriers in these areas is one way for vulnerablecommunities to adapt to climate change. Health risk and market demandinformation generated by ILRI and partners in the region, including ASARECA,and on which this innovation depends, has revealed the following:

§  Milk- and meat-borne health risks areoften overplayed and are largely eliminated through cooking. For example, thecommon consumer practice of boiling milk before use is as effective asindustrial pasteurisation in reducing such risks.

§  Boosting the image of livestock productsas healthy has benefits for which local consumers are willing to pay pricepremiums. For example, a recent study among consumers of camel milk and meatdelicacy known as nyirinyiri in Kenya revealed that consumers are willing topay up to twice as much for attributes of freshness and cleanliness.

§  T&C allows a balance between strictimplementation of regulations, which creates strong incentives for markets toavoid them due to the costs of compliance, and market access.

Scaling-up approaches

Figure2.1: Schematic representation of the mechanism of commercialized supply oftraining and certification.

Theusers of the innovation are certification authorities including regulators,standards bureaus, BDS providers, associations representing market chain actorsand development agencies. The innovation relies on application of BDS tointegrate small-scale informal market actors into the formal value chainthrough building capacity, assuring product quality, labelling and branding.The BDS approach extends the reach of the certification authorities whileproviding employment and income opportunity for the BDS providers through thefees paid to them by trained market chain actors.

 

Themarket chain actors, comprising mainly producer-sellers, vendors, transportersand processors, benefit through increased knowledge, reduced post-harvestlosses, official recognition and increased consumer confidence in the productsthey sell. The key factor is recognition that most consumers are poor and havefew affordable alternatives despite what policies say, hence their dependenceon informal markets.

 

There isa continuum between informality and formality and movement towards the latteris a gradual process that does not simply involve moving from one fixed stateto another. Successful promotion of the innovation requires engagement byregulators and development agents to support an environment that providesinformal actors with some of the protective benefits that formality can offer.In particular, such support helps informal actors overcome the constraint oflow investment into business that is often related to low education, poorawareness, inadequate information and lack of capital. This gives theopportunity for informal actors to move along the continuum and evolve theirpractices towards formality, scale-up and achieve target standards.

 

Recognitionof the following factors regarding informal actors will enhance promotion of thisinnovation: 1) that they dominate production, processing and delivery andemploy many people, especially in ASALs where alternative formal markets hardlyexist; 2) that they are mainly poor and without a voice; 3) that policy hashistorically focused on their displacement by formal capital-intensiveproduction and marketing; 4) that vested interests often reinforce theirdisplacement; and 5) that available services have not been tailored to them.

 

Second,recognition that livestock-mediated development is considered among the bestopportunities for livelihoods improvement, given increasing demand forlivestock products and widely recognised nutrition benefits. For example,growth in the dairy industry has been ranked by ASARECA and IFPRI as the mostimportant agricultural sub-sector in the ECA region in terms of potential grossdomestic product (GDP) gains.

 

TheT&C scheme related to milk market development in Kenya has now evolved toinclude the participation of the Dairy Traders Association (DTA) launched inSeptember 2009. Their aims and activities include self-regulation based on theT&C concept. DTA membership has grown from 37 when the association wasregistered some two years back, to 3000 members in September 2009. About 4000people, offering employment to over 10,000 people, have since been trained andcertified through the association. This is remarkable considering that onlyfive years before, trade in raw milk was not allowed and traders were oftenharassed due to concerns by officials regarding milk quality and safety.

 

Thechanges in Kenya have had important regional knock-on effects within thecontext of the ASARECA Policy Analysis and Advocacy Programme (PAAP) onrationalisation and harmonisation of dairy policies in the region, which issupporting a similar scheme in Tanzania through the Tanzania Dairy Board thathas already recruited and accredited 20 BDS providers. 

Thechallenges are: 1) overcoming negative mindsets about the role of informalagribusiness in development and instead, view informal enterprises as the basisfor more widespread economic and social development and as an engine forpoverty alleviation; 2) the tendency to adopt international food qualityassurance standards without considering local contexts, acceptable levels ofprotection and ignoring the role of traditional markets that have existed formillennia; and 3) promotion of investment by value chain actors in T&C, besidesother businesses or upon which expansion or further marketing innovations canbe built. It has been shown that viability of T&C BDS requires bundlingwith other BDS services.

Recommendationsfor addressing the challenges are: 1) effective dialogue based on robustevidence generated following consultation with key players to establish whatnew information is required; 2) careful selection of candidates for enrolmentinto the BDS scheme, coupled with effective induction on business opportunitiesand planning; and 3) active promotion of BDS services in the initial stage atpublic expense and thereafter, an assessment of who gains in each context anddistinction between public and private responsibility.

Thelessons learnt about the best ways to get the innovation adopted by the largestnumber of people are: 1) combination of practical demonstration with generationand dissemination of robust evidence; 2) application of collaborative andparticipatory approaches in both the generation of evidence and engagement ofbeneficiaries; 3) commercialising the supply of the innovation and reducingpublic responsibility as it catches on; 4) documentation and dissemination ofthe impact to stakeholders and the economy at large; and 5) involvement andleadership by a mandated government agency is an important component. However,evidence generated by research was the basis of the willingness of authoritiesto consider such alternative approaches in order to meet local needs andconditions, despite departing from international norms.

Contact details of the organisation:

InternationalLivestock Research Institute (ILRI),

P. O.Box 30709 Nairobi 00100 Kenya;

Telephone:+254 20 422 3000;

Fax:+254 20 422 3001

Contact details of the presenter andgenerators/promoters of the technology or innovation:

Dr. AmosOmore,

ImprovingMarket Opportunities, International Livestock Research Institute (ILRI),

P. O.Box 30709

Nairobi00100 Kenya;

Telephone:+254 20 422 3000;

Fax:+254 20 422 3001;

Mobile:+254 733-881170;

Email: A.Omore@cgiar.org

KaitibieS, Omore A, Rich K, Salasya B, Hooton N, Mwero D, Kristjanson P. 2008.Influence pathways and economic impacts of policy change in the Kenyan dairysector. Research Report 15. ILRI (International Livestock Research Institute),Nairobi, Kenya. (Available from http://mahider.ilri.org)

Omore A.Staal S and Randolph T. 2004. Overcoming barriers to informal milk trade inKenya. In: Proceedings of the EGDI-WIDER (Expert Group on Development Issues/World Institute for Development Economics Research) Conference on UnlockingHuman Potential Linking the Informal and Formal Sectors, Helsinki, 17–18September 2004. (Available from http://mahider.ilri.org)