Dairy Producers’ Willingness to pay for advisory service in Debrezeit milkshed: Implications for...

5th All Africa Conference on Animal Agriculture , October 25-28, UNECA, Addis Ababa5th All Africa Conference on Animal Agriculture , October 25-28, UNECA, Addis Ababa04/13/23 –

,

Statement of the problem… However, as many studies revealed, it is

» Too narrowly centered on technology transfer with insufficient attention paid to the human, social, institutional and organizational aspects.

» Besides, the service delivery has historically predominantly been in the public domain.

On the other side, multiple service providers from the public, private and third sector are emerging in the sector. » This is challenging the traditional livestock services and

service delivery system to become more efficient and effective.

The need for institutional reforms is appreciated now more than ever. » This article reports the result of a study on dairy service

delivery systems in Debrezeit milkshed, in Ada’a district where dairy is an important economic activity.

Dairy Producers’ Willingness to pay for advisory service in Debrezeit milkshed:

Implications for Pluralistic Dairy Service Delivery Systems in Ethiopia

Presented by Anteneh Girma, Mohamadou Fadiga & Ranjitha Puskur for the 5th All Africa Conference on Animal Agriculture and the 18th Annual Meeting of the

Ethiopian Society of Animal Production (ESAP), Addis Ababa, October 25-28, 2010.

Commercialization of Livestock Agriculture in Africa: Challenges and opportunities

5th All Africa Conference on Animal Agriculture , October 25-28, UNECA, Addis Ababa5th All Africa Conference on Animal Agriculture , October 25-28, UNECA, Addis Ababa

Outline of presentation

Emergence of pluralistic service delivery systems in developing countries

Objectives of the paper

Methods and Procedures

Results and Discussions

Way forwards


Background Governments have traditionally taken the dominant role

for its funding and delivery of agricultural extension/advisory service since 1840’s

Its contribution to agricultural development Its public good attribute

Ethiopia’s extension systems One of the largest public agricultural extension services in

Sub-Saharan Africa (SSA) and Third largest in the world after China and India

The essential role that agricultural advisory service can play for agricultural development and commercialization

changes in the global market, linking smallholder to high value added export market,

promoting environmentally sustainable production techniques coping with HIV/AIDs and other health changes


Background…

The experience of this public dominated extension implementation has recorded mixed impact on farm performance

The traditional extension service ( public funded & delivered) is found less effective because of the following major weakness

» Supply-driven and top-down approach » Poor financial and human capacity» Cereal crop-biased with insufficient attention given

high value crops production and commercialization of livestock sector

» Biased in favor of technology transfer at the expense of organizational development


Background…

Different strategies (market and non market) have been implemented for public agricultural service reforms

» Implementing reforms that depart form the traditional public services models entails institutional innovation

Pluralistic service delivery


Background…

The need for involving private sector, farmers’ organizations and NGOs/CSOs in sharing, augmenting and supplementing public sector service delivery is being increasingly recommended in Ethiopia

This study selected dairy sector to test the recommendations in an emerging market orientation and with multiple actors’ involvement in the service delivery in the country


Background…

Demand driven advisory services emerge when» service users ask for,

» need and value

» willing to invest their own resources in order to receive the services.

In Ethiopia, however, there is a lack of information on how producers respond to this emerging market setting where the majority of the service, except advisory service, is paid by dairy producers.


Objective of the Study

Assess dairy producers’ willingness to pay for advisory service

Understand the factors that determine their willingness to pay for dairy advisory service and

Analyze the possible options for pluralistic service delivery systems in the dairy sector


Description of the study Area

Market oriented dairy production with multiple actors’ involvement in the service delivery in the country.

Most developed milkshed in the country; » supplying the bulk of dairy products available in the Addis Ababa

market,

Largest and most diversified dairy market in Ethiopia» An extensive collection zone for milk produced by smallholder dairy

producers and dairy farms.

Two dairy processing plants and the biggest dairy cooperative in Ethiopia (the Ada’a dairy cooperative)» In terms of number of members and volume of production and with

its own milk processing and feed processing plants are located in this area

» Started provision of services to members (feed, AI, market)


Methods and Procedures

Data type

HH survey» 150 dairy producing HH were selected using

two-stage sampling procedure from urban, peri urban and rural kebeles

FGD and Key informant interview Service providers survey Government document review


Methods and Procedures …

Model used and data analysis Contingent Valuation Method (CVM)

» Double bounded dichotomous choice payment question

The double bound CV model

This is an interval regression where » WTPi is the upper bound and lower bound of various bid levels

for service delivery proposed to respondents» represents the vector of explanatory variables, » is the scale parameter and» is the vector of parameters of the explanatory variables.

20,i i i WTPWTP x where N :


WTP intervals




Nine variables (three continuous and six dummy, two of which are interaction terms) were used in the interval regression model

The resulting estimated parameters are used to compute the predicted willingness to pay for service delivery.

The mean WTP is defined as follow: with

and are respectively the cumulative distribution and the probability density function under the normal distribution.

i i i iE WTP x x



Fit

Adapted : Birner et a1., 2006: Framework for Designing & Analyzing Pluralistic Agricultural Advisory Service



Pluralistic

Dairy Service Delivery System

Fiscal Arrangements

for Decentralized Service Provision

Quality Management Assurance of

Service Provision Service Providers Types (Pluralistic),

Willingness to pay for services

Dairy producers’ ability and

willingness to pay

Production System

Market orientation and access to dairy

related services

Platform Linkage and

partnership b/n service providers

and Learning alliance

Effective Demand Quality of demand,

Articulation of demand and

accountability claim by the clients

Policy Development

and Legislation for services

Capacity & management

Service Providers staff capacity,

motivation, and quality of service

Adapted from: Hagmann, Connolly, Ficarelli, and Ramaru, 2002. The Service Delivery Framework


Results and Discussions

Preliminary results WTP

» 71.3 % were willing » 28.7 % weren’t willing to pay for dairy

advisory service. Reasons for not willing to pay

» 55.8% pointed out affordability as the main reason,

» 30.2% indicated that it is the responsibility of the government to provide such services and

» 14.6 % do not trust that the service could be improved through payment


Results and Discussions …

Preferred modes of payment » 80.6 % would like to pay for advisory services through

cooperative » 1.9 % in-group with other producers » 17.5 % of the respondents prefer to pay personally to the

service provider

Conditions that enhance the payment for the dairy advisory services» Improved income from dairy was the main factor (38.3 %), » Improvement in production output and market (36.4 %), » Relevance of the advisory service (15.9 %) and » Effectiveness and efficiency of the development agent (9.3 %)


Determinants of willingness to pay


Explanatory Variables Estimates P-Values

Intercept 12.495 0.007***

Perception on the quality of existing dairy services

-6.709 0.001***

Sex 0.669 0.521

Location 0.465 0.771

Education status 0.094 0.948

Location*Experience 0.585 0.323

Location*Training -2.739 0.078*

Age of the respondent -0.171 0.065*

Labor 0.918 0.096*

Total income*10 0.002 0.004**

Scale 6.972



Mean WTP

12.77 Birr per visit, 0.94 US$.

Distribution of Predicted Willingness to Pay across

Participants

0

0.05

0.1

0.15

0.2

0.25

0.3

3.06 6.08 9.09 12.11 15.12 18.14 21.15 24.17 27.19 30.20

Predicted Willingness to Pay (ETB)

Freq

uenc

y


» No statistical difference WTP across subsystem

» Difference in community aspects

» Difference in dairy production systems and the policy and institutional arrangement across these sub systems

» Difference in the capacity of potential service providers

Different options for the peri-urban and rural setting on one side and the urban setting on the other.



Implications Dairy producers have indicated their WTP for advisory service

» The service delivery system might be able to enhanced through cost recovery mechanisms

» Encourage the participation of private service providers Substantial amount of money accrue to the advisory service provider

if the calculated mean WTP were multiplied by the total number of dairy producers,

» Enhance the accountability to advisory specialists to make the service producers relevant

Payment through cooperative was the preferred mode of payment » Majority of the respondents have realized the benefit of being

organized in cooperative 62.9 % of the urban producers are members of a dairy

cooperative and non members are also confident on the performance of the

cooperative to facilitate such service delivery


Political decision to continue in delivering public advisory service for the rural and peri-urban settings

» Transforming the traditional role of extension to market- oriented public advisory service through participating dairy producers for the financing of the service

Implications …


Implications…

Urban dairy sub system is neither covered nor designed to access advisory service by the public sector » The urban sub system is covering the majority

of the milk market in the milkshed

» With large number of crossbred cows, which demand better management practices and thereby advisory service, leading dairy producers to join dairy cooperative

Dairy cooperatives could at least contract advisory service from competent service providers or recruit their own advisory staff


Way forward

Development of demand side of service delivery Community level Organize dairy producer by public / NGOs Empower producers organization

» Articulate, organize the delivery and share the costs of the services

Development of competent service providers District /milk shed levelGood choices of advisors Building competencies of advisors Quality assurance and qualification of service providersDelivery system that makes service providers accountable to the users

Supporting the response National/regional level Producers access to the

advisory services Increased competition

among the service providers

Capacity building and backstopping services to producers and service providers

More enabling environments


Acknowledgment

International Livestock Research Institute/IPMS project » graduate fellowship to the first author

while undertaking this research » the research costs


Thank You

Dairy Producers’ Willingness to pay for advisory service in Debrezeit milkshed: Implications for...

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